What is the threshold that a Company must meet to dismiss a senior management employee?
ANDREW CHUAH KHIM PEIK V HLG CAPITAL BERHAD  1 LNS 573
- Andrew Chuah Khim Peik (“Andrew”) was the Group Financial Controller of HLG Capital Berhad (“HLG”).
- Andrew’s employment with HLG was confirmed on 31st July 2006.
- HLG claimed that Andrew’s performance had deteriorated over the years and that Andrew has poor leadership skills and lacked competency and integrity.
- In 2009, HLG terminated Andrew’s employment with immediate effect via a letter dated 17 June 2009 (“Termination Letter”).
- Andrew filed an action against HLG in the Industrial Court.
- The Industrial Court found that Andrew’s termination was without just cause or excuse and ordered HLG to pay Andrew RM314,145-52. The Industrial Court found that no warning, opportunity or formal assessment was given to Andrew to improve.
- HLG challenged the decision at the High Court.
- HLG claimed that Andrew has been counselled several times by the human resources department and no bonus had been given to Andrew in 2007 to reflect HLG’s dissatisfaction with Andrew’s performance.
- Andrew claimed that the increment and bonuses were not given despite no appraisal being conducted and no complaint was received that he had bad leadership skills and lacked competency and integrity. Andrew claimed the Termination Letter was the first notice given to him on the dissatisfaction with his performance.
- The High Court allowed HLG’s challenge and in doing so, found that the Industrial Court had wrongly applied the general test to prove poor performance of employees to a senior management employee.
- The High Court held that the test to be applied is that it is sufficient for HLG to establish that the upper management of the company, in the absence of bad faith, was dissatisfied with Andrew and the same had been brought to Andrew’s attention.
- Andrew appealed to the Court of Appeal.
COURT OF APPEAL DECISION – APPEAL ALLOWED!
The Court of Appeal allowed the appeal and held in Andrew’s favour on the following basis:
- The industrial jurisprudence leans towards the employee and the threshold for a company to prove the dismissal was justified is high.
- However, in cases of dishonesty of employees at senior management level, the threshold is low.
- In case of poor performance by employee holding senior management level, the threshold is hybrid in nature and depends on the facts and circumstances of the case.
- If the Industrial Court had taken into consideration, all the facts related to the dismissal, the High Court should be slow to intervene and quash the decision.
- The Court of Appeal found that HLG did not meet the threshold to warrant the dismissal of Andrew.