An employee who reaches retirement age and is not declared redundant under the Collective Agreement is not entitled to retrenchment benefits.

AWARD

Anna Ng Fui Choo:

[1] This is a Ministerial reference made under s 26(2) of the Industrial Relations Act , 1967 (the Act) arising out of the trade dispute in respect of "Tuntutan Pampasan Di Bawah Artikel 33 - Retrenchment Benefits, Perjanjian Kolektif (2017 - 2019) oleh Palaniandy A/L Therumalay" between the Union and the company.

Background

[2] This case was first registered in Court 6, another division of the Industrial Court, Malaysia. It had been fixed for hearing but there wasn't any chairman in Court 6 to hear the case after the chairman of the said Court was transferred. Subsequently, the learned President of the Industrial Court transferred the case to Court 3 on 21 October 2020 to enable the hearing to be conducted by this Court.

Facts

[3] It is the company's pleaded case that prior to 1 July 2019, it operated a plant in Petaling Jaya (the PJ Plant) which manufactured products under the following units: (a) Culinary sauces (b) Milk powder (c) Chilled Dairy and (d) Milo. In 2018, the company entered into an agreement with Petaling Jaya Dairy Sdn Bhd (formerly known as Lactalis Manufacturing Malaysia Sdn Bhd) (hereinafter referred to as "Lactalis"), in respect of a transaction which would entail the sale of the company's Chilled Dairy business and the entire PJ Plant to Lactalis.

[4] As part of the agreement, several employees of the company who were based in the PJ Plant were offered conditional offers of employment with Lactalis subject to certain terms Those offered employment with Lactalis were at liberty to accept or reject such offer. For the employees who refused the conditional offers from Lactalis, they were to remain as employees of the company and were bound by the terms and conditions of employment with the company and the Collective Agreement (CA) between the Union and the company. One such employee was Mr Palaniandy a/l Therumalay (UW2) who had refused the conditional offer from Lactalis (pp 19 to 22 of the company's Bundle of Documents 1 (COB1)) and therefore he remained as an employee of the company.

[5] UW2 attained the age of 60 years on 1 July 2019 and in accordance with art 34 of the CA, he was to retire at the end of July 2019 (31 July 2019). UW2 had rejected Lactalis' conditional offer of employment so he was expected to retire on 31 July 2019. The company held several discussions with the Union and UW2 regarding UW2's employment. On 25 June 2019, a meeting was held between UW2 and the company's representatives and he was given the following three options:

(a) that UW2 remained as an employee of the company until his retirement and to assist with the company's efforts to move the Milo business to Chembong;

(b) that UW2 be transferred to one of the company's other factories to serve the remaining period of his employment until his retirement; or

(c) UW2 be placed on garden leave effective 1 July 2019 until his retirement on 31 July 2019.

[6] UW2 eventually went on garden leave from 1 July until 31 July 2019. This was formalised in a letter dated 3 July 2019 (pp 24 and 25 of COB1). The Union now claims that UW2 was deemed to be redundant after the sale of the company's PJ Plant and he was therefore entitled to retrenchment benefits under art 33 of the CA. The company has taken the position that UW2 was not redundant nor was he declared redundant and he was not entitled to such retrenchment benefits.

The Hearing

[7] Four witnesses were called in the hearing, two each for the Union and the company. UW1 is the Union's Vice President and he works in the plant in Nestle Shah Alam. He testified that UW2 was entitled to be paid retrenchment benefits as UW2 was still the company's employee on 1 July 2019 when he attained the age of 60. UW1 explained that when the company made the sale of the company's Chilled Dairy business and the entire PJ Plant to Lactalis, UW2's position as Plant Operator Grade 4 no longer existed or was required by the company. Therefore, the company was obliged to pay retrenchment benefits t