Remisiers Are Independent Agents, Not Employees: Industrial Court Rules in Case Against RHB Investment Bank

In a significant ruling for the financial services sector, the Industrial Court of Malaysia has reaffirmed the legal distinction between a "Dealer’s Representative" (remisier) and a direct employee. Chairman Chow Siew Lin, presiding over the case of Mooi Weng Hou v. RHB Investment Bank Berhad , held that the claimant was not a "workman" within the meaning of the Industrial Relations Act 1967, effectively closing the door on claims of unfair dismissal.

The Conflict at Hand

The dispute arose following the termination of Mooi Weng Hou ("the Claimant") by RHB Investment Bank on October 25, 2022. The Bank had terminated the Standard Remisier’s Agreement (SRA) after identifying that the Claimant had engaged in unauthorized short-selling activities in client accounts during a regulator-imposed suspension period.

The Claimant, having been suspended previously, argued that the Bank exercised "total control" over his work methods, commission structures, and compliance, thereby establishing an employer-employee relationship. Conversely, the Bank maintained that the Claimant was an independent contractor operating as an agent under the terms of the SRA, and thus, the Industrial Court lacked the jurisdiction to entertain an unfair dismissal claim.

Why the Court Said No to 'Employee' Status

The Court’s analysis hinged on the interpretation of the contractual relationship rather than the mere degree of control exercised. While the Claimant argued that oversight regarding dress codes, attendance, and regulatory compliance pointed to an employment contract, the Court found these factors insufficient to override the express terms of the SRA.

Citing the landmark Federal Court decision in Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia & Anor , the Court emphasized that while control is an important factor, it is not the sole criterion. Instead, the Court relied on the substance of the agreement, which explicitly defined the relationship as one of "agency," not employment. Under the Hoon Siew Chin & Ors v. Sarawak Securities Sdn Bhd precedent, courts have consistently held that the standard form SRA is designed for independent contractors, not employees.

Key Observations

The Court offered critical insights into the nature of the remisier-broking house relationship:

• On the nature of the contract: "There was never an intention of the Bank to create a relationship of employer and employee with the claimant. Hence, the SRA cannot be construed as a contract of employment."
• On agency obligations: "He operates as a commissioned agent for the broking house, and he is therefore not a full-time employee of the broking house. He is an agent vis-à-vis the broking house in a limited sense, namely only for the purpose of executing trades."
• On regulatory control: "The control exercised by the Bank was mainly confined to coordination and regulatory compliance and these requirements and rules are commonly found in services and/or engagement under the supervision of any regulatory body."
• On remuneration: "The pure commission based remuneration structure without any fixed wage or salary is a clear deviation from a monthly salary structure in a contract of employment."

A Clear End to the Dispute

The Industrial Court concluded that because the Claimant was an independent agent rather than an employee, he did not qualify as a "workman." Furthermore, the Court noted that both parties had contractually agreed to refer any disputes arising from the SRA to arbitration, rather than the Industrial Court.

With this ruling, the Claimant’s application for relief was dismissed. The decision serves as a stark reminder to professionals in the financial sector regarding the consequences of the "contract for service" model, reinforcing that the legal label assigned in formal agreements carries significant weight when the nature of the relationship is challenged. For financial institutions, the ruling validates the current agency-based model, ensuring clear boundaries between the Bank and its commissioned representatives.