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2024 MarsdenLR 1407
INDUSTRIAL COURT KUALA LUMPUR
MOHD HILMI ABDUL WAHAB – Appellant
Versus
AIRASIA BERHAD – Respondent
Award No: 1371 Of 2024 [Case No: 15(11)/4-1101/21]
Retrenchment during the COVID-19 pandemic was lawful as the employer established genuine redundancy and applied objective selection criteria, reaffirming managerial discretion in workforce reduction.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Retrenchment - Claimant dismissed due to redundancy amid COVID-19 pandemic - Company established financial difficulties and surplus of pilots - Retrenchment justified based on performance ratings and bona fide managerial discretion - Claimant's dismissal deemed lawful. (Paras 17, 21, 32, 41, 140)
(B) Retrenchment Process - Employer's prerogative to reorganize business - Justification for deviation from LIFO principle - Objective selection criteria applied in retrenchment - No requirement for employee consent prior to retrenchment notice. (Paras 95, 108, 129)
Facts of the case:
Claimant, a pilot, was retrenched by the Company due to financial difficulties exacerbated by the COVID-19 pandemic, resulting in a surplus of pilots. The Claimant disputed the retrenchment, alleging it was unjustified and lacked proper process. (Paras 11, 12, 15)
Findings of Court:
The Court found the retrenchment was conducted in good faith, with the Company demonstrating genuine redundancy and adherence to selection criteria based on performance. (Paras 140)
Issues: Whether the Claimant was dismissed with just cause, if the redundancy was genuine, and if the retrenchment process was fair. (Paras 17, 20)
Ratio Decidendi: The Court held that the Company established a legitimate need for retrenchment due to the pandemic, and the selection criteria were fairly applied, making the dismissal lawful. (Paras 21, 140)
Result: Claimant's case dismissed.
AWARD
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 Mohd Hilmi Bin Abdul Wahab ("the Claimant") by his employer, AirAsia Berhad ("the Company") on 14 June 2020.
B. Background
[2] This case was initially tried by me as the Chairman of Court 11, Industrial Court of Malaysia. I ceased to be the Chairman of Court 11, effective 16 January 2023. I have been requested to continue with the hearing of this 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 ("AAGB")], providing low cost air carrier service.
[4] Pursuant to an offer of employment dated 2 July 2018, the Claimant commenced employment with the Company as a Co-Pilot on 4 July 2018. He was subsequently promoted to the position of Captain in Operation Management Department with effect from 1 November 2018, the same position which he had held until the date of dismissal.
[5] On 16 March 2020, the Prime Minister of Malaysia announced the implementation of a Movement Control Order ("MCO") effective from 18 March 2020 to 31 March 2020, to contain the COVID-19 outbreaks.
[6] The MCO imposed restrictions on movement and public gathering, limited business operations to essential services, and requiring peoples to stay home except for essential purposes.
[7] Over the following months, the MCO was extended and modified in phases, including the Conditional MCO (CMCO) and the Recovery MCO (RMCO). Stricter controls were implemented during the periods of high transmission, followed by more relaxed measures when cases subsided. Various restrictions, such as interstate bans and closure of non-essential businesses, were applied based on the severity of the situation.
[8] As a result of the MCOs and COVID-19 pandemic, the aviation sector operations were affected and various austerity measures were taken by the Company, including workforce reductions and cost cutting initiatives.
[9] Town hall meetings were then held by the Company on 29 May 2020 and 4 June 2020 with the Flight Operations Department to explain, amongst others, the financial difficulties of the AirAsia Group and the reorganization exercise, to all pilots of the Company, including the Claimant.
[10] Subsequently, the Company conducted a one-to-one Zoom meeting session with the Claimant on 7 June 2020, during which he was informed that he had been identified as redundant and selected for retrenchment.
[11] The Claimant was served with the Notice of Retrenchment dated 8 June 2020, stating, inter alia, that the Company had experienced severe financial difficulties due to global economic changes and had no choice but to limit its workforce. Relevant excerpts of the Notice of Retrenchment are reproduced herein below as follows:
"Dear Mohd Hilmi Bin Abdul Wahab,
NOTICE OF RETRENCHMENT
We refer to the above matter and the meeting conducted by your Department.
For the last several quarters, the AirAsia Group has experienced severe financial difficulties due to, amongst others, global economic changes and an ever more difficult operating environment in the airline industry, particularly in the Asia Pacific region. Our latest consolidated income statement reported a net operating loss of RM457 million for 2019, which stands in stark comparison against the operating profits reported for 2018.
Despite these circumstances, we have tried to keep our Allstars team intact and retain all those under our employment, including those under fixed term contracts. As you are aware, among other things we have severely curtailed hiring, suspended all non-essential duty travel, deferred bonuses and merit increments, offered unpaid leave, cancelled events, and reduced salaries.
Unfortunately, these measures have been uns
