Employers generally have the managerial right to transfer employees between departments, roles or locations.
However, under Malaysian employment law, that right is not unlimited.
A transfer may amount to constructive dismissal if it fundamentally changes the employee’s position, is detrimental to the employee or shows that the employer no longer intends to honour the employment relationship.
The Industrial Court recently considered this issue in Jagdeep Kaur Udham Singh v Halal Development Corporation Bhd [2025] 3 ILR 19.
What Happened in the Case?
The employee had worked as the company’s General Manager of Human Capital since 2016. Her professional experience was almost entirely in human resources.
In March 2021, the company transferred her with immediate effect to become General Manager of Halal Event Management.
The new position was materially different:
- her previous position was focused on human resources;
- the new department was a profit centre responsible for generating revenue;
- she had no relevant event-management or revenue-generating experience;
- the transfer was not discussed with her beforehand;
- she was not briefed on her new responsibilities;
- she was not given a job description; and
- her seating arrangements were changed in a manner she considered inconsistent with her seniority.
The employee objected verbally and later in writing. When the company maintained that its decision was final, she treated herself as constructively dismissed.
Did the Employment Contract Permit Transfers?
Yes.
The employment contract gave the company discretion to transfer the employee to another job, location, department, division, branch, subsidiary or associated company.
However, a transfer clause does not give an employer an unrestricted right to make any transfer it wishes.
An employer’s power to transfer should generally be exercised:
- in good faith;
- for genuine business reasons;
- without an improper or collateral motive;
- without victimising the employee; and
- without fundamentally changing the employee’s terms or position to their detriment.
The Industrial Court therefore looked beyond the wording of the transfer clause and examined the practical effect of the transfer.
Why Did the Transfer Amount to Constructive Dismissal?
The Industrial Court found that the company had fundamentally breached the employee’s contract, particularly the implied term of mutual trust and confidence.
Three factors were especially important.
1. The new role was outside her experience
The employee’s background was in human resources. Nothing in her résumé showed experience in revenue generation or event management.
The new role could expose her to failure in an unfamiliar field. If she failed to meet revenue targets, her performance and professional reputation could be affected.
2. There was no prior discussion
The transfer took effect immediately and was not discussed with the employee beforehand.
The Court considered that it would have been more reasonable and prudent for the company to discuss the proposed role with her before making its decision.
This does not mean that consultation is legally required before every transfer. However, a complete absence of discussion may become significant where the new role differs substantially from the employee’s existing profession and responsibilities.
3. No job description or proper briefing was provided
The company had stated that affected employees would be briefed on their new responsibilities. However, the employee received neither a job description nor a proper briefing.
She was therefore expected to lead a new department without clarity about her duties, targets or expectations.
Taken together, these circumstances showed more than an ordinary administrative transfer.
What Is the Test for Constructive Dismissal?
The applicable test is the contract test, not merely whether the employer acted unreasonably.
An employee must generally prove that:
- the employer breached the employment contract;
- the breach was sufficiently serious to justify resignation;
- the employee left because of that breach; and
- the employee did not delay excessively before leaving.
In Tan Lay Peng v RHB Bank Bhd & Anor [2024] 5 MLRA 171, the Federal Court confirmed that the employer’s conduct must amount to a fundamental or repudiatory breach going to the root of the employment contract.
Reasonableness may still be considered when deciding whether such a fundamental breach occurred, but it does not replace the contract test. The Federal Court judgment explains the distinction.
Did the Employee Object Quickly Enough?
Yes.
The employee:
- verbally protested shortly after learning about the transfer;
- refused to acknowledge the transfer letter;
- sent a written objection on 24 March 2021;
- requested restoration to her former position; and
- treated herself as constructively dismissed on 30 March 2021 after the company rejected her objection.
The Industrial Court found that there was no undue delay.
This is important because an employee who continues working for too long without objection may be treated as having accepted the transfer.
Does Every Transfer to an Unfamiliar Role Amount to Constructive Dismissal?
No.
Employers are generally entitled to reorganise their workforce and transfer employees according to legitimate business needs.
A transfer is less likely to amount to constructive dismissal where:
- the contract contains a suitable transfer clause;
- the new role is reasonably connected to the employee’s skills;
- salary, status and responsibilities are preserved;
- the transfer is made in good faith;
- the employee receives a clear job description;
- appropriate training and support are provided; and
- the employer properly considers any genuine objection.
The issue is whether the transfer fundamentally alters the employment bargain, not merely whether the employee dislikes the new assignment.
In CIMB Bank Bhd v Ahmad Suhairi Mat Ali & Anor [2023] 6 MLRA 652, a transfer to an inferior position with diminished responsibilities and unrealistic targets was also found to amount to constructive dismissal, despite the employee retaining his job grade and remuneration. The Court of Appeal judgment demonstrates that courts examine the substance of a role rather than its title alone.
Does Salary Have to Be Reduced?
No.
A transfer may be detrimental even where salary and job grade remain unchanged.
The Court may examine whether the employee suffered:
- loss of authority;
- reduced responsibilities;
- diminished status;
- removal of subordinates;
- unrealistic performance expectations;
- reassignment outside their expertise; or
- damage to their professional standing.
Keeping the same title and salary does not necessarily cure a fundamental change to the employee’s actual role.
What Compensation Was Awarded?
The Industrial Court found that reinstatement was unsuitable and awarded the employee:
- RM64,828 as compensation in lieu of reinstatement, calculated at one month’s salary for each of four completed years of service; and
- RM291,726 in back wages, equivalent to 18 months’ salary.
The Court also found that the employee’s successive fixed-term contracts were, in reality, permanent employment. However, that finding depended on the company’s repeated renewals, conduct and apparent intention to retain her beyond the stated contractual period.
Practical Lessons for Employers
Before transferring an employee to a substantially different role, employers should:
- review the employment contract and transfer clause;
- identify the genuine business reason;
- compare the employee’s existing and proposed duties;
- consider whether the employee has the necessary experience;
- discuss significant changes with the employee;
- provide a clear job description;
- provide training and operational support;
- respond meaningfully to written objections; and
- avoid changes that unnecessarily diminish the employee’s status.
A broadly drafted transfer clause is helpful, but it will not protect a transfer that fundamentally breaches the employment relationship.
Practical Lessons for Employees
An employee who objects to a transfer should:
- review the transfer clause;
- ask for the new job description and targets;
- identify how the new role differs from the existing position;
- raise objections promptly and in writing;
- give the employer an opportunity to respond;
- preserve relevant emails and organisation charts; and
- obtain legal advice before resigning.
Resigning prematurely is risky. The employee must ultimately prove a fundamental contractual breach—not merely an inconvenient or unwanted transfer.
Final Thoughts
An employer may transfer an employee for genuine operational reasons, especially where the employment contract permits it.
However, the substance of the transfer matters.
In Jagdeep Kaur, transferring a long-serving human-resources professional into an unfamiliar revenue-generating role without consultation, a job description or proper briefing amounted to a fundamental breach of trust and confidence.
The case is a useful reminder that employees should not be treated as interchangeable pieces on an organisational chart.
If you need help planning an employee transfer, responding to a proposed change in role or assessing a constructive dismissal claim under Malaysian law, feel free to get in touch. You can also explore Employment Law Malaysia: The Complete Guide for Employees and Employers (2026) for practical articles covering workplace rights, transfers, termination and unfair dismissal.
This article provides general information and does not constitute legal advice. Industrial Court awards are fact-specific, and each transfer should be assessed according to the employment contract and surrounding circumstances.
