The company did not attend the hearing. It filed no pleadings and called no witnesses.
The employee still lost.
That was the unusual outcome in Sivanesh a/l Chandrasaegaran v Nityo Infotech Services Sdn Bhd [Award No. 1720 of 2026].
The case offers two important lessons: employees must identify the correct employer when filing an unfair dismissal claim, and even a serious contractual breach may not support constructive dismissal if the employee waits too long before acting.
What Happened in the Case?
The employee was appointed as Head of Engineering under an employment contract issued by Userdata Sdn Bhd.
However, he brought his constructive dismissal claim against Nityo Infotech Services Sdn Bhd.
He argued that Nityo was effectively his employer because:
- Nityo was a shareholder of Userdata;
- both companies shared senior management;
- Nityo allegedly paid his salary;
- Nityo’s HR personnel managed his employment matters; and
- Nityo signed a settlement agreement concerning his outstanding salary.
According to the employee, the two companies operated as one integrated business and were effectively his common employers.
He also alleged, among other things, that he had not been paid from October 2024, his access to essential work systems was disabled, he received a backdated termination letter and the agreed settlement agreement was not honoured.
The employer did not file its pleadings or evidence and was absent when the case was heard. The Industrial Court nevertheless dismissed the employee’s claim.
Why Did the Employee Lose Despite the Employer’s Absence?
An employer’s failure to attend does not automatically mean that the employee wins.
The employee must still prove every necessary element of the claim.
In this case, the Court found two fundamental problems:
- the claim had been brought against the wrong company; and
- the employee had waited too long before treating himself as constructively dismissed.
The employer’s empty chair did not fill those gaps.
Who Was the Employee’s Actual Employer?
The employment contract and salary documents identified Userdata as the employer.
Although the employee relied on Nityo’s involvement in payroll, human resources and management, the Court found that this did not conclusively establish that Nityo was his legal employer.
The settlement agreement signed by Nityo was also insufficient to prove the employment relationship.
The Court therefore held that Userdata was the actual employer. At the very least, Userdata should have been named in the employee’s representation and joined as a party before liability was pursued against Nityo.
Because the proper employer was not before the Court, the claim could not succeed.
Can Related Companies Be Treated as One Employer?
Possibly, but not automatically.
Companies within the same group may share, directors, shareholders, offices, HR personnel, payroll functions and/or operational management.
However, that does not necessarily make every company within the group the employee’s employer.
Each company ordinarily remains a separate legal entity. The existence of a parent, subsidiary or sister-company relationship does not, by itself, merge their employment obligations.
The Court may examine the substance of the relationship, including:
- which company issued the employment contract;
- which company appears on the payslips;
- who paid the employee;
- who controlled the employee’s work;
- who conducted performance appraisals;
- who made statutory contributions;
- which company exercised disciplinary authority;
- who had the power to dismiss the employee; and
- how the parties represented the relationship in their documents and conduct.
No single factor will necessarily decide every case. The evidence must be assessed as a whole.
Why Correctly Identifying the Employer Matters
An unfair dismissal claim under section 20 of the Industrial Relations Act 1967 concerns the termination of an employment relationship.
The employee must therefore establish:
- who employed them;
- whether that employer dismissed them; and
- whether the dismissal was without just cause or excuse.
If the wrong company is named, the Court may find that there was no employment relationship between the parties and therefore no dismissal by that company named in the represntation for the Court to adjudicate.
This is particularly important for employees working under corporate group arrangements, secondments, shared service structures or related companies with common management.
Employees should not assume that the company giving their daily instructions is necessarily the same entity that legally employs them.
Can Non-Payment of Salary Amount to Constructive Dismissal?
Yes.
Payment of salary is a fundamental obligation under an employment contract. A prolonged failure to pay wages may amount to a repudiatory breach going to the root of the contract.
The same may apply where an employer deducts money for EPF, SOCSO or tax but fails to remit it to the relevant authorities.
However, proving a serious breach is only part of a constructive dismissal claim.
The Federal Court confirmed in Tan Lay Peng v RHB Bank Bhd & Anor [2024] 5 MLRA 171 that Malaysia applies the contract test. The employee must establish a fundamental or repudiatory breach of the employment contract. The question is not simply whether the employer acted unreasonably.
The employee must generally prove that the employer commited a contractual breach which was sufficiently serious to justify leaving and as a result of the breach the employee left employment without undue delay.
Why Did the Delay Defeat the Claim?
The Court accepted that non-payment of salary could constitute a fundamental breach.
However, the employee continued working while the alleged breaches persisted for an extended period. He only issued his formal notice of constructive dismissal later.
The Court found that he had not acted sufficiently quickly and had therefore failed an essential part of the constructive dismissal test.
This does not mean there is a fixed number of days within which every employee must resign. Context matters, particularly where the breach occurs progressively and the employee repeatedly protests or where several incidents culminate in a final triggering event.
Nevertheless, an employee who knowingly continues working for too long without clearly reserving their rights risks being treated as having accepted or affirmed the breach.
Does an Employee Have to Resign Immediately?
Not necessarily, and resigning hastily can be equally dangerous.
An employee contemplating constructive dismissal should ordinarily:
- identify the precise contractual breach;
- raise the matter promptly and in writing;
- request that the employer remedy it;
- preserve employment, payroll and statutory-contribution records;
- avoid giving an unrelated reason for resigning; and
- obtain legal advice before walking out.
A difficult workplace, delayed payment or involvement by several related companies does not automatically establish constructive dismissal.
The employee bears the burden of proving the claim. Resigning first and trying to assemble the legal basis afterwards is rarely a comfortable strategy.
What Happened to the Settlement Agreement?
The employee also relied on Nityo’s alleged failure to honour a settlement reached before the Industrial Relations Department.
The Court found that enforcing that agreement was a separate issue. Its jurisdiction in the case was to determine whether the employee had been unfairly dismissed, not to enforce the settlement agreement.
The official JPPM guidance confirms that section 20 representations generally begin with conciliation and that a Memorandum of Agreement may be prepared when settlement is reached.
A breached settlement may therefore require a different enforcement route. It should not be repackaged as constructive dismissal without satisfying the elements of that claim.
Practical Lessons for Employers
Businesses operating through related companies should ensure that their employment arrangements are clear.
Employers should:
- identify the employing entity consistently across contracts and payslips;
- ensure the correct company pays salaries and statutory contributions;
- clearly document secondments and shared-service arrangements;
- specify which company exercises disciplinary and dismissal powers;
- avoid using different group entities interchangeably in HR correspondence;
- record any payroll or administrative services provided by related companies; and
- ensure settlement agreements identify the proper parties and obligations.
Corporate structures may look perfectly clear on an organisation chart but surprisingly blurry from an employee’s desk.
Practical Lessons for Employees
Employees who are uncertain about their employer should check:
- the name stated in their appointment letter;
- the entity shown on their payslip;
- EPF and SOCSO contribution records;
- tax documents;
- performance and disciplinary correspondence;
- the identity of the company paying their salary; and
- the entity named in any termination letter.
This should be done before filing a section 20 representation. An employee who considers themselves dismissed without just cause or excuse generally has only 60 days to make the representation.
Final Thoughts
The practical lesson from this case is simple: make sure you name the correct employer before asking whether a dismissal was fair.
Shared directors, HR support and payroll arrangements may create confusion, but they do not automatically make every company within a corporate group the employer.
The case also reinforces an uncomfortable truth about constructive dismissal: even where the employer has committed a serious breach, waiting too long may undermine an otherwise credible claim.
You can also explore Employment Law Malaysia: The Complete Guide for Employees and Employers (2026) for practical articles on employment contracts, workplace disputes and unfair dismissal.
This article provides general information and does not constitute legal advice.
