Mohd. Azmi FJ:

This is an appeal from an order of the learned Judicial Commissioner at Alor Star dated 23 May 1982 dismissing the appellant's origination motion to set aside the order made by Mr. Cheah Yew Seng, the Assistant Director of Labour Sungei Petani in Labour Case No. 10/1981, wherein the appellant was ordered to pay RM445,917.34 to the respondents as termination benefits under reg. 8 of the Employment (Termination and Lay-off Benefits) Regulations 1980 - PU (A) 278/80 ("the 1980 Regulations" for short).

The respondents were rubber estate workers employed by Bukit Lembu Division of the appellant company which was referred to in the proceedings as KMS Estate. The other part of the appellant's rubber estate was known as the Railway Division with which the present appeal is not concerned. All the respondents were "employees" within the meaning of s. 2(1) Employment Act 1955 (revised 1981), and when there was a change of ownership of Bukit Lembu Division by virtue of a sale by the appellant to the National Land Finance Co-operative Society Ltd. (hereinafter referred to as "NLF"), the respondents made a joint claim under s. 72 of the Employment Act to the Labour Office, Sungei Petani for payment of termination benefits totalling RM445,917.34 which they alleged was payable by the appellant by virtue of the termination of their services under reg. 8. The appellant resisted the claim on the ground that by refusing the offer for continued service on same terms and conditions by NLF (the new owner), the respondents had acted unreasonably in that they purposely kept themselves out of work for two months in February and March 1981, though they continued to live in the estate quarters throughout, and thereafter on 2 April 1981 they took up employment with NLF as new employees. As such they had manoeuvred themselves into a position whereby they rejected continuity of service in preference to termination of service for the sole purpose of claiming termination benefits - a result which the appellant alleged was never intended by the legislature. Regulation 8 reads as follows:

8. (1) Where a change occurs (whether by virtue of a sale or other disposition or by operation of law) in the ownership of a business for the purposes of which an employee is employed or of a part of such business, the contract of service of the employee shall be deemed to have been terminated unless -

(a) within seven days of the change of ownership, the person by whom the business is taken over immediately after the change occurs, offers to renew the contract of service of the employee or to continue to employ the employee under the terms and conditions of employment which are not less favourable than those under which the employee was employed before the change occurs; and

(b) the employee accepts such offer.

(2) Where the contract of service of the employee is deemed to be terminated under para. (1), the person by whom the employee was employed immediately before the change in ownership occurs and the person by whom the business is taken over immediately after the change occurs shall be jointly and severally liable for the payment of all termination benefits payable under these Regulations.

(3) Where an offer by the person by whom the business is taken over immediately after the change occurs to continue to employ the employee is accepted by such employee the period of employment of the employee under the period of employment of the employee under the person by whom the employee was employed immediately before the change occurs, shall, for the purposes of these Regulations, be deemed to be a period of employment under the person by whom the business is taken over, and the change of employer shall not constitute a break in the continuity of the period of his employment.

From the Statement of Agreed Facts submitted by Counsel for both parties, it is common ground that on or before 1 February 1981, the respondents were all employees of Bukit Lembu Divi