BRIEF FACTS:

• The appellants (“Saharunzaman”, “Noramidah” and “Mohd Razif”) were long-serving employees of the respondent (“Perodua”). They were informed that their workplace operations had been acquired by Nagoya Automobile Malaysia (“NAM”).
  
  
• Perodua instructed its employees to resign from their current position and accept a two-year term contract with NAM.
  
  
• However, this two-year contract failed to acknowledge their years of service and offered no assurance of continued employment once the contract ended.
  
  
• When Saharunzaman, Noramidah and Mohd Razif refused to comply, Perodua issued transfer orders to far-off locations within three days, effectively treating their refusal to comply as insubordination.
  
  
• Saharunzaman, Noramidah and Mohd Razif considered this a fundamental breach of their employment contract and initiated constructive dismissal claims.

THE DECISION OF THE INDUSTRIAL COURT (IC)

• Firstly, the IC held that Perodua’s actions undermined the core of the employment contract, clearly demonstrating intent not to honor its agreement with Saharunzaman, Noramidah, and Mohd Razif, who had loyally served the company for periods ranging from 9 to 22 years.
  
  
• The IC found no evidence that NAM’s contract would account for the employees’ accumulated years of service or seniority in the event of contract termination.
  
  
• The IC further stated that the transfer of Saharunzaman, Noramidah and Mohd Razif was unreasonable and made in bad faith where additional monthly costs would have to be incurred as they had existing commitments in their current locations.
  
  
• The IC held that the Saharunzaman, Noramidah and Mohd Razif have successfully proven constructive dismissal against Perodua and awarded compensation in lieu of reinstatement along with backwages.
  
  
• Perodua was not satisfied and challenged the decision of the IC at the High Court.

THE DECISION OF THE HIGH COURT (HC)

• The HC was of the view that Perodua has the right to require its employees to work at different locations, as outlined in the “transfer” clause of the employees Contract of Employment.
  
  
• The HC emphasized that, as long as the transfers were a reasonable exercise of Perodua’s managerial prerogative and not carried out in bad faith, the IC should not have interfered.
  
  
• The HC held that the Saharunzaman, Noramidah and Mohd Razif had failed to prove that the transfers breached a fundamental term of their employment contracts or showed an intention by Perodua not to honor the agreement.
  
  
• Consequently, The HC set aside the Awards by the IC for Saharunzaman, Noramidah and Mohd Razif.
  
  
• Saharunzaman, Noramidah and Mohd Razif were not happy with the decision of the HC and appealed to the Court of Appeal.

THE DECISION OF THE COURT OF APPEAL (COA)

• The COA observed that requiring Saharunzaman, Noramidah and Mohd Razif to resign from Perodua and exchange their permanent contracts for a two-year contract with NAM while threatening transfers to other states if they refused amounted to a form of “punishment.”
  
  
• The COA concluded that the transfers were carried out in bad faith and that Perodua’s primary intention was to pressure Saharunzaman, Noramidah and Mohd Razif into resigning, thereby avoiding any obligation to pay termination or layoff benefits.
  
  
• The COA also agreed with the IC’s observation that the Offer of Employment from NAM was fraught with uncertainties.
  
  
• The COA further held that it was unreasonable for Perodua to insist that its employees resign before taking up NAM’s two-year contract. If the employees declined the offer, Perodua should have paid them termination and layoff benefits instead.
  
  
• Accordingly, the COA set aside the HC’s decision and reinstated the IC’s ruling to award compensation to Saharunzaman, Noramidah and Mohd Razif.