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2023 MarsdenLR 2860
INDUSTRIAL COURT KUALA LUMPUR
SITI MARIA ABD GHANI – Appellant
Versus
LAKEFRONT RESIDENCE SDN BHD & ANOR – Respondent
Award No: 1833 Of 2023 [Case No: 21/4-1018/21]
An employer has the right to retrench employees based on genuine redundancy due to economic reasons, provided the decision is made in good faith and not motivated by bad faith or ulterior motives.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Retrenchment - Claimants challenged the fairness of their retrenchment following the closure of the construction division due to economic reasons and the COVID-19 pandemic - Court found the retrenchment was justified, bona fide, and not motivated by bad faith or ulterior motives. (Paras 1, 8, 47, 76)
(B) Managerial Prerogative - Employers have the right to reorganize their business for legitimate reasons, provided actions are bona fide and not discriminatory - Court emphasized that retrenchment due to redundancy must be genuine and supported by evidence. (Paras 23, 24, 42)
Facts of the case:
The Claimants were retrenched as their roles became redundant following the company's closure of its construction division due to financial losses exacerbated by the COVID-19 pandemic. They contested the validity of the retrenchment, claiming it was not justified and lacked proper compensation. (Paras 8, 76)
Findings of Court:
The Court determined that the retrenchment was conducted in good faith, justified by legitimate economic concerns, and not motivated by any discriminatory intent. (Paras 76, 77)
Issues: The main issues were whether the retrenchment was justified, whether the grounds provided by the employer were true, and whether any bad faith was involved in the selection of employees for retrenchment. (Paras 30, 31)
Ratio Decidendi: The Court ruled that the employer's decision to restructure and retrench employees was legitimate and supported by evidence of financial difficulties, affirming the principle that employers have the prerogative to reorganize their business as necessary. (Paras 23, 76)
Result: Claimants' claims dismissed.
| Table of Content |
|---|
| 1. overview of claimants and companies (Para 1 , 2) |
| 2. procedural background of the case (Para 3 , 4 , 5 , 6 , 7) |
| 3. dispute and business reorganization (Para 8 , 9 , 10 , 11) |
| 4. company's justification for retrenchment (Para 12 , 13 , 14) |
| 5. claimants' contentions against retrenchment (Para 15 , 16 , 17 , 18 , 19) |
| 6. role of the industrial court and standard of proof (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 7. criteria for justifying retrenchment (Para 30 , 31) |
| 8. evidence of business reorganization (Para 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40) |
| 9. legitimacy of retrenchment decision (Para 41 , 42 , 43 , 44 , 45 , 46) |
| 10. details of retrenchment exercise (Para 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57) |
| 11. legal precedents on redundancy (Para 58 , 59 , 60 , 61 , 62 , 63) |
| 12. counterarguments on job advertisements (Para 64 , 65 , 66) |
| 13. claimants' allegations and court's findings (Para 67) |
| 14. claims on compensation and legal obligations (Para 68 , 69 , 70 , 71 , 72 , 73) |
| 15. final decision on retrenchment (Para 74) |
| 16. conclusion on lawfulness of retrenchment (Para 75 , 76 , 77) |
| 17. overall conclusion and order (Para 78 , 79) |
Reference
[1] This is a reference by Honourable Minister of Human Resources under s 20(3) of the Industrial Relation Act 1967 dated 17 March 2021 to the Industrial Court in order for complaints of terminations be heard and an Award be handed down in respect of dismissals by way of retrenchment by the company against the claimants; the parties of which are briefly described as follows:
The Claimants
a. Case No, 21/4-1018/21
Siti Maria Binti Abd Ghani v. Lakefront Residence Sdn Bhd ("Siti Maria"). At the time of her dismissal on 28 August 2020, the Claimant held the position of Senior Executive Credit Control at Corporate Resources Division, Finance Department with basic salary of RM4,136.00 with Handphone Allowance of RM150.00, and employer EPF and SOCSO contributions. (refer p 2 of CLB 1, no 19 p 121 COB2 retrenchment listing and p 123-124 COB -2- Credit Control Department.) The Claimant has been working with the Company since 3 September 2012 until 28 August 2020. Therefore, the Claimant has seven complete years of service for the Company.
b. Case No 13/4-1258/21
Abdul Mubin Bin Mohd Salbini v. Eco Green City Sdn Bhd At the time of his dismissal on 27 July 2020, the Claimant held the position of Assistant Administration at Corporate Resources Division, Human Capital Department with basic salary of RM2,060.00 and employer EPF and SOCSO contributions. (refer p 64 of CLB 1 no 3 p 121 COB-2 retrenchment listing and p 125-126 COB -2- Human Capital & Administration Department). The Claimant has been working with the Company since 14 May 2018 until 28 July 2020. Therefore, the Claimant has been in employment of the Company for more than 2 years.
c. Case No 13/4-1264/21
Mushana Azfar Bin Mustafa v. Eco Green City Sdn Bhd At the time of his dismissal on 27 July 2020, the Claimant held the position of Executive Account Project Technical at Corporate Resources Division, Finance Department with basic salary of RM3,800.00 and employer EPF and SOCSO contributions. (refer page 6 of CLB 2, no 7 p 121 COB-2 retrenchment listing and p 129-130 COB -2- Finance Department.) The Claimant has been working with the Company since 8 October 2018 until 27 July 2020. Therefore, the Claimant merely has a complete year of service for the Company.
d. Case No 13/4-1263/21
Zaily Masyita Binti Mohd Shah v. Eco Green City Sdn Bhd Pursuant to an Award dated 12 September 2022, the Claimant's case was struck off upon the application by the Claimant's solicitors on 19 August 2022 to withdraw the said case.
The Companies
[2] There are 2 companies in these proceedings, namely Lakefront Residence Sdn Bhd and Eco Green City Sdn Bhd They are wholly owned subsidiaries and part of a public listed company; ie the MCT Berhad Group of Companies. The Claimants in these proceedings were employed under th
