Facts of the Case

Claimant commenced employment as a Claims Executive initially with MBF Insurans Bhd. with effect from 1.6.1999 on a monthly salary of RM2,200.00. He was subsequently seconded to the Claims Task Force effective from 4.11.1999. The Respondent alleged that the Claims Task Force was set up by MBF Insurans Bhd. for purposes of clearing the old and outstanding claim files of all claims. However, Claimant's function were to handle the communication and to follow up documentation but had no power to make decision which would be by the Managers.

Vide its letter dater 9.3.2000, MBF Insurans Bhd. had informed the Claimant that the Claims Task Force was to be dissolved on 1.4.2000 and that Claimant would be seconded back to the Claims Department at the Head Office. Claimant was subsequently confirmed in his position vide the Respondent's letter dated 15.3.2001 to take effect retrospectively from 3.2.2000. Claimant's role as Claims Executive was specifically confined to knock-for-knock ("k-f-k") claims which was centralized at the Head Office and which represented part of the motor claims section of the Claims Department.

Pursuant to a merger of companies, the insurance business of MBF was taken over by QBE Insurance (Malaysia) Berhad. Vide a letter dated 11.3.2002, MBF informed the Claimant that the business of MBF would be taken over by QBE Insurance and pursuant to the take over, Claimant's position in MBF would be redundant with effect from the date of the issuance of the High Court Vesting Order. Claimant was given the notice of termination of service with MBF but was informed that QBE Insurance (Malaysia) Berhad would, within 7 days of the change of ownership of business, offer continued employment on the terms and conditions of service no less favorable than what the Claimant had enjoyed with MBF. QBE Insurance made the announcement of the offer of continuous employment via letter dated 30.4. 2002 and Claimant accepted the offer on 2.5.2002.

Following the merger, the claims handling functions in the Respondent was decentralized to the respective branches and the claims Department in the Central Office was responsible for claims of the Central Region of Kuala Lumpur and Petaling Jaya only and the functions for k-f-k claims were absorbed by the claims handlers in the respective branches. Further, the Respondent had undertaken measures to underwrite lesser non-profitable motor business and to grow on the more profitable non-motor business such as Liability, Property and Marine insurance. The Respondent had further undertaken cost effectiveness exercise to downsize its work force resulting in a surplus of workmen being identified. The decision to downsize its workforce was notified to the Labour Office and this exercise was carried out in 2 stages namely in July and in December 2002. Vide its letter dated 20.5.2002 the Respondent informed all employees that a structured selection process would be conducted and that the selection would be based on their skills, knowledge, qualification and experience in relation to the job assigned. A resume form was required to be submitted and interview would be conducted.

In July 2002, Voluntary Separation Scheme (VSS) was offered to all employees including the Claimant after the interview process but Claimant declined to apply for VSS. Upon completion of the VSS exercise, the Respondent still found surplus in its workforce and embarked on a retrenchment exercise. As the decentralization of the claims handling in the Respondent resulted in the drastic reduction or diminution of the Claimant's workload as Claims Executive and that there was no longer a need to have him in the Claims Department to handle the "k-f-k" claims function, coupled with the Respondent's business direction to underwrite lesser motor business, by a letter dated 19.12.2002, Claimant was informed that his position was identified as redundant and consequently his service was terminated with effect from