Special Feature on Constructive Dismissal Part 4: LinkedIn, Squeezed Out – The Future of Constructive Dismissal?

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In the final instalment of our constructive dismissal series, we look at the historical case of Flexman v BG Group ET/2701998/11.

John Flexman is reportedly the first person in the world to bring a case for constructive dismissal over social media.

Flexman was the Graduate and Development Manager of BG Group, a gas exploration company based in Reading, England. The problem started when Mr Flexman uploaded his CV and ticked the box in his LinkedIn profile page to register his interest in ‘career opportunities’. He was contacted by his manager whilst on a family holiday in the United States and ordered to remove his CV. On his return he was accused of ‘inappropriate use of social media’ and called to attend an internal disciplinary hearing.

BG Group claimed that Flexman breached its social media policies by uploading his CV to LinkedIn and ticking the “career opportunities” box on his LinkedIn profile. It also accused Flexman of breaching confidentiality by stating on his CV that he was assisting the company in reducing its “attrition rate.”  Flexman eventually resigned and claimed constructive dismissal.

The Employment Tribunal upheld Flexman’s claim of constructive dismissal due to unacceptable delays in the company’s dealing of the case and the company’s failure to address a grievance related to the incident.

Forbes’ Kashmir Hill contended that the conflict between an employee’s desire to brag about what they’ve done at a company and that company’s desire to keep such things under wrap is a common one in the social media age. “As I’ve written before, corporate spies say there are lots of juicy tidbits to be found in LinkedIn profiles. Also at issue here appears to be a company’s sensitivity to its employees playing the field. Finding an employee on LinkedIn seeking “career opportunities” is a little like discovering your significant other has an active OKCupid account” writes Hill.

Through their omnipresence and power to make or break public perception of individuals and organisations, social media sites are now pervading into contractual relationships between employer and employee and destroying the sense of mutual trust and confidence. Employers must ensure they are one (or a few!) steps ahead of employees and have proper social media policies in place protect their reputation as well as stop possible leaks of confidential information.

To us at Har Abada Nasara, the Flexman Revolution is a prophetic indication of the shape of things to come in constructive dismissal. This case may set the trend for a more litigacious generation in the workplace. Employers in general and human resources practitioners in particular must be prepared for this wave of change brought about by a new breed of employees who have savoir-faire in both law and technology. The need for human resources practitioners to master more than just everyday operational personnel management skills cannot be emphasised enough.

Special Feature on Constructive Dismissal Part 3: “Jumping the Gun” Explained

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If an employee overreacts to the employer’s unreasonable act and quit before the employer actually commits a fundamental breach, the employee might be jumping the gun in presuming that a constructive dismissal has taken place.

Leaving hastily can be construed as abandoning employment. In Kerry Foods v Lynch [2005] IRLR 680, the employee was a manager in the appellant company. The terms and conditions of the employee’s contract of employment provided that he has to work a 5-day week, whereas other managers who were employed after him had to work a 6-day week. The company had indicated to the employee that it intended to persuade all managers to work a 6-day week. The employee had objected to the change and the company wrote a letter to him indicating that it intended to terminate his current contract in the absence of his agreeing to the new terms and to re-engage him under a new contract containing the new terms which was discussed.

The employee resigned and complained that the proposed changes to his terms and conditions had seriously damaged the relationship of trust and confidence between the parties. The Employment Tribunal found that the employee had been constructively dismissed, however, the Employment Appeal Tribunal (EAT) held that the company had provided lawful notice of termination, which could not constitute a breach of the implied term. The company’s service of a lawful notice of termination together with an offer of continuous employment on different terms could not amount to a repudiatory breach of contract. There had been neither a breach of the existing terms nor an anticipatory breach in indicating lawful termination of the contract on proper notice. The employee in this case had jumped the gun. The EAT declared that there was no dismissal, and set aside the tribunal’s decision and consequent award.

Back on home soil, the case of Malaysia Airline System Berhad, MAS Golden Boutique Sdn Bhd v Noridah bte Ahmad [2003] 2 ILR 561 illustrates the concept of jumping the gun in the context of a transfer. The 2nd company  in this case is the subsidiary of the 1st company, with the same Chairman.  After the Board of Directors’ meeting of the 2nd company, the claimant was asked to meet with the Chairman and the Executive Vice-President Corporate Services. The claimant was told by the Chairman that the 2nd company was not performing well and he wanted her to write in for a transfer or else she would be sacked. That same night the claimant wrote a letter to the Vice-President Corporate Services requesting for a transfer.  6 days later, the claimant sent another letter claming constructive dismissal, stating that she was forced by the Vice-President to request for transfer and that she did not deserve this treatment after having  served for 22 years with the companies, and that she had yet to receive a reply for her letter requesting for transfer.

The Industrial Court in Noridah held: “Going by the evidence and law, the court is satisfied that on the balance of probabilities the claimant had failed to prove that the companies had acted in the manner which resulted in the relationship of mutual trust and confidence between employer and employee had broken down. Evidence had shown that the 1st company was still willing to keep the claimant in their employment but the claimant in haste and on her own volition had abandoned the employment. It was the claimant herself, who had walked out of employment. The court therefore makes a finding that the claimant was not entitled to consider herself to constructively dismissed.”

Constructive dismissal is not the easiest of allegations to prove. Many employees get over-excited about making a claim for constructive dismissal without actually having a solid grasp of the facts at hand, let alone the law. Most base their claims on the advice of “friends” and rumours of success stories at the labour office. In truth, most constructive dismissal claims fail on technicality.

The most important thing for an employee to remember is to get your facts right in any circumstances. Never assume anything before you actually fully clarify your doubts relating to changes proposed by your employer. Be a little patient and wait out to see whether a breach actually takes place. If you jump the gun and quit your job without ample proof, your employer could just shrug it off and assert  they never did anything which would make you quit your job. Every employee must remember, the law does recognise the prerogative of employers to rearrange their commercial operations however they wish as long as the intention behind the action is bona fide in the interest of business.

If you suspect that you are being squeezed out of your employment by changes affecting your work, take it step by step.  Begin with a meeting with your manager or supervisor. Do this professionally: prepare notes of incidents or events leading up to your complaint or better still, transcribe them into a proper report format.  Voice your grievance calmly, stick to the facts and avoid getting emotional. You may also go directly to your HR Department if it is your manager who is the subject of your grievance. Be open to the responses you receive. Not every member of the management team is out to black-sheep the rest of the staff. If you are still dissatisfied, seek the advice of your friendly labour officer at the nearest Jabatan Tenaga Kerja or Jabatan Perhubungan Perusahaan. Same principle applies: bring your notes, include the transpire notes between you and your manager/HR Department. All the best.

Special Feature on Constructive Dismissal Part 2: Why HR Practitioners Must Be Savvy of the Contracts Act 1950

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The law of contract is very much embedded in the doctrine of constructive dismissal. In Malaysia, a big chunk of the body of principles of contract law is put into statutory form in the Contracts Act 1950.

Every HR practitioner must be familiar with the landmark case of Wong Chee Hong v Cathay Organisation [1988] 1 MLJ 92, which laid down the principle that in cases of constructive dismissal the test that ought to be applied is the “contract test”.  It is basically to establish if the employer is guilty of a breach of a term or condition of the employment contract that goes right down to the root of contract.

The contract test means that the complaint of constructive dismissal will only succeed where the employee is able to prove that the employer was guilty of conduct which was repudiatory or in fundamental breach of the contract and that the employee treated himself as discharged following the breach. A modern case on point would be Anwar Abdul Rahim b Bayer (M) Sdn Bhd [1988] 2 CLJ 197.

Constructive dismissal has been referred to as “a doctrine that gives life to an employee who has been dismissed without just cause or excuse”, as per Dato’ Abdul Malik Ishak J in Moo Ng v Kiwi Products Sdn Bhd, Johor & Anor [1998] 3 CLJ 475:

“It is a doctrine that gives life to an employee who has been dismissed without just cause or excuse… This doctrine hinges on the contract test as elucidated by Lord Denning in Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27. In a broad sense constructive dismissal occurs when an employee repudiates a contract of employment. The repudiation may take the form of a breach, anticipatory breach or notice on intention. It may be expressed or implied and must go to the substance of the contract. If an employee asserts that he has been constructively dismissed, he must establish that there has been conduct on the part of the employer which breaches an express or implied term of the contract of employment going to the very root of the contract.”

The onus of proving constructive dismissal lies with the employee. The employee has to prove on a balance of probabilities that:-

  1. The employer’s conduct amounted to a breach of contract which entitled the employee to resign; and
  2. Whether the employee made up his mind and acted at the appropriate point in time soon after the conduct which he complained of had taken place.

The employer’s defence, therefore, has to bear in mind these two limbs of the employee’s burden of proof. Employers must take advantage of the power conferred by contract law that even if there is a breach by the employer, it does not necessarily amount to sufficient cause for constructive dismissal unless the breach goes to the root of the contract and, if affirmative, whether the breach was a fundamental one.

Since the doctrine of constructive dismissal pivots on contract law, it would augur well for HR practitioners to expand their vista on the subject by a deeper understanding of contractual principles and statutory provisions.  In court, every constructive dismissal case is decided on it merits in accordance with contractual principles, and in today’s dynamic workplace environment, understanding the nuances of a constructive dismissal claim is essential to the practice of HR. An employer’s good intentions in making changes to an employee’s condition of employment will be irrelevant unless the court implies a term into the contract that the employer can “reasonably” alter the terms of employment. As an anticipatory measure, employment contracts must be carefully worded, and to this aim HR practitioners must be shrewd as to the yesses and nos of the Contracts Act 1950 in addition to the prevailing employment legislation in order to safeguard the employer from potential claims for breach of contract. When a claim is made, HR practitioners need to step out of their administrative role into that of an employment law advisor to the organisation’s top management in order to contrive the correct defence mechanism.

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.”

 

Of Snakes And Your Ladders To Improve Your English By Digesting Court Judgements

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I have always been fascinated with court judgements from my earliest days of learning the law. Among the many motivations I have for reading judgement discourses is the authoritative wordplay used by judges in delivering  decisions.

My personal view if if English is not your native tongue and you want to improve your command of the language by leaps and bounds, read court judgements. You will get a sensation akin to vertigo at first if you’re not used to it, but believe me, once you get the hang of it, it’s just another roller-coaster ride you want to go on again and again.

Court judgement language is rich. The aphorisms and adages and maxims and proverbs and idioms in delivering the “held” and in their obiter dicta. Often there is ten-uchi sarcasm in their expressions, sarcasm so sharp and swift that you only realise it when the proverbial blood drips. Many are milder, but put the guilty party right in his place, making you wish you had the judge’s word power to shut your office nemesis up in the same way.

One way or another, a layman (a person outside the legal profession) has  much to learn from studying the English language used in court judgements. I quote here some extracts from the judgement from the Malaysian case of Gek Sing a/l Kaliappan v Public Prosecutor [1999] 6 MLJ 641, per Vincent Ng J. I have highlighted words and phrases I deem of interest and your homework is to Google up (or take a pot-shot guess in some cases!) their meanings and come back to me 🙂

“It then dawned upon the learned magistrate who, incidentally, had presided over all the previous four similar snake-cases, that snakes of the species concerned fetched considerably higher prices in the overseas esoteric market of gourmet patrons than auction prices, and the courts may have been unwittingly used to regularise or legitimise the illegal possession for smuggling of protected snakes. To put it bluntly, there appeared to be a cunning conspiracy for monetary gain through cynical instrumentation of the court of law by certain parties. According to the learned magistrate, in his ground of judgement, the 2,546 snakes could fetch an estimated RM80,000 in the esoteric market, which works out to an average of RM31.42 per snake. Whereas it appears from the receipts exhibits in p 24 of the appeal record, that certain bidders at the auction conducted by the Wild Life Protection Department paid only around RM4 per snake. Thus, even taking into consideration the total fines of RM11,000 paid in the current case, it does not call for any mathematical prowess to figure out that the net profit on 2,546 snakes could not be less than RM58,816. Such cool amount of illicit profit obviously attracts hot penalty. Hence, in the current case, bearing in mind the unusually short recurrence span, and the prevalence in Perlis of illegal possession of huge quantity of snakes (obviously for smuggling purposes) and in order to deter such offences, the learned magistrate Tuan Azizan Md Arshad had, quite rightly and wholly acting within his powers, found it necessary to take judicial notice of the considerably higher prices than auction prices that such snakes fetch in foreign esoteric market, and was driven to impose a short term of imprisonment besides the maximum fine he had normally imposed in the previous cases…

In dispensing justice, magistrates should not be oblivious of the feel of temperature outside their courts and continue to adopt the same approach in sentencing while (as here) there is laughter in the air outside by certain characters on their way to the bank

However, confronted with the unfortunate fact disclosed in the appeal record that about 1,893 snakes had died while awaiting disposal… And, after having heard counsel, I decided that as a forewarning to characters of the appellant’s ilk, this was a proper case to invoke s 325 to increase the respective… period of imprisonments..”