The Case Of Matrix Global Education Sdn Bhd v Felix Lee Eng Boon [2023] 2 CLJ 34
The right to earn a livelihood is a fundamental liberty and entitlement that deserves protection as observed by the Federal Court in Maritime Intelligence Sdn Bhd v Tan Ah Geh [2021] 4 ILR 417. In this regard, the Industrial Relations Act 1967 (IRA 1967) was enacted as a social legislation to ensure that “a workman’s right to earn a livelihood is not truncated arbitrarily at the will of an employer”.
Section 20 of the IRA 1967 provides such protection- where an employee considers that he has been dismissed without just cause or excuse by his employer, he may make a written representation to have his matter referred to the Industrial Court.
However, what happens if you had negotiated with your resignation with your employer before resigning? Can you still pursue the matter with the Industrial Court and claim that your resignation was a forced resignation which amounted to dismissal without just cause or excuse? This question was answered by the Court of Appeal in the Matrix Global Education case.
Brief Facts
The Respondent (i.e. the Employee) was employed as the Chief Executive Officer (CEO) of the Appellant (i.e. the Company) to manage its schools. Upon receipt of complaints from parents about declining academic standards, a drop in the quality of the schools and a decrease in student admission and student retention, the Appellant decided to relieve the Respondent of his position. The Appellant offered him an alternative position as the Head, Group Corporate Affairs & Communications. The Appellant later discovered irregularities during the Respondent’s tenure and consequently, withdrew the alternative job role. The Respondent was asked to resign.
The Respondent entered into a negotiation with the Appellant to achieve a better severance package for his resignation. The Appellant accepted the Respondent’s resignation and honoured what had been agreed.
Notwithstanding this, the Respondent went to the Industrial Court and claimed that he was constructively dismissed. The Industrial Court ruled that the Respondent was dismissed without just cause and made an award of back wages and compensation in lieu of reinstatement. The High Court affirmed the award. The Appellant appealed to the Court of Appeal. This alert discusses the following:
1. Whether Respondent and Appellant entered into negotiated settlement of separation on terms mutually agreed.
2. Whether the Respondent had been dismissed without just cause and excuse by being forced to resign.
Analysis
a) Settlement of separation
The Court of Appeal held that both the High Court and the Industrial Court had failed to consider the relevant fact that the Respondent had, prior to his resignation, entered into negotiations with the Appellant to discuss a better severance package.
Evidence was presented before the court to establish that these facts were not in dispute. A series of e-mail communications ensued between the parties where the Respondent negotiated for better terms and reaffirmed his intention to achieve an amicable settlement. In his e-mails, the Respondent used wordings such as “my proposal is a very equitable one” and “trust that we would be able to arrive at an amicable arrangement expediently”.
Eventually, the Appellant granted the Respondent full waiver of his child’s tuition fees until the completion of the remaining academic term and restructured his car ownership scheme, on top of the Appellant’s initial offer of 6 months’ salary in lieu of notice.
The court observed that based on the evidence presented, the Respondent did entertain and entered into negotiations and achieved a better severance package as a result.
b) Forced resignation
It is trite that whether a resignation is a “forced resignation” is a question of fact. The High Court relied on Michael Brian Davis v Microsoft (M) Sdn Bhd [2000] 3 MLJ 669 which took the position that:
“The most obvious kind of indirect dismissal is where the employer invites the employee to resign in circumstances in which it is clear that, otherwise, the employee will in any case be dismissed.”
The Court of Appeal distinguished the Michael Brian Davis case, as in that case, the company had prepared a letter of resignation for the employee to sign. Here, the Respondent has legal training and has written his resignation e-mail in mature, mellowed language. In this scenario, the Court of Appeal stated that:
“If an employee agrees to put in his unqualified letter of resignation or acceded to the request that he should resign, it would be difficult for him to later complain about it that it was a ‘forced resignation’ unless there is evidence to show that he had been manhandled or threatened to be bashed up unless he resigns.”
In addition, the Court of Appeal highlighted the case of Sheffield v Oxford Controls Co Ltd [1979] ICR 396 where the UK’s Employment Appeal Tribunal dismissed the employee’s claim as the employee had resigned voluntarily after he had agreed to satisfactory terms or offer of financial benefits. The Tribunal held that “a resignation made pursuant to a series of negotiations completely negates the allegations of forced resignation”.
The Court of Appeal also took note of the choice of words used by the Respondent in writing his resignation e-mail to determine that he is not an employee who was “forced to resign” for fear of being terminated.
Overall, the Court of Appeal aptly concluded by saying:
“The respondent cannot have the best of both worlds; negotiating and accepting the terms of a separation and then at the same time claiming that he had been constructively dismissed. He cannot have the cake and eat it; entering into a negotiated settlement without reservation of rights and then launching a claim for more on account of being constructively dismissed.”
c) Fundamental breach of contract of employment
For completeness, the Court of Appeal found that there were no fundamental breaches on the part of the Appellant to justify the Respondent’s claim of constructive dismissal. The Respondent’s transfer was within the scope of his contract of employment and the Appellant’s subsequent decision to withdraw the offer of transfer cannot amount to constructive dismissal. Even if there was a fundamental breach of the contract of employment, the Respondent’s delay and conduct of entering into negotiations had affirmed the alleged breaches.
Conclusion
The Matrix Global Education case has clarified the question of whether an employee who has negotiated a separation agreement with their employer can still claim that they were forced to resign and constructively dismissed. Overall, while the IRA 1967 provides certain protections and benefits for employees, the legislation was designed with the view of promoting a fair and balanced relationship between employers and employees, rather than being solely pro-employee.
2 May 2023