Pushed Into Unpaid Leave
Your employer told you to take unpaid leave with no real choice in it.
Business is slow, or so you were told, and suddenly you are on leave with no pay until further notice. Nobody gave you a real choice in the matter.
Unpaid leave that is imposed rather than agreed can be treated as a serious breach of your contract. It edges close to the same ground as other constructive dismissal situations, and can also raise a broader unfair dismissal claim.
Can my employer force me onto unpaid leave?
Generally no, not without your agreement or a clear contractual right to do so. Pay is a basic term of employment, and withholding it unilaterally can amount to a fundamental breach1.
A short, mutually agreed unpaid break for personal reasons is different from an employer using unpaid leave to cut costs at your expense without consent.
What if I felt I had no choice but to agree?
Agreement given under pressure, such as a warning that refusing would mean termination, is not the same as a free choice. Courts look at the real circumstances, not just the paper trail.
Write down exactly what was said when the unpaid leave was proposed, including any warning about what would happen if you refused.
What evidence should you gather before deciding?
Keep the notice or message announcing the unpaid leave, and any company policy document about leave or layoffs.
Note how many other staff were affected the same way, since a leave scheme applied unevenly can be harder for your employer to justify.
What is your deadline if you treat this as dismissal?
You have sixty days from when you treat yourself as dismissed to file a Section 20 representation with the Director General of Industrial Relations2.
The burden then falls on your employer to show the unpaid leave was justified and reasonably handled, not on you to prove bad intent3.
What should you do this week?
Ask in writing how long the unpaid leave is expected to last, and whether it will be reviewed.
If the same employer has also cut your pay elsewhere, read about a salary cut that forced someone out, and use the deadline calculator to track your sixty days.
A lawyer can review the unpaid leave notice and tell you within a short chat whether it crosses into constructive dismissal.
Common questions
Is unpaid leave the same as being retrenched?
No, retrenchment ends your job with notice or pay in lieu, while unpaid leave keeps you employed without income. If the leave has no clear end date, it can function like retrenchment without the protections that come with it.
What if I need the income and cannot afford unpaid leave?
Explain your circumstances to your employer in writing and ask for alternatives such as reduced hours instead. Their response, or the lack of one, becomes part of the record if you later decide to treat this as dismissal.
Does signing a leave form mean I agreed to everything?
Not necessarily, especially if you signed because you feared losing your job otherwise. The circumstances around the signing matter as much as the document itself when a lawyer reviews your situation.
Can I claim the Employment Insurance System while this is happening?
Unpaid leave without a termination does not usually trigger Employment Insurance System benefits, since your job has not technically ended. Ask a lawyer whether your situation has effectively become a termination, which could change this.
Sources
- Malaysian courts apply the contract test from Wong Chee Hong v Cathay Organisation, asking whether the employer breached a term so basic it strikes at the foundation of the contract. Thomas Philip
- An employee who believes they were dismissed without just cause may file a Section 20 representation within sixty days of the dismissal. Mah Weng Kwai & Associates
- In an unfair dismissal case the burden of proof rests on the employer to show just cause or excuse for what happened. Mah Weng Kwai & Associates
Keep reading
A lawyer can review the unpaid leave notice and tell you within a short chat whether it crosses into constructive dismissal.