IN THE INDUSTRIAL COURT OF MALAYSIA

[CASE NO: 30(5)/4-2591/18]

BETWEEN

SYARIFAH ASSMAH SYED IDRUS

AND

NUSAPETRO SDN BHD

(Consolidated with Case No. 30(5)/4 -2592/18 by Court Order via Interim
Award No. 3180 of 2018 dated 12 th December 2018)

AWARD NO. 1474 OF 2019

BEFORE : Y.A. TUAN PARAMALINGAM A/L J.

DORAISAMY - Chairman (Sitting
Alone)

VENUE : Industrial Court of Malaysia, Kuala

Lumpur

DATE OF REFERENCE : 16.08.2018

DATES OF MENTION : 25.09.2018; 12.12.2018; 19.03.2019

DATE OF HEARING : 15.05.2019

REPRESENTATION : For the claimants - Mohan Ramakrishnan

& Santhini Thanapalan; M/s
Ramakrishnan & Associates

Company - Absent

REFERENCE:

This is a reference made under Sect ion 20 (3) of t he Industrial Relat ions Act
1967 (Act 177), arising out of t he dismissal of Syarifah Assmah Binti Syed

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Idrus (hereinaft er referred to as “t he 1 st Claimant ”) and Murniza Binti
Samsum Hariffin (hereinafter referred to as “t he 2 n d Claimant”) by Nusapetro
Sdn. Bhd. (hereinaft er referred to as “t he Company”) on 28 t h May 2018 and 15 t h
May 2018 respect ively.

AWARD

[1] The Minist erial reference in this case required the Court to hear and
determine t he 1 st and 2 n d Claimant s’ complaint of dismissal by t he Company o n
28 t h May 2018 and 15 t h May 2018 respect ively.

I. Procedural History

[2] The Court received the letters pertaining to the Ministerial reference
under Sect ion 20(3) of the Industrial Relations Act 1967 for both Claimant s o n
28 t h August 2018.

[3] The matters were fixed for ment ion on 25 t h September 2018, 12 t h
December 2018 and 19 t h March 2019.

[4] Upon hearing applicat ion by t he Claimant s on 12 t h December 2018, both

matters were then consolidated vide Interim Award No. 3180 of 2018 dated 12 t h
December 2018.

[5] The matter was fixed for hear ing on 15 t h and 16 t h of May 2019. However,
in t he morning of 15 t h May 2019, the Court was informed via telephone
conversat ion by the Company’s representat ive, i.e. one Puan Shafinaz Bt. Mohd.
Noh, that the Company will not be present at the trial as they do not wish to
take part in the proceedings any longer. The Court accordingly exercised it s
powers under Sect ion 29 (d) of t he Industrial Relat ions Act 1967 and declared
this proceeding to be heard ex parte. Sect ion 29 (d) of t he Industrial Relat ions
Act 1967 provides t hat the Court may, in any proceedings before it, “hear and
determine the matter before it notwithstanding the failure of any party to submit
any written statement whether of case or reply to the Court within such time as

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may be prescribed by the President or in the abse nce of any party to the
proceedings who has been served with a notice or summons to appear ”.

[6] The trial proceeded by way of an ex parte hear ing on 15 t h May 2019 wit h
only t he 1 st Claimant (CLW-1) and the 2 n d Claimant (CLW-2) taking the stand.

II. Factual Background

[7] The 1 st Claimant commenced employment wit h t he Company (which was

then known as BC Petrochemical Sdn. Bhd.) on 24 t h Januar y 2011 as an
Applicant Sales Engineer wit h a start ing basic salary of RM6,500.00 per mont h
effect ive from 16 t h February 2011.

[8] The 2 n d Claimant commenced employment wit h t he Company on 1 st April

2007 as Technical Support wit h a start ing salar y of RM1,200.00 per mont h.

[9] The Company t hereafter re-designated the Claimant to the post of Project
Engineer, Filtrat ion. Likewise, the 2 n d Claimant was also re-designated to the
post of Document Control Execut ive.

[10] It is the Company’s policy to pay the salar ies of its employees by t he 28 t h
day of each mont h. However, from April 2017 unt il May 2018, the Compan y
began paying the Claimant s ’ salaries lat e, in any event aft er the 7 t h of t he
subsequent mont h. The Company had also made the necessary statutory
deduct ions for KWSP, Zakat, LHDN and SOCSO from the Claimants ’ salar ies.
Despite making the deduct ions, t he Company had failed to pay t he said
deduct ions to the respect ive authorit ies. In t he case of t he 1 st Claimant, the
Company had even issued an EA Form for t he year 2017 stat ing t hat full
payment s had been made to the aut horit ies. However, when the 1 st Claimant
checked wit h t he respect ive authorit ies, she discovered that the Company had
failed to pay t he respect ive authorit ies for several mont hs, contradict ing it s
confir mat ion in t he EA Form for t he year 2017.

[11] The 2 n d Claimant also had written a letter on 26 t h March 2018 to the
Company. wit h regard to the discrepancies in the payment s for t he year 2017 to

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the necessary statutory bodies (i.e. KWSP, Zakat, LHDN and SOCSO) upon
checking wit h t hem, but the Company failed t o respond.

[12] The sit uat ion became progressively worse when the Company failed to
pay the Claimant s their salaries from the mont h of February 2018 unt il May
2018. The Claimant s then had on numerous occasions approached Puan Syafinaz
(i.e. the Senior Execut ive of Human Resources in t he Company) to request for
their salar ies. Explanat ions were given as well as promises made but nothing
came to fruit ion.

[13] The Claimant s had also requested on numerous occasions to the Human
Resources Depart ment to set an appoint ment wit h the management of the
Company in order to resolve the issue of salaries but their requests were denied
as t he Human Resources Depart ment refused to cooperate wit h t he Claimant s to
resolve the issue.

[14] As t he Company had evinced an int ent ion to no longer be bound by t he

terms of their contracts of emplo yment, in part icular wit h regards to the
payment of t heir salaries, t he Claimants tendered their not ices of resignat ion
(wit h the requisit e notice period given) dated 30 t h March 2018 (by t he 1 st
Claimant) and 16 t h April 2018 (by the 2 n d Claimant). The last date of work was
29 t h May 2018 (for t he 1 st Claimant) and 15 t h May 2018 (for t he 2 n d Claimant).
The Company, on the other hand, contends t hat the Claimant s had resigned
voluntarily.

[15] It is the Claimants’ content ion t hat the Company’s act ions in failing to
pay and/or settle t he Claimants ’ salaries had result ed in a breach of an int egral
term of their contracts of employment which ent it led the Claimant s to consider
themselves construct ively dismissed. The Company however contends that they
had remitted all t he payments to the Claimant but no evidence was put forth by
the Company during the trial of this matter as t hey were not present.

[16] The Company also contends t hat they had conducted an internal meet ing
wit h all t he staff of the Company on 23 r d May 2017 (which was also attended by
the Claimants) addressing the actual financial status of t he Company due to the
declining oil & gas market which had affected the Company’s performance since

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2017. In t he said meet ing, the staff were caut ioned of the situat ion and t he
aftermat h effects should they cont inue to be employed by t he Company.

[17] The Claimant s contend that they had been dismissed wit hout just cause
and excuse by t he Company as the Company had failed to rect ify t he said breach
despit e t heir repeated verbal complaint s t o the Human Resources Depart ment
and t heir superiors.

[18] The 1 st Claimant ’s last drawn salary was RM8,190.00 per mont h whereas
the 2 n d Claimant ’s last drawn salary was RM4,410.00 per mont h.

III. The Role Of The Industrial Court

[19] In WONG CHEE HONG v. CATHAY ORGANISATION (M) SDN. BHD.

[1988] 1 MLJ 92 t he Federal Court held that the role of t he Industrial Court
pertaining to a reference under sect ion 20 (3) of t he Industrial Relat ions Act
1967 is to ask it self a quest ion whether there was a dismissal; and, if so,
whet her it was wit h or wit hout just cause or excuse.

V. Issues To Be Decided

[20] The issues that arise in t his case are:-

(i) Whet her there was a construct ive dismissal of t he Claimant s’

employment due to the non-payment of their salaries by t he
Company for the mont hs of Januar y 2018 unt il May 2018;

(ii) Whet her t he dismissal of the Claimant s by the Company was wit h
or without just cause or excuse.

VI. The Court’s Findings And Reasons

(i) Was there a constructive dismissal?

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[21] The law relat ing to construct ive dismissal was established by t he Supreme
Court in t he case of WONG CHEE HONG v. CATHAY ORGANISATION
(MALAYSIA) SDN. BHD. [1988] 1 CLJ 298 where Salleh Abas LP said:-

“According to the Court of Appeal in Western Excavating (E.C.C.) Ltd. v.

Sharp [1978] IRLR 27, it means no more than the common law right of an
employee to repudiate his contract of service where the conduct of his
employer is such that the latter is guilty of a breach going to the root of
the contract or where he has evinced a n intention no longer to be bound
by the contract. In such a situation the employee is entitled to regard
himself as being dismissed and walk out of his employment ”

[22] The burden in a construct ive dismissal case is on t he employee to prove,

on a balance of probabilit ies, t hat he/she had been construct ively dismissed. The
condit ions that had to be established by the emplo yee in order to const itut e
construct ive dismissal was set out in t he case of WESTERN EXCAVATING
(ECC) LTD. v. SHARP [1978] 1 All ER 713:-

(a) That the employer, by it s conduct, had breached one or more of t he

terms of the emplo yment contract ;

(b) That the terms which had been breached goes to the foundat ion o f
the contract ;

(c) That the emplo yee, pursuant to and by reasons of t he aforesaid

breach, had left the emplo yment and not for some other reason; and

(d) That the emplo yee left at an appropriate t ime soon after t he breach.

[23] The burden of proof however is a shift ing burden wherein after the Court
is sat isfied that the employee has sat isfied the init ial burden of proving that
there was indeed a breach of a fundament al term t hat goes to the root of t he
contract of employment by t he emplo yer or that by the conduct or omission o f
the emplo yer it is deemed that they have evinced an intent ion to no longer be
bound by t he said contract of emplo yment, the burden then shift s to the
employer to prove t hat the dismissal was done wit h just cause and excuse.

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[24] The subject matter or the reason why the Claimant s had resigned which
they consider as construct ive dismissal is due to the non-payment of their
salaries by the Company.

[25] Payment of salar y is a fundament al term in any employment contract as

employees work in return for payment of salar y. When t here is a breach of such
a term, t he employee is just ified in considering himself as construct ively
dismissed from his employment.

[26] In t he case of KGN-HIN BUS COMPANY SDN BHD v. FERDAUS MD.

HASSAN & ORS [2001] 2 ILR 41 it was held by the Industrial Court:-

“The claimants contended that it is the company’s obligation to pay

wages as provided for under s. 19 of the Employment Act 1955. Despite
the intervention of the labour department the company still failed to make
any payment towards the claimants’ salaries. The failure of the company
to pay wages is a serious breach of the employment contract and it goes
to the root of the contract. In the circumstances all the claimants are
entitled to treat themselves as being constructively dismissed ”.

[27] It is evident from t he facts of the case that the Company had not been
paying t he Claimants’ salaries prompt ly or when it fell due. Instead, t he
Company had taken the opt ion to pay the said salaries in instalments. Since the
Company was not present in Court to give evidence in order to support their
content ions as stated in their Statement In Reply, t hus there had been no
evidence put forth before t his Court that the reasons for non-payment of t heir
salaries were due to the financial difficult ies suffered by t hem. In any event, it
is the dut y of t he Company to pay t heir staff’s salaries prompt ly. Failure to pay
salaries prompt ly ent it les t he Claimant s to hand in t heir resignat ion letters and
to have their said resignat ion treated as construct ive dismissal. This was stated
in the case of DR. RAYANOLD PEREIRA v. MENTERI SUMBER MANUSIA &
ANOR [1997] 3 CLJ Supp 116 where Nik Hashim JC (as His Lordship then was)
held:-

“Reference may be made to the case quoted in the applicant ’s statement

of facts in the case of Hanlon v. Allied Breweries (UK) Ltd. [1975] IRLR

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 321 quoted in “Unfair Dismissal Handbook” by Malcolm Mead, 2 n d Edn.
(at pp. 66 and 69) which lay down the proposition that it is a long
recognised implied terms that there is an obligation to pay agreed wage s
promptly... where the employee was not paid according to the contract,
the industrial tribunal held that this entitled the employee to resign and
to have her resignation treated as a constructive dismissal because the
employer had repudiated a term of th e contract”.

(Emphasis added)

[28] The next quest ion that arises is whether there was a delay in t he
Claimant s handing in their resignat ion letters and treat ing t hemselves as
construct ively dismissed? This is because the non-payment of salaries by the
Company occurred as ear ly as April 2017 but the Claimant s kept on working for
the Company unt il 29 t h May 2018 (1 st Claimant) and 15 t h May 2018 (2 n d
Claimant). The Claimant s’ test imony in Court was that they were given
promises and indeed were led to believe that despite the delay or non-payment
of t he salaries, the Company gave the impression that they will turn t he corner
and things would get better, especially when there were tenders for new projects
and such, whereupon their arrears of salar y would be paid. The Claimant s felt it
was t heir dut y as employees to not abandon the Company and further they were
given the hope that their salaries would eventually be sett led. Alas, nothing was
fort hcoming thereaft er, causing t hem to hand in their resignat ions. In the case o f
THARMANANDAN THANGAMUTHU v. ALAM ETIKAA RESOURCES (M) SDN
BHD [2017] 2 ILR 631 it was held by the Industrial Court:-

“Despite the fact that there was delay in terminating the contract in
response to the employer’s breach, the claimant could not be said as
having waived or accepted the breach for 6 month as the financial
situation of the company was explained to the staff including the claimant
(see meeting minute dated 30 October 2014 pp. 52 to 60 COB) the
company was having financial hardship to the extent that it has to borrow
money to pay the salaries of its employee and the delay in salary payment
was expected by the claimant. Further the act of the COWS who give
advancement of the total amount of RM11,000 is another factor that may
had delayed the claimant in terminating the contract. There was also

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 promise made by the Managing Director when the performance of the
company improved and the financial situation restored, the salary will be
paid. It is my view that in this case where constructive dismissal was
caused by non-payment of salary, the delay was because the claimant
continue with the employment with the hope that the financial situation
of the company will be restored and he will be paid his salary.
Unfortunately, after 6 month of patiently waiting, there was no sign that
the company’s financial situation will improve. Under such
circumstances, it is my view that there was no inordinate delay on part
of the claimant in terminating his employment and the claimant had
never waived the breach and agreed to vary the contract. Alternatively,
it is my considered view that the law on constructive dismissal which
requires that the claimant should have acted fast in the face of the
employer’s conduct does not apply in the instant case where the issue
involved was the deferment of salary payment. Sometimes the continuity
of employment was more important and given the priority than a prompt
salary payment unless and until the circumstances or the situation of
the employee is as such that will not afford them to continue further
with the employment’.

(Emphasis added)

[29] It suffices to say t hat the case of THARMANANDAN THANGAMUTHU v.

ALAM ETIKAA RESOURCES (M) SDN BHD is on all fours wit h t he case at
hand. It is evident from t he minutes of the briefing held by t he Company wit h
it s staff o n 23 r d May 2015 (at pp. 38-39 of COB) that the management of the
Company, whilst recognising t he financial sit uat ion it was under, nevertheless
had a clear direct ion to turn t he corner and this was accepted wit h much hope by
the Claimant s who pat ient ly wait ed for t heir salaries to be normalised. However,
from January 2018 to March 2018, the Claimant s did not receive any salaries or
any part thereof and the management of the Company even saw it fit to not
engage in communicat ion wit h the Claimants in order to resolve the issue. This
left the Claimant s wit h very litt le choice except to resign from t heir
employment and treat the resignat ion as a construct ive dismissal. Being
responsible staff, they had complied with the terms of t heir contracts of

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employment by giving sufficient not ice wit h t he hope of being paid their
salaries, but unfortunately and sadly t hey were not.

[30] The Court finds that there had been a breach of a fundamental term of t he
employment contract when t he Company failed to pay the Claimant s’ salaries
when it fell due for the mont hs of Januar y 2018 unt il May 2018. The Claimant s
were just ified in considering t hemselves as construct ively dismissed and
resigning on 30 t h March 2018 (1St Claimant) and 16 t h April 2018 (2 n d Claimant)
respect ively. The effect ive dates of the construct ive dismissal was on 29 t h May
2018 (for t he 1St Claimant) and 15 t h May 2018 (for t he 2 n d Claimant) after the
requisite not ice period had been given in t heir respect ive not ices of resignat ion.

(ii) Was the dismissal done with just cause or excuse?

[31] The Court finds that there has been a fundament al breach of t he
employment contract on the part of t he Company when it failed to pay t he
Claimant s’ salaries for the mont hs of January 2018 unt il May 2018 when it fell
due. The Claimant s had succeeded in establishing that they were construct ively
dismissed by the Company.

[32] The burden t hus shift ed to the Company to prove, on a balance of

probabilit ies, t hat the dismissals of the Claimants had been done wit h just cause
and excuse. The Company and/or its representat ives were not present in Court to
rebut the Claimant s’ evidence that they had been construct ively dismissed and
that such a dismissal was done wit hout just cause or excuse. As such, the
evidence o f the Claimants put forward to this Court is deemed unchallenged by
the Company.

[33] The Court is t hus sat isfied and hereby determines that there was a
construct ive dismissal of t he Claimant s’ employment s by t he Company and that
such a dismissal was done wit hout any just cause or excuse.

VI. The Remedy

[34] The Company had indicated that they are in dire financial sit uat ion and
were closing down their business and operat ions on 31 st May 2019 vide t heir

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letter to Court dated 30 t h April 2019 (Court file Enclosure No. 27) which is
reproduced below:-

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[35] However, there is no evidence whatsoever that eit her the Company had
been wound up or that steps had been undertaken to close down their business.
Under such circumst ances, there is no concrete proof before t he Court that
reinst atement has become an imposs ibilit y and thus compensat ion in lieu of
reinst atement cannot be awarded, in line wit h the principles laid down in t he
Federal Court case of UNILEVER (M) HOLDINGS SDN. BHD. v. SO LAI &
ANOR [2015] 3 CLJ 900. Be that as it may, it is not disputed that the C ompany
is in some form of financial difficult y and as such it would be inappropriate to
order the Claimant s to be reinst ated to their former posit ions in the Company.
As such, the Court will award compensation in lieu of reinst atement to the
Claimant s.

(i) The 1 s t Claimant

[36] The 1 st Claimant had pleaded in her Statement of Case that her last drawn
salary was RM8,190.00. She had been employed in t he Company for 7 years and
her date of dismissal was 29 t h May 2018.

[37] The Court finds t hat an award of compensat ion in lieu of reinstatement, at
the rate of one mont h’s salary for each year of service, would be appropriate.
Since t he 1 st Claimant had been in t he Company’s emplo yment for 7 years (i.e.
since January 2011) before her date of dismissal on 29 t h May 2018, thus t he
Claimant would be ent it led to compensat ion in lieu of reinstatement amount ing
to RM57,330.00, i.e. RM8,190.00 x 7.

[38] The Court also orders the 1 st Claimant to be paid backwages for 12
months which gives out a total of RM98,280.00, i.e. RM8,190.00 x 12.

[39] The 1 st Claimant test ified that she had applied on numerous occasions for
a job but have been unsuccessful in securing any. She started selling unit trusts
wit h RCAF Invest ments which earned her a paltry sum of RM10,000.00 per
annum. She remains unemplo yed unt il today. Under such circumst ances, t he
Court exercises it s discret ion to not impose any deduct ions for post-dismissal
income.

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(ii) The 2 nd Claimant

[40] The 2 n d Claimant had pleaded in her Statement of Case that her last drawn
salary was RM4,410.00. She had been employed in the Company for 11 years
and her date of dismissal was 15 t h May 2018.

[41] The Court finds that an award of compensation in lieu of reinst atement, at
the rate o f one mont h’s salary for each year of service, would be appropriate.
Since the 2 n d Claimant had been in Company’s employment for 11 years (i.e.
since April 2007) before her date of dismissal on 15 t h May 2018, thus the
Claimant would be ent it led to compensat ion in lieu of reinstatement amount ing
to RM48,510.00, i.e. RM4,410.00 x 11.

[42] The Court also orders the 2 n d Claimant to be paid backwages for 12
months which gives out a total of RM52,920.00, i.e. RM4,410.00 x 12.

[43] The 2 n d Claimant test ified that she was without a job for the first three
months after her dismissal. She subsequent ly managed to find a job but merely
stated it was a wit h a lower salary wit hout stat ing t he actual figures. Under the
circumstances, the Court exercises it s discret ion to impose a 20% deduct ion o n
the backwages awarded to the 2 n d Claimant.

VII. Award

[44] The Court awards and directs t hat the Company pay to the 1 st Claimant
(Syarifah Assmah Binti Syed Idrus) a total sum of RM155,610.00, which is
derived from t he following calculat ion:-

(i) RM8,190.00 x 12 mont hs RM 98,280.00

(ii) RM8,190.00 x 7 mont hs RM 57,330.00

Total RM 155,610.00

[45] The Court also awards and directs t hat the Company pay to the 2 n d
Claimant (Murniza Binti Samsum Hariffin) a total sum of RM90,846.00,
which is der ived from the following calculation:-

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 (i) RM4,410.00 x 12 mont hs RM 52,920.00

(ii) Less deduct ion of 20% RM (10,584.00)

(iii) RM4,410.00 x 11 mont hs RM 48,510.00

Total RM 90,846.00

[46] The payment of the award sums, subject to statutory deduct ions (if any),
must be made wit hin 30 days by the Company to the Claimant ’s solicitors,
Messrs. Ramakrishnan & Associat es, wit hin 30 days from t he date ment ioned at
the bottom of this Award.

HANDED DOWN AND DATED THIS 16 t h DAY OF MAY 2019

(PARAMALINGAM J DORAISAMY)
CHAIRMAN
INDUSTRIAL COURT, MALAYSIA
KUALA LUMPUR

Case(s) referred to:

Wong Chee Hong v. Cathay Organisation (M) Sdn. Bhd. [1988] 1 MLJ 92

Wong Chee Hong v. Cathay Organisation (Malaysia) Sdn. Bhd. [1988] 1 CLJ
298

Western Excavating (ECC) Ltd. v. Sharp [1978] 1 All ER 713

KGN-HIN Bus Company Sdn Bhd v. Ferdaus Md. Hassan & Ors [2001] 2 ILR 41

Dr. Rayanold Pereira v. Menteri Sumber Manusia & Anor [1997] 3 CLJ Supp
116

Tharmanandan Thangamuthu v. Alam Etikaa Resources (M) Sdn Bhd [2017] 2

ILR 631

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Unilever (M) Holdings Sdn. Bhd. v. So Lai & Anor [2015] 3 CLJ 900

Legislation referred to:

Industrial Relat ions Act 1967, ss. 20 (3), 29 (d)

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