Compensation in lieu of reinstatement is not applicable for employees who have reached retirement age as they cannot be reinstated.

Mohamed Apandi Ali FCJ:

Leave Question

[1] This court had, on 6 January 2014, granted leave to the appellant to appeal on a single question of law, which reads:

"Whether compensation in lieu of reinstatement can be awarded to a person who cannot be reinstated and/or whether the issue of reinstatement even arises as he had already attained the age of retirement at the time of the filing of his claim (under s 20 of the Industrial Relations Act 1967 )."

Background Facts

[2] The salient facts of this case which are not disputed are as follows. So Lai ("the 1^st respondent") had been in the employment of the appellant company for 17 years when he was dismissed on 14 March 2001. He was then a Redistribution Stockist Operation Supervisor and his dismissal was consequential to a domestic enquiry conducted by the appellant company, based on allegations of receiving unauthorised payments from a complainant, one Tey Hup Heng Trading Sdn Bhd. At the time of his dismissal, the 1^st respondent was, according to his terms and conditions of service, only 14 months away from his mandatory retirement age of 55 years. He was deemed to have started working with the appellant company since 22 February 1984, after the appellant bought over the business from his earlier employer company in 1995.

[3] The 1^st respondent challenged his dismissal by filing a complaint to the Industrial court ("the 2^nd respondent") pursuant to s 20 of the Industrial Relations Act 1967 ("the IRA 1967"). The Industrial court decided in favour of the 1^st respondent and proceeded to award compensation in lieu of reinstatement, calculated based on the 1^st respondent's years of service and in addition awarded backwages for 24 months.

[4] Being dissatisfied with the Industrial court's decision, the appellant filed for judicial review under O 53 Rules of the High 1980 and applied for an order of certiorari to quash the said award.

[5] The application for certiorari was dismissed by the High court. The award on dismissal was upheld. The award on compensation in lieu of reinstatement was also upheld but the award in respect of backwages was reduced from 24 months to 14 months, namely the period to the retirement age at 55, of the 1^st respondent.

[6] On appeal, the court of Appeal dismissed the appellant's appeal and affirmed the decision of the High court, in respect of the compensation awarded.

Findings By The High court

[7] In view of the narrow scope of the leave question posed to this court, it is pertinent to highlight only parts of the judgment of the High court relating to the issue at hand, namely compensation in lieu of reinstatement when the dismissed employee had already attained the age of retirement at the time of filing his claim under s 20 of the IRA 1967.

[8] On this issue, the learned Judicial Commissioner in his grounds of judgment, observed as follows:

"There are two aspects to the compensation awarded by the ICC. The first is as regards backwages. The ground of challenge of A was that the ICC had acted on an incorrect basis of fact and erred in law in awarding backwages for 24 months amounting to RM196,718.00 when C was only 14 months away from retirement age (55 years).

It is trite law that backwages from the time of dismissal up to the date of the award that are payable to the workman who is unfairly dismissed may be ordered in full up to a maximum of 24 months. [See: Thilagavathy Alagan Muthiah v. Meng Sing Glass Sdn Bhd & Anor, 1997 MarsdenLR 2307 per Abdul Kadir Sulaiman J (as he then was)]. The 24 months' period is the maximum and is not to be awarded in every case of wrongful dismissal. The correct practice based on authorities is to consider the retirement age of the workman and the remaining years of employ