The court affirmed the employer's right to terminate employees due to genuine redundancy caused by economic downturn, provided the process is bona fide and adheres to legal standards, including the LIFO principle.

[1] This is a reference made under s 20(3) of the Industrial Relations Act 1967 [Act 177] pertaining to the dismissal of Cheong Ei Leen (hereinafter referred to as "the Claimant") by Mayflower Holidays Sdn Bhd (hereinafter referred to as "the Company") on 24 September 2020.

[2] The Ministerial of Industrial Relation of Malaysia reference required this Court to hear and determine the Claimant's complaint of dismissal on 24 September 2020 by the Company.

Referred Cause Papers

[3] The following Pleadings and Documents filed before this Honorable Court are as follows:

a) The Claimant's Statement of Case dated 4 November 2021 ("Claimant's Statement of Case");

b) The Company's Statement In Reply dated 29 November 2021 ("Company's Statement In Reply"); and

c) The Claimant's Rejoinder dated 8 August 2022 ("Claimant's Rejoinder").

[4] The Witnesses who gave evidence on behalf of the Company during the trial of this matter are as follows:

a) Canna Tan Mei Tham - the previous Human Resource Manager of the Company, the Witness Statement was marked as COWS-1;

b) Mark Lam Sek the Head of Group Finance & Administration of the Company, the Witness Statement was marked as COWS-2;

c) Abdul Rahman Bin Mohamed - the General Manager of Mayflower Holidays Sdn Bhd at the time the Claimant was in employment and now the General Manager of Mayflower Car Rental Sdn Bhd The Witness Statement was marked as COWS-3A and the Supplementary Witness Statement was marked as COWS-3B; and

d) The Claimant gave evidence in this matter on herself.

[5] The Bundles of Documents that were filed by the Company and the Claimant respectively are as follows:

a) The Company Bundle of Documents, was marked as COB-1;

b) The Company's Supplementary Bundle of Documents was marked as COB-2;

c) The Company's Second Supplementary Bundle of Documents was marked as COB-3;

d) The Company's Third Supplementary Bundle of Documents was marked as COB-4. The Company's Fourth Supplementary Bundle of Documents was marked as COB-5;

e) The Claimant's Bundle of Documents, was marked as CLB-1;

f) The Claimant's Additional Bundle of Documents, was marked as CLB-2; and

g) The Claimant's Additional Bundle of Documents-2 was marked s CLB-3.

Chronology Of Events

[6] The Claimant, Cheong Ei Leen, commenced employment with the Company on 4 January 1999 as an Executive Trainee. She was confirmed in her position and eventually held the position of Manager, Sales (Education Tourism) at the time of termination on 24 September 2020. Her last drawn salary was RM6,250.00 with a fixed allowance of RM700.00, which was subsequently reduced as part of a payroll reduction exercise.

[7] The Claimant contended that her dismissal was without just cause or excuse, asserting that the redundancy was a disguise and violated the principle of "Last In First Out" (LIFO).

[8] Issue For Determination:

a) Whether the dismissal of the Claimant by reason of redundancy was with just cause and excuse;

b) Whether there was actual redundancy;

c) Whether the LIFO principle was adhered to;

d) Whether the termination was with just cause or excuse;

e) Whether the Company was in financial distress justifying retrenchment;

f) Whether the procedures followed were fair and in line with industrial law and standards.

The Company's Position

The Company Contended That:

[9] The Claimant's position was made redundant due to the adverse and prolonged impact of the COVID-19 pandemic, particularly on the Education Tourism Department.

[10] The department was entirely shut down due to zero business activity, leading to the retrenchment of all staff in that division, including the Claimant.

[11] Financial records indicated significant accumulated losses and capital deficiencies from 2018 to 2021, justifying the need for immediate restructuring.

[12] The Company undertook several cost-saving measures prior to retrenchment, including salary reductions, suspension of benefits, utilization of leave, and shorter work weeks.

[13] The Claimant accepted termination benefits, including ex-grati