Corridor Conversations and Cost-Cutting: Industrial Court Slams Media Giant’s "Arbitrary" Retrenchment

In a landmark decision by the Industrial Court of Malaysia, the dismissal of long-serving News Editor Toh Seow Beng by Star Media Group Berhad has been ruled to be without just cause or excuse. The court found that the company’s justification for retrenchment—grounded in alleged redundancy—was not only unsubstantiated but stood in direct opposition to evidence of the company’s strong financial position.

A 28-Year Career Ended by "Corridor" Decisions

The claimant, a veteran journalist with 28 years of service at the company, found his position as News Editor unexpectedly terminated in December 2020. Star Media Group justified the move as part of a "headcount reduction exercise" necessitated by the COVID-19 pandemic and declining print revenue. However, as the hearing unfolded, the company's internal process for selecting the claimant for retrenchment became the focal point of the dispute. When asked how this decision was reached, a company witness admitted that it was effectively settled in an "informal setting" during a "corridor conversation," with no formal HR investigation or written reports to support the move.

Arguments on the Breadth of Redundancy

The company contended that its market share had plummeted, citing the need for aggressive restructuring. They maintained that the claimant’s role was redundant as they needed to reduce operating expenditures.

Conversely, the claimant argued that his job functions remained essential. He pointed out that his duties—including coordinating online operations, checking facts and grammar, and managing reporter assignments—were promptly absorbed by eight junior editors who were retained by the company. He further challenged the company’s decision to ignore the "Last-In, First-Out" (LIFO) principle, noting that his nearly three decades of service should have afforded him priority over his junior colleagues.

Legal Analysis: The Burden of Proof in Redundancy

The Industrial Court emphasized that while an employer has the managerial prerogative to restructure its business, it must prove that the redundancy is bona fide . The court highlighted three fatal flaws in the company's case:

1. Financial Viability: The company’s own audited financial statements showed massive cash reserves of over RM283 million at the time of the retrenchment, shattering the argument that it was in a state of financial distress justifying such drastic measures.
2. Persistent Functions: Relying on the established principle from Stephen Bong v. FCB (M) Sdn Bhd , the court found that redundancy does not exist simply by eliminating a job title if the actual job functions remain necessary and are simply offloaded to other staff. Here, the evidence confirmed the eight junior editors were still performing exactly the same tasks the claimant had done.
3. Code of Conduct Non-Compliance: The failure to consult or provide notice, as suggested by the Code of Conduct for Industrial Harmony, was viewed as a strong indicator that the retrenchment lacked good faith.

Key Observations

The court’s reasoning was anchored in several clear, scathing observations:

• "The absence of such documentation demonstrates that the Claimant's selection was not supported by any formal or objective assessment, but instead arose from informal and undocumented exchanges."
• "It is trite law that when the job functions of an employee are taken over by other employees, a redundancy situation cannot arise, thus rendering the dismissal of the Claimant without just cause and/or excuse."
• "Retrenchment is justified only where an employer can show bona fide economic necessity or operational restructuring. The existence of more than RM283 million in cash reserves at the material time negates any claim of financial hardship."

Final Decision and Remedy

The Industrial Court ruled the termination illegal and, given the claimant's nearing of retirement age, opted for a full monetary award rather than reinstatement. The court ordered the company to pay backwages, bonuses, and contractual retrenchment benefits calculated under the terms of the 2017 agreement, which the court ruled remained legally binding as the company’s unilateral attempt to alter them was procedurally flawed.

Ultimately, the company was ordered to pay a total sum of RM721,496.58 , marking a significant victory for the claimant and a reinforcement of the principle that corporations cannot use the guise of "restructuring" to arbitrarily strip long-serving staff of their livelihoods without verifiable justification.