Gopal Sri Ram JCA:

[1] The appellant is a company that deals in foreign exchange; Forex for short. It acts for customers who speculate on the value of all sorts of currencies. It buys and sells currencies in the money market with a view to profit. It is just like a stockbroker, except that it deals in currencies instead of shares. It has several departments. Each department or desk as it is known in the trade, deals with a range of currencies. A licence is required to carry on the business. And Bank Negara exercises strict control over such activities.

[2] The respondent was, at all material times, employed as a manager of the appellant. His designation was "manager (forex)". He was in charge of the continental currencies and Ringgit desk. Under the terms of his contract of employment, the respondent received a fixed salary as well as a percentage of the profits annually earned by the appellant.

[3] On 21 February 1991, Bank Negara wrote to the appellant stating that with effect from the financial year 1991, money broking companies were not allowed to share their profits with their employees. There then followed an exchange of correspondence between the appellant and Bank Negara of which two letters from the latter to the former require mention.

[4] The first is a letter dated 25 March 1991 which contains the following paragraphs:

We refer to your letter of 26 February 1991 on the above matter and write to inform you that as indicated in our earlier letter of 21 February 1991, all money broking firms, without exception, are required to discontinue profit-sharing schemes for their employees.

We take note that Amanah Butler's existing profit-sharing scheme is a contractual obligation under its terms and conditions of employment. We would advise that immediate steps should be taken by your company to re-negotiate and implement a new remuneration scheme, in order to conform with the above requirement.

[5] The second is a letter dated 15 June 1991 which reads as follows:

We refer to your letter dated 24 April 1991 on the above matter. Bank Negara Malaysia has no objection to Amanah Butler Malaysia Sdn Bhd paying bonuses to its employees, provided that the payment of bonus is not on the basis of a contractual obligation calculated as a predetermined percentage of its annual profit before tax.

[6] The appellant did not attempt to re-negotiate the terms of the contract of employment which the respondent had with it as advised by Bank Negara. Instead, in August 1991, it unilaterally altered the terms and conditions of the respondent's contract by paying him a bonus of a sum less than that he had previously earned by way of commission. The justification advanced for this reduction in income was that the desk of which the appellant was in charge had performed dismally. The appellant also expressed its disappointment at the respondent's performance. In essence, the appellant reduced the respondent's income not because of the directive from Bank Negara, but for misconduct namely, the poor quality of the respondent's work.

[7] The respondent was unhappy with the loss in income and the reason given for it by the appellant. He considered himself to have been dismissed and therefore ceased work. He then made representations to the director general under s 20(1) of the Industrial Relations Act 1967 ("the Act"). The director general having unsuccessfully attempted a reconciliation of the dispute made his report to the Minister, who then referred the dispute to the Industrial Court. The parties then delivered their pleadings.

[8] The relevant paragraphs of the respondent's statement of case read as follows:

3.1 In or about August 1991, the company purported to unilaterally vary the terms of the claimant's contract of employment pertaining to the profit sharing scheme. The claimant then by letter dated 6 August 1991 wrote to the company on the matter. A copy of the said letter is annexed hereto and marked 'CL1'.

3.2 By letter dated 9 August 1991 the co