AWARD

THE REFERENCE

The parties to the dispute are Singer (Malaysia) Sdn. Bhd. (the company) and Yap Yong Meng (the claimant). The dispute is over the dismissal of the claimant by the company on 31 January 2002.

THE UNDISPUTED FACTS

The claimant first joined the company on 1 March 1972 as a salesman and resigned from the company on 16 May 1994. At that time he was holding the position of General Manager Sales. The claimant rejoined the company on 15 October 1998 as General Manager Field Operations. The claimant was dismissed by the company on 31 January 2002. The company cited redundancy and retrenchment as the reason for his dismissal. At the time of the dismissal the claimant was holding the position of General Manager Marketing. His last drawn salary was RM10,860.00 per month.

THE ISSUES

The Issues before the court are as follows;

(i) Whether the company has established the grounds or reasons it relied on to dismiss the claimant; and

(ii) Whether the grounds or reasons advanced by the company amount to just cause or excuse.

THE LAW ON REDUNDANCY AND RETRENCHMENT

The learned Author, Dunstan Ayadurai, in his book "Industrial Relations in Malaysia" 2nd Ed. at p. 159 defines the term redundancy as follows:-

"Redundancy" refers to a surplus of labour and is normally the result of a reorganization of the business of employer and its usual consequence is retrenchment, ie, the termination by the employer of those employees found to be surplus to his requirements after the reorganization. Thus, there must first be redundancy or surplus or labour before there can be retrenchment or termination of the surplus.

The principle governing the retrenchment were outlined in the case of Cycle & Carriage Bintang Bhd. v. Cheah Hian Lim; [1992] 2 ILR 400 . The court stated as follows;

(i) It is for the management to decide on the strength of the staff which it considers necessary for the efficiency in its undertaking. When management decides that workmen are surplus and that there is therefore a need for retrenchment, an arbitration tribunal will not intervene unless it is shown that the decision was capricious or without reason, or mala fide , or was actuated by victimization or unfair labour practice.

(ii) It is the right of every employee to re-organise his business in any manner for the purposes of economy or convenience, provided he acts bona fide .

(iii) An employer has the right to determine the volume of his staff consistent with his business and if, by the implementation of a reorganization scheme adopted for reasons of economy and better management, the services of some employee become excess of requirements, the employer is entitled to discharge such excess.

(iv) In the absence of any express agreement on the point, an employer is not obliged to find suitable employment for redundant workers.

(v) In effecting retrenchment, the employer should comply with the industrial law principle of LIFO unless there are sound and valid reasons for departure. Thus, an employer is not entirely denied the freedom to depart from this principle.

(vi) The retrenchment of an employee can be justified if carried out for the profitability, economy or convenience of the employer's business. The services of an employee may well become surplus if there was a reduction, diminution or cessation of the type or work the employee was performing.

THE COMPANY'S CASE

The Managing Director of the company Mr. Yeap Dean Wah COW1 testified that the company had suffered loss about RM90 million in 2001 and RM49 million in 2002. The main reason for the company was making loss was due to declining sales and heavy debts. In order to reduce expenses the company had to take various austerity measures. However, when there was no improvement the company had no choice but to resort to reorganization and downsizing. The company had made a decision to retrench employees from various divisions and the company had made a decision to dissolve the marketing division and certain departments in the Marketing