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2020 MarsdenLR 742
COURT OF APPEAL PUTRAJAYA
NG CHANG SENG – Appellant
Versus
TECHNIP GEOPRODUCTION (M) SDN BHD & ANOR – Respondent
[Civil Appeal No: W-02(A)-692-04-2019]
Retrenchment must follow established guidelines ensuring genuine redundancy and adherence to the Last-In First-Out principle; failure to do so renders the dismissal unlawful.
Headnote:(A) Industrial Relations Act 1967 – Section 30(5A) – Code of Conduct for Industrial Harmony 1975 – Retrenchment exercise – Claimant's retrenchment deemed mala fide and not following Last-In First-Out principle – Claimant had not been rendered redundant – The Company failed to demonstrate that retrenchment was genuine or followed necessary protocols (Paras 4, 6, 12, 19, 33).
(B)
Principles of Retrenchment – Employers need to adhere to bona fide practices during a retrenchment exercise – Evidence must substantiate claims of redundancy to maintain just cause in termination (Paras 8, 10, 64).
(C)
Issues
– Whether the retrenchment was justified under the defined principles – Importance of documenting redundancy and providing opportunities to the employee for performance improvement (Paras 33, 78).
Findings of Court:
The Industrial Court found the retrenchment of the Claimant lacked justification and proper procedures, thus ruling it as unlawful (Paras 107, 108).
Result:
Appeal allowed; the Industrial Court's award reaffirmed, and costs awarded to Claimant.
[1] This is a case where after having served the company for some 13 years an employee was chosen, very unfortunately, for retrenchment, as part of the company's worldwide policy of restructuring by downsizing as investments from clients on oil exploration had slowed down in tandem with the falling oil price then in the second half of 2015. To be fair to the company, many others in the company in Malaysia were also selected for retrenchment.
[2] However the nub of the complaint was that the procedure of Last-In FirstOut ("LIFO") had not been followed and that there was no cogent reason not to follow it. Likewise, the employee argued, retrenchment should start with the foreign contract employees first before Malaysians, all things being more or less equal. He argued that the retrenchment exercise was mala fide and that it was a cloak to conceal what in effect was the company's perception that his performance was poor or that he had a bad attitude as he had objected to an earlier proposed transfer to another project where he would be reporting to one who was previously his subordinate whose performance he had given his performance appraisal as his superior.
[3] His reference to the Industrial Court ("IC") was registered as Industrial Court Case No 3/4- 562/16. The IC heard the dispute between the parties and on 30 May 2018 handed down its Award in Award No: 1211 of 2018 [[2018] MELRU 1211].
[4] His argument found favour with the Industrial Court. It held in its Award that the termination had been without just cause or excuse as the retrenchment exercise was not done bona fide but rather a way for the company getting rid of an employee that they perceived had performed poorly without a proper right to be heard and that the whole exercise was colourable with that collateral purpose.
[5] On appeal, the High Court on a judicial review application quashed the award of the Industrial Court on 26 March 2019 on the ground that the retrenchment exercise was genuine and was part of the Company's prerogative to restrategise in the wake of the slowdown in business in the oil and gas sector in line with the deteriorating oil prices then.
[6] The High Court was satisfied that the Claimant had unreasonably rejected the offer to work at another project of the Company on account of having to report to a subordinate and that in any event the foreign and contract staff retained over the Claimant had special skills sets not possessed by the Claimant.
[7] Hence the appeal by the employee to this Court. The parties shall be referred to as the Claimant and the Company and where necessary as the appellant and respondent correspondingly.
Principles
Principles Applicable In Retrenchment
[8] It is an accepted principle of industrial jurisprudence that a company is at liberty to reorganise its workforce and more so when there is a downturn in its business. It is part of managerial prerogative to downsize or right size, to outsource or to resort to term contract for work that is uncertain.
[9] An excess of staff force could be the result of a slowdown in business or the closing down of some businesses because of off-shoring or outsourcing, or the introduction of computerisation and the use of artificial intelligence ("AI") and robotics or the investing in and leveraging of information technology ("IT") to reduce workers.
[10] In East Asiatic Company (M) Bhd And Valen Noel Yap; [1987] 1 ILR 363a, the Industrial Court noted that it is the right and privilege of every employer to reorganise his business in any manner he thinks fit for the purpose of economy or even convenience; and if by implementing a restructuring scheme for genuine reasons, there are excess employees to be discharged then the employer may proceed to do so.
[11] Again, in William Jacks & Co (M) Sdn Bhd v. S Balasingam, [2000] 7 MLJ 1 , it was stated that 'so long as that managerial power is exercised bona fide, the decision is immune from examination even by the Industrial Cou
