Special Feature on Constructive Dismissal Part 1: Juicing the Turnip: Mediation and Mediative Methods of Managing Constructive Dismissal

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Staring this week, we shall feature a four-part series on constructive dismissal.

The series is aimed at informing the public in general, and new HR practitioners in particular, about the doctrine of constructive dismissal.

Note that this series, as with our other blog entries, are merely intended as as general information and not meant as legal advisory.

In the context of constructive dismissal in Malaysia, there is a provision for a conciliation process under S.20 of the Industrial Relations Act1967 to resolve the matters between the employee and the employer. Only after this has failed will the matter be referred to the Minister of Human Resources who will decide whether the case should be heard by the Industrial Court.

Parties involved in a constructive dismissal dispute are encouraged to enter into mediation with the intention of reaching a consensual settlement. In mediation, the mediator controls the processes through the stages of introduction, joint sessions, caucus and agreement, while parties control the outcome. The mediator merely assists in identifying and articulating parties’ interests, priorities and intentions.

Mediation is intended to reduce the backlog of cases before the Industrial Court and promote a speedy resolution to the dispute. The advantages of mediation as opposed to litigation are apparent. The mediation process takes up less time than the settlement of a court case and a successful mediation procedure may minimise the financial exposure of both parties.

We are of the view that organisations can adopt “mediation” strategies which forestall potential constructive dismissal claims even before employees have a chance at thinking them up.

Generally, being procedurally fair and compliant to statutory provisions relating to disciplinary sanctions will go a long way. Having an open, transparent and honest two-way communication with employees via meetings or townhalls about the state of the business especially if a laying-off exercise is unavoidable can help minimise the risk of potential claims for both constructive and unfair dismissals. Seeking employee consent and “buy-in” of new policies prior to implementation will take the mutual  trust and confidence factor between employer and employee to a different level, not to mention acting as a contractual safeguard for the employer. Employees who are not kept in the dark will be more inclined to accept the employer’s decision, even though they may not necessarily agree with it.

When it comes to performance issues of individual employees, the ploys may be a little painstaking but the result is well worth it. Explain what the employee has done wrong and provide constructive criticism. Set clear and genuine performance targets, meet the underperformer to discuss the problem, and then devise a potential solution with them. Following this, clear performance goals should then be set and implemented with dates agreed for a follow-up meeting to discuss whether the proposed solution has been working.

This “target-setting” approach may have to be repeated several times before the employer can decide to let the employee go.

To help the process along, employers may issue a warning for  underperformance, as well as cases of misconduct. Legally, a warning is not a precursor to dismissal, however, allegations about misconduct or underperformance should be made out clearly and in full to the employee. The employee then needs to be given a chance to respond, even if the employer is planning to dismiss them. Employers also need to genuinely consider their response.

Dismissing employees is something that cannot be hastily done.  The way an organisation conducts the dismissal may have an impact on whether the employee takes legal action. Give ample notice, pay the required amount of compensation and offer to help them find another job where possible. The whole thing must be carried out in the most professional and non-vindictive of demeanours in order to get the best of the situation and avoid the worst.

And finally, we like the judgement of Farley J in the 1993 case of Standard Trustco Ltd.:

“… you cannot get blood from a stone but you can get some juice from a turnip if it is squeezed the right way.”

 

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