The Industrial Court here has ruled that a former CEO of a baking and food company, who went unpaid for three months after being blamed for the firm’s losses, was constructively dismissed.
The court, which awarded RM560,000 to Lai Meng Sim, said DAG Express Sdn Bhd had breached his employment contract by not paying his salary for three months after alleging that he had failed to “manage the firm in a profitable manner as promised”.
Court chairman Augustine Anthony said the company’s failure to remit the claimant’s statutory deductions, such as the EPF, Social Security Organisation, and Employment Insurance System, also breached fundamental terms of the employment contract.
“The claimant’s evidence that the company failed to pay income tax deductions to the Inland Revenue Board is also a serious breach of the contract,” he said in the award handed down on July 31.
Lai began his employment on Sept 23, 2021, with a monthly salary of RM35,000. The claimant considered himself as constructively dismissed on Sept 29, 2023, upon the company’s failure to pay his salary from July to September and remit all statutory contributions.
He said the company’s move to put the blame squarely on him for its inability to meet its financial obligations to all the employees was not acceptable.
Anthony said witnesses gave various details of the claimant’s assurance to the company’s director that the baking and food industry was a profitable venture, which led him to his appointment as CEO.
He said the company blamed Lai for substantial losses over a two-year period, which led to the non-payment of salaries and the withholding of statutory contributions.
“This court is unable to accept the company’s witnesses’ testimony, what more when all the evidence of the purported oral communications between the claimant and a director of the firm remains hearsay evidence,” he said.
He said the failure of the company to call the director to testify as a witness clearly shows that the claimant’s evidence remains firmly unchallenged.
He awarded 14 months’ backdated salary, amounting to RM490,000, and RM70,000 as two months’ compensation in lieu of reinstatement, bringing the total to RM560,000.
Christine Jee Panji Papanji and Jolyn Ch’ng Wei Fern acted for the claimant while Ava Geh Ciu Hui represented the company.
