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2023 MarsdenLR 853
INDUSTRIAL COURT KUALA LUMPUR
SELVARANI SELVADURA – Appellant
Versus
ARNOLD ANDREW & CO – Respondent
Award No: 1418 Of 2023 [Case No: 3/4-1412/21]
The court established that an employer must provide substantial evidence of financial distress to justify retrenchment; failure to do so results in a finding of unlawful dismissal.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal of employee - Claimant dismissed without just cause or excuse as the Company failed to prove financial difficulties justifying retrenchment during the COVID-19 pandemic - Court emphasizes the burden of proof lies with the employer to substantiate claims of redundancy. (Paras 31, 33, 37, 40, 43, 44, 50, 54)
(B) Retrenchment - The court held that retrenchment must be justified by genuine financial distress and not merely as a pretext for dismissal - Employer must demonstrate bona fide reasons for retrenchment, and failure to provide sufficient evidence leads to a finding of unlawful dismissal. (Paras 34, 35, 42, 49)
Facts of the case:
The Claimant, a Conveyancing Lawyer, was dismissed by the Company on 1 May 2020, allegedly due to financial difficulties stemming from the COVID-19 pandemic. The Claimant contended that the dismissal was unjustified and without cause, as the Company failed to follow proper procedures. (Paras 5, 6, 9, 20, 26)
Findings of Court:
The Company did not provide adequate evidence to support its claim of financial distress and failed to demonstrate that the retrenchment was necessary, leading to the conclusion that the dismissal was without just cause. (Paras 43, 50)
Issues: Whether the dismissal was with just cause or excuse and whether the Company acted bona fide in its retrenchment exercise. (Paras 39)
Ratio Decidendi: The court ruled that the Company failed to substantiate its claims of financial distress, thus the dismissal of the Claimant was deemed unlawful and without just cause, emphasizing the employer's burden of proof in retrenchment cases. (Paras 44, 50)
Result: Claimant's claim allowed; the Company ordered to pay RM172,500.00 in compensation. (Paras 65)
| Table of Content |
|---|
| 1. dismissal of the claimant on 1 may 2020. (Para 1 , 2 , 3 , 5 , 6 , 7 , 8 , 9) |
| 2. company's justification for termination due to financial difficulties. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 3. claimant's assertions regarding unlawful termination. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 4. court's role in determining just cause for dismissal. (Para 31 , 32 , 33 , 34) |
| 5. legal standards governing retrenchment. (Para 35 , 36 , 37 , 38) |
| 6. court's evaluation of evidence regarding financial distress. (Para 39 , 40 , 42 , 43 , 44 , 46 , 48) |
| 7. court's order for compensation in lieu of reinstatement. (Para 50 , 54 , 56) |
[1] This is a reference made under s 20(3) of the Industrial Relations Act 1967 [Act 177] arising out of the dismissal of Selvarani Selvadurai (hereinafter referred to as "the Claimant") by Arnold Andrew & Co (hereinafter referred to as "the Company") on 1 May 2020.
[2] The Ministerial reference in this case required the Court to hear and determine the Claimant's complaint of dismissal by the Company on 1 May 2020 and was received by the Industrial Court on 3 May 2021.
[3] Hearing of this case proceeded on 5 October 2022, 6 October 2022 and concluded on 13 October 2022. In this trial, the following witnesses have been called by the parties:
(a) The Claimant's witness:
CLW-1: Ms Selvarani Selvadurai, the Claimant, former Conveyancing Lawyer of the Company.
(b) The Company's witness:
COW-1: Arnold Andrew P. Anthony Muthu, Managing Partner of the Company.
COW-2: Ms N. Vachala Bai L. Nagaraja Rao, Legal Executive in the Company.
[4] This Court had considered all the notes of proceedings in this matter, and the following documents in handing down this Award:
(a) Pleadings
(i) Statement of Case dated 3 September 2021;
(ii) Statement in Reply dated 21 September 2021;
(iii) Rejoinder dated 28 September 2021.
(b) Bundles of Documents
(i) Claimant's Bundle of Documents marked as "CLB-1";
(ii) Claimant's Additional Bundle of Documents marked as "CLB-2";
(iii) Claimant's Additional Bundle of Documents (2) marked as "CLB-3";
(iv) Company's Bundle of Documents marked as "COB-1".
(c) Witness Statements
(i) Claimant's Witness Statement of Selvarani Selvadurai marked as "CLWS-1";
(ii) Company's Witness Statement of Arnold Andrew P. Anthony Muthu marked as "COWS-1";
(iii) Company's Witness Statement of N. Vachala Bai L. Nagaraja Rao marked as "COWS-2".
(d) Written Submissions
(i) Company's Written Submissions dated 12 December 2022;
(ii) Claimant's Written Submissions dated 13 December 2022;
(iii) Company's Written Submissions In Reply dated 19 December 2022;
(iv) Claimant's Written Submission In Reply dated 19 December 2022.
A. Factual Matrix
[5] The dispute before this Court is the claim by the Claimant that she had been dismissed from her employment without just cause or excuse by the Company on 1 May 2020.
[6] The Claimant was employed by the Company as a Conveyancing Lawyer on 10 June 2016 with her basic salary of RM7,500.00 per month. The probation period was six (6) months, which may be reduced or extended at the discretion of the Company.
[7] The Company is a legal firm and the Claimant was an Advocate and Solicitor in the Conveyancing Department of the Company specifically tasked with providing legal services surrounding the Sale and Purchase of Immovable Property.
[8] On 18 March 2020, the Government of Malaysia imposed a nationwide lockdown, ie. the Movement Control Order (MCO) due to the Covid-19 pandemic.
[9] On 1 April 2020, the Claimant received an e-mail from the Company stating that the Claimant was terminated with one month notice allegedly due to the alleged financial difficulty experienced by the Company following the MCO. The Claimant's last day of employment was on 30 April 2020 as stated in the e-mail dated 1 April 2020 and the Notice of Termination.
B. The Company's Case
[10] The Company states that the Claimant started working with the Company on probation since 10 June 2016 as an Advocate and Solicit
