The Industrial Court upheld an employer's prerogative to retrech employees during financial hardship, determining that redundancy must be genuine and proven.

Reference

[1] This is a reference under s 20(3) of the Industrial Relations Act 1967 (1967 Act) by the Honourable Minister of Human Resources, emanates from the dismissal of How Zheng Hong ("the Claimant") by Airasia Berhad ("the Company") on 14 June 2020.

Preamble

[2] This Court considered all the notes of proceedings in this matter, documents and the cause papers in handing down this Award, namely:

(i) Statement of Case dated 12 November 2020;

(ii) Statement In Reply dated 26 November 2020;

(iii) Rejoinder dated 3 December 2020;

(iv) Company's Bundle of Documents: COB-1;

(v) Company's Bundle of Documents (2): COB-2;

(vi) Company's Bundle of Documents (3): COB-3;

(vii) Company's Bundle of Documents (4): COB-4;

(viii) Company's Bundle of Documents (5): COB-5;

(ix) Company's Bundle of Documents (6): COB-6;

(x) Company's Bundle of Documents (7): COB-7;

(xi) Company's Document (2019 Performance Points for Co-Pilots): CO-8;

(xii) Claimant's Bundle of Documents: CLB-1;

(xiii) Claimant's Bundle of Documents (2): CLB-2;

(xiv) Claimant's Bundle of Documents (3): CLB-3;

(xv) Claimant's Bundle of Documents (4): CLB-4;

(xvi) Witness Statement of Shafinaz Shamsuri: COWS-1;

(xvii) Witness Statement of Sim Siew Shan: COWS-2;

(xviii) Witness Statement of the Claimant, How Zheng Hong: CLWS-1;

(xix) Witness Statement of Adam Shaharel: CLWS-2;

(xx) Company's Written Submission dated 22 December 2022;

(xxi) Claimant's Written Submission dated 27 December 2022;

(xxii) Company's Written Submissions in Reply dated 31 January 2023; and (xxiii) Claimant's Written Submissions in Reply dated 2 February 2023

Brief Facts

[3] The Company is wholly owned subsidiary of Capital A Berhad (formerly known as AirAsia Group Berhad) (hereinafter referred to as "the Group") providing low cost air carrier service.

[4] The Claimant commenced employment as a Co-Pilot with the Company on 6 July 2009 vide a letter of offer dated 30 June 2009. At the time of his termination, the Claimant held the same position as a Co-Pilot with the Company and his last drawn salary was RM5,500.00 per month.

[5] The dispute before this Court is the claim by the Claimant that he was terminated from his employment on 14 June 2020 without just cause or excuse by the Company on the grounds of redundancy.

The Company's Case

[6] For the full financial year of 2019, the Group has reported a Net Operating Loss of RM457,080,000.00 compared to a Net Operating Profit of RM352,664,000.00 in 2018 (p 5 of COB-1).

[7] Despite kick starting the year with a strong performance in January 2020, the uncertainty of the COVID-19 outbreak as well as increasing travel restrictions and border controls have led to weaker air travel demand in February and March 2020.

[8] Following the Movement Control Order enforced on 18 March 2020, the Company has been forced to halt its operations and ground 96% of its fleets.

[9] As a result, the Group has reported a net loss of RM953,324,000.00 for the first quarter ended 31 March 2020. The Group's cash flow reported a net outflow of RM804,694,000.00 (p 40 of COB-1).

[10] The Group has implemented cost-containment measures such as:

(i) right-sizing of manpower;

(ii) salary cut for management, staff and directors;

(iii) negotiation of deferrals with lessors, suppliers and partners; and

(iv) restructuring of fuel hedging positions.

[11] As at April 2020, the Company has retrenched 35 foreign Captains who were employed on short-term contracts. Their last working day was on 8 April 2020.

[12] Effective from 1 April 2020, the guaranteed flying hours for junior Captains have been reduced to 5, 10 and 15 hours respectively based on their accumulated flying hours and 30 hours for first officers. This was announced in the pilot's Workpla