Legal Update 23 of 2016

Employment Law - Whether the termination of an employee on the grounds of redundancy was just and lawful.

CASE:

Woo Vain Chan v Malayawata Steel Berhad [2016] 4 MLRA 79 CA

BRIEF FACTS:

  • The appellant, Woo Vain Chan ('Vain Chan') commenced employment with Malayawata Steel Bhd (now known as Ann Joo Steel Berhad) ("Company") in 2000 as Vice President of Investment and General Affairs.

  • The Company has investments in areas such as properties and palm oil estates. 

  • In 2001, the Company revised its existing structure, and Vain Chan was redesignated to the position of Vice President of the Plantation and Property Investment Division (PPID)

  • In addition, Vain Chan's main focus was his personal attendance under a set of special task ('Special Tasks')

  • However, the Company's investment in oil palm estate and properties did not have a competitive advantage and expertise in the above two sectors.

  • The Company realised that none of the Special Tasks which forms a bulk of Vain Chan's workload had materialised.

  • Thus, the Company was of the view that Vain Chan's position was not justified as the work requirements were purely administrative which could easily be handled and performed by either a clerk or an agency.

  • Vain Chan was offered a voluntary separation but he rejected it.

  •  In 2002, Vai Chan was informed via a letter that his services were no longer required. Vain Chain was offered a lump sum payment of RM 60,000 inclusive of payment in lieu of notice as well as his accrued annual increment. 

  • Dissatisfied with his dismissal, Vain Chan then filed a representation at the Industrial Relations Department under Section 20 of the Industrial Relations Act 1967 and was subsequently referred to the Industrial Court ('IC').

  • The Chairman of the IC decided in favour of Vain Chan in ruling that his dismissal was unjust and ordered the company to pay Vain Chan RM 193,000 in backwages and compensation.

  •  On appeal, the High Court allowed the Company's application to quash the IC's decision.

  • Hence, the present appeal by Vain Chan. The central issue for the Court of Appeal to decide is whether the dismissal of Vain Chan has been done with lawful excuse.

  • DECISION: Vain Chan's Appeal Allowed

  • The law on redundancy as a ground for dismissal in industrail relations jurisprudence is rather settled. 

  • Redundancy refers to the surplus of labour and is normally the result of a reorgansation of the business of an employer, and its usual consequence is retrenchment. 

  • The Company has the burden to prove that the case for redundancy was made out so as to justify the dismissal of the appellant from its employment. 

  • It would not suffice just to show that the company was undergoing restructuring exercise. 

  • It must be further exhibited through evidence that the exercise had impacted on the job function to the extent that it rendered a certain employee a surplus to the manpower. 

  • While the company has the right to re-organise its business, the company must act in good faith and not capriciously or with motive of victimisation of unfair labour practice.

  •  The company here did not adduce any evidence to substantiate its averment that it was operating under a very challenging set of circumstances at the material time when it was dealing with difficulties posed by the reduction in demand.

  • Another essential feature of redundancy is to see whether the work continues to exist or whether the work although continuing to exist required fewer employees to carry it out.

  • It is essential that it is the job functions and duties that are affected and not merely the job title or designation. 

  • If the same or essentially the same work was found to be carried out under a different name or manner, there is no redundancy. 

  • Evidence adduced by the Company showed that a substantial amount of Vain Chan's duties and responsibilities still existed at the time of his retrenchment. 

  •  Thus, the termination of Vain Chan's services was not made in good faith as the Company had no reason to terminate Vain Chan's employment.

 

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