INTRODUCTION

This is a Ministerial reference to the Industrial Court under section 20(3) of the Industrial Relations Act 1967 ("the Act") arising out of the dismissal of Tan Wee Khoon ("the claimant") by Agilent Technologies (Malaysia) Sdn Bhd ("the company") on grounds of redundancy on 1 July 2003.

BRIEF FACTS OF THE CASE

The claimant was dismissed from the company on 1 July 2003. At the time of his dismissal, the claimant was holding the position of a Cafeteria Manager at a salary of RM5,400.00 per month. In paragraph 3.2 of his Statement of Case ("the SOC"), the claimant avers that his job was not redundant but merely being outsourced to another person.

THE LAW

The functions of the Industrial Court in a reference under section 20 of the Act has been clearly spelt out in the Federal Court of Goon Kwee Phoy v. J&P Coats (M) Bhd where the Federal Court amongst other things stated:-

"Where representations are made and referred to the Industrial Court for enquiry, it is the duty of that Court to determine whether the termination or dismissal is with or without just cause or excuse. If the employer chooses to give a reason for the action taken by him the duty of the Industrial Court will be to enquire whether the excuse or reason has or has not been made out. If it finds as a fact that it has not been proved, the inevitable conclusion must be that the termination or dismissal was without just cause or excuse. The proper inquiry of the Court is the reason advanced by it and that Court or the High Court cannot go into another reason not relied on by the employer or find one for it.".

The term "redundancy" has been defined by Dunyston Ayudurai in Industrial Relations in Malaysia at page 2.55 in the following terms:-

"Redundancy refers to a surplus of labour and is normally the result of a reorganisation of the business of an 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 of labour before there can be retrenchment or termination of the surplus".

In the case of William Jacks & Co (M) Sdn Bhd v. S Balasingam, [2000] 7 MLJ 1, the Court of Appeal held as follows:-

"It is the right of every employer to reorganize his business in any manner for the purpose of economy or convenience provided he acts bona fide... The employer has the right to determine the volume of his labour force consistent with his business and organization and if by the implementation of a reorganization scheme adopted for reasons of economy and better management of the business the services of some of the employees become excess of the requirement of the business the employer is entitled to discharge such excess".

The Honourable Judges in the Court of Appeal case of Kelab Sukan Pulau Pinang & Another v. Vijayapal Singh Hira Singh & Anor, [1997] 3 MLJ 421 in referring to s 5(2)(a) and 13(3)(d) of the Industrial Relations Act 1967 had clearly stated that inter alia that promotion and discharging an employee on grounds of redundancy are 'managerial prerogatives'.

In the High Court case of Kaolin (M) Sdn Bhd v. Samba Sirvang Thanimalai, [2001] 1 MLJ 120 the it was held that it was the duty of Industrial Court to investigate the facts and circumstances of a particular case to determine whether the exercise of the company's power was done bona fide. If an employer goes through a process of reorganization merely for purpose of providing an excuse to get rid of the services of an innocent workman who had incurred his displeasure, he would be acting mala fide (see: Ong Lean Phaik v. C. F. Sharp & Co (M) Sdn Bhd; [1980] 1 ILR 284 Award No 121 of 1980).

It is also a settled principle that in selecting employees for retrenchment an employer should resort to the "last in first out" rule. However it can be departed from by an employer for a valid reason (see National Union of Cinema & Amusement Workers v. Shaw Computer M