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2023 MarsdenLR 1471
INDUSTRIAL COURT KUALA LUMPUR
YAP KIT SEONG – Appellant
Versus
INTI IABS SDN BHD – Respondent
Award No: 2279 Of 2023 [Case No: 7/4-1002/22]
Retrenchment must be justified and conducted in good faith; failure to demonstrate genuine necessity renders dismissal without just cause.
Headnote:(A) Industrial Relations Act 1967 - Section 20 - Dispute regarding retrenchment - Claimant alleged unfair dismissal by employer due to economic downturn caused by the Covid-19 pandemic - Court found retrenchment lacked justification and was done in bad faith - Employer failed to demonstrate genuine cost-cutting measures or compliance with the Code of Conduct for Industrial Harmony - Claimant's retrenchment was ruled without just cause, resulting in an award of RM314,390.00 in compensation. (Paras 1-61)
(B) Good Faith in Retrenchment - Employer must show bona fide reasons for retrenchment; failure to comply with established industrial relations principles can render retrenchment invalid. (Paras 50-56)
| Table of Content |
|---|
| 1. reference to industrial court. (Para 1 , 2) |
| 2. claimant's termination details. (Para 3 , 4) |
| 3. claimant's allegations of unfair dismissal. (Para 5 , 10 , 11) |
| 4. claimant's employment history and context. (Para 6 , 7 , 8 , 9 , 12) |
| 5. legal standards for dismissal. (Para 13 , 14) |
| 6. understanding retrenchment and managerial prerogative. (Para 16 , 17 , 18) |
| 7. burden of proof on employer in retrenchment cases. (Para 19 , 20 , 21) |
| 8. court's evaluation of retrenchment justification. (Para 22 , 23 , 24 , 25) |
| 9. company's financial situation and its implications. (Para 26 , 27 , 28) |
| 10. depreciation and financial assessments. (Para 29 , 30 , 31) |
| 11. arguments regarding business operations. (Para 32 , 33 , 34) |
| 12. evidence regarding student intake and financial health. (Para 35 , 36) |
| 13. company's actions and compliance with good faith. (Para 37 , 38 , 39 , 40) |
| 14. corporate personality and its implications. (Para 41 , 42 , 43 , 44) |
| 15. cost-cutting measures and their legitimacy. (Para 45 , 46 , 47 , 48) |
| 16. bona fide actions in retrenchment. (Para 49 , 50 , 51) |
| 17. conclusion on retrenchment validity. (Para 52 , 54 , 56) |
| 18. court's final orders and remedies. (Para 57 , 58 , 59) |
[1] This is a reference by the Director General of Industrial Relations to this Industrial Court under s 20(3) of the Industrial Relations Act 1967 ("The Act") for an award in respect of the dispute arising out of the alleged retrenchment of YAP KIT SEONG ("the Claimant") by his employer, INTI IABS SDN BHD ("Company").
[2] The Court takes cognizance of the following bundles, statements, submission and cause papers filed:
I. Statement of Case dated 8 August 2022
II. Statement of Reply dated 8 September 2022
III. Company's Bundle of Document (COB1)
IV. Company's Bundle of Document 2 (COB 2)
V. Company's Bundle of Document 3 (COB 3)
VI. Claimant's Bundle of Document (CLB 1)
VII. Claimant's Bundle of Document Volume 2 (CLB 2)
VIII. Claimant's Witness Statement (CLWS1)
IX. Witness Statement of SONG KUOK THONG (COWS1)
X. Witness Statement of CHONG KOK WAI (COWS2)
XI. Claimant's Written Submission dated 6 July 2023
XII. Claimant's Bundle of Authorities
XIII. Company's Written Submission dated 6 July 2023
XIV. Company's Bundle of Authorities
XV. Claimant's Submission of reply dated 13 July 2023
XVI. Claimant's Supplementary Bundle of Authorities
XVII. Company's Written Submission in Reply dated 13 July 2023
XVIII. Company's Bundle of Authorities (2)
[3] The Claimant's employment with the Company came to end on 31 October 2021 via a letter dated 27 July 2021. The letter stated that the reason for the termination was:
"The current economic situation resulting from the Covid 19 Pandemic, has caused decline in business ands revenue and compelled the Management to review its business directions. It is inevitable that the Company has to reduce operating costs and enhance efficiency and productivity if it is to remain competitive. Regretfully, the Company has to close the entity of INTI College Nilai."
[4] The Claimant not being satisfied with his termination from the Company, had proceeded and filed a claim under s 20 of the Industrial Relations Act 1967 seeking for a reinstatement.
Brief Facts Of The Case
[5] The Claimant alleged that the retrenchment exercised by the Company from his employment was done in bad faith and tantamount to an unfair dismissal. The Claimant stated that the reason given by the Company for the purported retrenchment exercise which was to reduce cost in the light of "current economic changes due to Pandemic Covid 19" as mentioned in the letter of termination dated 27 July 2021, was false as there was at the material time no justification for the retrenchment. The Claimant further added that the retrenchment on the ground of redundancy was in fact a disguised dismissal of the Claimant without just cause and excuse.
[6] The Claimant was employed by the Company on 1 April 1998 as Physics Lecturer (Job Grade-Lecturer II) in Subang Jaya Campus ("Subang Campus"). Effective fr
