Can you claim constructive dismissal if your employer transfers you far from home?

A transfer letter can change much more than an employee’s place of work. It may mean finding another home, living apart from children and paying additional travel costs while earning the same salary.

An employer may have a contractual right to transfer staff. However, the wording of that right and the circumstances in which it is exercised can make a significant difference.

What happened?

In Saharunzaman Barun v Perodua Sales Sdn Bhd & Anor and Other Appeals [2025] 2 MLRA 184, three employees declined an arrangement requiring them to resign from Perodua and join another company on two-year contracts.

They were then directed to report to Kota Kinabalu, Kuching and Kuala Terengganu within three days. Their requests for reconsideration did not resolve the dispute. They treated themselves as constructively dismissed.

What did the court decide?

On 3 January 2025, the Court of Appeal restored the Industrial Court awards in their favour. It found that the transfer exercise was carried out in bad faith and fundamentally breached their employment contracts.

The court applied the established contractual test. An employee must show a breach sufficiently serious to undermine the employment contract; simply describing a transfer as unfair is insufficient.

Here, reasonableness formed part of the contractual transfer terms. The rushed postings, surrounding restructuring and employees’ circumstances mattered. The court also criticised requiring two employees to start work in Sabah and Sarawak without the necessary work permits.

What should employees do when receiving a difficult transfer instruction?

Start with the appointment letter and transfer notice. Check the permitted locations, notice given, reporting date, relocation assistance and any promise that transfers will be reasonable.

Put specific difficulties in writing. Explain, for example, an ongoing course of medical treatment, the cost of maintaining two households or why the reporting date is impractical. Attach supporting documents and propose workable alternatives, such as additional preparation time or a nearer vacancy.

Keep a dated record of the instruction, your response and the employer’s reply. If you believe the transfer fundamentally breaches your contract, obtain advice promptly before resigning or refusing to report. The timing and wording of your response can affect a constructive dismissal claim.

What should employers take from this case?

Before issuing a transfer, check the contractual power, record the operational need and assess the proposed timetable and assistance. Respond meaningfully to concerns raised by the employee. Where permits are needed, arrange them before requiring work to begin.

A transfer clause should be exercised consistently with its terms and a genuine business purpose. It should not become a means of forcing an employee out after the employee declines a different employment arrangement.

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