INDUSTRIAL COURT OF MALAYSIA

[CASE NO. 13(l)(4)/4-2312/2006]

BETWEEN
LEE ENG JOE
AND
FIBERTEX NONWOVENS SDN BHD

AWARD NO. 79 OF 2010

BEFORE : PUAN AMELIA TEE HONG GEOK BT. ABDULLAH - CHAIRMAN

VENUE : Industrial Court Malaysia, Kuala Lumpur
DATE OF REFERENCE : 10.08.2006

DATES OF MENTION : 21.11.2006; 31.07.2007; 10.04.2007; 17.04.2007;

07.05.2007; 24.05.2007; 24.07.2007; 18.03.2008;
25.03.2008;
DATES OF HEARING : 08.04.2008; 09.04.2008
DATE OF COMPANY’S
SUBMISSIONS RECEIVED : 12.05.2008
DATE OF CLAIMANT’S
SUBMISSIONS RECEIVED : 27.06.2008
DATE OF COMPANY’S IN
REPLY RECEIVED : 18.08.2008
REPRESENTATION : For the claimant - Krishna Dallumah; M/s
Krishna Dallumah, Manian & Indran
For the respondent - T Siva Subramaniam; M/s
T Siva & Co

REFERENCE: This is a reference by the Honourable Minister of Human

Resource und er sec tio n 20(3) o f the Ind ustrial R elatio ns Act 1967 o n
10 August 2006 aris ing out of the d is missal of E ncik Lee Eng Joe
(hereina fter refe rred to as the “C laima nt”) o n 12 Augus t 2005 b y
Fibe rtex Nonwo ve ns Sdn. Bhd. (he reina fte r re ferred to as the
“Respondent”).
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 AWARD

BACKGROUND

1. This is a Minis terial reference to the Ind ustrial Court und er

sectio n 20(3) o f the Ind ustrial R elatio ns Act 1967 (Ac t 177) made o n

10 August 2006 for an award in respect of the dismissal of Lee Eng Joe (“the

C laimant”) b y F ib ertex No nwo vens Sd n. Bhd. (“ the R espond ent ”) on

12 Augus t 2005.

2. This matter was heard by the previous Chairman of another divis ion.
The hearing of this case was duly completed on 8 April 2008. The
Respondent’s counsel filed the Written Submission on 12 May 2008 and
Written Submission In Reply on 18 August 2008. The C laimant’s counsel
filed the Written Submission on 27 June 2008.

3. As the status of the award of this case was pending, the Honourab le
President of the Industrial Court directed that this matter be transferred to
this division (Court 13). Both representative for the Claimant and counsel
for the Respondent consented to the award of this case to be handed down
by another Chairman. It must be noted that the previous Chairman was
appointed as a Jud icial Commiss ioner of the High Court of Malaya “on
14 August 2009. Accordingly, I shall now hand down the award for this

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case. This award is written based on the documents filed by both parties

and the notes of evidence recorded verbatim by the previous Chairman.

BRIEF FACTS

4. The C laimant commenced emp loyment with the Respondent

Company on 6 August 2003 as a Production Technic ian. On 7 June 2004,

the C laimant was promoted as Production Executiv e with the last drawn
salary of RM3, 800.00 per month.

5. The Respondent is a manufacturer of non woven fabrics and textiles

used as raw material in the manufacturing of d iapers.

6. On 18 July 2005, Mohamad Zawawi Mohd Noor (COW -2), Human

Resource Manager issued a show cause letter and letter of suspension to the
Claimant produced as CL-4 stating inter alia as follows:

“It has been reported that on Thursday, 14.07.2005, time

approximately at 6. 00 PM, Ahmad Izham (I/T Engineer) in the
presence if Ow Shyen Nyen (Process and Maintenance) and Soh Chi
Haur (Production Executive), found One (1) unit of the missing
wireless card which was ins ide your laptop bag at your office. ”

The Respondent requested for an exp lanation and decided to suspend the
Claimant on half p ay for one week.

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7. The Claimant vide rep ly dated 22 July 2005 as exhib ited in CL-5

exp lained that:

“My intention in taking the wireless network card then was to

examine and study the functions of the wireless network card so as to

improve my knowledge on wireless networking before leaving office

last Thursday. I never had any intention of removing the said card
from the office. In fact, I wanted to return the said card to Ahmad

Izham after examining it last Thursday. ”

8. The Respondent vide Notice of Inquiry dated 29 July 2005, CL-6 and
the Claimant was charged with the following misconduct:

“That on Thursday, 14 t h July 2005, you have been found taking (with
intention of stealing) one piece of wireless network card without
proper authorization. Stealing or committing theft is a serious act of
misconduct and such act of misconduct can lead to dismissal. ”

The Respondent further extended the Claimant ’s suspension for one week
with full pay.

9. Vide letter dated 8 August 2005, the Respondent referred to the

Domestic Inquiry which was held on 3 August 2005 and made the following

decision:

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 “On completion of the Inquiry, the Panel of Inquiry has concluded
that the charges levelled against you have been proven. You were
therefore, found guilty of gross misconduct.

In deciding on an appropriate punishment, the company took into

account your past record with the company. Based on this, it has
been decided that you would not be dismissed but demoted to a
lower position as a Production Technic ian T4. ”
[Emphasis added]

The Claimant’s salary was placed at the salary of RM1,400 per month with effect
from 8 August 2005.

10. The Claimant vide letter dated 12 August 2005 as exhibited in CL-2
considered himself constructively dismissed and stated categorically that the
punishments of demotion in post and reduction of salary were absolutely
unfair and unacceptable.

11. The Claimant in the Statement of Case prays for an order that he be
reinstated to his post of Production Executive without loss of seniority,
wages and benefits, monetary or otherwise together with arrears of salary
from the date of dismissal to the date of reinstatement.

12. The Respondent in the Statement In Reply averred the following:

(i) at the domestic inquiry, the Claimant was found guilty of the
c harges p referred agains t him an was d emo ted to the o nly

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 position vacant at the material time, which was Production

Technician T4;

(ii) it was out of concern for the Claimant’s livelihood and security
of emplo yment that the Respondent opted for lesser

punishment of demotion instead of dismissal.

13. In the Rejoinder filed by the Claimant, it was inter alia averred that

the domestic inquiry did not judic ially appreciate the evidence before it and

failed to consider relevant factors and had considered irrelevant f actors in

coming to an unfair decision to demote the Claimant.

THE CLAIMANT’S CASE AND SUBMISSIONS

14. The relevant evidence-in-chief of the Claimant as produced in CLWS -1

are as follows:

Q: What was decided at the domestic inquiry?

A: ....
The domestic inquiry carried out by the company was not a
fair trial. The witnesses of the company d id not testify .... The
important thing is that the domestic inquiry d id not apprec iate
the evid ence of Mr. Chan Kok Fong who testified that he had
g iv en m e p er m is s io n to e x a m in e and s t ud y t h e w ir e les s

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 network card. Neither d id the domestic inquiry give reasons

for their dec is ion.

Q: Did you accept the demoted post after the domestic inquiry?

A: Without sufficient evidence, the company demoted me to a

position from where I first started with the company. Wasn’t

that an attempt by the company to drive me forcibly out of the

company?

15. The Claimant’s witness, Chan Kok Fong (CLW-2) who was the
Electrical Engineer cum Chargeman stated that on 14 July 2005, CLW -2 met
the Claimant at the Production Line 4 when the Claimant showed him a box.
CLW-2 saw some cable, antennae and network cards. The Claimant then
took the card and put it in his pocket. CLW -2 was asked the following
question:

Q: Was the removal of the network card fro m the box with or
without your permiss ion?

A: With my permission.

Q: Did you give him permission to test the network card?

A: Yes.

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16. Learned counsel for the Claimant filed the Written Submissions and
submitted inter alia the following:

(i) the domestic inquiry panel failed to understand and judicially

appreciate the effect of Mr. Chan Kok Pong’s evidence when

arriving at its decision;

(ii) there was no evidence whatsoever adduced by the Respondent

to show the mental element (intentio n to steal) on th e part of

the C laimant;

(iii) the decision of the Respondent in punishing the Claimant

without sufficient evidence is a fundamental breach which goes
to the root of the employment contract;

(iv) the C laimant has proved on a preponderance of probabilities

that he has been constructively d is missed by the Respondent
Company.

THE COMPANY’S CASE AND SUBMISSIONS

17. The Respondent called the following witnesses to testify:

(i) Ow Shyen Nyen (COW-1), Process Engineer;

(ii) Mohamad Zawawi Mohd Noor (COW-2), Human Resource

Manager;

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 (iii) Ahmad Izham bin Razali (COW-3), IT and Electrical Engineer.

18. COW-1 testified the following in his evidence-in-chief and the relevant

portion of the Witness Statement in COWS-1 are as follows:

Q: What was the alleged misconduct?

A: It was alleged that on 14 July 2005 that the C laimant had

taken a wireless card belonging to the Company.

Q: What is a wireless card?

A: It is a card used to register finished products so that the

inventory in the warehouse is correctly recorded. Witho ut such
record the production process can be interupted.

19. COW-2 in his evidence stated that on 14 July 2005, he received a

complaint that the Claimant had removed a wireless card from a package

containing spare parts delivered by one of the Respondent ’s Company

suppliers. According to COW-2, the Claimant’s misconduct was so serious

that he could have been d ismissed, but the Managing Director decided to

mete out a lesser punishment instead, for reasons of not depriving him of a
livelihood.

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20. COW-3 stated categorically in evidence that:

“I was waiting for an urgent delivery wireless cards. I did not receive
the parts and this disrupted work in my department. At about 4.30
pm, I telephoned the supplier and I was informed that the parts were
delivered to our office at 12.00 noon and it was received by one of
our staff.

I made a search at the production office with the help of two other
co-workers. We found the missing wireless card inside the Claimant ’s
notebook bag and we remove it. ”

21. Learned counsel for the Respondent submitted inter alia as follows:

(i) he domestic inquiry panel acted in good faith and within its
managerial prerogative. The Respondent had well founded
suspicion of the Claimant’s dishonesty and misconduct;

(ii) he right to demote the Claimant for misconduct arose from

contractual authority as provided in Clause 31.3 (Discipline) of
the Respondent’s Company Employment Handbook 1
(Managerial & Executives) exhib ited as COE 1;

(iii) he Claimant failed to establish that the breach was serio us,
fundamental and are going to the root or foundation of the
contract. The Claimant has not successfully established that he
was constructively dismissed;

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 (iv) he Claimant was punished with just cause in furtherance of

disciplinary proceedings where the Respondent reasonably

found him guilty of the misconduct.

THE LAW ON CONSTRUCTIVE DIMISSAL

22. The onus of proof is on th e C laimant to prove that he was

constructively d ismissed. Once the C laimant had proved that he was
constructively dismissed, the onus of proof shifts to the Respondent to prove
that the dismissal was with just cause or excuse. In constructive dismissal,
the focus is on the employer’s conduct with respect to the particular
employee concerned against the backdrop of the employee’s employment
contract, see Constructive Dismissal: Commentaries and Cases, C CH
Asia Pte Limited, 2008 by Thavalingam Thavarajah, page 4. The test for
constructive dismissal was whether the Respondent had breached a
fundamental term of the contract of emplo yment which went to the root of
the contract or had evinced an intention not be bound by the contract.

22. In W ong Ch ee H ong v. Ca tha y O rga nisation (M) Sdn Bhd

[1988] 1 C LJ 45; the S up reme Co urt d ec id ed as fo llo ws :

“Thus it would be a dismissal if an emp loyer is guil ty of a breach

whic h goes to’ the root of the contract or if he has evinced an
intention no longer to be bound by it In such situatio n the emp loyee

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 is entitled to regard the contract as terminated and himself as being
dismissed.

...

The next questio n is this. Is the dismissal with a just cause or

excuse? Since the appellant has succeeded in showing that he was
dismissed, it is for the respondent company to show that the
dismissal was with a just cause or excuse. ”

The principle of law enunciated in Wong Chee Hong is once constructive

dismissal is proven by the employee, the burden of showing whether the dismissal is

with just cause or excuse lies on the Respondent.

24. The term “constructive dismissal” has been clearly defined in the case
of Western Excavating (E.C.C.) Ltd. v. Sharp [1978] 1 All E.R. 713 at
page 717 where Lord Denning M.R. Had held that the correct test to apply is
the contract test to be as follows:

“... If the employer is guilty of conduct which is a significant breach

going to the roo t of the contract of employment, or which shows that
the employer no longer intends to be bound by one or more of the
essential terms of the contract, then the emp loyee is entitled to treat
himself as discharged from any further performance. If he does so,
then he terminates the contract by reason of the employer ’s conduct.
He is constructively dismissed.”
[Emphasis added]

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EVALUATION AND FINDINGS

25. The proper approach in dec id ing whether constructive d ismissal has

taken p lace is for the Court to deter mine whether “the conduct of the
emp loyer was such that the emp loyer was guilty of a breach go ing to the

root of the contract or whether the emp loyer has evinced an intention no
longer to be bound by the contract” This princ ip le had been succinctly
exp lained in the Court of Appeal case of Anwar Abdul Rahim v. Bayer

(M) Sdn Bhd [1998] 2 CLJ 197 at p age 205 and Shahabudin Abdul
Rashid v. Talasco Insurance Sdn Bhd [2004] 4 C LJ 514.

26. The burden of proving constructive d ismissal is on the emp loyee ie,
the C laimant in the instant case. It was incumbent on the C laimant to
estab lish on a balance of probabilities that the Respondent’s conduct
amounted to a fundamental breach that went to the root of his employment
contract.

27. On the totality of the evidence adduced and having regard to all the
written submiss ion of both parties, it is the find ing of this Court the
Respondent had not committed any act whatsoever to have breached a
fundamental term of the Claimant’s term of employment which goes to the
root of the contract. -On the balance of probabilities and having considered
the factual matrix and circumstances of the case, this Court finds that the

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Claimant failed to prove that he was constructively d ismissed by the

Respondent Company. The reasons for arrivi ng at this find ing are as

follo ws :

(i) the domestic inquiry panel had acted in good faith and within

its managerial prerogative. At the inquiry, the panel heard the

testimony of witnesses and the C laimant was given every

opportunity to advance his explanat ions on the charge levelled

against him. The domestic inquiry was conducted against the

Claimant in accordance with the employee’s handbook,

expressly incorporated into Clause 20, Claimant ’s letter of
appointment dated 6 August 2003.

(ii) when dec iding on an appropriate p unis hment, the C laimant

was not d ismissed but demoted to a lower positio n as a
Production Technic ian T4. T he right to demote the C laimant
for misconduct arose from contractual authority as provided in
the F ibertex Nonwovens Sdn. Bhd. Employ ment Book 1
(Managerial & Executives) dated 1 July 2005 in C lause 31.3
(Discip line) as follows :

“Where the Company has dec ided to ho ld an inquiry, the

Company will inform the emp loyee concerned in writing. As
such inquiry if the emp loyee is found guilty of the charge and
depend ing on the nature of the miscond uct, the Company
may:

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 Dismiss the employee without notice
Downgrade the employee
Impose any other lesser punishment as the Company’s deem
fit.”

It is crystal c lear that the emp loyment contract permits the

Respondent to demote the C laimant as a form of discip linary
action aris ing from the domestic inquiry find ings. A demotion
pursuant to a finding of guilt by a domestic inquiry panel
cannot render an employer guilty of committing a breach for
purposes of a constructive d is miss al, see Wan Man Ab.
Latiff v. Tahan Insu rance Mala ysia Bhd [2008] 1 ILR 373
and Gula Padang Terap Bhd v. M ohd Yusoff Mahmood
[2005] 1 ILR 602;

(iii) the C laimant admitted in cross -examination that he put the

network card into his laptop bag.

Q: During the Domestic Inquiry you also admitted to taking

the card?

A: Yes.

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 Q: During the Domestic Inquiry, you also admitted that you put the
network card into you laptop bag?

A: Yes.

The irresistib le conclus ion which can be drawn from th e cross-

examination of the C laimant is that the C laimant had intended

to derive wrongful gain from the use of the card;

(iv) the Respondent, by its conduct, has not breached a term or

terms of the Claimant’s contract of employment or has evinced

an intention no longer to be bound by it;

(v) in add ition to the evidence adduced before this Court, the
Court has perused the domestic inquiry notes (exhib it - COB,
pages 15-21) and other relevant documents in the
Respondent’s Company bund le of document. This Court is
satisfied that there were c lear and cogent evid ence before the
domestic inquiry justifying a finding of guilt and sees no reason
to disturb such finding.

CONCLUSION

28. In conclusion, taking into account the totality of the evidence

adduced by both parties and bearing in mind section 30(5) of the Industrial

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Relations Act 1967 to act according to equity, good conscience and the
substantial merits of the case without regard to technicalities and legal form,
this Court finds that the Claimant failed to prove that he was constructively
dismissed by the Respondent Company.

29. Accordingly, the Claimant’s case is hereby dismissed.

HANDED DOWN AND DATED THIS 20 ™ JANUARY 2010.

(EDDIE YEO SOON CHYE)

CHAIRMAN
INDUSTRIAL COURT MALAYSIA
KUALA LUMPUR

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