AWARD

The reference of the honourable minister of human resources, Malaysia dated 20 November 2000 is regarding the dismissal of Herinderjit Singh ("the third claimant") by the company on 9 May 1998.

The third claimant is the only remaining claimant in this case after the case in respect of the first, second and fourth claimants was settled between the two parties and then withdrawn by the claimants concerned. Accordingly, their respective cases were struck off by the court videMaxis Communication Bhd v. IR Zainal Mohd Anuar & Ors which was handed down on 5 March 2004.

For the purposes of this award, the claimant in this case is to be referred to as the third claimant, which reference is in accordance with the reference used in the notes of evidence/proceedings of the case.

Brief Facts

The company was established in 1993 with the objective of providing and developing an integrated communications and internet infrastructure in Malaysia.

The third claimant commenced employment with the company as an engineer in the company's network engineering construction and operations division on 5 June 1995 (COB1 p 129 to 132).

In accordance with the company's technical career structure, the third claimant was subsequently informed by the company of his new job title as senior engineer with effect from 1 July 1997 (COB1 p 134).

During the asian financial crisis in 1997, the Malaysian economy experienced a downturn. The company's business activities were not spared. This resulted in the substantial reduction in the demand for the company's services especially in the fixed network related operations

By a letter dated 13 February 1998, the company terminated the services of the third claimant with effect from 9 March 1998 (COB1 p 135 and 136).

The third claimant was not entitled to retrenchment benefits but the company paid him an ex gratia retrenchment benefit of RM10,263. He was also paid his salary from 1 to 8 May 1998 together with accrued but unutilised annual leave.

At the time of his retrenchment, the third claimant's last drawn salary was RM3,421 per month.

Issue

The issue is whether the company had terminated the services of the third claimant with just cause or excuse when it retrenched him on the ground of redundancy arising from the company's bad financial position (see also Maycorp Malaysia Sdn Bhd v. Sim Hong Siang; [2001] 3 ILR 337 at p 339).

The Law

In William Jacks & Co (M) Sdn Bhd v. S Balasingam, [2000] 7 MLJ 1 Gopal Sri Ram JCA gave the meaning of "retrenchment" as follows:-

Retrenchment means: "the discharge of surplus labour or staff by the employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action" (per SK Das J, in Hariprasad v. Divelkar AIR [1957]121 at p 132).

His Lordship also stated:-

Whether the retrenchment exercise in a particular case is bona fide or otherwise, is a question of fact and of degree depending for its resolution upon the peculiar facts and circumstances of each case. It is well-settled that an employer is entitled to organize his business in the manner he considers best. So long as that managerial power is exercised bona fide, the decision is immune from examination even by the Industrial court. However, the Industrial court is empowered, and indeed duty-bound, to investigate the facts and circumstances of a particular case to determine whether that exercise of power was in fact bona fide.

In Harris Solid State (M) Sdn Bhd & Anor v. Bruno Gentil Pereira & Anor, [1996] 3 MLJ 489, Gopal Sri Ram JCA at p767 stated as follows:-

...An employer may re-organise his commercial undertaking for any legitimate reason, such as promoting better economic viability. But he must not do so for collateral purpose....

In East Asiatic Company (M) Bhd v. Valen Noel Yap; [1987] 1 ILR 363a, 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 f