Termination under a Voluntary Separation Scheme extinguishes prior employment rights unless explicitly preserved, reinforcing that absent clear terminology, rights do not co-exist post-termination.

[1] This is an appeal by the appellants against the decision of the Court of Appeal on 7 February 2011, in allowing the respondents appeal against the decision of the High Court. Leave to appeal was granted by this Court on 20 June 2011 and the only question of law framed for determination in this appeal is:

"Whether rights that arise upon the termination of an employment contract are extinguished by a termination pursuant to a Voluntary Separation Scheme Contract ("VSS") even when the VSS does not contain any of the following:

a) an express clause that extinguishes such rights which arise only upon termination;

b) an express waiver of those rights by the party entitled to the benefits flowing therefrom; and

c) an express provision stating that the VSS now encapsulates the entirety of the rights of all parties thereto."

[2] The appellants are the plaintiffs and the respondent is the defendant. For convenience, parties will be referred to as the plaintiffs and defendant as in the trial Court.

Background Facts

[3] The defendant herein was formerly known as Lembaga Padi dan Beras Negara (LPN). In 1994, LPN was subjected to a corporatisation exercise wherein the former employees of LPN were absorbed into the defendant with effect from 1 July 1994. Before the corporatisation exercise, the employees of LPN were subjected to a "Termination Of Employment Benefits" as envisaged in cl 7.3 of the original handbooks known as "Terma & Syarat Perkhidmatan Eksekutif " and "Terma & Syarat Perkhidmatan Bukan Eksekutif ". Under the said clause, an employee was entitled to termination benefits when terminated from employment before attaining the age of fifty-five due to reasons other than of compulsory retirement, optional retirement, death or a disability.

[4] With privatisation, the defendant decided to standardise its terms and conditions of employment to be in tandem with the spirit of corporatisation. Clause 7.3 of the original handbooks was incorporated into the subsequent handbooks known as "Buku Panduan Kumpulan Eksekutif " and "Buku Panduan Kumpulan Bukan Eksekutif " (hereinafter referred to as the "Buku Panduan") which in turn superseded the earlier handbook. Under the "Buku Panduan" cl 7.3 was rewritten in cl 5.5 which reads:

"A permanent officer of BERNAS who is confirmed in his appointment and who is terminated from service with BERNAS before attaining compulsory retirement age for reasons other than Compulsory Retirement, Optional Retirement, Death or Disability will be paid termination benefits as follows:

Factor x Last drawn Basic Monthly salary x years of service with BERNAS".

(Factor is 1.5 for those employed below 10 years of service and 2 for those above 10 years of service)

[5] On or about 12 September 2003, the defendant invited applications from its employees to leave their employment under the VSS, under a circular dated 12 September 2003 (the 2003 circular). This exercise was part of its restructuring scheme.

[6] According to the 2003 circular a successful applicant would be subject to the following terms:

(a) The last date of employment will be 31 December 2003;

(b) A generous basic compensation ranging from 23 months to 35 months basic salary or the number of months until retirement, whichever is lesser;

(c) For those who joined the defendant from LPN, an additional ex gratia compensation ranging from 0.5 months to three months last drawn salary;

(d) Salaryin lieu of notice;

(e) Salaryin lieu of unutilised annual leave; and

(f) Medical benefits for a period of one year after termination.

[7] The plaintiffs were successful in their applications under the VSS. The benefits under the VSS w