AWARD

The first claimant commenced employment with company as a draughtsman on 2 October 1989. At the time of his retrenchment on 7 August 1998 he was holding the position as senior fine artist and his last drawn salary was RM4,250 (after a pay cut from RM5,000).

The second claimant started working for the company on 23 February 1990. When she first started she was a general clerk. However at the time of her retrenchment on 7 August 1998, she was a project secretary attached to two architect assistants.

Both claimants claimed that their dismissals by way of retrenchment was based on unreasonable excuse, contrary to natural justice, without just cause and contrary to law. This is because the company has failed to comply with LIFO principle and the company has not acted in bona fide when deciding to retrench both of them.

The company in their statement of reply contended that the retrenchment of the claimants was justified because the company was affected by the economic downturn which the country was facing in the later part of 1997 and; that the principle of LIFO was not applicable to the claimants since they were the only employees in their respective designations.

The well settled principles relating to retrenchment are that it is the prerogative of the management of a company to decide the strength of its staff which it considers necessary for efficiency in its undertaking; and that when the management decides that employees are surplus thereby necessitating retrenchment, the Industrial Court will not interfere unless it is shown that the decision was capricious, or without reason, or was mala fide , or was actuated by victimisation or unfair labour practice. These principles in industrial law on retrenchment have been succinctly illuminated by the learned president of industrial Court Sabarudin Othman in the case of Cycle & Carriage Bintang Bhd v. Cheah Hian Lim[1992] 2 MELR 9; [1992] 2 ILR 400 at p. 403.

These principles pertaining to retrenchment have been upheld by the Court of Appeal and the High Court. This can be seen in cases of Tuan Syed Hashim Long v. Esso Production Malaysia Inc [1998] 5 MLJ Supp 535 and Kelab Sukan Pulau Pinang v. Vijayapal Singh Hira Singh[1997] 1 MELR 32, [1997] 3 MLJ 421. In Kelab Sukan Pulau Pinang 's case the Court of Appeal stated that "once the chairman found as a fact that the closing down of the restaurant by the club was done bona fide because of the losses being incurred and that the termination of Noor's (an employee) services was for an established redundancy, the award in so far as it concerned Noor (the employee) could not be impugned". In Syed Hashim 's case the learned High Court judge agreed with the learned chairman of the Industrial Court where the latter stated that "... the right to reorganise the company is the prerogative of the management to achieve maximum efficiency and effectiveness and to avoid any kind of duplicity of work in the company".

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Therefore, when a company gives notice of retrenchment to its workman and the dispute arising therefrom is referred for adjudication to a tribunal, the only questions for its decisions are

(a) whether the retrenchment was justified by the circumstances of the case,

(b) whether the grounds for the retrenchment given by employer are true, that is, whether there had in fact occurred a reduction in the business of the company due to circumstances such as scarcity of raw material on the availability of which the running of the factory depends or stoppage of wor