SAKK v Industrial Court of Malaysia & Anor [2025] 4 MLRA 385

SAKK v Industrial Court of Malaysia & Anor [2025] 4 MLRA 385

Court of Appeal (Sabah & Sarawak, Kota Kinabalu)

Constructive Dismissal under the Contract Test

1. The Appellant was employed as a Chief Instructor (later redesignated as Head of Training) by the 2nd Respondent (Layang-Layang Flying Academy Sdn Bhd) since September 2014.
2. On 13 October 2017, the 2nd Respondent issued a letter directing the Appellant to utilize 56 days of accumulated earned leave starting 16 October 2017.
3. The Appellant was ordered to hand over all company assets (car, laptop, office keys, and intellectual property), cease authorizing flights and stop assigning duties to staff.
4. The letter stated that the Appellant’s “future employment” with the parent company would be deliberated by the Board of Directors upon his return from leave.
5. On 23 October 2017, the Appellant wrote a letter seeking clarification on his employment status and expressing concern that the 2nd Respondent intended to remove him.
6. Receiving no response from the employer, the Appellant considered himself constructively dismissed on 13 November 2017 and subsequently filed a claim for unfair dismissal.
7. Both the Industrial Court and the High Court dismissed the Appellant’s claim, leading to this appeal.

1. Whether the Appellant was constructively dismissed by the 2nd Respondent.

(1)  Whether the Appellant was constructively dismissed by the 2nd Respondent.

(a) The court reaffirmed that the “contract test” is the sole standard for determining constructive dismissal in Malaysia [paragraph 30]. A fundamental breach occurs if the employer’s conduct, viewed cumulatively, goes to the root of the contract or evinces an intention no longer to be bound by its terms.

(b) Directing an employee to surrender all company properties and creating ambiguity regarding their “future employment” undermines the security of the position and breaches the implied term of mutual trust and confidence.

(c)  An employer’s silence or failure to respond to a reasonable request for clarification regarding an employee’s status can reinforce the perception of a repudiatory breach.

The Court of Appeal allowed the appeal and set aside the decisions of the High Court and Industrial Court. The Court found the 2nd Respondent’s cumulative conduct, forced leave, asset surrender and creating status ambiguity, tantamount to constructive dismissal.

The case was remitted to the Industrial Court for the assessment of backwages and compensation to be paid to the Appellant. The costs of RM20,000.00 were awarded to the Appellant.

1. Courts must evaluate the cumulative impact of an employer’s conduct over time rather than viewing specific incidents in isolation.
2. Actions such as forcing an employee to take leave while simultaneously demanding the return of essential ‘tools of trade’ like company cars and laptops, indicates a clear intention to sever the relationship rather than maintain the status quo.
3. Creating ambiguity regarding future employment or failing to respond to formal requests for clarification on job security constitutes a breach of the implied term of mutual trust and confidence.
4. A short delay in resigning (such as one month) does not constitute ‘undue delay’ or a waiver of the breach if the employee is proactively seeking clarification or attempting to resolve the matter amicably.
5. While employers have the right to reassign duties, these powers must be exercised in good faith and cannot be used as a pretext to unilaterally change core contract terms.