Retrenchment may be justified if the employer shows a genuine need for reorganization without bad faith, adhering to industrial standards.

Reference

[1] This is a reference by the Director General of Industrial Relations Department dated 6 September 2021 pursuant to s 20(3) of the Industrial Relations Act 1967 which was received by the Industrial Court of Malaysia on 28 September 2021 arising out of the alleged dismissal of Ahmad Nasirruddin Harun (hereinafter referred to as "the Claimant") by KPJ Healthcare Berhad (hereinafter referred to as "the Company") on 31 January 2021.

Factual Background

[2] The Claimant commenced his employment with Ipoh Specialist Centre (hereinafter referred to as ISC) under Medical Associates Sdn Bhd (which was also a member of the Johor State Economic Development Corporation "JSEDC" Group of Companies) at KPJ Ipoh Specialist Hospital as an Accountant with a basic salary of RM2,370.00 per month with a fixed monthly special allowance of RM300.00 per month effective 1 October 1995 vide a letter of appointment dated 28 August 1995 (at pp 4-6 of CLB).

[3] Thereafter, the Claimant was offered the position of Corporate Executive to Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB) and seconded to Ipoh Specialist Centre (ISC) at KPJSB as Business Development Manager effective 15 March 1997. He continued working with the Company holding various senior positions until 2015, the Claimant was promoted and transferred to the position of Senior General Manager - Group Education & Strategic Support Services of the Company.

[4]Vide a letter of appointment dated 29 January 2016 (at pp 7-10 of CLB) and pursuant to the Employment Contract dated 1 February 2016 (at pp 11-23 of CLB), the Claimant was appointed as Senior General Manager - Group Education & Strategic Support Service of KPJ Healthcare Berhad (hereinafter referred to as KPJHB) for a three (3) year period with effect from 1 February 2016 to 31 January 2019 with a basic salary of RM32,000.00 per month. The Claimant shall be reporting directly to the President & Managing Director of KPJHB, subject always to any changes to the organizational structure of the Company.

[5] The employment contract as Senior General Manager of KPJHB of the Claimant was extended vide a renewal of contract dated 20 July 2018 (at pp 28-30 of CLB) and employment contract dated 1 August 2018 (at pp 32-44 of CLB) for another three (3) years effective from 1 August 2018 to 31 July 2021 and resume the same responsibilities as the Senior General Manager of KPJHB based in KPJHB Headquarters in Kuala Lumpur with increment of basic salary of RM37,000.00 per month and continue to receive the special allowance of RM5,800.00 and the Director's allowance of RM3,750.00 per month.

[6] The Claimant and Ahmad Shahizam Mohd Shariff (the President & Managing Director of the Company) had a meeting on 29 December 2020 during which, Ahmad Shahizam Mohd Shariff explained to the Claimant that his position had become redundant and therefore the Claimant should either opt for a mutual separation agreement (MSA) or an early retirement. Ahmad Shahizam Mohd Shariff also indicated to the Claimant that if he accepted either one of these proposals, he would be paid an amount of RM715,000.00 and the Claimant should inform Ahmad Shahizam Mohd Shariff of his decision in writing by 4 January 2021.

[7] Notwithstanding that, the Company had issued a Memo dated 29 December 2020 (at p 45 of CLB) for an offer of mutual separation / early retirement to the Claimant after the management reorganization exercise which has been approved by the Board and the new structure is to be implemented from January 2021 resulting in the Company not being able to map out an appropriate role for the Claimant in the new organi