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2023 MarsdenLR 931
INDUSTRIAL COURT KUALA LUMPUR
NEOH WEE MING – Appellant
Versus
AIRASIA BERHAD – Respondent
Award No: 1411 Of 2023 [Case No: 15(11)/4-914/21]
Retrenchment must be justified by redundancy and executed fairly; the employer's prerogative in workforce management is subject to scrutiny for good faith and adherence to established principles.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Retrenchment - Claimant's employment terminated on grounds of redundancy due to financial difficulties exacerbated by COVID-19 pandemic - The court evaluated the justification for retrenchment and the selection criteria applied by the employer - The court found that the employer's actions were bona fide and in accordance with established principles of industrial law. (Paras 21, 23, 40, 78)
(B) Retrenchment - The principles governing retrenchment emphasize the employer's prerogative to reorganize their workforce, provided it is executed fairly and in good faith - The court affirmed that the burden of proof lies with the employer to demonstrate redundancy and adherence to fair practices. (Paras 21, 23, 56)
Facts of the case:
The Claimant, employed as a Licensed Aircraft Engineer, was retrenched by the Company due to severe financial losses attributed to the COVID-19 pandemic, which necessitated workforce reductions. The Claimant contested the fairness of his retrenchment and the criteria used for selection. (Paras 10, 16)
Findings of Court:
The court concluded that the Claimant's position became redundant due to the significant decline in operations and that the retrenchment was conducted in good faith, adhering to the principles of fairness and necessity. (Paras 78, 80)
Issues: The primary issues were whether the retrenchment was justified and conducted fairly, and if the selection criteria applied were appropriate and in accordance with industry standards. (Paras 20, 56)
Ratio Decidendi: The court determined that the retrenchment was justified due to the financial crisis caused by the pandemic, and that the employer had a valid basis for selecting employees for retrenchment based on performance and operational needs, thus upholding management's prerogative in staffing decisions. (Paras 21, 56)
Result: The Claimant's case against the Company is hereby dismissed.
| Table of Content |
|---|
| 1. minister's reference to the industrial court. (Para 1 , 2) |
| 2. claimant's employment and retrenchment details. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 3. company's defense regarding retrenchment. (Para 13 , 14) |
| 4. claimant's arguments against retrenchment. (Para 15 , 16 , 17) |
| 5. impact of covid-19 on aviation industry. (Para 18 , 19 , 20) |
| 6. definition and principles of retrenchment. (Para 21 , 22 , 23) |
| 7. justification of retrenchment based on financial hardship. (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 8. claimant's acknowledgment of financial measures. (Para 34 , 35 , 36 , 37) |
| 9. discussion on redundancy of claimant's position. (Para 40 , 41 , 42 , 43 , 44 , 45) |
| 10. company's selection criteria for retrenchment. (Para 49 , 51 , 52 , 53) |
| 11. claimant's challenge to selection criteria. (Para 60 , 61 , 62) |
| 12. claimant's allegations against compliance with ccih. (Para 69 , 70 , 71 , 72) |
| 13. notice requirements for retrenchment. (Para 73 , 74 , 75 , 76) |
| 14. final findings on retrenchment justification. (Para 77 , 78 , 79) |
A. Reference
[1] This is a reference from The Honourable Minister of Human Resources, Malaysia to the Industrial Court of Malaysia under s 20(3) of the Industrial Relations Act 1967 ("the IRA ") in respect of the dismissal of Neoh Wee Ming ("the Claimant") by his employer, AirAsia Berhad ("the Company") on 14 June 2020.
B. Background
[2] This case was previously tried and concluded by me as the Chairman of Court 11, Industrial Court of Malaysia. I had ceased to be the Chairman of Court 11, effective 16 January 2023. I have been requested to hand down this award as the presiding Chairman for the case after I was re-appointed as the new Chairman of Court 15, effective 1 June 2023.
C. Facts
[3] The Company is a wholly owned subsidiary of Capital A Berhad (formerly known as AirAsia Group Berhad) ("CAB"), providing low cost air carrier service.
[4] Pursuant to a letter of offer of employment dated 27 July 2007, the Claimant commenced employment with the Company as an Engineering Trainee with effect from 20 August 2007.
[5] Having successfully completed his training, the Claimant was then transferred and re-designated as Licensed Aircraft Engineer ("LAE") in the Company's Maintenance Operation Department, with effect from 20 December 2013 vide the Company's letter dated 5 February 2014.
[6] On 16 March 2020, the Prime Minister of Malaysia announced the implementation of the Movement Control Order ("MCO") effective 18 March 2020 until 31 March 2020 to contain the COVID-19 outbreak which was subsequently extended to a later date.
[7] As a result of the MCO and pandemic, the aviation sector operations were affected and the Company announced that the employees would be placed on unpaid leave for certain number of days in a month to ensure the Company's sustainability. In this regard, the Claimant was placed on five (5) days of unpaid leave per month from April 2020.
[8] On 4 June 2020, the Company held a town hall meeting and the Company's Chief Executive Officer (CEO), Riad Asmat shared about the status of the Company with regard to the Covid-19 pandemic and informed that the Company would be embarking on a retrenchment exercise, wherein those affected would be notified via email.
[9] Subsequently, the Claimant received an email from the Company informing him that a Zoom meeting session had been scheduled by the Company with him on the following day, 5 June 2020.
[10] On 5 June 2020, the Company conducted a one to one Zoom meeting session with the Claimant to explain to him the decision made by the Company on retrenchment which included him.
[11] By a letter dated 7 June 2020 ("Notice of Retrenchment"), the Company informed the Claimant of the financial hardships that the Company was going through and its decision to abolish the Claimant's position. Relevant excerpts of the said letter are reproduced herein below as follows:
"Dear Neoh Wee Ming,
NOTICE OF RETRENCHMENT
We refer to the ab
