Back
2023 MarsdenLR 1063
INDUSTRIAL COURT KUALA LUMPUR
LIM KA LEONG – Appellant
Versus
LAKEFRONT RESIDENCE SDN BHD & OTHER CASES – Respondent
Award No: 2331 Of 2023 [Case Nos: 21/4-1015/21 21/4-1016/21 21(7)/4-1554/21]
Retrenchment is lawful when job functions become redundant due to genuine organizational changes made in good faith for economic viability, as established in the Industrial Relations Act.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Retrenchment - The Court found that the retrenchment of three claimants was justified due to redundancy resulting from the company's decision to close its construction business for economic reasons, including losses from delays and poor quality, exacerbated by the covid-19 pandemic. The management's decision was made in good faith and not to victimize the claimants. (Paras 8, 30, 72, 74)
(B) Redundancy - The Court affirmed that redundancy occurs when job functions become surplus due to genuine organizational changes, and employers have the managerial prerogative to reorganize their business as long as it is done bona fide. (Paras 22, 41, 46)
Facts of the case:
The claimants were retrenched due to the closure of the construction division of MCT Berhad Group, which was facing financial difficulties and ceased all construction work, leading to the redundancy of the claimants' roles. (Paras 3, 8, 32)
Findings of Court:
The retrenchment was lawful as the company had demonstrated a bona fide need for reorganization due to economic pressures and the closure of its construction operations. (Paras 72, 74)
Issues: The main issues included whether the retrenchment was justified, whether the reasons provided by the employer were true, and whether the retrenchment was motivated by bad faith. (Paras 29, 30)
Ratio Decidendi: The Court ruled that the employer's decision to reorganize was justified, supported by evidence of financial losses and the necessity of ceasing construction operations, confirming that the retrenchment was not motivated by bad faith. (Paras 39, 72, 74)
Result: Claimants' claims dismissed.
| Table of Content |
|---|
| 1. reference and parties involved in retrenchment cases. (Para 1 , 2 , 3) |
| 2. procedural background and witness testimonies. (Para 4 , 5 , 6 , 7) |
| 3. dispute over retrenchment and business reorganization. (Para 8 , 9 , 10) |
| 4. arguments from the company and claimants regarding retrenchment. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 5. role and standard of proof in industrial court. (Para 19 , 20 , 21) |
| 6. principles governing retrenchment and redundancy. (Para 22 , 23 , 24 , 25 , 26) |
| 7. court's observations on retrenchment justification. (Para 29 , 30 , 31 , 32 , 39 , 40) |
| 8. final conclusions on the legality of retrenchment. (Para 46 , 66 , 72 , 73) |
[1] This is a reference by Honourable Minister of Human Resources under s 20(3) of the Industrial Relation Act 1967 dated 17 March 2021 to the Industrial Court in order for complaints of terminations be heard and an Award be handed down in respect of dismissals by way of retrenchment by the company against the claimants; the parties of which are briefly described as follows:
The Claimants
[2] There are three claimants in these consolidated cases and heard together. The representation for Lim Kar Leong took a sudden change when on the third day of hearing ie 7 July 2023, learned counsel for all the claimants informed the Court that he no longer represents Lim Kar Leong and made an oral application to discharge himself. As there was no objection neither by the learned counsel for the company nor by Lim Kar Leong himself, this Court had allowed the oral application for a discharge by the counsel from further acting for Lim Kar Leong whom had since represented himself. The three claimants are as follows:
a. Case No 21/4-1015/21
Lim Kar Leong v. Lakefront Residence Sdn Bhd
At the time of his dismissal on 18 September 2020, the Claimant held the position of Senior Manager with basic salary of RM12,328.00 with Site Allowance of RM500.00, handphone allowance of RM250.00, medical reimbursements of RM90.00 and employer EPF and SOCSO contributions. [refer: Paragraph 2 & 3, SoC]. The claimant has been working with the Company since 4 September 2013 until 18 September 2020.
b. Case No 21/4-1016/21
Hee Say Wee v. Lakefront Residence Sdn Bhd
At the time of his dismissal on 29 September 2020, the Claimant held the position of Assistant Project Manager with a basic salary of RM10,617.00 with Site Allowance of RM500.00, Handphone Allowance of RM200.00 and employer EPF and SOCS0 contributions [refer: Paragraph 2 & 3, SoC] The Claimant has been working with the Company since 10 April 2012 until 29 September 2020.
c. Case No 7/4-1554/21
Noor Zaheera Akma Binti Khairul Anuar v. Sky Park Properties Sdn Bhd
At the time of his dismissal on 24 September 2020, the Claimant held the position of Senior Executive Contract with a basic salary of RM3,863.00 with Handphone Allowance of RM150.00 and employer EPF and SOCSO contributions [refer: Paragraph 2 & 3, SoC] The Claimant has been working with the Company since 18 April 2013 until 24 September 2020.
The Companies
[3] There are 2 companies in these proceedings, namely Lakefront Residence Sdn Bhd and Sky Park Properties Sdn Bhd They are part of MCT Berhad Group of Companies. The Claimants in these proceedings were employed under these companies at the time of their retrenchment. The primary business of the MCT Berhad Group was property development and construction. However, the Group has since closed its construction business and is exclusively in the business of property development.
Procedural Background
[4] Trial proceeded on three days namely 21 November 2022, 1 June 2023 and 7 July 2023. The Company filed and referred to three (3) Bundles of Documents at trial, marked as follows:
(a) Company's Bundle of Documents (1) - 'COB1'
(b) Company's Bundle of Documents (2) -'COB2';
(c) Company's Bundle of Documents (3) - 'COB3'
(d) Company's Bundle of Documents (3) - 'COB4'
[5] The Claimants filed four (4) Bundles of Documents, marked as follows:
(a) Claimant's Bundle of Document
