Wong Jun Kit and the Constructive Dismissal

Wong Jun Kit was 18 when he joined his father’s forklift business in 1998. He started as a technician. By 2004, he was managing the company’s Shah Alam branch. Two decades later, after his father, Wong Kok Wan, passed away, he challenged the validity of the will. In response, his stepmother, who is also a company director, slashed his salary. It fell from about RM27,500 a month to RM9,000, and then to RM6,000. His wages were withheld. His EPF and SOCSO contributions ceased. He was left with no work. The Industrial Court called it a fundamental breach of his employment contract and an act of retaliation. It awarded him approximately RM1 million. Every higher court that reviewed the case agreed.

The Federal Court has now refused the company leave to appeal, bringing a five-year dispute to a close. The decision is a stark reminder that constructive dismissal — where an employee is forced to resign because of the employer’s conduct — carries the same legal consequences as any other unfair dismissal. And in a family business, those consequences can be deeply personal.

A Family, a Will, and a Pay Cut

Wong Jun Kit worked for Wong Forklift Hire & Services Sdn Bhd, a company his late father had founded in Klang in 1969. Even though he had worked there for years, he had no written employment contract with the company. His father died on 16 March 2018 in an accident at work. Just over two weeks later, on 2 April 2018, the family agreed to jointly apply for letters of administration — there appeared to be no will. Then, on or about 6 April 2018, Wong’s stepmother produced a document purporting to be the late Wong Kok Wan’s will. It left all his assets to her and her two children, Wong Jun Wai and Wong Jun Yi, who were also appointed directors of the company. Wong and other family members doubted its authenticity and challenged its validity at the Shah Alam High Court. The court battle between him and his stepmother soon spilled into his working life.

In October 2018 — the same month Wong filed suit at the Shah Alam High Court challenging the will of his late father — his stepmother, Sim Foo Yoke, a director of the company, reduced his salary. No one at the company consulted Wong before imposing the reduction. No evidence was produced that other employees were subjected to the same treatment. In February and March 2019, his wages were not paid at all. His EPF and SOCSO contributions ceased. He was assigned no work — placed, as the High Court later described it, in “cold storage.” Wong did not delay. The following month, in April 2019, he demanded that his full salary be restored. The company did not comply. Faced with a fundamental breakdown in the employment relationship, he resigned and filed a complaint of constructive dismissal under the Industrial Relations Act 1967.

What Is Constructive Dismissal?

Constructive dismissal occurs when an employer commits a breach of the employment contract so serious that the employee is entitled to treat the contract as terminated and walk away. The employee is not resigning voluntarily — they are resigning because the employer has made continued employment impossible.

The leading Malaysian case, Wong Chee Hong v Cathay Organisation, established that constructive dismissal is governed by the “contract test,” not a test of reasonableness. The test was further articulated in Bayer (M) Sdn Bhd v Anwar Abd Rahim, where the court held that an employee must prove the employer is guilty of a breach that goes to the root of the contract, or has shown an intention no longer to be bound by it. Four conditions must be satisfied:

First, there must be a breach of contract by the employer. Second, the breach must be sufficiently important to justify the employee resigning. Third, the employee must leave in response to the breach and not for any other unconnected reason. Fourth, the employee must not delay in terminating the contract — otherwise, they may be deemed to have waived the breach and agreed to vary the contract.

In Wong Jun Kit’s case, the Industrial Court found that the pay cut, the withheld wages, and the non-payment of EPF and SOCSO contributions each constituted a fundamental breach of his employment contract. The High Court, reviewing the decision, noted that the company had also left him with no work — placed, in effect, in “cold storage.” Taken together, the courts found, these actions satisfied the contract test. Wong did not delay: he demanded restoration of his salary the month after he went unpaid, and when the company failed to comply, he resigned. And the timing, so soon after the will challenge, made the employer’s motive impossible to ignore.

What the Industrial Court Found

Industrial Court Chairman D Paramalingam was direct. The salary reduction, he found, was “certainly no coincidence.” It was imposed in the same month Wong filed suit challenging his father’s will. “The salary reduction was a retaliation by (Sim) against the claimant for having filed the suit,” the award read.

The company claimed in its defence that the reduction was due to a downturn in business and that Wong’s work performance was unsatisfactory. The court rejected both explanations. No evidence of unsatisfactory performance was ever produced — the issue was raised for the first time only after Wong had given notice of constructive dismissal. The company also failed to prove that any other employee had been handed a salary reduction.

The court found that Wong had acted reasonably and in a timely manner. He demanded the restoration of his full salary after two months of non-payment, and the company failed to comply. He was entitled, the court held, to walk away.

Reinstatement was not appropriate. The dispute had irretrievably damaged the employment relationship, and the family dynamics made a return to work impossible. “The company director, who is the claimant’s stepmother, could not see eye-to-eye after he initiated a suit questioning the last will of (his late father),” Paramalingam observed. Instead, the court awarded compensation in lieu of reinstatement and back wages:

Compensation in lieu of reinstatement: RM550,000
Back wages: RM660,000
Less post-dismissal earnings: RM198,000
Total award: approximately RM1 million

The compensation was computed based on an average salary of RM27,500, taking into account the evidence that Wong had drawn between RM26,300 and RM32,500 per month.

The Journey to the Federal Court

The High Court dismissed the company’s judicial review application. Justice Hayatul Akmal Abdul Aziz (now a Court of Appeal judge) held that the company had failed to discharge its burden of proof. The facts, she said, were not in dispute — nor was the family relationship between the parties. The company had arbitrarily and unilaterally reduced Wong’s salary, failed to pay his wages, stopped his EPF and SOCSO contributions, and left him with no work. He had satisfied all the criteria of the “contract test,” and the Industrial Court had not erred in finding constructive dismissal. The company was ordered to pay RM6,000 in costs.

The Court of Appeal affirmed that decision. In July 2026, a three-member Federal Court bench chaired by Justice Rhodzariah Bujang, sitting with Justices Ahmad Terrirudin Salleh and Nazlan Ghazali, refused the company leave to appeal, and ordered the company to pay Wong Jun Kit RM50,000 in costs. Leave to appeal to the Federal Court is granted only in cases involving novel constitutional or legal questions of public importance. The court found no such question here. The award now stands as final.

Practical Takeaways

• Constructive dismissal is as serious as any other unfair dismissal. If an employer’s conduct amounts to a fundamental breach of the employment contract, the employee can resign and claim the same remedies — including compensation in lieu of reinstatement and back wages — as any other unfairly dismissed employee.
• A pay cut can be a fundamental breach. A substantial, unilateral reduction in salary — especially when coupled with other adverse actions such as withholding wages, stopping statutory contributions, and removing work — may be treated by the courts as a constructive dismissal.
• Timing and motive will be scrutinised. The pay cut occurred in the same month Wong challenged his father’s will. The court drew a direct link between the legal action and the company’s treatment of him. Employers who act against an employee shortly after a dispute arises should expect their motives to be examined.
• Defences must be supported by evidence. The company claimed the salary reduction was due to a business downturn and poor performance. It produced no evidence for the performance claim, and the issue was raised for the first time after the constructive dismissal notice. A bare assertion will not survive scrutiny.
• Reinstatement is not always possible — but compensation still is. The court recognised that the family relationship was irretrievably damaged, making reinstatement unrealistic. The remedy then shifts to monetary compensation, which can be substantial.
• Family businesses are not immune. The fact that a company is family-run does not exempt it from the Industrial Relations Act. Employment rights apply regardless of the shareholding structure or the relationships between the parties.

A Closing Thought

Wong Jun Kit gave more than two decades of his working life to the family business. He started as a technician at 18 and rose to manage a branch. When his father died, he challenged a will — and in the same month, his salary was cut, his work was taken away, and his livelihood was dismantled. The courts, from the Industrial Court to the Federal Court, were clear: a family connection does not give an employer the right to breach an employment contract. When a pay cut is used as retaliation, the law will treat it as what it is — a dismissal, and an unfair one.

View the flowchart: Constructive Dismissal — The Contract Test Explained →

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The claimant’s name is rendered as Wong Jun Kit in the Industrial Court award; some news reports use the variant “Wong Joon Kiat.”