In the case of Tan Lay Peng (in her capacity as the administratrix of the estate of Tan Leong Huat) v. RHB Bank Berhad (Civil Appeal No.01(f)-10-04/2023(P), which was decided on 9 February 2024, the Federal Court unanimously affirmed the “contract test” as the appropriate test for determining a constructive dismissal case.
A former employee of RHB Bank Berhad (“the Bank/Respondent”), Tan Leong Huat (“Mr. Tan/Appellant”), was employed by the Bank as its Operations Head, Thailand Operations in Bangkok, the sole branch of the Bank at the material time.
In November 2013, the Bank opened its second branch in Sri Racha which was placed under the supervision of Mr. Tan. In June 2014, the Bank appointed Ms. Marina Chin Yoke Fong as the Head of Thailand Operations to oversee the operations of the Bangkok, Sri Racha, and the intended Ayutthaya branches.
In 2014, the Bank issued a transfer order for Mr. Tan to assume the role of Branch Manager of the Ayutthaya branch. The transfer order stipulated that his assignment is for a period of nine months. Mr. Tan complied with the transfer order and the Ayutthaya branch was opened in November 2014.
Subsequently, the Bank appointed a Thai national, Ms. Irin Chanonthiensink, as the Ayutthaya Branch Manager. In the circumstances, the Bank issued a transfer order for the transfer of Mr. Tan to the International Infrastructure, PMO and Operation Support, Group International Business in Malaysia with effect from 1 March 2015. Mr. Tan objected to his repatriation to Malaysia, refused to report for duty and pleaded constructive dismissal.
The Industrial Court found in favour of Mr. Tan and awarded him the sum of RM216,840 as compensation in lieu of reinstatement. The Bank’s application for judicial review was dismissed by the High Court. However, on appeal to the Court of Appeal, the Court of Appeal decided that the Industrial Court had applied the wrong test in determining whether Mr. Tan was constructively dismissed, giving rise to the appeal before the Federal Court.
