Suffian LP CJ: (read by Wan Suleiman FJ):

MM Ismail the plaintiff was employed by EMMCO the defendant as a Railway Inspector. The plaintiff did not belong to a union. His salary and conditions of service were contained in a letter of appointment dated 26 February 1968, Exh. P1 at p. 41 of the appeal record.

Clause 10 of the letter of appointment headed "Termination" reads as follows:-

10. Either party may terminate the appointment at any time by giving two months' notice in writing. Alternatively, the company may terminate the appointment at any time on giving two months' pay in lieu of notice.

Then there is cl. 7 headed "Medical Benefits". It reads as follows:

7 You will be entitled to medical benefits in accordance with Pt III of the terms and conditions of employment for monthly-paid staff.

The terms and conditions of employment referred to in cl. 7 were embodied in a collective agreement (Exh. D10 at p. 54) between the defendant company and a union of some of its employees, of which union the plaintiff is not a member.

Part III of that agreement is headed "Medical Benefits."

Section 1(g)(i) of that part reads: -

(g).(i) Any employee who, after a minimum of five years continuous and good service is retired or retrenched by the company shall be entitled to the same benefits as laid down in para. (f) above.

Paragraph (f) reads:

(f) If, in the opinion of the company's medical officer, an employee is medically unfit to continue to be employed by the company, he/she shall be paid two months' salary (in lieu of notice) and two weeks' pay for each year of continuous service over one year. The rates shall be based on the salary at the time of termination of service.

I would have thought that para. (g)(i) has nothing to do with medical benefits (it deals with retirement or retrenchment benefits) and that therefore it does not apply for the benefit of the plaintiff, but the defendant says that it does and I would therefore proceed on the basis that it does, because the benefits to the plaintiff under it were greater than those under P1.

The defendant company mined iron. Because its ore reserves were exhausted, the company decided to close down. So by letter dated 21 January 1971 (Exh. P2 at p. 45), the company gave four days' notice to terminate the plaintiff's service under cl. 10 of Exh. P1 with effect from 25 January 1971, that is short of the two months' notice which the company was required to give under that clause. Therefore under that clause the company should have paid the plaintiff two months' pay in lieu of notice.

The plaintiff thereupon sued the company in the Magistrate's Court at Kuala Trengganu. In his statement of claim he said that the company in breach of his terms of employment terminated his service by giving him only four days' notice, that he was entitled to two months' notice or two months' salary in lieu, that therefore he prayed for an order that the company give him two months' salary in lieu, and damages for breach of contract, and other relief.

In its defence the company admitted that the plaintiff was given only four days' notice and entitled two months' salary in lieu, but contended that it did pay the plaintiff two months' salary in lieu of notice, that before so paying it gave the plaintiff a statement of final emoluments due to him, that the plaintiff confirmed and agreed the amount of final emoluments due to him, and that over and above what was legally due to the plaintiff the company gave the plaintiff one month's salary as ex-gratia payment.

The learned Magistrate gave judgment for the plaintiff, holding that:

(1) the company failed to give the plaintiff the two months' notice required;

(2) the statement of final emoluments did not show that two months' salary in lieu of notice had been paid to the plaintiff; and

(3) The collective agreement D10 did not apply to the plaintiff and that therefore its Pt III cannot be relied upon by the company to suggest that two months'