Facts of the Case

Claimant commenced employment with the Respondent on 24.7.1990 as a Store Supervisor with a salary of RM850.00 per month plus an attendance allowance of RM150.00 and an incentive allowance of RM160.00 per month. With effect from May 1998, Claimant was seconded from the Respondent to Federal Furniture (1982) Sdn. Bhd. and was promoted as Human Resource Executive. Effective from 1.8.2000 her monthly salary was increased to RM2,000.00. The Respondent and Federal Furniture (1982) Sdn. Bhd. were the subsidiaries of Federal Furniture Holding Sdn. Bhd.

On 12.9.2001, the Respondent served on the Claimant a one month notice of termination of her service to take effect on 11.10.2001 purportedly on ground of a retrenchment exercise on account of the cessation of its furniture manufacturing operation which was due to the then economic downturn in the United States and world wide that had badly affected its exports.

On 12.10.2001, however, Claimant was appointed immediately after her termination of service as HR cum Admin Executive by another subsidiary, Federal Furniture Industries Sdn. Bhd., of the same holding company but on a reduced salary of RM1,500.00 per month and effective from 1.12.2001, she was transferred to another company known as Interior Design World Sdn. Bhd. While working in Interior Design World Sdn. Bhd., vide a letter dated 4.12.2001, Claimant was also required to carry out all payroll calculations, EPF, SOCSO, Income Tax payments and other related matters of the Respondent, Federal Furniture (1982) Sdn. Bhd. and Federal Furniture Industries Sdn. Bhd.

Claimant pleaded that the Respondent had failed to pay her any retrenchment benefits according to law and that the Respondent had not followed the Code of Conduct in the retrenchment exercise. She contended that her termination was mala fide and actuated by victimization and an unfair labour practice. Hence, she prayed for reinstatement to her former position, inter alia.

The Issues

The sole issue before this Court is whether the Respondent was bona fide in retrenching the Claimant and whether it was with just cause or excuse.

The Law

In Williams Jacks & Co (M) Sdn. Bhd. v. S. Balasingam [1997] 3 CLJ 235, the Court of Appeal defined retrenchment as follows:-

"Held:-

[4] Retrenchment has been defined as the discharge of surplus labour of staff by an employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action. Whether the retrenchment exercise in a particular case is bona fide or otherwise is a question of fact and of degree depending on the peculiar circumstances of the case. It is well-settled that the employer is entitled to organise his business in the manner he considers best. So long as the managerial power is exercised bona fide, the decision is immune from examination by the Industrial Court."

Hence, the exercise of the managerial power to retrench the workmen must be bona fide in order to justify their dismissal.

In Stephen Bong v. FCB (M) Sdn. Bhd. & Anor; [1999] 3 MLJ 411, the High Court held that:-

"It is not the law that redundancy means the job or work no longer exists. Redundancy situations arise where the business requires fewer employees of whatever kind. The Industrial Court was right when it held that the applicant was redundant as there was reduced work and reduced business within the Company which made the applicant's position as an executive director in charge of one of the groups redundant."

In Sarawak Shell Berhad v. Ismail bin Sahat & Ors [2002] 2 ILR 371 which was quoted in Advanced Prestige Sdn. Bhd. v. Benny Knut Neumann [2002] 3 ILR 866 at 875, the Industrial Court had set out the role of an industrial adjudicator in dealing with the issue whether it ought to intervene with a managerial decision to retrench as follows:-

"Where the Court is asked to inquire into the exercise of management prerogatives, its function must be correctly understood. Where pursuant to such exercise,