Reducing Risks of Forced Resignation Claims

Managing performance and discipline is an essential part of every leader in any organization. Good discipline ensures smooth and uninterrupted operations, and renders peace of mind at work for colleagues as well as superiors. This leadership task must not be neglected. Any leader who neglects to perform this should be charged with dereliction of duty, and if he is seriously unable to or does not have the guts to do so, he should be demoted or transferred to another position with no leadership role at all, or even be dismissed. In this connection, to avoid dismissing this useless leader, he could be told that it is better for him to resign. Being told to resign is something which can happen to any employee, whether he is in a leadership position or not.

Why Tell An Employee to resign instead of dismissing him?

There could be any number of reasons for it. There could be someone who is totally inept in his role and who is unable to improve or adapt to the job. It could be someone who is simply recalcitrant and stubborn who refuses to heed counselling. It could be because the management is compassionate and does not want the employee to end up with a black mark on his employment record.

It could also be because the management wants to avoid a dismissal decision that could end up in the Industrial Court on claim of unfair dismissal. But unfortunately, telling a person to resign could also land the employer in court because the employee claims he is forced or pressured to resign when he does not want to.

The Proper Way To Do It

It is actually not wrong to tell off an employee and advise him to resign. Numerous court cases have confirmed so. In a most recent case of Matrix Global Education Sdn Bhd v Felix Lee Eng Boon, the Court of Appeal ruled that merely suggesting, advising, or giving an employee the option to resign is not conclusive proof of constructive dismissal or forced resignation. This ruling highlighted a shift in the prevailing trend on the issue.

Similarly, an earlier 2002 case of City-Link Express (M) Sdn Bhd v Greenson Dauk, affirmed that it is not unusual for management to tell an underperforming or misbehaving employee of their dissatisfaction with their work. The Industrial Court Chairman said that in reality, management may reach a point where it has no choice but to state the facts to the employee. He noted that if an employee, after being told about their failures, decides it is in their best interest to resign, it is difficult for a court to find that they were forced to quit.

Here are key principles to follow to minimize risks:

Avoid Using Threats and Pressure: While you can advise an employee to resign, you must ensure that this advice is not accompanied by implicit threats or undue pressure. Coercing an employee to write a resignation letter through overt threats or a subtle display of authority can cross the line into unlawful territory. It would be to your advantage if you happen to have audio CCTV recording it happening or if you follow up the discussion with an email that clearly reiterates that he is not pressured to resign, he has enough time to consider the reason why the advise for him to resign is given to him in the light that he is not able to meet expectations and he has no bright future if he stays on.

Offer Some Considerations in return for his resignation: If an employee accepts some form of consideration, such as a benefit or goodwill payment in exchange for their resignation, or if he states in his resignation that he asks for a testimonial in return, he cannot later claim forced resignation.

Beware of Acting Coercively towards him, i.e. avoid actions that allows him to claim that he is pressured to resign. Coercive action include confining him to a room until he writes the resignation letter, not giving enough time to consider and think or to talk to others before writing the resignation.

By adhering to these principles, HR professionals and managers can maintain a delicate balance between the company's needs and the employee's rights, upholding fair and ethical employment practices. This approach ensures that your actions are aligned with established legal principles and reduces the risk of costly claims for forced resignation.

Best Practices for Superiors Who Have to Manage Performance and Discipline

When you have to tell an employee they don't have a future with the company, follow these best practices to protect the company and treat the employee fairly.

Avoid Threats and Pressure: Don't make implicit threats or put undue pressure on the employee[cite: 18, 20]. Actions like confining an employee until they write a resignation letter or giving them an unreasonably short time to decide are considered coercive tactics

Offer Genuine Choices: Do not tell an employee they have no choice but to resign or be fired. Instead, provide genuine options and allow them to make a free and informed decision

Investigate Any Allegations: If an employee claims they were pressured or threatened, HR should thoroughly investigate the claims and document all interactions carefully. This documentation can prove that the employee was not forced to resign.

Consider Offering a Benefit: If possible, offer a reasonable benefit in exchange for their resignation, such as some financial relief or other consideration. An employee who accepts such a benefit cannot later claim forced resignation.

Following these guidelines helps ensure your organization's actions are seen to be fair, ethical, and in line with legal principles.

Chan Wang Tak

Pakar Industry Negara, HR Consultant

Author of 400 Q&A on the Practice of Labour Laws in Malaysia