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2023 MarsdenLR 854
INDUSTRIAL COURT KUALA LUMPUR
SUNIL KUMAR PARAYIL KANNOTH – Appellant
Versus
TARPON ENERGY SERVICES ASIA PACIFIC SDN BHD – Respondent
Award No: 2066 Of 2023 [Case No: 22/4-335/21]
The court upheld that retrenchment must be bona fide, with the employer bearing the burden of proof to establish genuine redundancy, especially during economic downturns.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal of employee - Claimant dismissed on grounds of redundancy following management buyout and Covid-19 pandemic - Company claimed financial instability necessitated retrenchment - Court found dismissal was bona fide and justified based on evidence of redundancy and financial necessity. (Paras 1, 25, 50, 56)
(B) Employment Law - Redundancy - Employers have discretion to reorganize business; retrenchment must be bona fide - Burden of proof lies with employer to demonstrate genuine redundancy - Court should defer to employer’s business judgments unless acted mala fide. (Paras 24, 35, 52)
Facts of the case:
The Claimant, employed as Construction Manager, was dismissed due to redundancy on 7 April 2020, shortly after assurances of no redundancies were given by new management. The Company cited financial instability exacerbated by the Covid-19 pandemic as the reason for the dismissal.
Findings of Court:
The Court found that the Company had established genuine redundancy and that the dismissal was carried out in good faith, dismissing the Claimant's claims of unfair dismissal.
Issues: The primary issues were whether a valid case of retrenchment was established and whether the dismissal was made bona fide.
Ratio Decidendi: The Court concluded that the Company had satisfied the burden of proof for demonstrating redundancy and acted in good faith during the retrenchment process.
Result: Claim dismissed.
| Table of Content |
|---|
| 1. procedural history of the case. (Para 1 , 2 , 3 , 4 , 5) |
| 2. claimant's employment history and dismissal. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14) |
| 3. company's position on retrenchment. (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23) |
| 4. role of industrial court. (Para 24 , 25) |
| 5. dispute over claimant's employment start date. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 6. burden of proof on redundancy. (Para 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 7. no obligation to consult employees. (Para 43 , 44 , 45 , 46) |
| 8. replacement and retrenchment principles. (Para 47 , 48 , 49) |
| 9. reasonableness of the company's restructuring. (Para 50 , 51 , 52 , 53 , 54) |
| 10. conclusion and dismissal of the case. (Para 56) |
Reference
[1] This is a reference made under s 20(3) of the Industrial Relations Act 1967 (Act 177), arising out of the dismissal of Sunil Kumar Parayil Kannoth (hereinafter referred to as "the Claimant") by Tarpon Energy Services Asia Pacific Sdn Bhd (hereinafter referred to as "the Company") on 7 April 2020.
[2] The Ministerial reference in this case required the Court to hear and determine the Claimant's complaint of dismissal by the Company on 7 April 2020.
I. Procedural History
[3] The Court received the letter pertaining to the Ministerial reference under s 20(3) of the Industrial Relations Act 1967 on 20 January 2021.
[4] The matter was fixed for mention on 1 March 2021, 13 October 2021, 23 December 2021, 10 May 2022 and 24 May 2022.
[5] The trial proceeded on 19 December 2022, 14 April 2023 and concluded on 15 May 2023.
II. The Parties' Position On The Merits
(a) The Claimant
[6] The Claimant commenced his employment with the Company as an Electrical & Instrument Superintendent ("E & I Superintendent") on 29 June 2011 pursuant to a Contract of Employment dated 13 June 2011.
[7] The Claimant rose through the ranks to Construction Manager and his last- drawn monthly salary amounted to RM24,114.00 per month.
[8] Sometime in the middle of 2019, the Company underwent a management buyout wherein the then existing management team of the Company consisting of individuals named Shane Donnachie, John O'Keeffe and Matthew Lucien Seale ("the New Owners") completed the purchase of the Company's shares whereby the said individuals took over the management of the Company effective 31 December 2019.
[9] Around the time of the said takeover, the new management of the Company issued the following statement and gave following assurances to all employees of the Company:
i. 'Tarpon, even whilst a part of the PTW Group, was very much a standalone organisation and so the ongoing changes will be minimal and seamless';
ii. the management buy-out would safeguard 'more than 300 jobs';
iii. that 'it will be business as usual for everyone';
iv. that 'there will be no redundancies'; and
v. that there are plans 'to add some new additions to the team very shortly to service our growing backlog and facilitate the continued growth of the Company in both our primary regions'.
[10] The Claimant's job as Construction Manager survived the business takeover exercise by the new management team. However, on 7 April 2020, the Claimant received a letter from the Company notifying him that his position has become redundant due to the Company's review of manpower requirement to maintain financial stability and that his services will not be required effective from 7 April 2020. A severance package was stated in the letter.
[11] During the Claimant's tenure as the Construction Manager and at the time of his dismissal on ground of redundancy, the Claimant's business both in Malaysia and Indonesia remained a viable and going concern and the projects that are currently being executed and bringing in revenue for the Company worth approximately RM17,000,000.00 are as follows:
i. Terengganu Crude Oil Terminal (TCOT) Plant upgradation (Malaysia Project):
ii. 2 Nos of E-Houses for Lochard Energy (Malaysia Project);
iii. Communications cabinets for Mor
