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2025 MarsdenLR 5237
INDUSTRIAL COURT KUALA LUMPUR
LIM SZE KAI – Appellant
Versus
HKBN JOS (MALAYSIA) SDN BHD – Respondent
Award No: 326 Of 2025 [Case No: 21/4-2304/20]
The dismissal of an employee without just cause or excuse is unlawful, and non-competition clauses that restrict trade are void under Section 28 of the Contracts Act 1950.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal of employee - Claimant dismissed without just cause or excuse for refusing to accept revised employment terms - Non-competition clause deemed void under Section 28 of the Contracts Act 1950 - Employer's burden to prove just cause for dismissal not met - Claimant entitled to compensation. (Paras 22, 38, 42)
(B) Employment Law - The employer must provide clear grounds for dismissal; failure to do so renders the dismissal unlawful. (Paras 25, 27)
Facts of the case:
The Claimant was employed as General Sales Manager and was dismissed without stated reasons after refusing to sign revised employment terms that included a non-competition clause. (Paras 2, 9, 21, 42)
Findings of Court:
The dismissal was found to be without just cause or excuse, and the Claimant was awarded compensation in lieu of reinstatement and backwages totaling RM111,040. (Paras 38, 42)
Issues: Whether the Claimant's refusal to sign revised terms constituted resignation and whether the dismissal was justified. (Paras 22)
Ratio Decidendi: The court held that the non-competition clause was void and the employer failed to demonstrate just cause for dismissal, thus the Claimant's termination was unlawful. (Paras 29, 32, 36)
Result: Claimant awarded RM111,040.00 as compensation.
AWARD
Reference
[1] This is a reference dated 7 October 2020 made under s 20(3) of the IRA 1967 ("the Act") arising out of the dismissal of Lim Sze Kai (hereinafter referred to as "the Claimant") by HKBN JOS (Malaysia) Sdn Bhd (hereinafter referred to as "the Company") on 21 April 2020.
Salient Facts
[2] On 15 June 2016, the Claimant commenced his employment with the Company as the General Sales Manager (M2) (See: pp 3 to 8 of CLB1) and was offered the initial remuneration in the forms of a basic monthly salary of RM11,000.00 (See: Clause 1, p 3 of CLB1) and monthly allowances of RM250.00 (Handphone Allowance) and RM600.00 (Travelling and Parking Allowance) [See: p 9 of CLB1].
[3] On 26 September 2016, the Claimant was confirmed in his employment as the General Sales Manager (M2), with retrospective effect on 20 September 2016. [See: p 10 CLB1]. The Claimant managed the marketing and sales team and the Company had placed several sales employees under the supervision of the Claimant.
[4] On 17 April 2017, the Claimant's monthly basic salary was adjusted and increased to RM11,605.00, with effect from 1 April 2017 (See: page 3 CLB2) On 29 June 2017, 3 months after his basic salary increment, the Claimant was appointed and promoted as the JOS Executive Grade M2 with capacity as the General Sales Manager. With this new appointment/promotion, the Claimant's position was elevated to the executive level with effect from 1 July 2017, although his monthly basic salary maintained at RM11,605.00 (since April 2017). Notwithstanding, the terms of employment after this appointment/promotion had improved (See: pp 11 to 12 of CLB1).
[5] Thereafter, the Claimant's monthly basic salary was adjusted and increased every year, with no issuance of any new letter to that effect. Besides the basic salary and allowances, the Claimant was entitled to:
a) Annual incentives and bonus based on the Annual Incentive Scheme (AIS);
b) Sales commissions on monthly basis.
[6] As of 25 March 2020, based on the monthly salary slip/statement issued by the Company, the Claimant's last drawn remuneration was as follows:
See: p 7 CLB2
[7] On the evidence, items 6.2 and 6.3 are referred to as "discretionary monthly allowance which may vary from department to department and subject to the nature of the work scope, payable with effect form 20 June 2016" and that "The management shall have the right to withdraw and/or vary the above allowance(s) at its sole discretion at any time during your servce and in which you shall be informed accordingly". [p 9, CLB-1]. Item 6.4 varies based on the monthly sale performance of the Sales and Marketing team.
[8] In this respect, for the preceding 4 months prior to his termination, the Claimant's monthly sales commissions were as follows:
[9] On 21 April 2020, the Claimant's employment was officially terminated by the Company via letter and e-mail.
a) See: p 31 of CLB1; and
b) See: pp 31 and 32 of CLB1
Pleadings, Witnesses' Statements, Bundles Of Documents And Other Cause Papers
[10] The cause papers filed by the Company and the Claimant in respect of this matter are as follows:
(a) The Claimant's Statement of Case dated 9 December 2020 ("Claimant's Statement of Case").
(b) The Company's Statement In Reply dated 24 December 2020 ("Company's Statement In Reply").
(c) The Claimant's Rejoinder dated 14 January 2021 ("Claimant's Rejoinder").
[11] The Witnesses who gave evidence on behalf of the Company during the trial are as follows:
(a) Mr Steven Soo Tiam Wah - Managing Director of the Company, Witness Statement marked as COWS-1A and COWS-1B.
(b) Ms Janet Yeung Tim Yee - the previous Director - Talent Engagement, Enterprise Solutions & JOS Group of the Company, Witness Statement marked as COWS-2.
[12] The Claimant gave evidence in this matter and there were no other witnesses who gave evidence on behalf of the Claimant. The Witness Statement of the Claimant has been marked as CLWS-1 and CLWS-1A.
[13] The documents and/or exhibi
