Can a foreign national have a permanent contract of employment?

AHMAD ZAHRI MIRZA ABDUL HAMID v. AIMS CYBERJAYA SDN BHD [2020] 1 LNS 494

• Ahmad, an expatriate, received a letter of appointment for the position of consultant from AIMS. The contract for consultancy services was for a fixed term from 1 October 2009 to 30 September 2010 (“Consultant Contract”).

• Ahmad received three (3) subsequent renewals in respect of the Consultant Contract for a further twelve (12) months’ period each, up to 30 September 2013. The terms and conditions of the Consultant Contract remained unchanged.

• However, the third subsequent renewal of the Consultant Contract for a further twelve (12) months’ period from 1 October 2012 to 30 September 2013 was as a consultant of AIMS Cyberjaya Sdn Bhd (“AIMS Cyberjaya”) instead of AIMS due to the phasing out of AIMS. All the terms and conditions remained the same as the original Consultant Contract and the letter was signed by the chief executive officer of AIMS Cyberjaya.

• AIMS was subsequently consolidated into AIMS Cyberjaya. In view of the company restructure, Ahmad was re-designated to assume his position of Vice President, Product & Solutions in AIMS Cyberjaya from 1 January 2013.

• Ahmad was given a letter by AIMS Cyberjaya offering him further employment from 1 October 2013 until 30 September 2014. However, AIMS Cyberjaya sought to exclude a performance bonus scheme which was present in Ahmad’s previous employment terms.

• Ahmad had informed the chief executive officer of AIMS Cyberjaya that he was not agreeable to the new terms and conditions of the contract.

• AIMS Cyberjaya renewed Ahmad’s contract for a further period of three (3) months from 1 October 2013 to 31 December 2013. The terms and conditions of the contract still remained unchanged, i.e. excluding the performance bonus scheme.

• Ahmad informed AIMS Cyberjaya that he was unable to accept their offer, via an email.

• Ahmad later received a letter notifying him that AIMS Cyberjaya had given him two (2) months’ notice of expiry of his contract from 1 November 2013 to 31 December 2013. AIMS Cyberjaya also informed Ahmad that they had decided to grant him an early release from his employment with effect from 19 October 2013.

• Ahmad made a representation to the Industrial Relations Department under section 20 of the Industrial Relations Act 1967 (“Act”) that he had been unfairly dismissed without just cause and excuse and the reconciliation attempts before the Industrial Relations Department failed and the matter was subsequently referred to the Industrial Court for adjudication.

• The Industrial Court held that Ahmad was a permanent employee of AIMS Cyberjaya and the “fixed term contracts” were not genuine fixed term contracts and Ahmad’s dismissal was without just cause and excuse. The Industrial Court awarded back wages of twenty-four (24) months and compensation of one and a half (1 1/2) month salary for each year of Ahmad’s service in lieu of reinstatement.

• Dissatisfied with the award of the Industrial Court, AIMS Cyberjaya filed a judicial review application to quash the Industrial Court’s award.

• The High Court dismissed AIMS Cyberjaya’s application for judicial review and AIMS Cyberjaya appealed to the Court of Appeal.

• The Court of Appeal allowed AIMS Cyberjaya’s appeal and set aside the decision of the High Court and the award of the Industrial Court.

• Ahmad then appealed to the Federal Court.

• The Federal Court held that the Court of Appeal had erred in finding that a foreign national cannot have a permanent contract of employment.

• It held that the citizenship of Ahmad has no bearing in deciding whether Ahmad was in permanent employment or in employment under a fixed term contract.

• The Act does not make any distinction between the citizens of Malaysia and non-citizens.

• Further, Malaysia is a member country of the International Labour Organisation which includes an undertaking to promote and guarantee equality of opportunity and treatment between migrant workers and nationals.

• The Federal Court also held that the renewing of the fixed term contract meant that the contract was in effect a permanent employment contract