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2025 MarsdenLR 4379
INDUSTRIAL COURT KUALA LUMPUR
CHOO KIT ONN – Appellant
Versus
LAKEFRONT RESIDENCE SDN BHD – Respondent
Award No: 807 of 2025 [Case No: 19/4-1791/21]
An employer has the managerial right to retrench employees for genuine redundancy due to operational changes, provided the process is bona fide and not motivated by bad faith.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) and Section 30(5) - Dismissal of employee due to redundancy following closure of construction operations for economic reasons, including losses and pandemic impact - The Court found the retrenchment exercise valid and conducted in good faith. (Paras 1, 30, 84, 85)
(B) Right to reorganize - Employers have the managerial prerogative to restructure operations; retrenchment from genuine redundancy must not be in bad faith or motivated by ulterior motive. (Paras 24, 31, 35)
Facts of the case:
The Claimant was retrenched as part of a broader redundancy exercise involving 179 employees due to the closure of the construction operations of the Group, a decision driven by financial losses and market downturn due to COVID-19. The closure was deemed necessary for business viability. (Paras 2, 19, 84)
Findings of Court:
The Company substantively proved that the retrenchment was a bona fide exercise rooted in necessity, confirming that all staff roles in construction were rendered redundant due to operational shutdown. (Paras 82, 84)
Issues: The critical questions include the genuine necessity for reorganization, whether the retrenchment was executed with just cause, and if the process adhered to proper industrial practices. (Paras 30, 31)
Ratio Decidendi: The Court affirmed that an employer is entitled to reorganize its business for legitimate economic reasons, given the decision was not motivated by bad faith, and found that retrenchment was justified based on financial necessity and operational changes. (Paras 24, 84)
Result: The Claimant's termination was upheld as lawful and justified; claims dismissed.
| Table of Content |
|---|
| 1. ministry involvement in retrenchment cases. (Para 1 , 2) |
| 2. claims regarding redundancy and restructuring. (Para 10 , 11 , 12 , 15 , 16) |
| 3. actions and justifications for retrenchment. (Para 22 , 30 , 39 , 40) |
| 4. principles of managerial prerogative. (Para 23 , 24 , 25) |
| 5. the need for lawful and bona fide retrenchment. (Para 31 , 33 , 35) |
| 6. verdict on the lawfulness of the retrenchment. (Para 84 , 85) |
Reference
[1] This is a Ministerial Reference dated 30 April 2021 under s 20(3) of the Industrial Relations Act 1967 ("the Act") arising out of the dismissal of Choo Kit Onn (hereinafter referred to as "the Claimant") by Lakefront Residence Sdn Bhd (hereinafter referred to as "the Company") with effect from 24 September 2020 for a decision and an Award to be handed down.
Introduction
[2] The dispute before this Honourable Court is in relation to the Claimant's retrenchment by the Company;
a) the Company is part of the MCT Group of Companies;
b) the Claimant is one of 179 employees who were retrenched following the Group's decision to close its construction operations;
c) the Group's decision to close its construction operations is due to commercial reasons for better economic viability. The Group was suffering losses from its construction operations. These losses coupled with the forecasted downturn in business due to the COVID-19 pandemic, led to the decision to close the construction operations;
d) the Claimant's role related to the construction operations of the Group. Following the closure of the construction operations, all job functions in the construction operations, including the Claimant's job functions, became redundant; and
e) this redundancy led to his retrenchment.
[3] Trial proceeded and concluded on 21 October 2024. The notes of proceedings are found in the Notes of Proceedings (NOP).
[4] The Company filed and referred to three Bundles of Documents at trial, marked as follows:
(a) Company's Bundle of Documents (1) — 'COB-1';
(b) Company's Bundle of Documents (2) — 'COB-2'; and
(c) Company's Bundle of Documents (3) — 'COB-3'.
[5] The Claimant filed one Bundle of Documents — 'CLB-1'.
[6] At trial, two witnesses testified for the Company.
[7] The first witness was Apollo Bello Tanco, the CEO of MCT Berhad and its Group of companies ('Mr Apollo').
a) As CEO, Mr Apollo is the Head of all companies under the MCT Berhad Group. He testified with regards to the decision to close the Group's construction operations and explained the rationale for this decision; and
b) his witness statement is marked as 'COWS-1'.
[8] The second witness was Muhammad Syafiq Soh Abdullah, the former Director of Human Capital and Administration of MCT Berhad ('En Syafiq').
a) En Syafiq was the Head of HR for all companies under the MCT Berhad Group from 15 April 2019 until 14 October 2023. He testified with regards implementation of the retrenchment exercise and the employees who were retrenched; and
b) his witness statement is marked as 'COWS-2'.
[9] The Claimant was the sole witness on his side. His witness statement is marked as 'CLWS-1'.
Salient Facts
The Company's Case
[10] The primary business of the MCT Berhad Group was property development and construction.
[11] However, the Group has since closed its construction operations and is exclusively in the business of property development. The decision was to reorganise the business/operations of the Group.
[12] The decision to close the construction business, as well as the rationale for the said decision, was explained by Mr Apollo. Mr Apollo was cross-examined on this issue and remained steadfast, consistent and clear in his testimony. Mr Apollo's testimony is as follows. [As at Q3 - Q12 COW-106-29 Notes of Proceedings (NOP)]
[13] In mid-2020, MCT Berhad decided to restructure and reorganise the Group's business model and operational structure. The Group changed its business model and operations from 'property development and construction' to solely 'property development'.
a) Fol
