Hashim Yeop A Sani SCJ

(delivering the Judgment of the Court): The facts are not disputed. By an agreement dated April 27, 1981 the appellant, Palmco Holdings Bhd., bought and took over the business of operating the hotel known as the Casuarina Beach Hotel at Batu Ferringhi, Penang from the Casuarina Beach Hotel Sdn. Bhd., a subsidiary of M/s Lau Geok Swee Sdn. Bhd. It was agreed, inter alia, under the said agreement that Palmco Holdings Bhd. would offer employment to all existing employees in the undertaking. However, there was also an oral understanding between the parties (not disputed by the appellant) that Palmco Holdings Bhd. would not offer employment to those employees who were relatives of the Lau Geok Swee family and those employees who were past the retirement age and also those who were not regular employees. Apparently because of the oral agreement the appellant did not offer employment to the five persons whose names are set out in paragraph 3 of the affidavit dated July 21, 1983 — page 7 of appeal record. They then claimed for termination benefits.

The hearing of the claims for termination benefits by the said five persons scheduled for hearing on April 25, 1983 was postponed to enable the appellant to challenge the vires of the Employment (Termination and Lay-Off Benefits) Regulations 1980 under which the claims were made.

In the High Court, Penang the declarations sought by the appellant may be summarised as follows. It was said that the 1980 Regulations are ultra vires the Employment Act 1955 in that the Minister of Labour and Manpower purported to make the regulations under section 102 of the Employment Act 1955 which does not empower the making of regulations on the subject of payment of termination and lay-off benefits. Alternatively a declaration was sought that regulation 8(2) of the said 1980 Regulations is invalid as it was made in excess of the rule-making power of the Minister in that the said regulation seeks to impose liability on persons other than employers and therefore contravenes section 60J(1) of the Act which only enables the Minister to make regulation for the payment of termination, lay-off and retirement benefits by employers.

During the hearing before the learned Judge it was conceded that the said regulation was made by the Minister of Labour under section 60J(1) and not under section 102 of the Employment Act 1955.

Section 60J(1) reads as follows:

"The Minister may, by regulations made under this Act, provide for the entitlement of employee to, and for the payment by employer of —

(a)termination benefits;

(b) lay-off benefits;

(c) retirement benefits."

As the learned Judge correctly summarised, regulation 8(1) of the 1980 Regulations provides that a contract of service of an employee shall be deemed to have been terminated unless (a) within 7 days of the change of ownership the new owner offers to renew the contract of service of the employee or to continue to employ the employee under the terms and conditions of employment which are not less favourable than those under the outgoing owner; and (b) the employee accepts such offer.

Regulation 8(2) reads as follows:

"If the person by whom the business is to be taken over immediately after the change occurs does not offer to continue to employ the employee in accordance with paragraph (1), the contract of service of the employee shall be deemed to have been terminated, and consequently, the person by whom the employee was employed immediately before the change in ownership occurs and the person by whom the business is taken over immediately after the change occurs shall be jointly and severally liable for the payment of all termination benefits payable under these Regulations." (Emphasis supplied.)

The crucial words for our purpose are "the person by whom the business is taken over immediately after the change occurs". Is such person an employer within the meaning of section 60J(1)?

The powers of the courts on the question of determining t