Employment and Industrial Relations Update: The Industrial Court Reaffirms the Threshold for Constructive Dismissal Claims in Kevin Power v MISC Berhad

Introduction

On 17 March 2026, the Industrial Court in Kevin Power v MISC Berhad¹ dismissed a former Project Director’s claim of constructive dismissal, reaffirming the well-established requirement for a fundamental breach of contract to feature in claims of constructive dismissal. 

Brief facts

In April 2022, the Claimant was placed on a Performance Improvement Plan (“PIP”) following his performance rating for appraisal year 2021 where he was rated as "3 Low (Partially Met Expectations)". His PIP was to last until September 2022, following which a decision would be made by the Company’s Performance Improvement Review Committee (“PIRC”). At the time of his emplacement and for the duration of the PIP, the Claimant did not raise any grievances under the Company’s grievance mechanisms.

In June 2022, the Claimant was assigned to an international posting in China, effective July 2022, and subject to the Claimant’s receipt of a work permit. The international posting was an assignment that could be extended, shortened or cancelled at the Company’s discretion. 

The Claimant accordingly travelled to China for the international posting in early September 2022. However, during an internal meeting in mid-September involving Senior Management and the client, the client notified that it had concerns over the Claimant and requested for the Claimant’s removal from the project in China.

In balancing the client’s concerns, the importance of the project and the Claimant’s own wellbeing, before a work permit was issued to the Claimant in connection with his international posting, the Company directed the Claimant to return to Malaysia. The Claimant cooperated and returned to Malaysia as instructed. Throughout this time, the Company supported the Claimant with the process in returning to Malaysia. 

The evidence placed before the Industrial Court established that the Company had expressly conveyed to the Claimant that his recall to Malaysia and the cancellation of his international posting had no bearing on the terms and conditions of his employment. Meanwhile, the Claimant’s performance was still being monitored, and a performance review was to be undertaken after his return to Malaysia. 

Upon his return to Malaysia and prior to the performance review session, on 14 October 2022, the Claimant proposed to the Company that a mutually agreed separation be reached, consistent with his intention to leave the organisation on his own volition and accord. He further requested for the cessation of the PIP, and that no submission be given to the PIRC. The Company in turn responded that it would require time to deliberate the Claimant’s request. 

Thereafter, before the Company could revert to the Claimant and less than two weeks since his request for mutual separation in mid-October 2022, on 25 October 2022, the Claimant wrote to the Company contending that his PIP was done in bad faith, the cancellation of his international posting was abrupt, and that the Company had constructively dismissed him, notwithstanding there was no change to his job title, salary, or terms of employment following his recall to Malaysia. The proposal for mutual separation in turn became a monetary demand against the Company in excess of RM1.5 million. 

The decision of the Industrial Court

The Industrial Court considered all evidence placed before it and agreed that the Claimant’s poor performance issues were substantiated by evidence of his low ratings, his participation with the PIP, and expressed awareness and acknowledgement of areas of shortcomings within the documentation. The PIP did not constitute grounds for constructive dismissal, more so when the Claimant had not disputed his emplacement in April 2022, and had cooperated with the same.

The Industrial Court agreed that the sudden demands for monetary compensation in excess of RM1.5 million and the content of the Claimant’s constructive dismissal letter pointed to the conclusion that the Claimant was not interested in continuing his employment with the Company, he had evinced an intention to avoid any potential action in connection with his performance issues, and that he sought to obtain a monetary benefit from the Company under the pretext of constructive dismissal. 

In dismissing the Claimant’s claim, the Industrial Court emphasised that the onus is on the Claimant to show a fundamental breach going to the root of the contract. In the present case, there was no such breach in the Company’s decision to place him on a PIP/recall him from his international posting, given these actions were well within the Company’s contractual and managerial prerogative.  

This decision reaffirms that the threshold for establishing constructive dismissal remains a high one, that being the contract test. Mere dissatisfaction with an employer’s decisions will not suffice.

MISC Berhad was represented in this matter by Suganthi Singam (Partner) and Hannah Subramaniam (Associate) of the Firm’s Employment & Industrial Relations Practice.

The Industrial Court’s Full Award can be accessed here. 

Footnote:

1. Award No 480 of 2026.

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