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2025 MarsdenLR 2456
INDUSTRIAL COURT PULAU PINANG
TAN KIAN CHUAN – Appellant
Versus
KHIAN3 INDUSTRIES SDN BHD – Respondent
Award No: 764 Of 2025 [Case No: 18/4-1694/23]
The absence of an employment contract and the lack of evidence proving a workman status under the Industrial Relations Act lead to the dismissal of the unfair dismissal claim.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) and s 2 - Unfair dismissal claim - Dismissal of director versus employee status - Court found that the Claimant, despite contributing to the Company, was not classified as a workman under the Act as he failed to provide sufficient evidence of an employer-employee relationship and did not dispute his earlier termination as a Managing Director. The Claimant alleged wrongful dismissal on the basis of non-re-election at an Extraordinary General Meeting, which was determined to be a procedural action and not a dismissal. The Court concluded that the Claimant's case did not meet the legal requirements for unlawful dismissal as he was merely a non-executive director at the time of alleged dismissal and had not demonstrated a true employment status. (Paras [6], [30], [56], [57])
Facts of the case:
The Claimant was involved in the establishment of the Company and served at various capacities, receiving compensation and benefits, but argued that he was wrongfully dismissed due to conflict of interest allegations tied to his role at another business. The Company refuted the employment status, asserting that his last position was as a non-executive director after being terminated from executive role due to misconduct.
Findings of Court:
Claimant was not recognized as an employee; claims of wrongful dismissal lacked merit; the Claimant's removal was part of a procedural decision by the Company at the EGM, not a dismissal as understood by the Act.
Issues: Whether the Claimant was an employee under the Industrial Relations Act and whether he was wrongfully dismissed at the EGM on 22 March 2023.
Ratio Decidendi: The court emphasized that the absence of a formal employment contract and the nature of the relationship did not warrant the Claimant the protections under the Industrial Relations Act, affirming that an executive role must substantiate a workman classification under the law.
Result: Claimant's claim dismissed.
| Table of Content |
|---|
| 1. reference and background of the dismissal case (Para 1 , 2) |
| 2. company's position on claimant's employment status (Para 3) |
| 3. claimant's arguments and financial claims (Para 4 , 5) |
| 4. preliminary argument on status as workman (Para 6 , 7 , 8) |
| 5. court's analytical approach to determine employment (Para 9 , 10 , 11 , 12) |
| 6. legal definition of 'workman' and termination rights (Para 13 , 14 , 15) |
| 7. absence of employment contract affects workman status (Para 16 , 17 , 18 , 19 , 20) |
| 8. evidence of dual roles and courts' precedent cases (Para 21 , 22 , 23) |
| 9. judge's findings on employment status based on evidence (Para 24 , 25 , 26 , 27 , 28 , 29 , 30) |
| 10. court concludes absence of employer-employee relationship (Para 31 , 32) |
| 11. clarification of alleged dismissal vs. removal (Para 33 , 34 , 35) |
| 12. legitimacy of director's removal not equating to dismissal (Para 36 , 37 , 38 , 39 , 40) |
| 13. discrepancy in claimant's status post-termination (Para 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48) |
| 14. the implication of salary payments on employment status (Para 49 , 50 , 51 , 52) |
| 15. final considerations on claimant's employment status (Para 53 , 54 , 55 , 56) |
| 16. final decision on the claimant's case (Para 57) |
Reference
[1] This is a reference made on 20 November 2023 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 TAN KIAN CHUAN (hereinafter referred to as 'the Claimant') by KHIAN3 INDUSTRIES 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 the 22 March 2023.
Brief Background Facts Of The Case
[2] The Claimant's pleaded case as contained in his Statement of Case dated 7 February 2024 is as follows:
(i) The Claimant pleaded that the Company was founded in 2017 by his efforts, together with the financial contribution of other shareholders.
(ii) The Claimant averred that he commenced employment with the Company as a Sales and Marketing Director, while another shareholder, one Ronny Lee Khee Nien, is the Account and Operations Managing Director.
(iii) The Claimant averred that although there was no employment contract between him and the Company, however, he was assigned a portfolio in the Company's Sales and Marketing department and had successfully discharged his duties.
(iv) The Claimant averred that during his employment with the Company, he had fulfilled his job scope, and the financial growth of the Company improved yearly due to his efforts and contribution.
(v) The Claimant averred that he received the following monthly salaries from the Company:
(1) From 1 September 2018 till 30 March 2020, the Claimant had been receiving the following monthly salary from the Company:
Basic Pay: RM13,000.00
Allowance: RM3,000.00
(2) From 1 April 2020 till 31 July 2020, the Claimant had been receiving the following monthly salary from the Company:
Basic Pay: RM7,800.00
Allowance: RM1,800.00
(3) From 1 August 2020 till 31 August 2020, the Claimant had been receiving the following monthly salary from the Company:
Basic Pay: RM10,400.00
Allowance: RM2,400.00
(4) From 1 September 2020 till 31 May 2022 the Claimant had been receiving the following monthly salary from the Company:
Basic Pay: RM13,000.00
Allowance: RM3,000.00
(5) From 1 June 2022 till 28 February 2023, the Claimant had been receiving the following monthly salary form the Company whereby the Claimant's last drawn basic salary by the Company calculated as of 22 March 2023 was RM,406.45 on a pro-rate basis of RM4,800.00:
Basic Pay: RM4,800.00
(vi) The Claimant added that his monthly salary was subject to EPF and SOCSO contributions.
(vii) Subsequently, the Claimant stated that on 25 March 2022, he was accused by the Company of being in conflict of interest with the Company as he was also the d
