Back
2025 MarsdenLR 6237
INDUSTRIAL COURT KUALA LUMPUR
CHOO KIT ONN – Appellant
Versus
LAKEFRONT RESIDENCE SDN BHD – Respondent
Award No: 807 Of 2025 [Case No: 19/4-1791/21]
An employer's right to reorganize and retrench employees is valid if the decision is bona fide, justified by genuine redundancy, and properly executed according to established industrial practices.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) and Section 30(5) - Dismissal for retrenchment - Claimant retrenched due to closure of construction operations by the Company for economic reasons amid losses and Covid-19 impact - Closure rendered all construction-related roles redundant, including that of the Claimant. (Paras 1, 2, 30, 84)
(B) Right to reorganize - An employer has the managerial prerogative to reorganize its business as long as it acts bona fide; retrenchment must be justified by genuine redundancy. (Paras 24, 31, 36)
Facts of the case:
The Claimant was one of 179 employees retrenched by the Company following its decision to cease construction operations due to financial losses and the Covid-19 pandemic. The Claimant contended that his retrenchment was unfair, asserting that his role continued to exist and that the Company had retained others in similar roles. (Paras 2, 22)
Findings of Court:
The Court found that the retrenchment was lawful as it was based on genuine redundancy due to the closure of construction operations, which rendered the Claimant's role unnecessary. The Company acted in good faith and followed proper procedures. (Paras 83, 84)
Issues: The main issues included whether there was a genuine need for the Company's closure of construction operations, if the Claimant's position was genuinely redundant, and whether the retrenchment was conducted in good faith. (Paras 30, 31)
Ratio Decidendi: The Court ruled that the Company demonstrated a legitimate business need to close its construction operations, thereby justifying the retrenchment of all employees in that sector, including the Claimant. (Paras 36, 84)
Result: Claimant's claims dismissed.
[1] This is a Ministerial Reference dated 30 April 2021 under s 20(3) of the Industrial Relations Act 1967 ("the Act") arising out of the dismissal of CHOO KIT ONN (hereinafter referred to as "the Claimant") by LAKEFRONT RESIDENCE SDN. BHD. (hereinafter referred to as "the Company") with effect from 24 September 2020 for a decision and an Award to be handed down.
Introduction
[2] The dispute before this Honorable Court is in relation to the Claimant's retrenchment by the Company;
a) The Company is part of the MCT Group of Companies;
b) The Claimant is one of 179 employees who were retrenched following the Group's decision to close its construction operations;
c) The Group's decision to close its construction operations is due to commercial reasons for better economic viability. The Group was suffering losses from its construction operations. These losses coupled with the forecasted downturn in business due to the Covid-19 pandemic, led to the decision to close the construction operations;
d) The Claimant's role related to the construction operations of the Group. Following the closure of the construction operations, all job functions in the construction operations, including the Claimant's job functions, became redundant; and
e) This redundancy led to his retrenchment.
[3] Trial proceeded and concluded on 21 October 2024. The notes of proceedings are found in the Notes of Proceedings (NOP).
[4] The Company filed and referred to three Bundles of Documents at trial, marked as follows:
(a) Company's Bundle of Documents (1) — 'COB-1';
(b) Company's Bundle of Documents (2) — 'COB-2'; and
(c) Company's Bundle of Documents (3) — 'COB-3'.
[5] The Claimant filed one Bundle of Documents - 'CLB-1'.
[6] At trial, two witnesses testified for the Company.
[7] The first witness was Apollo Bello Tanco, the CEO of MCT Berhad and its Group of companies ('Mr Apollo').
a) As CEO, Mr Apollo is the Head of all companies under the MCT Berhad Group. He testified with regards the decision to close the Group's construction operations and explained the rationale for this decision; and
b) His witness statement is marked as 'COWS-1'.
[8] The second witness was Muhammad Syafiq Soh Bin Abdullah, the former Director of Human Capital and Administration of MCT Berhad ('En Syafiq').
a) En Syafiq was the Head of HR for all companies under the MCT Berhad Group from 15 April 2019 until 14 October 2023. He testified with regards implementation of the retrenchment exercise and the employees who were retrenched; and
b) His witness statement is marked as 'COWS-2'.
[9] The Claimant was the sole witness on his side. His witness statement is marked as 'CLWS-1'.
Salient Facts
The Company's Case
[10] The primary business of the MCT Berhad Group was a property development and construction.
[11] However, the Group has since closed its construction operations and is exclusively in the business of property development only. Decision to re-organize the business/operations of the Group.
[12] The decision to close the construction business as well as the rationale for the said decision was explained by Mr Apollo. Mr Apollo was cross-examined on this issue and remained steadfast, consistent and clear in his testimony. Mr Apollo's testimony is as follows. [As at Q3 - Q12 COW-106-29 Notes of Proceedings (NOP)]
[13] In mid-2020, MCT Berhad decided to restructure and re-organize the Group's business model and operational structure. The Group changed its business model and operations from 'property development and construction' to solely 'property development'.
a) Following the re-organization, the Group ceased its construction operations and is exclusively in property development only;
b) Therefore, the Group no longer carries out any construction related work. Instead, all construction related work is now contracted externally to third party contractors and professionals;
c) Consequently, the construction operations of the Group dissolved completely. All job functions related to the construction operations ceased
