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2023 MarsdenLR 171
INDUSTRIAL COURT KUALA LUMPUR
ZULIKA ATIKA KHAMIS – Appellant
Versus
NICE PARADISE SDN BHD – Respondent
Award No: 2194 Of 2023 [Case No: 3(6)(15)/4-1933/20]
The court ruled that the retrenchment of employees was not conducted bona fide, infringing their rights under employment contracts, and failing to apply the LIFO principle.
Headnote:(A) Industrial Relations Act 1967 - Subsection 20(3) - Claimants' dismissal by Nice Paradise Sdn Bhd alleged to be without just cause - Court found dismissal was not bona fide, failing to prove financial necessity for retrenchment - Claimants' rights under employment contracts were infringed. (Paras 16, 51, 101)
(B) Burden of proof - It lies with the employer to demonstrate that dismissal was with just cause; failure to do so results in a presumption of unjust dismissal. (Paras 16, 17, 101)
(C) Last in First Out (LIFO) principle - Not uniformly applied by the Company, leading to unfair dismissal claims. (Paras 66, 75)
Facts of the case:
The Claimants, 30 former employees of Nice Paradise Sdn Bhd, were dismissed on 14 May 2020 amid claims of redundancy due to financial difficulties exacerbated by the pandemic. They contended the Company failed to provide proper justification and did not follow the LIFO principle. (Paras 1-5)
Findings of Court:
The Court ruled that the retrenchment was not executed bona fide and did not comply with the principles of fairness and the LIFO rule, resulting in unjust dismissals. The total compensation awarded was RM559,569.74. (Paras 100, 101)
Issues: The main issues included whether the retrenchment was justified and conducted in good faith, and adherence to the LIFO principle.
Ratio Decidendi: The Court emphasized that the Company failed to substantiate its claims of financial distress and did not adequately follow the LIFO principle, leading to the conclusion that the dismissals were without just cause. (Paras 101)
Result: The Company is ordered to pay the Claimants RM559,569.74 within 30 days from the date of this Award.
| Table of Content |
|---|
| 1. dismissal and employment background of claimants. (Para 1 , 2 , 3 , 4) |
| 2. claims of unfair dismissal and redundancy. (Para 5 , 6 , 7) |
| 3. court's review of evidence and submissions. (Para 8 , 9) |
| 4. role of the court and burden of proof. (Para 10 , 11 , 12 , 13) |
| 5. approach to common issues in the case. (Para 14 , 15) |
| 6. legal standards for retrenchment and dismissal. (Para 16 , 17 , 18 , 19) |
| 7. contractual obligations and rights of claimants. (Para 20 , 21 , 22 , 23 , 24) |
| 8. company's measures to avoid retrenchment. (Para 25 , 26 , 27) |
| 9. economic downturn and its impact on business. (Para 28 , 29 , 30 , 31) |
| 10. definition and principles of redundancy. (Para 32 , 33 , 34) |
| 11. application of doctrine of frustration. (Para 35 , 36 , 37) |
| 12. bona fide vs mala fide in retrenchment. (Para 38 , 39 , 40) |
| 13. financial actions of the company. (Para 41 , 42 , 43 , 44 , 45) |
| 14. intent and actions of the company regarding retrenchment. (Para 46 , 47 , 48 , 49 , 50 , 51) |
| 15. company's obligations to provide information. (Para 52 , 53 , 54 , 55 , 56) |
| 16. evaluation of retrenchment measures. (Para 57 , 58 , 59 , 60) |
| 17. comparison with previous cases and rulings. (Para 61 , 62 , 63 , 64) |
| 18. application of lifo principle in retrenchment. (Para 65 , 66 , 67 , 68 , 69) |
| 19. assessment of individual cases and lifo application. (Para 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80) |
| 20. rights of probationary vs confirmed employees. (Para 81 , 82 , 83) |
| 21. determination of remedies based on findings. (Para 84 , 85 , 86 , 87 , 88 , 89 , 90) |
| 22. court's final decision and award. (Para 91 , 92 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 100) |
Reference
[1] This is a reference dated 8 September 2020 made by the Minister of Human Resources pursuant to subsection 20(3) of the Industrial Relations Act 1967 [Act 177] arising out of the dismissal of Zulika Atika binti Khamis & 29 Others ("the Claimants") by Nice Paradise Sdn Bhd ("the Company") on 15 May 2020
Brief Facts
[2] There are 30 Claimants altogether & all were appointed to the Company on various dates. Initially there were 33 Claimants, but one has passed away, another withdrew her case a few months into the case due to health reasons & the third person was never interested the moment the claim was filed. The Company, who was initially known as Frasers Paradise Sdn Bhd bought a hotel, namely Vivatel in Kuala Lumpur on 23 February 2017. At the time of termination, the Company was known as the name above; namely Nice Paradise Sdn Bhd There was never an issue with the change in name & not pleaded so the Court has deemed that fact as accepted.
[3] The 30 Claimants were all employees of the Company, & some have been in Vivatel even before the hotel was bought by the current owners: namely the Company. The Claimant's had different lengths of employment at the hotel. It should also be noted that from the outset the Company avers that some of the Claimants have been confirmed whilst others have not been confirmed. This fact has been challenged by the Claimants in their Statement of Case & Rejoinder. This is also despite the fact that the Claimants began working with the Company & the Vivatel at different times.
[4] However, an agreed fact between the Parties is that the date of termination was on 14 May 2020 & not 15 May 2020 as stated in the referral letter from the Honourable Minister. One Claimant, namely Ms Noor Fadilah Lim Abdullah or CLW-1 who was also the Human Resources Manager of Vivatel Kuala Lumpur, was terminated seven days after the other Claimants on 21 May 2020. The Claimants filed a representation to the Honourable Minister of Human Resources & on 8 September 2020 the Minister agreed, & the matter was referred to the Industrial Court. The case was initially registered in three separate Courts before being consolidated through an initial Award dated 5 May 2021.
[5] According to the Claimants, the retrenchment was due to a purported redundancy or rightsizing which they claim wa
