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2023 MarsdenLR 2830
INDUSTRIAL COURT KUALA LUMPUR
PUA KOK CHUAN – Appellant
Versus
MODULAR CONSTRUCTIONS TECHNOLOGY SDN BHD – Respondent
Award No: 2202 Of 2023 [Case No: 5/4-426/21]
The Court affirmed that retrenchment based on genuine business needs and financial hardship constitutes just cause for dismissal, with the burden of proof resting on the employer to demonstrate this.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Dismissal - Claimants dismissed on grounds of redundancy due to economic downturn and restructuring following the Covid-19 pandemic - The Company provided evidence of financial hardship and a bona fide rationale for retrenchment - Court held that the burden of proof lies with the Company to establish that dismissal was with just cause or excuse. (Paras 8, 10, 20, 21, 31)
(B) Burden of proof - The law stipulates that if dismissal is not disputed, the burden is on the employer to prove just cause for dismissal. (Paras 9, 10)
(C) Standard of proof - The standard required in cases of unjust dismissal is on the balance of probabilities, not beyond a reasonable doubt. (Paras 11, 12)
Facts of the case:
The Claimants were dismissed from their employment by the Company, which cited financial difficulties and restructuring due to the Covid-19 pandemic as reasons for retrenchment. The Claimants contended the dismissal was without just cause. (Paras 4, 5, 12)
Findings of Court:
The Court found that the Company had demonstrated a genuine need for the retrenchment based on financial constraints and restructuring, thereby fulfilling its burden of proof. (Paras 21, 31)
Issues: The primary issues were whether the dismissals were with just cause or excuse, and whether the Company had substantiated its claim of redundancy. (Paras 18)
Ratio Decidendi: The Court ruled that the retrenchment was conducted in good faith as a response to genuine business needs, and the burden of proof was satisfactorily met by the Company, leading to the dismissal of the Claimants' cases. (Paras 26, 31)
Result: Claimants' cases dismissed.
| Table of Content |
|---|
| 1. claims of dismissal without just cause. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. claimants argue retrenchment was in bad faith. (Para 7 , 12 , 13) |
| 3. court's duty to assess dismissal justification. (Para 8 , 9 , 10 , 11) |
| 4. court findings on redundancy and justification. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 5. legal principles regarding bona fide retrenchment. (Para 26 , 27 , 28 , 29 , 30) |
Reference
[1] These are references made under s 20(3) of the Industrial Relations Act 1967 ("Act") arising out of the dismissal of Pua Kok Chuan, AG Hamzah bin Karim, Norhana binti Azis, Ong Yen Seng, Syed Aliff Asraf bin Syed Abas, Wan Mohd Tajul Arif bin Wan Hamad, Mohd Najmuddin bin Jamal, Low Tack Huat and Syed Sairul Putra bin Syed Salim ("Claimants") by Modular Constructions Technology Sdn Bhd and Lakefront Residence Sdn Bhd ("Company") on the 7 January 2021, 17 March 2021, 30 April 2021 and 4 August 2021.
[2] The references in these cases required the Court to hear and determine the Claimants' complaint of dismissal by the Company on 17 August 2020, 18 August 2020, 19 August 2020, 24 September 2020, 29 September 2020 and 26 January 2021 respectively.
[3] This Court considered the notes of proceedings, documents and cause papers in handing down this Award namely:
(a) Statements of Case dated 13 March 2021, 18 March 2021, 20 September 2021, 28 June 2021, 14 July 2021, 16 November 2021, 3 December 2021
(b) Statements in Reply dated 2 April 2021, 19 July 2021, 16 August 2021, 28 October 2021, 3 December 2021, 14 February 2022
(c) Rejoinder dated 12 April 2021, 20 April 2021, 3 August 2021, 3 September 2021, 8 November 2021, 8 December 2021, 25 February 2022
(d) Claimants' Bundle of Documents - CLB-1P, CLB-2P, CLB-3P, CLB-1A, CLB-1N, CLB-1(O), CLB-1(L), CLB-1(L)(a), CLB-1(S)
(e) Company's Bundle of Documents -COB-1, COB-2, COB-3
(f) Claimants' Witness Statement - CLW1LS (Low Tack Huat)
(g) Company's Witness Statement - COW1S (Teh Heng Chong)
(h) Company's Witness Statement - COW2S (Muhammad Syafiq bin Abdullah)
(i) Claimants' Written Submission and Reply
(j) Company's Written Submission and Reply
Background
[4] The disputes before this Court are the claims by the Claimants that they had been dismissed from their employment without just cause or excuse by the Company on the said dates respectively.
[5] On the said respective dates, the Company issued letters of retrenchment to the Claimants informing them that they are being retrench from their employment with immediate effect due to circumstances beyond the control of the Company, the business volume has reduced in the recent past and efforts to increase the volume of business may not be successful in the immediate future due to the adverse impact of the global Covid-19 pandemic, the management has been compelled to review its manpower requirements to commensurate with its business and administration operations.
[6] The Company had given the Claimants, 2 months salary in lieu of notice.
[7] The Claimants contended that the Company's retrenchment exercise was done in bad faith and without just cause or excuse.
The Duty of the Industrial Court
[8] The Supreme Court in the case of Wong Chee Hong v. Cathay Organisation (M) Sdn Bhd ; ; [1988] 1 MLJ 92; [1988] 1 CLJ (Rep) 298 held that:
"When the Industrial Court is dealing with a reference under s 20, the first thing that the Court will have to do is to ask itself a question whether there was a dismissal, and if so, whether it was with or without just cause or excuse.".
[9] The Federal Court in the case of Goon Kwee Phoy v. J & P Coats (M) Bhd [1981] 1 MLRA 415; [1981] 2 MLJ 129 held that:
"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 re
