Retrenchment can be justified if employers act bona fide and demonstrate genuine organizational needs, without binding adherence to 'Last In, First Out' principles when valid criteria are applied.

Headnote:(A) Industrial Relations Act 1967 - Section 30(5) - Retrenchment - The court considered the validity of dismissal of employees claiming wrongful termination on grounds of redundancy following company reorganization due to financial losses. The firm provided evidence of genuine need for staff reduction owing to operational surplus and lack of necessity for the roles held by claimants. Court upheld need for bona fide action by employer regarding redundancy. (Paras 5, 24, 58)

(B) Retrenchment criteria - The court ruled adherence to 'Last In, First Out' principle not mandatory and acceptable as long as other objective criteria are applied fairly involving employee qualifications and the company's operational needs. (Paras 40, 58)

(C) Burden of proof - The court reiterated that the onus to prove wrongful dismissal lies with the claimants to substantiate their claims against the employer's justification for retrenchment. (Paras 5, 38)

Facts of the case:
The 11 claimants were retrenched by the respondent company due to a restructuring initiative necessitated by substantial financial losses from the prior fiscal years and claimed unfair dismissal. The context of job functions and necessity were assessed for redundancy which led to the retrenchment decisions being made.

Findings of Court:
The court found that the retrenchment was genuine and followed appropriate principles, leading to the conclusion that the claimants’ roles were redundant.

Issues: The issues at hand pertained to the genuine need for business reorganization, adherence to fair retrenchment principles, and the classifications of redundancy.

Ratio Decidendi: The court's reasoning was based on the belief that employers must demonstrate bona fides in retrenchments while also supporting operational efficiency. In this instance, the employer demonstrated a legitimate requirement to reduce staff linked to operational management analysis which legitimate grounds for their actions.

Result: Claimants' claims dismissed.

Table of Content
1. dismissal due to retrenchment (Para 1 , 2)

P Iruthayaraj D Pappusamy:

[1] This reference stems from the dismissal of Encik Mohd Nor bin Hassan ("the 1^st Claimant"), Encik Mohd Hamid bin Basir ("the 2^nd Claimant"), Encik Mohd Noor Hisham bin Hassan ("the 3^rd Claimant"), Puan Pau a/p Choi ("the 4^th Claimant"), Puan Norma bt Mat Yashim ("the 5^th Claimant"), Encik Zaidi bin Mustapa ("the 6^th Claimant"), Puan Norshahda bt Mohd Nor ("the 7^th Claimant"), Encik Mohamad Radzi bin Hassan ("the 8^th Claimant"), Encik Mohd Khairilanuwar bin Saad ("the 9^th Claimant"), Encik Manisegaran a/l S Muniandy ("the 10^th Claimant"), Encik Samsul Arif bin Shuhud ("the 11^th Claimant") by Continental Sime Tyre PJ Sdn Bhd ("the Company") on 13 August 2007.

Background Facts

[2] The employment background of the 11 Claimants in the Ministerial reference are as follows:

1^st Claimant - Mohd Nor bin Hassan

(CLW-1 in the proceedings)

His witness statement is marked as CLWS-1.

The 1^st Claimant commenced employment with the Company on 2 January 2000 as Engineering Executive in the Engineering Service Department (Boiler House). By Company's letter dated 3 August 2007 he was retrenched from employment with effect from 12 August 2007. Accordingly he was paid a total retrenchment benefit amounting to RM28,528.24 as per Article 28 of the COMSA Collective Agreement ("the CA")(Refer to page 1 of COB-1). The 1^st Claimant contended that he was dismissed without just cause or excuse. His last drawn salary was RM2,811.00 per month. He had served the Company for a total of 7 years and 7 months.

2^nd Claimant - Mohd Hamid bin Basir

(CLW-5 in the proceedings)

His witness statement is marked as CLWS-5.

The 2^nd Claimant commenced employment with the Company on 1 June 2001 as Engineer in the department of Kilang Tayar OTR. By Company's letter dated 3 August 2007 he was retrenched from employment with effect from 12 August 2007. Accordingly he was paid a total retrenchment benefit amounting to RM31,459.93 (see page 11 of COB-1). The Claimant had pleaded that he was dismissed without just cause or excuse. His last drawn salary was RM3,292.00 per month. He had served a total of 6 years and 2 months.

3^rd Claimant - Mohd Noor Hisham bin Hassan

(CLW-6 in the proceedings)

His witness statement is marked as CLWS-6.

The 3^rd Claimant commenced employment with the Company on 16 July 2001 as Engineering Technician in the Engineering-Area/Mixing. By Company's letter dated 3 August 2007 he was retrenched from employment with effect from 12 August 2007. Accordingly he was paid a total retrenchment benefit amounting to RM23,833.51 as per Article 28 of the CA (see page 23 of COB-1). The Claimant however had contended that he was dismissed without just cause or excuse. His last drawn salary was RM2,500.00 per month. He had served a total of 7 years and 1 month in the Company.

4^th Claimant - Pau a/p Choi

(CLW-7 in the proceedings).

Her witness statement is marked as CLWS-7.

The 4^th Claimant commenced employment with the Company on 1 November 1998 as Senior Executive Material Economy Cost. By Company's letter dated 3 August 2007 she was retrenched from employment with effect from 12 August 2007. Accordingly she was paid a total retrenchment benefit amounting to RM101,460.45 as per Article 28 of the CA (see page 31 of COB-1). The Claimant however contended that she was dismissed without just cause or excuse. Her last drawn salary was RM6,408.00 per month. She had served a total of 9 years and 3 months in the Company.

5^th Claimant - Norma binti Mat Yashim

(CLW-3 in the proceedings)

Her witness statement is marked as CLWS-3.

The 5^th Claimant commenced employment with the Company on 2 July 2001 as Secretary. By Company's letter dated 3 August 2007 she was retrenched from employment with effect from 12 August 2007. Accordingly she was paid a total retrenchment benefit amounting to RM19,915.35 as per Article 28 of the CA (see page 47 of COB-1). The Claimant however contended that she was dismissed without just

Click Here to Read the rest of this document

2014 MarsdenLR 1214

MAHKAMAH PERUSAHAAN KUALA LUMPURMOHD NOR HASSAN & ORS – AppellantVersusCONTINENTAL SIME TYRE PJ SDN BHD – RespondentAward No: 578 Of 2014 [Case No: 4/4-612/08]

Retrenchment can be justified if employers act bona fide and demonstrate genuine organizational needs, without binding adherence to 'Last In, First Out' principles when valid criteria are applied.

MAHKAMAH PERUSAHAAN KUALA LUMPUR
MOHD NOR HASSAN & ORS – Appellant
Versus
CONTINENTAL SIME TYRE PJ SDN BHD – Respondent
Award No: 578 Of 2014 [Case No: 4/4-612/08]