The Court ruled that the non-renewal of a fixed-term contract constituted unjust dismissal as the employer failed to prove just cause, establishing the employee's permanent status.

Reference

[1] This is an order of reference dated 18 April 2022 by the Director General of Industrial Relations Department pursuant to subsection 20(3) of the Industrial Relations Act 1967 arising out of the alleged dismissal of Syed Hizam Alsagoff (the Claimant) by Cahya Mata Sarawak Berhad (the Respondent) on 31 August 2021.

Brief Facts

[2] The Company is Cahaya Mata Sarawak Berhad (CMSB).

[3] The Claimant commenced his employment with the Company on 17 January 2005 as the Finance Manager. In 2005, the Claimant was promoted to General Manager of Group Finance and Treasury. In 2008, the Claimant was promoted to Acting Group Chief Financial Officer. In 2009 the Claimant was promoted as Group Chief Financial Officer, and the Claimant's last position as Group Chief Financial Officer was renewed three times until his contract ended in 2021.

[4] At the time his contract ended, the Claimant's last drawn basic salary was RM81,244.00

[5] Via a letter dated 5 May 2021, the Company suspended the Claimant on full pay for thirty days to investigate allegations of financial mismanagement related to hedging losses at OM Materials (Sarawak) Sdn Bhd, losses from PPES Works (Sarawak) Sdn Bhd's subcontract works in the WPCO6 project and the Claimant's involvement in the investment made into the Malaysian Phosphate Additives (Sarawak) Sdn Bhd project.

[6] The Company appointed an independent third-party consultant, KPMG Management & Risk Consulting Sdn Bhd, to investigate the allegations.

[7] By a letter dated 18 May 2021, the Company requested the Claimant's explanation on allegations that he had a direct or indirect interest in two vendors of the Company, namely Data Solutions Sdn Bhd and ERP21 Pte Ltd

[8] On 5 July 2021, the Company requested clarification from the Claimant regarding an individual named Sharifah Mahani Binti Syed Alwi Alsagoff or Sharifah Mahani Alsagoff.

[9] The Company extended the Claimant's suspension period until 2 August 2021, and again, the Company extended the Claimant's suspension until 31 August 2021.

[10] By a letter dated 19 August 2021, the Company informed the Claimant that his August 2021 salary would be withheld because of the pending investigation and findings concerning the Allegations of Financial Mismanagement.

[11] By a letter dated 30 August 2021, the Company informed the Claimant that his employment contract would not be renewed upon its expiry on 31 August 2021.

[12] Dissatisfied with the Company's decision, the Claimant commenced the action.

The Law

Roles And Functions Of The Industrial Court

[13] The principle pertaining to fixed-term employment contracts was laid down in the case of M Vasagam Muthusamy v. Kesatuan Pekerja-Pekerja Resorts World, Pahang & Anor 2002 MarsdenLR 779 ; 2003 MarsdenLR 1751 ; where Faiza Tamby Chik J held:

The applicant contended that the Industrial Court had not applied the correct test in making its decision by first asking itself whether there was a dismissal and secondly that if there was a dismissal, whether the dismissal was with just cause or excuse. I am of the opinion that the Industrial Court had correctly addressed the issue in this case by determining first whether or not the contract in question was a genuine fixed term contract (see pp 3 and 4 of the said award). If the Industrial Court made a finding that it was not a genuine fixed term contract but was really a contract of emplo