Back
LABOUR OFFICE MIRI
SARAWAK SHELL BHD – Appellant
Versus
ISMAIL SAHAT & ORS – Respondent
Award No. 396 Of 2002 [Case No: 8/4-234/97]
The parties with a view to expediting the disposal of the cases and the conclusion of the proceedings have asked the court to make rulings on the following preliminary issues:
i)Was there a need for the company to undertake a reorganisation exercise?; and
ii)Was the company entitled to adopt its own Selection Criteria in place of the retrenchment principle of Last In First Out (LIFO)?
Preliminary Ruling On The First Issue
The first question posed to the court for its preliminary ruling must be seen in the proper context of industrial adjudication. Where the court is asked to inquire into the exercise of management prerogatives, its function must be correctly understood. Where pursuant to such exercise, the management decides that workmen are surplus and have to be retrenched and such is alleged to be a dismissal without just cause or excuse, it is not the office of the court to step into the board-room of a business organisation and intrude into what are essentially management decisions, for eg, by holding that it was doing well enough and that there was therefore no need for the management to have made the decision to reorganise its business. The stark and bare question: "Was there a need for the company to undertake a reorganisation exercise?" is therefore not a matter for the court to decide. Its task is a more carefully circumscribed one; it is to determine whether the decision that there was a need to retrench employees on the grounds that they were surplus to the employer's needs was a genuine one made for bona fide purposes of the business of the organisation rather than one which is tainted by evidence that the decision was capricious, without reason, mala fide or that the exercise was actuated by motives of victimisation or unfair labour practice.
This context and nature of the question addressed to the court is well put by the court in East Asiatic Company (M) Bhd v. Valen Noel Yap; [1987] 1 ILR 363, where the learned chairman stated succinctly the approach in dealing with retrenchment exercises as follows:
For it is the right and privilege of every employer to reorganise his business in any manner he thinks fit for the purpose of economy or even convenience; and if by implementing a reorganising scheme for genuine reasons of better management and economy the service of some employees become excess of requirements, the employer is entitled to discharge such excess. But this right of the employer is limited by the rule that he must act bona fide and not capriciously or with motives of victimisation or unfair labour practice. Nor does this right for instance entitle an employer under the cover of reorganisation, to rid himself of employees who have offended him in some way or to promote the interests of some favoured employees to the detriment of others.
Where retrenchments are subject to the court's scrutiny, it is for the employer to establish the grounds for coming to the decision to retrench ie, that the redundancies and retrenchments were genuinely for the reasons raised by the employer. Such reasons are open to challenge by the retrenched workmen. They might question the genuineness of basis of the reasons relied upon by the employer or the very existence of the grounds raised by the employer.
It is open for the retrenched workman to show that the retrenchment was one, inter alia made without reason, arbitrarily or capriciously or that the exercise was tainted by evidence of mala fide or was actuated by motives of victimisation or in pursuit of some other collateral purposes which have little or nothing to do with the business interests of the employer such as tantamount to some unfair labour practice. While the ultimate decision to downsize for business reasons is essentially a management decision, employers are, however expected to have regard to the obligations set out in document I intituled "Areas for Co-operation and Agreed Industrial Relations Practices" annexed to the "Code of Conduct for Industrial Harm
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
