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2022 MarsdenLR 1193
INDUSTRIAL COURT KUALA LUMPUR
CHANG CHOON HOOI – Appellant
Versus
APEX PAL MALAYSIA SDN BHD – Respondent
Award No: 1420 Of 2022 [Case No: 11/4-2082/20]
Employer must provide proof of redundancy to justify retrenchment; failure to do so constitutes dismissal without just cause or excuse.
Headnote:(A) Industrial Relations Act 1967 – Section 20(3) – Dismissal of employee – Employee dismissed under the pretext of redundancy during COVID-19 – Employer failed to prove redundancy and acted unjustly in termination – Employee's role maintained post-dismissal with no valid grounds for retrenchment – Court recognizes principles on retrenchment, emphasizing good faith and the balancing of employer-employee rights. (Paras 20-24, 57-61)
(B) Employment law principles – Mutual trust and confidence in employment relationship – Dismissal during pandemic circumstances called into question by the employer's inaction regarding unpaid leave proposal. (Paras 47-50)
Facts of the case: Employee, appointed as Finance Manager, was terminated on grounds of redundancy amidst pandemic-related operational difficulties. His dismissal was disputed, citing the company's failure to substantiate redundancy claims and allegations of poor performance. (Paras 1-3, 10, 19)
Findings of Court: Employer acted in bad faith; retrenchment not justified as the employee's role was not redundant. (Paras 25-26, 36)
Issues: Legitimacy of the claimed redundancy, the fairness of the dismissal process, and adequacy of notice given to the employee. (Paras 11, 14-60)
Ratio Decidendi: Dismissal was found without just cause as redundancy was not proven, implicating the employer's failure to act in good faith and maintain the employment contract's trustworthiness. (Paras 57-58)
Result: Court awarded RM30,240.00 to the claimant for back wages. (Paras 62-68)
A. Reference
[1] This is a reference from The Honourable Minister of Human Resources, Malaysia to the Industrial Court of Malaysia under s 20(3) of the Industrial Relations Act 1967 ("the IRA") in respect of the dismissal of Chang Choon Hooi aka Vincent Chang ("the Claimant") by his employer, Apex-Pal Malaysia Sdn Bhd ("the Company") on 17 April 2020.
B. Facts
[2] The Company is principally engaged in the business of food and beverage. It operates several Japanese restaurant outlets in Peninsular Malaysia as well as Sarawak under the trading name of "Sakae Sushi".
[3] Pursuant to an employment letter dated 27 November 2019 ("Employment Letter"), the Claimant was appointed by the Company as a Finance Manager with effect from 27 November 2019.
[4] Sometime in February 2020, the Company announced the Voluntary Separation Scheme ("VSS") to all the staffs working in the Head Office and a total four (4) staffs were eventually allowed to leave under the VSS.
[5] On 16 March 2020, the Prime Minister of Malaysia announced the implementation of the Movement Control Order ("the 1st MCO") effective 18 March 2020 until 31 March 2020 to contain the COVID-19 outbreak.
[6] The Company's HR Manager had a meeting with the departmental heads including the Claimant on the following day, where the Company's HR Manager informed that the Company was unable to pay the staff salaries for 10 working days within the 1st MCO period.
[7] On 26 March 2020, the Prime Minister of Malaysia announced the extension of the 1st MCO from 31 March 2020 until 14 April 2020 ("the 2nd MCO"). Immediately after the aforesaid announcement, the Company's HR Manager announced in the Company's Head Office WhatsApp Chat Group on 27 March 2020 that due the extension of the 1st MCO, the Company was not able to operate its business as usual and unable to pay to the staffs their fully month of salary.
[8] The Company requested all the staffs who were not required to work during the Movement Control Orders period to volunteer to take unpaid leave from 18 March 2020 to 14 April 2020.
[9] The Claimant disagreed with the Company's request to take unpaid leave for that period and counter proposed to the Company to go on leave subject to the Company paying him 50% of his salary for that period.
[10] On 3 April 2020, the Claimant received an email from the Company's HR Manager enclosing a letter of termination dated 3 April 2020, terminating the Claimant's employment with the Company, purportedly on the ground of redundancy. The Company agreed to pay RM6,300.00 as payment in lieu of notice to the Claimant. The Claimant via letter dated 11 April 2020 replied to the said letter of termination and disputed the termination.
[11] On 15 April 2020, the Claimant received another email from the HR Manager enclosing a revised letter of termination, also dated 3 April 2020 ("the Revised Termination Letter"). The Claimant was asked to ignore the Company's earlier email dated 3 April 2020, enclosing the first letter of termination.
[12] Save for the effective date of termination and the term on payment in lieu of notice, the content of the Revised Termination Letter is identical to the first letter of termination. The relevant excerpts of the Revised Termination Letter are reproduced herein below as follows:
"Dear Mr Chang,
RE: NOTICE OF TERMINATION EMPLOYMENT UNDER PROBATION
We regret to inform you that you are being laid-off from your position as Financial Manager. This is irreversible decision and will be effective from 17 April 2020. This lay-off action is indefinite in duration and should be consider as permanent.
The business environment has been in turmoil, ever since the outbreak of the Covid-19 situation. The implementation of Movement Control Order (MCO) in Malaysia has brought significant impact to many business, causing many companies to be facing serious and tough challenges. Our Company is not spared as well. In view of this, we have no choice but to downsize the Company i
