Worker argues employer breached contract by moving her from HR to revenue-generating position without consultation
The Industrial Court of Malaysia recently dealt with a significant constructive dismissal case involving a senior HR manager who claimed she was forced to resign after being transferred to an unfamiliar revenue-generating role without consultation or adequate preparation.
The worker argued that her employer fundamentally breached their employment contract by transferring her from a cost-centred HR position to a profit-centred role requiring skills and experience she did not possess.
She claimed the transfer was made without prior discussion, proper job descriptions, or adequate support, and was accompanied by demeaning changes to her workplace conditions.
Transfer without consultation leads to dismissal?
The worker had been employed as general manager of human capital since September 2016 at a government-linked corporation under the Ministry of Investment, Trade and Industry.
She worked under successive fixed-term contracts that were consistently renewed without breaks in service, focusing exclusively on HR functions throughout her five-year tenure with the organisation.
In March 2021, the employer implemented a company-wide reorganisation aimed at achieving financial sustainability and reducing dependence on government funding.
This transformational plan was designed to span six years from 2020 to 2025, with the establishment of Revenue Generating Units under a new Commercial Division to make the organisation more self-sustaining.
On 8 March 2021, the worker received an email at 12:42 am from the acting CEO informing her of an immediate transfer to general manager of a newly created event management division under the Commercial Division.
The transfer notification came with a new organisational chart that took effect the same day, affecting eleven employees across the organisation in various departments.
Transfer case highlights consultation failures
The evidence revealed a complete absence of prior consultation between the worker and management regarding her transfer to the new role.
During testimony, the acting CEO confirmed he had never discussed the transfer with the worker beforehand, stating he possessed the authority to move employees according to business needs without requiring prior consultation from affected staff.
The worker was on annual leave from 8-10 March 2021 and only discovered the transfer when she read the emails on 11 March 2021. She returned to the office on 12 March and immediately voiced her disagreement to her superior and the acting CEO, though this verbal protest was not formally documented by either party.
Despite the employer's email dated 11 March 2021 stating that affected employees would receive briefings on their new job descriptions from their respective department heads, the worker never received such briefing or a proper job description for her new role.
The worker refused to collect the formal transfer letter dated 15 March 2021 and did not acknowledge receipt of the transfer documentation, which was confirmed during the acting CEO's testimony.
Transfer conditions breach employment standards
The transfer placed the worker in a fundamentally different role requiring revenue generation, a responsibility entirely foreign to her HR background and experience.
The acting CEO acknowledged during cross-examination that the new position was indeed a revenue-generating unit, and another witness confirmed the worker would eventually be given targets to generate revenue for the organisation.
Adding to the worker's concerns was a new seating arrangement communicated on 18 March 2021 that placed her in a shared room with another senior manager, whilst an assistant general manager retained a private office with a closed door.
The worker viewed this arrangement as demeaning to her status as a general manager within the organisation's hierarchy.
The worker formally objected to these changes in an email dated 24 March 2021: "Another startling development is the new seating arrangement details that was sent to me through email dated 18 March 2021. In this new seating arrangement, I have been placed in a common seating area with other staff in a shared room, in my new position as general manager, [event management], whereas the assistant general manager is placed in a private room with a closed door all to himself. This is a clear example of [the employer] breaching the implied duty of mutual trust and confidence, by demeaning me in the eyes of my colleagues."
'Contract test' for constructive dismissal
The Industrial Court in this case (Case No.: 11/4-2879/21) applied the established "contract test" for constructive dismissal, which requires proof that the employer's conduct constituted a fundamental breach going to the root of the employment contract or demonstrated an intention to no longer be bound by the contractual relationship.
This test focuses on whether the employer's actions were serious enough to justify the employee treating the contract as terminated.
The court determined that despite the fixed-term contracts, the worker was treated as a permanent employee in practice based on the employer's actions and communications.
The acting CEO's email dated 29 March 2021 promised future opportunities, stating: "Later, [event management] will become a subsidiary and you have the opportunity for a career advancement prospects with a better range of remuneration and incentive package."
Examining the worker's resume, the court found: "There is nothing in the said resume to show that [the worker] has the experience in revenue-generating. Instead, the resume clearly shows that [the worker's] experience has always been in HR."
This contradicted the employer's argument that the worker possessed suitable experience for the new role requiring revenue generation and event management skills.
Transfer compensation awarded to worker
The court concluded that the employer had fundamentally breached the worker's employment contract, noting:
"[The employer] had fundamentally breached [the worker's] contract of employment, particularly the implied term of mutual trust and confidence as [the worker] had been given a role whereby if she fails to perform would have affected [the employer] and she would have been faulted for it."
The timing of the worker's response proved crucial to her claim's success. The court found no undue delay in the worker's response to the alleged breach, noting she had promptly objected upon learning of the transfer, formally complained on 24 March 2021, and declared constructive dismissal on 30 March 2021 after receiving the employer's rejection of her concerns.
The court awarded the worker compensation totalling RM356,554, comprising RM64,828 for compensation in lieu of reinstatement (calculated at one month's salary for each year of service) and RM291,726 in back wages for 18 months.
Reinstatement was deemed unsuitable for maintaining workplace harmony, with the court stating: "Reinstatement of [the worker] to [her] former position is not a suitable remedy and not in the interest of industrial harmony."
