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2024 MarsdenLR 2372
INDUSTRIAL COURT KUALA LUMPUR
HANIZAH AHMAD JAMALUDDIN – Appellant
Versus
SCOMI KMC SDN BHD – Respondent
Award No: 410 Of 2024 [Case No: 3/4-2760/21]
The dismissal of employees must be justified with clear evidence of compliance with legal standards, including adherence to the Code of Conduct and LIFO principles.
Headnote:(A) Industrial Relations Act 1967 (Act 177) – Subsections 20(3) and 30(5) – Dismissal of employees due to retrenchment – Claimants dismissed without just cause and excuse as the Company failed to prove compliance with necessary safeguards under the Code of Conduct of Industrial Harmony and the LIFO principle – The Court emphasized the need for evidence to support claims of redundancy and restructuring. (Paras 11, 14, 61)
(B) Burden of Proof – The Company must prove that the termination was justified and followed proper procedures, including adherence to the Code and LIFO principles. (Paras 16, 33, 41)
(C) Lifting the Corporate Veil – The Court found grounds to lift the corporate veil due to the intertwined nature of the companies within the group, holding the parent company accountable for the actions of its subsidiaries. (Paras 45, 47)
Facts of the case: The Claimants were dismissed by Scomi KMC Sdn Bhd on 16 January 2021, claiming redundancy due to financial distress and restructuring. The Claimants had lengthy service records within the Scomi group. (Paras 3-10)
Findings of Court: The Claimants were dismissed without just cause and excuse, as the Company failed to provide sufficient evidence of compliance with the necessary legal standards for retrenchment. (Paras 61-62)
Issues: Whether the dismissal was justified under the Industrial Relations Act and whether the Company complied with the Code and LIFO principles. (Paras 14, 33)
Ratio Decidendi: The Court ruled that the Company did not meet its burden of proof regarding the justification for dismissal, emphasizing the need for clear evidence in redundancy cases. (Paras 61-62)
Result: The Court ordered the Company to pay compensation to both Claimants. (Paras 68-70)
AWARD
The Reference
[1] This matter is based on the referral dated 4 August 2021 by the Director General of Industrial Relations pursuant to subsection 20(3) of the Industrial Relations Act 1967 (Act 177) arising out of the dismissal of Hanizah Binti Ahmad Jamaluddin ("the First Claimant") by Scomi KMC Sdn Bhd ("the Company") on 16 January 2021.
[2] The matter was heard together with another case namely case number 3/4-2761-21 and the referral is also dated 4 August 2021 by the Director General of Industrial Relations pursuant to subsection 20(3) of the Industrial Relations Act 1967 (Act 177) arising out of the dismissal of Nor Asiah Binti Mohd Noor ("the Second Claimant") by Scomi KMC Sdn Bhd ("the Company") on 16 January 2021.
Brief Facts
[3] The First Claimant joined the SCOMI Sdn Bhd as a probationary Clerk/Typist on 30 April 1993 via letter dated 28 April 1993. Subsequently the next submitted document was a Letter of Offer dated 12 February 2018 for the post of 'Executive - Tender & Contract' in Scomi Oiltools Sdn Bhd The First Claimant was given the assurance that there was no break in her service with Scomi Special Vehicles Bhd which is assumed was her previous posting. Later on 1 October 2019, the First Claimant was transferred from Scomi Oiltools Sdn Bhd to the Company via letter dated 10 October 2019.
[4] The Second Claimant joined the Kota Minerals & Chemicals Sdn Bhd, which is a subsidiary of Scomi Group Bhd, as an Accounts Assistant on 1 May 2004 via letter dated 21 April 2004. In 2007, the letters addressing the Second Claimant was using the Scomi letterhead and signed off by Group Chief Executive Officer. The said letter also had imprinted at the bottom of the letter is Scomi Oiltools Sdn Bhd (formerly known as Kota Minerals & Chemicals Sdn Bhd). The next change based on the Company's bundle came in 2011, where the letterhead was entitled Scomi but at the bottom of the letter it was now Scomi KMC Sdn Bhd, the Company, with a different company registration number. As compared to the First Claimant, there was no transfer letter given.
[5] The Company is almost entirely owned by Scomi Oiltools Sdn Bhd at 99.6% of the shares, based on SSM Corporate Information submitted by the Company in pp 1 to 6 at COB-1. These companies are all under the group of companies headed by Scomi Energy Services Bhd ("SESB"), which is itself based on the Corporate Structure provided by the Company in pp 7 to 8 at COB-1. Although, according to the Statement in Reply from the Company states that the Company is a subsidiary of SESB where it was claimed to own 52% stake and a further 4% through Scomi Oiltools Sdn Bhd However, the evidence provided is an organisation chart in the Company's bundles which will be discussed later in this award.
[6] The evidence in Court by the Company's witnesses had stated that the Company's ownership structure has changed but not supported by any documentary evidence. Upon further examination, not all the witnesses that came to give evidence could actually furnish the Court with sufficient evidence that reflects some of the questions that were raised regarding the Company. The crux of the Company's witnesses was to state that the Company was indebted and that it was under judicial management at the time of the termination of the Claimants.
[7] In support of the indebtedness of the Company, the Company's Counsel submitted volumes of agreements, debentures and letters, namely pp 9 of COB-1 to pages 1683 of COB-5 which have highlighted the fact that the loan taken by one of the companies in the group specifically KMCOB Capital Berhad. Initially it was from three banks but later the debt was taken over by other banks with guarantees from other companies within the group. This included the Company guaranteeing a part or the entire loan on behalf of the other companies within the group. The Court has no intention to go in-depth into the inner workings of the group of companies because this Court is
