The court upheld that dismissal due to redundancy was justified, affirming that an employer must prove financial strains and may not be obligated to consult employees prior to retrenchment.

Background

[1] This is a reference made under s 20(3) of the Industrial Relations Act 1967 arising out of the dismissal of Puan Nirmala Devi A/P N Letchumanan ("the claimant") by Informatics Training Technology Sdn Bhd ("the company") on 20 January 2006.

[2] This matter was heard on 16 September 2009 and was completed on 2 December 2009. The claimant's solicitors, Messrs Kalai & Partners were directed to file in the written submission on or before the 11 January 2010. However after numerous extensions, the claimant's counsel still failed to file in the written submission until 7 April 2010. On 7 April 2010 the court directs the company's counsel to file in their submission on or before the 11 May 2010. The company's written submission was filed and served on the claimant's counsel on 7 May 2010. However, until the 23 June 2010 the claimant's counsel still failed to file any submission in-reply. The court proceeded to hand down this award based on the pleadings, the evidence of the witnesses, and bundle of documents filed by both parties and also the company's written submission.

Introduction

[3] The claimant commenced employment with the company on 16 January 1992 as a Lecturer at the Kuala Lumpur Centre on a starting monthly salary of RM750.

[4] On 20 January 2006, the company issued a letter of retrenchment informing the claimant that as a result of the restructuring and reorganisation of the company's overall operations, her position has become redundant. The company agrees to pay the claimant a compensation sum of RM23,000.49 in two instalments as the retrenchment benefits The claimant's last drawn salary was RM2,580.

The Issues

[5] The main issue before the court is whether the claimant was dismissed for just cause or excuse. To ascertain this, it is incumbent upon this court to consider the following;

(i) Did the redundancy situation arise leading to the claimant retrenchment in this case; and

(ii) If there was a redundancy situation, was the consequential retrenchment made in compliance or in conformity with accepted standards of procedure.

The Law

[6] The law on retrenchment is now well settled. The function of the Industrial court in a reference under s 20 of the Industrial Relations Act 1967 has been clearly stated by the Federal court in the case of Goon Kwee Phoy v. J & P Coats (M) Sdn Bhd, 1981 MarsdenLR 117 where his Lordship Raja Azlan Shah, CJ (Malaya) (as he then was) stated at p 136:-

Where representations are made and are referred to the Industrial court for enquiry, it is the duty of that court to determine whether the termination or dismissal is with or without just cause or excuse. If the employer chooses to give a reason for the action taken by him the duty of the Industrial court will be to enquire whether that excuse or reason has or has not been made out. If it finds as a fact that it has not been proved, then the inevitable conclusion must be that the termination or dismissal was without just cause or excuse. The proper enquiry of the court is the reason advanced by it and that court or the High court cannot go into another reason not relied on by the employer or find one for it.

[7] Redundancy does not necessarily mean that the job or work no longer exists At p 121 of his book "Industrial Relations in Malaysia", Dunston Ayadurai had defined redundancy as follows:-

Redundancy refers to a surplus of labour and is normally the result of a reorganisation of the business of an employer, and its usual consequence is retrenchment, ie. the termination by the employer of those employees found to be surplus to his requirements after the reorganisation. Thus, there must first be redundancy or surplus of labour before there can be retrenchment or termination of the surplus

[8] The law recognises that a company has the right to organise its business in the manner it considers best. However in doing so, the company must act bona fide and not capriciously or with motives of victimisation or unfair lab