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Legal Update 3 of 2020

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    Legal Update 3 of 2020

    By jhj admin | Legal Updates | 0 comment | 11 January, 2021 | 0

    Is it legal for an employer to terminate an employee based on a contractual right to terminate the employee contained in the employment contract?

    Case:

    OMAR OTHMAN v. KULIM ADVANCED TECHNOLOGIES SDN BHD [2019] 6 MLRA 756

    Brief Facts:

    • Omar Othman (“Employee”) was terminated by Kulim Advanced Technologies Sdn Bhd (“Employer”) based on a contractual right to terminate ie by giving Employee 3 months’ notice. This is also known as “termination simpliciter”.

     

    • The Employer argued that the Employee had not “objected” to the termination and had in fact proceeded to accept the payment given in lieu of notice.

     

    • The Employee then claimed that the termination was wrongful and challenged it at the Industrial Court.

     

    • The Industrial Court found that the Employee had been unlawfully terminated because termination simpliciter is not recognised by the Industrial Relations Act 1967.

     

    • The Employer challenged the decision at the High Court where the Judicial Commissioner of the High Court took the view on the facts that it was not a case of termination simpliciter and thereby quashed the decision of the Industrial Court.

     

    • The Employee appealed to the Court of Appeal.

    COURT OF APPEAL DECISION – APPEAL ALLOWED!

    • The Court of Appeal held that “termination simpliciter” relates to the absolute common law right of an employer to terminate the employee pursuant to the terms of the contract.

     

    • But the Court of Appeal held that “termination simpliciter” is not recognised by the Industrial Relations Act 1967 (“Act”).

     

    • The Employer’s reasons for termination in this case was based on a contractual right in the employment contract and the termination was thus not based on poor performance, misconduct, redundancy, etc as to establish a prima facie case to terminate on just cause and excuse, as required in section 20 of the Act.
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