The retrenchment must be substantiated by genuine redundancy, and the employer's actions must be bona fide; otherwise, reinstatement and punitive damages may be warranted.

JUDGMENT

Lee Swee Seng JCA:

[1] The Respondent here, Ooi Mei Chein ("Mei Chein"), holding a senior position as the Head of Treasury and Commercial Administration Services in a company, found herself retrenched, after 24 years of service. It was traumatic for her and more so when at the domestic front, she was going through the throes of a divorce and navigating the issues of custody and maintenance of children.

[2] The Appellant Company, called "OSRAM" in brief, is based in Penang. It is a premium supplier of semiconductor-based lighting products more familiarly known as LEDs. The Appellant OSRAM was one of 4 business units in the OSRAM Group of Companies under its Parent Company OSRAM Gmbh in Munich, Germany ("the Parent Company").

[3] The Appellant Company said it had outsourced its accounting and treasury function to a Global Shared Services Organisation ("GSS") such that the Respondent's role has become redundant. There was no oblique or collateral purpose from the outsourcing or right sizing exercise. It is a managerial prerogative after all for a company to determine the size of its workforce so long as the exercise is not done mala fide with the motive of removing anyone that has fallen into disfavour with the Company.

[4] The workman on the other hand argued that her services were still needed and that only certain functions were taken over by the GSS. Much of her Treasury duties remained intact like Accounts Payable and Accounts Receivable and the departments under her like Accounting, Taxation, Treasury and Commercial Administration were then parked under a new Head of Department. She also highlighted that the overall business of the Company had grown with some three-fold increase in revenue and that overall her roles and responsibilities had not been significantly reduced. Indeed, according to her, 19 functions and 15 roles of hers remained intact and that her services were still relevant and required by the Company.

[5] The Industrial Court in its Award dated 29 May 2019 diagreed with her and found that the termination on 30 September 2015 on ground of redundancy was faisrly done and that the redundancy package was reasonable in the circumstances of the case. She applied to the High Court by way of Judicial Review to quash and set aside the Award of the Industrial Court.

In The High Court

[6] The High Court on 23 August 2021, upon a judicial review of the Award of the Industrial Court, quashed and set aside the Award and granted reinstatement as well as back wages of 24 months and punitive damages and costs. She went back to work on 22 September 2021 and remained in service even up to the date of hearing of the appeal before us.

[7] The High Court found that her remaining work functions cannot simply be redistributed to other departments for no good reason and moreover there was an increase in revenue and net profit of the Company during the relevant period from 2014 to 2015. Aggrieved by the said decision of the High Court, the Company as Appellant had appealed to the Court of Appeal.

Before The Court Of Appeal

[8] Before us the following issues were canvassed by the Appellant Company:

(a) Whether the retrenchment was done bona fide and following established legal principles;

(b) Whether reinstatement in the circumstances of the case would not be conducive for industrial harmony; and

(c) Whether the punitive compensation awarded was reasonable in the circumstances of the case.

The Law On Judicial Review In Dismissal Cases Under The Industrial Relations Act 1967

[9] Much has been argued that it is perfectly proper for a High Court in hearing a matter on judicial review to consider the merits of the case as was held by the Federal Court in Ranjit Kaur a/p S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd , [2010] 6 MLJ 1 :

"[15]... Historically, judicial review was only concerned with the decision making process where the impugned decision is flawed on the ground of procedural impropriety. However, over the years, our courts have made