IN THE INDUSTRIAL COURT OF MALAYSIA

CASE NO: 7/4-2404/19

BETWEEN

GEERT AUGUST M MAES

AND

DELAWARE CONSULTING MALAYSIA SDN. BHD.

AWARD NO: 1484 OF 2023

BEFORE : Y.A. PUAN VANITHAMANY SIVALINGAM

VENUE : Industrial Court of Malaysia, Kuala Lumpur.

DATE OF REFERENCE : 04.12.2019.

DATE OF MENTION : 14.01.2020, 02.04.2020, 04.08.2022, 22.08.2022,

DATE OF HEARING : 14.06.2022.

REPRESENTATION :

Mr. A. Sivananthan
of Malaysian Trades Union Congress (MTUC)
(Representative for the Claimant)

Mr. Nadzrul Niezar

This is a reference by the Honorable Minister of Human Resource, Malaysia to this

Industrial Court under Section 20(3) of the Industrial Relations Act 1967( “The Act”) for

an award in respect of the dispute arising out of the alleged termination of GEERT

AUGUST MAES (“The Claimant”) by his employer, DELAWARE CONSULTING

MALASYIA SDN BHD ( “The Company”).

This Court takes cognizance of the following bundles, statements, submission and

cause papers filed;

DOCUMENTS IN COURT FILES

a) Statement of Case dated 26.2.2020

b) Statement In Reply dated 17.3.2020

c) Company’s Buddle of Document (COB1)

d) Company’s Additional Buddle of Document (COB2)

e) Claimant Buddle of Document (CLB1)

f) Company’s Witness Statement of DAYAPARAN BASKARANG(COWS1)

g) Claimant Witness Statement (CLWS1)

h) Company’s Written Submission dated 14.7.2022

i) Company’s Buddle of Authorities

j) Claimant Written Submission dated 12.8.2022

k) Claimant Buddle of Authorities

l) Claimant’s Submission in Reply dated 6.2.2022

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BRIEF FACTS

THE CLAIMANT’S CASE

[1] The Claimant commenced his employment in Kuala Lumpur as Senior Manager

in the Operation Department pursuant to the contract of employment dated

01.03.2019. The duration of the contract was from 01.03.2019 to 1.3.2020 with basic

salary of RM15,000.00.

[2] Prior to the appointment, the Claimant was based in Singapore and upon the

request of the Managing Director, the Claimant was moved to Kuala Lumpur to

manage the office in Kuala Lumpur.

[3] Via letter dated 16.04.2019, approximately after more 1 month, the Company

wrote to the Human Resource Ministry that due to the economic situation and the

volatile of the Company’s business, the Company has decided to retrench the

Claimant as his role has become redundant.

[4] Therefore, via letter 03.05.2019, (after 2 months he was employed in Kuala

Lumpur), the Company gave the termination notice to the Claimant requiring him not

to perform his duties from 07.05.2019 onwards. The Claimant’s access to the

Company’s email and IT systems were revoked from 07.05.2019.

[5] The Claimant alleged that the termination of the contract on the grounds of

redundancy was done is haste and premature. The Company has failed to prove that

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his position has become redundant with efficient evidence therefore the termination

was done without just cause or excuse.

THE COMPANY’S CASE

[6] The Company averred that the contract of employment between the Claimant

and the Company was on fixed term basis. Pursuant to the Contract of Employment,

either party is entitled to terminate the Agreement pursuant to Clause 9.

[7] The Company terminated the Claimant’s employment due to redundancy. The

Company averred that their decision of terminating Claimant was within the Company’s

managerial prerogative and as done without malice and ill intention. The Company

offered 3 months salary in lieu of the notice and decided that the Claimant no longer

needed to attend to work and access to the system.

[8] The Company offered the following to the Claimant:

a) 2 months salary in lieu of the Notice;

b) 1 month salary was offered as compensation for early termination;

c) To pay the remaining rental fee for the apartment rented by the Claimant in

Kuala Lumpur.

[9] The Company had communicated its decision with the Claimant on numerous

occasions from 03.04.2019 to 07.05.2019 and the Claimant was fully aware of the

reasons for the termination.

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THE LAW

[10] The function of the Industrial Court in reference under s.20 of the Industrial

Relation Act 1967 was clearly stated by the Federal Court in the case of GOON KWEE

PHOY -v- J & P COATS (M) BHD [1981] 1 LNS 30 where His Lordship Raja Azlan

Shah CJ (as his Lordship was then) held as follow;

“Where representations are made and are referred to the Industrial

Court for inquiry, it is the duty of that Court to determine whether the

termination or dismissal is with or without just cause or excuse. If the

employer choose to give a reason for the action taken by him the duty

of the Industrial Court will be to inquire whether that excuse has or has

not been made out. If it finds as a fact that it has not been proved then

the inevitable conclusion must be that the termination or dismissal was

without just cause or excuse. The proper inquiry of the Courts is the

reason advanced by it and that Court or the High Court cannot go into

another reason not relied on by the employer or find one for it”.

[11] The Company stated in their notice dated 03.05.2019 that the Claimant was

terminated as his position has been identified to be redundant. Retrenchment is

one of several ways that a contract of employment can be ended. For a

retrenchment to take place there must be a redundancy in the Company’s business

organisation. Redundancy does not mean that the Claimant’s job function had

ceased to exist or diminished to the point that his job function no longer exist. It

may arise in a situation where the business requires fewer employees than before.

(See STEPHEN BONG -v- FCB (M) SDN BHD & ANOR [1999] 1 LNS 131).

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[12] When management decided that workmen are surplus and therefore there is a

need for retrenchment, an arbitration tribunal should not intervene unless it is shown

that the decision was capricious and without reason, or was mala fide or was actuated

by victimisation or unfair labour practise. (CYCYLE & CARRIAGE BINTANG BHD -v-

CHEAH HIAN LIM [1992] 2ILR 400). In WILLIAM JACK & Co SDN BHD -v- S.

BALASINGHAM [1997] 3 CLJ 235 the court stated as follows:

“Whether the retrenchment exercise in a particular case is bona fide, is

a question of fact and of degree depending for its resolution upon

peculiar fact and circumstance of each case. It is well settled that an

employer is entitled to organise his business in the manner he

considered best. So long as that managerial power is exercised bona

fide, the decision is immune from examination even by the Industrial

Court. However, the Industrial Court is empowered and indeed duty

bound, to investigate the fact and circumstances of a particular case to

determine whether that exercise of power was in fact bona fide”

[13] It is the trite law that the burden of proof is on the Company to prove the

redundancy. In the case of BAYER (M) SDN BHD -v- NG HONG PAU [1999] 4CLJ

155, Shaik Daud Ismail JCA held as follow:

“On redundancy it cannot be gain said that the appellant must come to

the Court with concrete proof. The burden is on the appellant to prove

actual redundancy on which the dismissal was grounded”.

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[14] The standard of proof need to be met by the Company is one of balance of

probabilities which is the civil standard. The Industrial Court as a court of equity should

be more flexible in arriving at its decision and should act according to equity, good

conscience and the substantial merits of the cases without regard to technicalities and

legal form. (See TELEKOM MALAYSIA KAWASAN UTARA -v- KRISHNAN KUTYY

SANGUNI NAIR & ANOR [2002] 3 CLJ 314 ).

THE ISSUE

[15] It is not disputed that the Company dismissed the Claimant by a letter

dated 3.5.2019 on the ground of redundancy. Therefore, the issue for the Court

to determine are:

(a) Whether there existed circumstances which justified the

termination exercise undertaken by the Company and,

(b) Whether the Company had acted bone fide in terminating the

Claimant from his position by taking into consideration the

accepted standards and procedures in law.

EVALUATION AND FINDING OF COURT

Whether there existed circumstance which justified the retrenchment exercise

undertaken by the Company.

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[16] The Company’s main argument in justifying the retrenchment of the Claimant

was redundancy. The Company was conducting an organizational restructuring for the

best interests of the Company. The Company claimed it has been suffering losses

and the only measure that the Company could take at that time was terminating the

Claimant in order to prevent from further losses.

[17] Company argued that an employer does not need to be making loss to justify a

retrenchment exercise. The Company further cited ARKITEK AKIPRIMA SDN BHD

-v- LIANG SIEW FATT & ANOR (2002) 1 MELR 46 and submitted that it is the

prerogative of the management of a Company to decide the strength of its staff which

it considered necessary for efficiency in its undertaking, and that when the

management decided the employee 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.

[18] In the case of MAMUT COPPER MINING SDN BHD -v- CHOU FOOK KONG

@ LEONARD & ORS [1997] 2 ILR 625, the Industrial Court held as follows;

“Cost control and staff re-organisation for better economy and

efficiency is in itself legitimate reason for retrenchment. There is no

pre condition that the same must be preceded by losses suffered

by the company. Indeed a careful employer would be wise to act

before failing profit and ultimately the red ink finally manifest itself

in its profit and loss accounts. The recourse then might be closure

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 of business rather than a reorganisation, a far more drastic

consequence for reasonable people to accept ” .

[19] Similarly, the Court in the case of SARAWAK SHELL BHD -v- ISMAIL

SAHAT & ORS [2002] 2 ILR 371 held that :

“That leaves the Court with the Claimant’s complaint on the

reorganisation that the company was still making a profit. This point

has long been canvassed before the Court and it is more than clear

that the mere fact that a business concern is profitable does not

disentitle a business organisation form making management

decision to reorganised its business and operation which might

result in surplus and the need to carry out a retrenchment“.

(see LIM KOK ONN -v- SHELL MALAYSIA TRADING SDN BHD

[2016] 3 ILR 413).

[20] On the facts of this case, this Court finds that the Company failed to

present cogent and convincing evidence that by terminating the Claimant, the

Company reduced its financial constraints. In fact, the Company also did not

show any documentary evidence as to how much financial savings it made by

terminating the Claimant’s employment. (see MOHD AZHAN ARIFFIN -v-

RANHILL BERHAD 2017 [3] ILR 496)

Whether the company had acted bone fide when retrenching the claimant

from his position by taking into consideration the accepted standards and

procedures

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[21] The next question is whether the retrenchment process is done in good

faith or bona fide. To answer this question, the Court need to look into few factors

whether the Company has applied the principle of LIFO or whether the Company

has sought guidance from the Code of Conduct of Industrial Harmony on the

steps to be taken before a retrenchment can be carried out a fair and bona fide

manner. Article 20 of the Code provides as follows:

“In the circumstances where redundancy is likely an employer should, in

consultation with his employees’ representatives or their trade union, as

appropriate, and in consultation with the Ministry of Labour and Manpower,

take positive steps to avert or minimise reduction of workforce by the adoption

of appropriate measures such as:

a) limitation on recruitment;

b) restriction of overtime work;

c) restriction of work on weekly day of rest;

d) reduction in the number of shifts or days worked a week;

e) reduction;

f) re-training and/or transfer to other department/work “.

[22] Although the Code of Conduct does not have the force of law, Section 30(5A)

of the Industrial Relations Act 1969 provides that is Court in making its award take

into consideration any agreement or code relating to employment practices. The

Claimant in his witness statement stated that he did not know any information about

the cost cutting measure and he did not know any of the steps taken by the Company

to mitigate any of the losses suffered by the Company.

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[23] According to the Claimant, the Company has been working with the Company

since 18.07.2018 based in Singapore. The Company invited the Claimant to work in

Kuala Lumpur approximately around end of year 2018. Thereafter, pursuant to the

Agreement dated 11.01.2019, the Claimant commenced his employment with the

Company based in Kuala Lumpur from 01.03.2019.

[24] The Company claimed that it was conducting an organizational restructuring as

a measure to save the Company. The Company in its Notice of Termination of Contract

of Employment dated 03.05.2019 has mentioned that the Company was undergoing a

rapid change for the last 6 months. The Court is perplexed on why did the Company

instructed the Claimant to move to Kuala Lumpur and decided to engage the

Claimant’s services under afresh contract when the Company was not doing well for

the past 6 months? The Claimant commenced his employment with the Company on

01.03.2019 and on 16.04.2019 the Company had notified the Ministry of Human

Resource. To this Court, this letter does not bear any weight as the Company was

possibly only informing the Ministry of its plan to reduce its workforce.

[25] First of all, the Company did not embark into exercising any sort of guidance

listed in the Code of Conduct of Industrial Harmony. The Company did not mention

anything pertaining to the Code of Conduct of Industrial Harmony.

[26] The Company submitted on the Minimum Retirement Age Act 2012 which

stipulates that the minimum retiring age for an employee will be at 60 years of age in

Malaysia. The Company submitted that the Claimant has been receiving pension from

the Belgian Government. This Court is not concerned about what benefit the

Claimant has been receiving. The fact that he has been receiving pension from Belgian

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government does not allow the Company to terminate the Claimant without just cause

or excuse. The Company employed the Claimant on 18.07.2018, knowing that the

Claimant was retired. The Claimant was asked to move to Kuala Lumpur from

Singapore in March 2019, it shows that the Claimant has been transferred from

Singapore to Kuala Lumpur. This transfer was simply dressed up as in the form of new

employment. Furthermore, the Claimant was employed in Malaysia knowing that he

has passed his retirement age. The Company will be estopped from raising the issue

of Retirement Age at this stage. Most importantly, the Claimant’s contract did not

stipulate that any age for retirement. As per the Minimum Retirement Age Act 2012,

60 years is the minimum age of retirement. Hence an employee can be engaged to be

gainfully employed beyond the age of 60 based on terms of his employment.

[27] The Company has not adduced any evidence to show that the Company was in

red, no evidence adduced to show that the Claimant’s job has become redundant. The

burden of proof is still on the Company to prove that the Claimant’s position has

become redundant. This Court observed that the Company merely alleged that there

was a redundancy to the Claimant’s position but no evidence was adduced to support

their assertion. Taking into account these facts, this Court is convinced that the

Company was merely trying to get rid of the Claimant and terminated the Claimant on

the grounds of redundancy.

[28] As such, since the Claimant’s retrenchment purportedly pursuant to the

restructuring exercise was lacking in good faith, improper and unfair for reasons which

this Court has enumerated herein above. Accordingly, the Court finds that the Claimant

was dismissed without just cause or excuse.

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REMEDY

[29] The Claimant prays for reinstatement. Considering the fact of this case, the

Court finds that reinstatement may not be an appropriate remedy since almost 4 year

have lapsed since the Claimant was terminated in 03.05.2019. Therefore the monetary

award of compensation in lieu of reinstatement would be more suitable. (See

KOPERASI SERBAGUNA SANYA BHS (SABAH) -v- DR. JAMES ALFRED

(SABAH) & ANOR [2000] 3 CLJ 758.)

[30] The Court is also mindful of the provisions of s. 30(5), s. 30(6A) and

the Second Schedule of the Industrial Relations Act 1967 in considering the

appropriate relief to be awarded to the Claimant. Having considered all the above items

and items 1 and 3 of the Second Schedule of the Act, the Court hereby orders that the

Claimant’s claim be allowed. Therefore, this Court gives the order that the Claimant

shall be paid his last drawn salary of RM15,000.00, for the remaining period of the

contract of employment which is from August 2019 until March 2020 for the remaining

8 months of the contract period.

[31] The sum of money in paragraph 31 should be amounting to Ringgit Malaysia

One Hundred Twenty Thousand (RM120,000.00) only shall be paid by the Company

to the Claimant via Malaysian Trades Union Congress (MTUC) within 30 days from the

date of this Award subject to statutory deduction that is applicable.

HANDED DOWN AND DATED THIS 05TH JULY, 2023

-signed-

( VANITHAMANY SIVALINGAM )
CHAIRMAN
INDUSTRIAL COURT OF MALAYSIA
KUALA LUMPUR

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