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2025 MarsdenLR 4153
INDUSTRIAL COURT PENANG
CHANG CHUEN HWA – Appellant
Versus
SOUTH ISLAND PLASTIC SDN BHD – Respondent
Award No: 108 of 2025 [Case No: 18/4-710/22]
In employment law, a director can also be classified as a workman if evidence shows an employer-employee relationship, regardless of formal titles and the absence of a written contract.
Headnote:(A) Industrial Relations Act 1967 - Section 2 - Dismissal from employment - Court examined whether claimant qualifies as a 'workman' under the Act. Claimant alleged unfair dismissal due to family disputes within company ownership. Court considered employment evidence and statutory contributions. (Paras 1-2, 8-9, 10-12, 51-61)
(B) Claimant's Employment Status - Employment not determined by formal appointment letter; nature of control exercised by company assessed. Court referenced the principle that directors can also be employees under contractual arrangements. (Paras 10-15, 22-24)
(C) Burden of Proof - Company must prove dismissal was with just cause; court emphasized lack of evidence of poor performance by claimant. (Paras 52-60)
Facts of the case:
Claimant was Managing Director, dismissed following internal family disputes over company shares. Claim asserted wrongful dismissal due to refusal to accept new contract. (Paras 2-2)
Findings of Court:
Court found claimant is a workman eligible for protection under the Act, concluding dismissal lacked just cause. (Paras 50-60)
Issues: Whether claimant was a 'workman' under the Industrial Relations Act; whether dismissal was justifiable. (Paras 54-56)
Ratio Decidendi: Claimant deemed a workman despite lack of formal contract; dismissal ruled without just cause due to inadequate evidence presented by the company. (Paras 61-61)
Result: Claimant awarded backwages of RM552,000.00 for wrongful dismissal.
| Table of Content |
|---|
| 1. court's jurisdiction based on director-general's reference. (Para 1 , 2) |
| 2. background facts of the claimant and company's positions. (Para 3) |
| 3. disputed employment status of claimant. (Para 4 , 5) |
| 4. nature of employment relationships and definitions under the act. (Para 6 , 10 , 12) |
| 5. court's reasoning on implied contracts and employee status. (Para 8 , 14 , 41) |
| 6. separation of roles as employee and director. (Para 24 , 25) |
| 7. final order regarding compensation for unfair dismissal. (Para 62 , 64) |
Reference
[1] This is a reference made on 21 March 2022 by the Director-General of Industrial Relations Department to the Industrial Court of Malaysia under s 20(3) of the Industrial Relations Act 1967 ('the Act') arising out of the dismissal of Chang Chuen Hwa (hereinafter referred to as 'the Claimant') by South Island Plastics Sdn Bhd (hereinafter referred to as 'the Company'). The Director-General's reference in this case before the Court requires the Court to hear and determine the Claimant's complaint of dismissal by the Company on 10 May 2021.
Brief Background Facts Of The Case
[2] The Claimant's pleaded case as contained in his Statement of Case dated 30 May 2022 is as follows:
a. The Claimant pleaded that the Company was founded by the late Dato' Tan Su Chin and his son, Tan Sri Dato' Seri Tan Kok Ping on 2 September 1982 and commenced operations on 20 June 1983.
b. The Claimant was thereafter appointed to the Company's Board of Directors on 21 February 1983.
c. The Claimant averred that he joined the Company on 1 July 1983 as a working director (employee no 10002) with a starting salary of RM1,000.00 and reported to one Tan Kok Aun the Managing Director of the Company at the material time.
d. The Claimant resigned from the Board of Directors of the Company as its shares were acquired substantially by Berjaya Group Berhad. However, the Claimant was re-appointed as the General Manager of the Company and reported to Mr Tan Kok Aun.
e. Thereafter, the Claimant stated that Berjaya Group Berhad relinquished their shares in the Company and the Claimant was re-appointed to the Board of Directors on 28 March 1995 and subsequently promoted to Executive Director of the Company.
f. The Claimant averred that one Tan Poay Seng was appointed as director of the Company and to the Board of Directors on 30 May 1997. Mr Tan Poay Seng is the son of Tan Sri' Tan Kok Ping and the grandson of Dato' Tan Su Chin.
g. On 17 February 2020 according to the Claimant, the Company was acquired by a public company known as Magni-Tech Industries Berhad.
h. In the same year, the Claimant was promoted to Managing Director (MD) of the Company since the Company was now a wholly owned subsidiary of Magni-Tech Industries Berhad.
i. The Claimant averred that he was required to report to Mr Tan Poay Seng, who is the Group Managing Director of Magni-Tech Industries Berhad as well as the Company's Board of Directors.
j. At the material time, the Claimant pleaded that he was paid a salary with statutory deductions like Employees Provident Fund (EPF) contributions from the time of his tenure as a working director on 1 July 1983 to the date of his dismissal on 10 May 2021.
k. The Claimant averred that a family dispute arose upon the demise of Dato' Tan Su Chin on 9 February 2019, between Tan Sri Tan Kok Ping's family and his siblings, Tan Kok Pooh and the Claimant's wife, Tan Kok Hooi in respect of the estate of the late Dato' Tan Su Chin in Hong Kong and Australia.
l. As a result of the dispute, Mr Tan Poay Seng handed a Letter of Service on Contract Basis dated 28 December 2020 to the Claimant, where the Claimant claimed that the Company intended to convert the Claimant's status of employment from a permanent employee to a fixed-term employee.
m. The Claimant averred that he rejected the said offer via letter dated 29 January 2021 on the ground that he was a permanent employee of the Company who had served the Company for 37 years.
n. On 14 April 2
