Back
2025 MarsdenLR 5623
INDUSTRIAL COURT MALAYSIA
Yap Lee Har – Appellant
Versus
KNM Exotic Equipment Sdn Bhd – Respondent
11/4-891/22
An employment relationship is a fundamental prerequisite for a claim of unfair dismissal. If a claimant cannot establish that they were an employee of the respondent entity, the claim for dismissal must fail as the respondent cannot be held liable for an employment contract that does not exist.
Headnote:(A) Industrial Relations Act 1967 - Section 20(3) - Claim for unfair dismissal - Burden and standard of proof - In a claim for unfair dismissal, the burden of proof rests on the employer to show that the dismissal was with just cause or excuse, based on the balance of probabilities. (Paras 10, 11, 12)
(B) Contract of employment - Nature of secondment - Identification of employer - An employment relationship is a mandatory prerequisite for a claim of unfair dismissal. Secondment arrangements do not automatically terminate the original contract of employment. (Paras 20, 25)
Facts of the case:
An individual sought relief for alleged unfair dismissal. The claimant asserted they were an employee of the respondent company due to a history of transfers and internal secondments over several years. The respondent company argued that the claimant was an employee of a separate external group, acting only on secondment, and that no direct contract of employment existed with the respondent.
Findings of Court:
The court determined that historical documentation, including initial appointment letters and subsequent transfer records, indicated the claimant remained an employee of an external entity. Payments for the claimant were back-charged to the external entity, and there was no evidence of a new employment contract with the respondent. Claims of direct employment were inconsistent with the documentary evidence.
Issues: The main issues were determining whether the claimant was an employee of the respondent company and whether the termination of the secondment arrangement constituted an unfair dismissal under the law.
Ratio Decidendi: The court ruled that an established employment relationship is a fundamental requirement for maintaining a claim of unfair dismissal. Because the evidence conclusively showed the claimant was an external employee on secondment rather than an employee of the respondent entity, the claimant failed to satisfy the burden of proof regarding the existence of the employment relationship.
Result: Claims dismissed.
| Table of Content |
|---|
| 1. factual background and procedural context of the industrial dismissal dispute. (Para 1 , 2 , 3 , 4 , 5) |
| 2. conflicting contentions regarding employment identity and validity of termination. (Para 6 , 7 , 8 , 9) |
| 3. establishing burden of proof and civil standard in dismissal proceedings. (Para 10 , 11 , 12 , 13) |
| 4. evaluation of evidence proving continuous employment with external entity. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22) |
| 5. determination that no primary employer-employee relationship existed with company. (Para 23 , 24) |
| 6. final ruling dismissing the claimant's case due to unproven employment. (Para 25) |
REFERENCE:
[ 1 ] This is a reference from the Director General for Industrial Relations to the Industrial Court of Malaysia under subsection 20(3) of the Industrial Relations Act 1967 [Act 177] in respect of the dismissal of YAP LEE HAR (“the Claimant”) by KNM EXOTIC EQUIPMENT SDN. BHD. (“the Company”) on 7th September 2021.
AWARD
[ 2 ] In view of the Restraining Order relating to the KNM Group of Companies the hearing for this case was only able to proceed on 26th April 2024. The hearing then continued on 4th June 2024 and concluded on 30th July 2024.
[ 3 ] The Company called two (2) witnesses i.e. Lai Yoke Ching (“COW-1”) and Ma Lourdes Francisco (“COW-2”). Whilst the Claimant gave evidence on her own behalf.
[ 4 ] In handing down this Award the following were considered by this Court:
(a) the record of proceedings;
(b) the notes of proceedings;
(c) Statement of Case dated 15th June 2022;
(d) Statement in Reply dated 5th August 2022;
(e) Rejoinder dated 16th August 2022;
(f) the Witness Statements of –
(i) the Claimant (“CLWS1”);
(ii) COW-1 (“COWS1”); and
(iii) COW-2 (“COWS2”);
(g) the Claimant’s Bundles of Documents marked as CLB;
(h) the Company’s Bundles of Documents marked as COB1 and COB2;
(i) the Claimant’s Written Submissions dated 7th October 2024;
(j) the Company’s Written Submissions dated 7th October 2024;
(k) the Claimant’s Written Submissions in Reply dated 11th November 2024; and
(l) the Company’s Written Submissions in Reply dated 11th November 2024.
Background Facts
[ 5 ] Based on the pleadings and bundles of documents, this Court takes note of the following –
(a) the Claimant commenced employment with a company known as Inter Merger Project Management Sdn Bhd on 16th May 1997 as an Account Assistant drawing a monthly basic salary of RM1,300.00. It is further noted Inter Merger Project Management Sdn Bhd is a member of the Inter Merger Group;
(b) throughout her employment, the Claimant had been transferred to subsidiaries of Inter Merger Project Management Sdn Bhd as well as companies which form part of the Inter Merger Group (which included IM Bina Sdn Bhd);
(c) prior to her termination of employment, the Claimant was working with the Company (i.e. KNM Exotic Equipment Sdn Bhd) which is part of the KNM Group Bhd and was holding the position as a Finance Executive and drawing a monthly basic salary of RM8,128.00;
(d) on 13th August 2021, the Company issued a letter to the Claimant stating and/or suggesting that the Claimant's appointment in the Company was a secondment from IM Bina Sdn Bhd. Following a recent change in the KNM Group Bhd Organization Structure the Company proposed that the Claimant put in her resignation letter as a staff of IM Bina Sdn Bhd and
then re-apply to the Company, but for the position as Budget Cost Control Executive with a salary of RM1,000.00 below her last drawn salary; and
(e) vide email dated 7th September 2021, the Claimant replied by stating her refusal to do so and considered the Company’s action as terminating her services without notice.
The Claimant’s Case and Submissions
[ 6 ] Based on the Claimant’s Pleadings, the Claimant’s Written Submissions and the Claimant’s Written Submissions in Reply, the Claimant avers she was unfairly dismissed by the Company. In relation thereto, the Claimant avers as follows –
(a) the Claimant was
