Can An Employee Be Forced To Transfer?

The right to transfer an employee is a well-established principle in Malaysian employment and industrial relations law, and the Industrial Court would rarely interfere with it.

However, there are some factors that may limit an employer's ability to transfer an employee without their consent, such as the following:

a. Whether the transfer is between different roles or departments within the same location, branches or locations, or companies within the same Group.

b. Whether or not the transfer is motivated by genuine business reasons.

c. In some cases, the practical effect of the transfer may also be relevant such as the effect of a shift in the work location or job commitment.

In relatively brief, employee transfers aren't always simple. Unauthorized transfers of employees may result in a breach of contract or wrongful termination.

Employers are normally acknowledged to have the managerial authority to transfer their employees. When the ultimate decision is used, it is usually for reasons related to business efficiency, but it can also be used as a form of disciplinary punishment for misconduct. This right does not have to be attributed to a contract because it can exist without one: it is an implied right that courts rarely overturn unless there is a contract to the contrary (except if a contract states otherwise).

However, there are limitations to how employers may exercise their right to transfer employees, and these limitations have been commonly discussed by courts as regards:

a. There isn't anything contrary in the contract of employment; 

b. The organisation has acted in good faith, and it is in the interests of the company; 

c. The organisation is not motivated by any unintended motive or maliciousness; 

d. The transfer is not made to harass or victimise the employee; and 

e. The transfer doesn't involve a change in the working conditions.

In brief, employers have broad discretion in transferring employees unless the transition violates the employees' contractual agreements or is motivated by reasons that no court would sanction.

The transfer must not violate the terms of the employees' agreements.

• This implies that the transfer cannot be used to the employee's disadvantage or detriment. Any drop in benefits or modifications to service conditions must be explicitly authorised by contract. As a result, an employer has the right to demand his employee to work in a different location or to transfer from one department to another, as long as the exchange is on equal footing.
• The facts of the case will determine whether the transfer results in a negative change in employment agreements. In general, this can be determined by determining whether it results in a financial loss in wages, bonus payments, or other benefits packages.
• Nevertheless, it isn't always simple and clear and can only be determined by taking into account the overall circumstances of the exchange. Might it be, for example, detrimental if an employee is relocated from Kuala Lumpur to Kuantan? How about transferring from one unit to another?
• Although there wasn't any evidence of demotion in Yee Song Joo v PM Securities Sdn Bhd [2017] MELRU 1511, the court found that the employee's exchange, or "re-designation," with another department was a clear violation of the employee's duration of employment (which formed wrongful termination) because the employee's obligations and responsibilities were transitioned from dealing with IT matters to business development and branch management (the employee was re-designated from Head of IT to Head of Branch). The employee's permission was required in this case because the court stated that the company could not unreasonably and unilaterally transfer and re-designate the employee to another position materially different from the employment agreement.
• The Court held in Barat Estates Sdn Bhd & Anor v. Parawakan Subramanian & Ors [2000] 1 MLRA 404 that transfer to a new entity without consent may be a violation of the Federal Constitution: "[b]y its spirit and intendment, it [Article 6 of the Federal Constitution] vests in an employee the right to be employed by an employer of his choice...compelling an employee to work for a particular employer, without exceptions may apply if the transferor and transferee entities are part of the same group enterprise (That is, whether they operate as a single industrial establishment or as an integrated whole.)
• In other cases, where the transfer is within the employer's managerial discretion, employees do not have the right to protest. Their refusal may be considered insubordination, justifying disciplinary measures, including dismissal.

The transfer must not be motivated by an underlying agenda.

• A case in point is when the decision was made to penalise an employee for his involvement in the union. The responsibility for demonstrating deception and victimisation falls on the employee. It is not an easy burden to bear, considering that courts are reluctant to get involved with the employer's business affairs. However, in most cases, employees will rely on documentation of a material change in employment agreements, such as a reduction in benefits or an adjustment in the scope of their responsibilities, to challenge the exchange.