The employer must demonstrate genuine financial necessity and adherence to industrial harmony standards in retrenchment processes to justify termination.

AWARD

Vanithamany Sivalingam:

Reference

[1] This is a reference by the Honorable Minister of Human Resource to this Industrial Court under s 20(3) of the Industrial Relations Act 1967 ("the Act") for an award in respect of the dispute arising out of the alleged retrenchment of MOHD OSMAN BIN IDRIS ("the Claimant") by his employer, MK ELECTRIC (M) SDN BHD ("Company").

[2] The Court takes cognisance of the following papers and document files:

i) Statement of case dated 27 August 2021

ii) Statement in reply dated 15 September 2021

iii) Rejoinder dated 26 May 2023

iv) Claimant's Bundle of Documents (CLB1)

v) Company's Bundle of Documents (COB1,COB2 & COB3)

vi) Witness Statement of the Claimant (CLWS1A,CLWS1 B)

vi) Witness Statement of MOHD OSMAN BIN IDRIS (CLWS1A)

vii) Witness Statement of ANGELA ELIZABETH LINGAM (COWS1)

viii) Witness Statement of AHMAD KARUNIZAN BIN KAMARUDZAMAN (COWS2B)

ix) Company's Written Submission dated 28 April 2023

x) Company's Bundle of Authorities

xi) Company's Bundle of Document (Vol 1 and Vol 2)

xii) Claimant's Written Submission 10 May 2023

xiii) Submission in Reply by Company dated 17 May 2023

xiv) Submission in Reply by Claimant dated 10 August 2023

Brief Facts Of The Case

[3] The Claimant was employed by the Company on 17 October 2005 as a Tooling Technician with the salary of RM1,800.00. The Claimant's last drawn salary was RM4,554.27.

[4] The Claimant claimed that he had been employed with the Company for 14 years and 11 months. He had been awarded with numerous appreciation certificates for taking the effort to reduce cost in tool repairing, external repairing, and internal repairing works. The Claimant had also contributed to the Kaizan Ideas and multiple ideas for reducing the cost for the Company. The Claimant claimed that he possessed special skills for the 3rd party supplier cost reduction and credibility, among others.

[5] The Claimant claimed that the Company still requires the Claimant's skills, however, the Company had randomly chosen the Claimant to be retrenched. The Claimant alleged that the Company did not show any organisation chart which has been restructured during the exercise of the retrenchment. The Claimant alleged that the principle of Last In-First Out ("LIFO") was not complied with by the Company. The Claimant also alleged that the Company still operates as usual.

[6] The Company averred that the main business of the Company was to manufacture wiring devices and electrical connectivity accessories. The Company is part of the Howell Group of Companies. Since 2018, the Company has suffered decline in the business and production volume which resulted in the Company having declined revenue. The Company averred that the situation had been exacerbated by the Movement Control Order ("MCO") on 18 March 2020.

[7] As a means to alleviate the Company's financial position, the Company undertook some cost-cutting measures which includes;

i) implementing a travel freeze with effect from 31 January 2020 to reduce the expenditure;

ii) implementing voluntary unpaid leave on a Group-wide basis in March 2020;

iii) cancelling the Merit Pay Increment for the employees of the Company.

[8] Despite of this cost-cutting measures that were implemented, the Company could hardly survive. Therefore, the restructuring exercise was inevitable to improve business efficiency to meet the challenging business environment. The Company exercised the restructuring of its business in accordance with the Reduction In Force Policy ("RIF Policy"). The RIF Policy sets out the guidance on an objective assessment, leading to the retention or separation of an employee. In this process, the Claimant's department was identified as one of the department which required restructuring. In evaluating the Claimant and employees in his units, the Company adopted the RIF Policy in determining the employee's skills based on the following criteria;

i) Jig Fabrication Moulding, Assy & Laser Room/ Repairs/ Services/ Assembly for daily job;

ii) Crane/ Stacker/ M