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Written by Sim Zi Ying
Introduction
This is an appeal by the Appellant against the decision of the High Court, that allowed a judicial review application in favour of the Respondent, an employee who failed to get relief before the Industrial Court.
Case Facts
The Respondent has worked as a sales representative for the product of liquor and spirit for the Appellant since 1977. He was assigned a sales coverage area and was paid a monthly salary and commission which is known as the Sales Commission Scheme.
In October 2009, the Sales Commission Scheme was revised by the Appellant. The Respondent accepted the revision but later on, the Scheme was revised again on the 1st of May 2016. The Appellant removed Negeri Sembilan from the sales coverage area of the Respondent and the monthly sales target of the Respondent was also increased from RM 1,500,000 to RM 1,690,000. However, the Respondent did not resign upon receipt of the letter that notified him of the revision of the Scheme and reorganization of the sales coverage rate.
The Respondent only resigned 9 months later, on the 10th of March 2017 and regarded himself as constructively dismissed. On 29th of March 2017 , he filed a representation under section 20 of the Industrial Relations Act 1967.
Issue of Law
There were two legal issues to be determined in the appeal: 1. Whether the Industrial Court had substantive jurisdiction since the reinstatement was not pleaded, 2. Whether the Respondent was constructively dismissed.
Arguments by the Parties
The Appellant argued that the Industrial Court lacked substantive jurisdiction, as the Respondent did not want to be reinstated to his post. He submitted that the Respondent was not constructively dismissed as the commission payable to the employee was incentive and not part of his salary. The Respondent had also condoned the revision of the commission rate by working 9 more months.
The Respondent argued that the Industrial Court was seized with jurisdiction to hear the matter because of the Ministerial reference under section 20(3) of the Industrial Relations Act 1967. In respect of constructive dismissal, the Respondent argued that the delay in resigning did not amount to the condonation of the revised Scheme. The commission that the Respondent was paid was not an incentive but a right, the reduction of commission rate amounted to a breach that went to the root of the employment contract.
Decision of the Court
Issue on Jurisdiction
The Industrial Court did not cease to have ‘substantive jurisdiction’ merely because the remedy of reinstatement was not pleaded or asked for at the hearing. Under section 20(1) of the Industrial Relation Act 1967, the requirement to plead reinstatement as a remedy is only material at the stage of making a representation to the Director General. Once the case is referred to the Industrial Court by the Minister, there is no longer a specific requirement for the employee to plead for the remedy of reinstatement. The Industrial Court Rules 1967 which governs the procedure of the Industrial Court does not impose the obligation to plead the remedy of reinstatement in the Statement of Case either. Besides, section 30(6) of the Industrial Relations Act 1967 gives the Industrial Court wide discretion in giving relief. Hence, the Industrial Court has the jurisdiction to hear a claim for constructive dismissal or unfair dismissal even if the remedy of reinstatement is not pleaded or pursued at the hearing.
In the premises, the appeal on the jurisdiction of the Industrial Court to hear the case was dismissed and the decision of the High Court was affirmed.
Issue on Constructive Dismissal
An employee is only entitled to regard himself as dismissed if there is a breach of the fundamental terms of the contract of employment. The question that arose was whether the revision of the sales commission rate and the change in the area of sales coverage amounted to a breach of fundamental terms of the employment contract.
The Court held that the payment of sales commission was not a fundamental term of the employment. It was clearly stated in the Letter of Appointment that the sales of the commission were an incentive for good performance and it did not state that the commission rate was fixed. In fact, the respondent had accepted the revision in 2009.
The change in the sales coverage area by removing Negeri Sembilan cannot amount to a fundamental breach. This is because, in the Letter of Appointment, Negeri Sembilan was not included as the area of coverage of the respondent. It was added much later. The Letter of Appointment also clearly stated that ‘the area of coverage may be reviewed from time to time as and when the need arises’.
Next, there was a delay of 9 months, before he resigned after he had been notified of the revision on the sales commission rate. During these periods, he had accepted the extra benefits that were offered to him even after he complained about the revision. Besides, he did not indicate that he would be leaving.
Based on the above reasons, the respondent had failed to establish that he was constructively dismissed. The respondent had waived the breach by his conduct of failing to walk out of his employment within a reasonable time after the alleged breach of contract.
For this issue, the appeal was allowed by the Court of Appeal and the decision of the High Court was set aside
Decision of the Court
The key takeaways from the decision made by the Court of Appeal are:
First, an employee who files the representation for unfair dismissal or constructive dismissal under section 20(1) of the Industrial Relations Act need not plead reinstatement as a remedy if the matter is referred to the Industrial Court. The remedy of reinstatement is material at the stage of making representation to the Director General.
Second, section 30(6) of the Industrial Relations Act provides a wide jurisdiction for the Industrial Court in giving relief. Hence, the Industrial Court is not restricted in giving a relief even if there is no reinstatement pleaded in the Statement of Case.
Third, an employee who claims constructive dismissal must walk out of their employment within a reasonable time after the alleged breach of contract by the employer. There shall be no delay in the employee’s resignation. In the current case, 9 months of delay was considered as a waiver of the breach