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2021 MarsdenLR 3014
INDUSTRIAL COURT KUALA LUMPUR
TINUS WILTING – Appellant
Versus
ITASA ASIA SDN BHD – Respondent
Award No: 1215 Of 2021 [Case No: 21(6)/4-2264/19]
Change of ownership does not automatically terminate an employee's contract; the new owner must honor previous employment agreements.
Headnote:(A) Employment (Termination and Lay-Off Benefits) Regulations 1980 – Section 8 – Employment Act 1955 – Section 12(3)(f) – Claimant employed under a fixed-term contract terminated after a change of ownership via Share Sale Agreement – Company contended claimant was never its employee post-acquisition – Court found the claimant continued his employment post-acquisition and was wrongfully dismissed on 17 October 2016 – Court held that the company's Notice of Termination did not terminate the claimant's employment due to the lack of just cause – Claimant awarded compensation for 24 months back wages and 2 months in lieu of reinstatement. (Paras 101-109)
AWARD
Brief Facts
[1] The claimant was appointed by Akronn Industries Sdn Bhd ('Akronn') on a fixed-term contract for a period of five years, ie from 1 June 2014 to 31 May 2019 as an Executive Director (CLB-1, p 9) and for this position the claimant was paid a fixed monthly salary of RM28,000.00 per month and a fixed housing allowance of RM3,000.00 per month.
[2] As an Executive Director of the company under it's former name Akronn, the claimant was given a directorship by which he had a minority share in Akronn pursuant to which he was entitled to a Director fee.
[3] By virtue of a Share Sale Agreement dated 02 June 2016 (COB-1, pp 9 - 43), Itasa Servicios Generales SL ('Itasa Spain') had acquired Akronn wherein inter alia the name of the business was changed to Itasa Asia Sdn Bhd (Itasa Asia). The directorship the claimant held had been relinquished with the change of ownership of Akron by Itasa Asia.
[4] It was the company's contention that Akronn had assigned the claimant to the company to offer his cooperation to assist and support the company during the transition period of the takeover until the completion of the taking over exercise to ensure that the problems arising from the takeover are eased or duly taken care of.
[5] The claimant had on 8 June 2016 or thereabout left Malaysia due to the expiry of the claimant's work permit in Malaysia and as testified by the claimant, as Akronn had required him to assist the company's operations in Europe. The claimant did not return thereafter.
[6] By way of a Notice of Termination of Contract dated 17 October 2016 the company informed the claimant that the claimant's services were no longer needed and hence the claimant's complaint with the Industrial Relations Department in Negeri Sembilan for unfair dismissal and the Minister's Reference to the Industrial Court.
[7] Despite the change of name from Akronn to Itasa Asia Sdn Bhd ("Itasa Asia") the company registration number, and man power in particular the entire operations, business of the company and every employee of the company remained the same and continue with their same employee number as before the share sale exercise, which is summarized as follows:
7.1 the company's registration number at Suruhanjaya Syarikat Malaysia ("SSM") remain as 922402-T which is the same company registration number appearing in the claimant's Letter of Offer dated 21 May 2014.
7.2 the company continues to operate its business from the same plant and premise ie at "Lot 6, Phase NU2A, Nilai Utama Enterprise Park, Nilai, 71800, Negeri Sembilan"; as can be found in both the SSM Search as at 14 January 2019 and the company's business address in the claimant's Letter of Offer dated 21 May 2014.
7.3 all existing employees continued working as usual with the same employee numbers in their employment;
7.4 all existing employees continued their employment based on the same employment contracts entered prior to the share sale and change of company's name; and
7.5 all existing employees are not required to execute new employment contract under the company's new/current name (Itasa Asia).
[8] After the share sale exercise was completed on or around May 2016, the company continued to pay the claimant's monthly salary and allowance in accordance with the terms and conditions of the Fixed-term Employment Contract until a termination notice dated 17 October 2016 issued to the claimant effective immediately, by which the claimant's Fixed-term Employment Contract was terminated by the company.
Company's Submissions
[9] The company contends that although the agreement was titled, "Share Sale Agreement", the sale of Akronn was not merely a sale of the shares to new shareholders but was rather a complete sale of the business with a change of ownership as admitted by the claimant during cross-examination that the company had taken over Akronn "lock, stock and barrel" including the employees (Statement of Case, para 10, p 6).
[10] The company contend
