TERMINATION OF EMPLOYMENT
By Faudzil Harun
Breach of Contract by Employer
Section 15 (1)
An employer shall be deemed to have broken his contract of service with the
employer if
he fails to pay wages in accordance with Part III.
Section 13 (2)
Section 13 (2)
Either party
to a contract of service may terminate such contract of service without notice
in the event of any willful breach by the other party of a condition of the
contract of service.
Breach of Contract by Employee
Section 15 (2)
An employee shall be deemed to have broken his contract of service with the
employer if he
has been continuously absent from work for more than two consecutive working days
without prior leave from his employer, unless he has a reasonable excuse for such
absence and has informed or attempted to inform his employer of such excuse prior to or at
the earliest opportunity during such absence.
Section 13 (2)
Either party
to a contract of service may terminate such contract of service without notice
in the event of any willful breach by the other party of a condition of the
contract of service.
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Other Situation for Termination of Employment
Voluntary Termination of Employment
Termination of the contract of employment can be brought by the action of the
employee by way of : Voluntary Resignation, Retirement, Medical Boarded Out or
Death of Employee.
Frustration of Contract
The general principles of the doctrine of frustration is that if the performance of the contract of employment is rendered impossible to perform by some intervening events, then it will be terminated by frustration. The most common examples of frustration of contract in employment are illness and imprisonment.
The general principles of the doctrine of frustration is that if the performance of the contract of employment is rendered impossible to perform by some intervening events, then it will be terminated by frustration. The most common examples of frustration of contract in employment are illness and imprisonment.
The crucial thing in frustration of contract in
the employment situation is not the period of absence but the fact that there
now exist circumstances, which would not allow the contract to subsist. The
employee will not be able to return to his job by reason of his health or
physical condition or he is in jail for a sufficiently long period, which
compels the employer to take on a replacement without which the job will not be
done.
If the employee is not able to turn up for work for a few days or even a few
months because he is ill, it will not frustrate the contract if there is
possibility or indication that the employee can return to work after a period
of leave and a course of treatment.
The effect of frustration is the termination of the contract without the
employer or the employee terminating it.
Abandonment of Employment
Mere absence from work does not tantamount to an abandonment of employment and to automatic termination of contract. Breach of Section 15 (2) of the Employment Act, 1955 does not ipso facto cause the defaulting employee’s contract with his employer to be terminated.
There is no such thing as a statutory termination of employment contract. The employer may proceed to terminate the contract under Section 13 (2) of the Employment Act, 1955. But he cannot assume that the employee has abandoned his employment. The absence must be for a sufficient long period to indicate the employee does not intend returning to his employment.
Mere absence from work does not tantamount to an abandonment of employment and to automatic termination of contract. Breach of Section 15 (2) of the Employment Act, 1955 does not ipso facto cause the defaulting employee’s contract with his employer to be terminated.
There is no such thing as a statutory termination of employment contract. The employer may proceed to terminate the contract under Section 13 (2) of the Employment Act, 1955. But he cannot assume that the employee has abandoned his employment. The absence must be for a sufficient long period to indicate the employee does not intend returning to his employment.
Industrial
Court’s Opinion on Abandonment of Employment
1. MAS v Selvamalar – I/C Award 54/82
The Industrial Court held that the employee had abandoned her contract
1. MAS v Selvamalar – I/C Award 54/82
The Industrial Court held that the employee had abandoned her contract
when she had absented without leave for a
few weeks.
2. MISC Bhd v Karamjit Singh a/l Terlok Singh – I/C Award 299/96
The court quoting Lord Denning in London Transport Executive v
2. MISC Bhd v Karamjit Singh a/l Terlok Singh – I/C Award 299/96
The court quoting Lord Denning in London Transport Executive v
Clarke(1921)ICR355 held : “Long leave without approval
is inconsistent
with the continuance of the contract. Workman has dismissed himself.”
3. Jeepwanlal Ltd v Their Workmen (Indian Case) – Quoted in Alvin’s
3. Jeepwanlal Ltd v Their Workmen (Indian Case) – Quoted in Alvin’s
Employee Misconduct, it was held :
“If an employee continue to be absent from duty
without obtaining leave
and in an
unauthorized manner for such a long period of time … an
inference may reasonably be drawn
from such absence that by his absence
he has abandoned service.”
Forced Resignation
Forced resignation is actually an indirect dismissal.
Cyril Grunfield in his book – The Law of
Redundancy (3rd edition) quoted :
“The term indirect dismissal is used to distinguish cases of termination by the employer in which, while he has not dismissed directly, he has also not broken the contract so as to justify constructive dismissal. The main example of indirect dismissal is where the employer invites the employee to resign in circumstances in which it is clear that, otherwise the employee will in any case be dismissed.”
“The term indirect dismissal is used to distinguish cases of termination by the employer in which, while he has not dismissed directly, he has also not broken the contract so as to justify constructive dismissal. The main example of indirect dismissal is where the employer invites the employee to resign in circumstances in which it is clear that, otherwise the employee will in any case be dismissed.”
It is well established principles of Industrial Law that if it were proven that
an employer offered the employee the alternative of “resign or be dismissed”
and without anything more, and the employee resigned, that would cause a
dismissal.
The principle is said to be one of causation – the causation being the threat
of the dismissal.
It is the existence of the threat of being dismissed, which causes the employee to be willing to resign.
It is the existence of the threat of being dismissed, which causes the employee to be willing to resign.
In Jennico Associates Sdn Bhd v Lilian
Theresa De Costa – I/C Award 606/96, the Industrial Court held :
“It will be clear that the underlying basis of the doctrine of ‘forced
resignation’ is the existence of facts showing that an employee was put under
compulsion to resign; and that if she declined to do so, the employer would
proceed to dismiss her in any event. The employee might have been compelled to
hand in her letter of resignation upon the request or invitation of her
employer or at the dictation of the latter. She might have done so upon
receiving a demand or an ultimatum from her employer. There might be disclosed
in the evidence elements of persuasion, for example that it would be better for
the employee to resign with a record unblemished by a dismissal or even the
provision of a favourable, or at least a neutral letter of reference to
prospective employers.”
Option to Resign
If an employer tells his employee that if he does not like to work in the place he can leave if he wants to and the employee walks out this will not be construed as a dismissal. It has been established that the employer is at liberty to propose that any employee leave his employment by payment of an agreed compensation and if the employee accepts the proposition then there is no dismissal.
If an employer tells his employee that if he does not like to work in the place he can leave if he wants to and the employee walks out this will not be construed as a dismissal. It has been established that the employer is at liberty to propose that any employee leave his employment by payment of an agreed compensation and if the employee accepts the proposition then there is no dismissal.
The Industrial Relations Court of
Australia in Steward v Pullin (1994) 58 IR322 held that :
for there to be a resignation on the part of the employee it must be apparent
that there was a real choice on the part of the employee to be exercised.”
Retrenchment
Retrenchment involves the reduction of the workforce due to downturn of
business. There are cases where retrenchment happens when a particular kind of
work have cease. It is also possible to reduce workers with the use of
technology or efficient methods of doing a job. Retrenchment also occurs when
an employer ceases or sells his business.
It is the right of the employer to reorganize his business in any manner for
the purpose of economy or convenience or undertake a retrenchment exercise so
long as it is bona fide.
Retrenchment is necessary incidence of running a business, but retrenchment is
justified only when due to shortage of work that had caused the surplus of
employees. The questions in justifying the retrenchment are :
1. Whether the retrenchment was
justified by the circumstances of the case?
2. Whether grounds given by the employer
are true?
3. Whether the retrenchment was motivated by bad faith and a desire to
3. Whether the retrenchment was motivated by bad faith and a desire to
victimize or harass the employee whom for some
ulterior reasons the
employer wanted to discharged.
Code of Conduct for Industrial Harmony
This code is an agreed document endorsed by both employers and employees. The Industrial Court has given recognition to the provision of the code in various awards. The code places some burden on the employer who intends to carry out retrenchment exercise. Some of the recommended steps by the code for the employer to consider are :
1. Limitation on recruitment.
2. Restriction of overtime work.
This code is an agreed document endorsed by both employers and employees. The Industrial Court has given recognition to the provision of the code in various awards. The code places some burden on the employer who intends to carry out retrenchment exercise. Some of the recommended steps by the code for the employer to consider are :
1. Limitation on recruitment.
2. Restriction of overtime work.
3. Restriction of work on weekly rest day.
4. Reduction in number of working days or shifts.
5. Reduction in number of hours of work.
6. Re-training and transfer of employee to
other work.4. Reduction in number of working days or shifts.
5. Reduction in number of hours of work.
Last In First Out Principle (LIFO)
It has been established in industrial law that in effecting retrenchment, an employer should comply with the industrial principles of “last in first go” unless there are sound and valid reasons for departure. When other things are equal, this principle must be followed. The employer is not denied freedom to depart from the principle for sufficient and valid reasons.
This is more rational as an employee with long years could be promoted or transferred to a new job.