Informatics Computer Centre Sdn Bhd v Mahkamah Perusahaan Malaysia, 12-07-2010

• Judge: DATO’ HAJI MOHD ZAWAWI BIN SALLEH
• Judgment Date: 12 July 2010
• Appellant: INFORMATICS COMPUTER CENTRE SDN BHD
• Court: High Court (Malaysia)
• Record Number: R2(4)-25-202-2008
• Respondent: MAHKAMAH PERUSAHAAN MALAYSIA,LEONG LAI SIM

DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR

(BAHAGIAN RAYUAN DAN KUASA-KUASA KHAS)

PERMOHONAN UNTUK SEMAKAN KEHAKIMAN NO. R2(4)-25-202-2008

Dalam perkara Awad Mahkamah Perusahaan Malaysia No. 892 Tahun 2008 bertarikh 22.5.2008

Dan

Dalam perkara permohonan untuk perintah Certiorari

Dan

Dalam perkara Aturan 53 Kaedah-Kaedah Mahkamah Tinggi 1980

ANTARA

INFORMATICS COMPUTER CENTRE SDN BHD

(NO. SYARIKAT: 126857-P) … PEMOHON

DAN

1. MAHKAMAH PERUSAHAAN MALAYSIA … RESPONDEN-

2. LEONG LAI SIM RESPONDEN

(No. K/P: 660517-08-6200)

JUDGMENT

Mohd Zawawi Salleh, J:

Introduction

[1] This is an application by the Applicant for an order of certiorari to quash Award No. 892 of 2008 dated 22.5.2008 of the Industrial Court (“First Respondent”). The First Respondent found in favour of the Second Respondent and awarded monetary compensation for the Second Respondent in the sum of RM40,000.00 (less statutory deduction, if any) (“Impugned Award”).

Brief Facts

[2] The brief facts relevant to this application are as follows:

1. The Second Respondent was employed as a lecturer (Grade E1) by the Applicant effective 1.5.2003 with a salary of RM2,250.00 per month in the Applicant’s branch in Kuantan;

2. Her salary was subsequently increased to RM2,400.00 per month effective 1.2.2005. Further, she was also placed in Grade H1 in the grading system of the Applicant which is higher than her previous grade;

3. On 1.11.2006, the Second Respondent was issued a Notice of Termination dated 1.11.2006 by the then Human Resource Manager of the Applicant, one Miss Wendy Tan Siew Leng, informing the Second Respondent that her position had become redundant because the Applicant was restructuring and reorganizing its overall operations in Malaysia;

4. According to the Applicant, the Second Respondent had expressly accepted the aforesaid termination unconditionally by executing the “acceptance of termination” column in the aforesaid Notice and returning the said Notice to the aforesaid Human Resource Manager;

5. The Second Respondent then brought a claim against the Applicant at the Industrial Court.

Ground of Challenge

[3] The substance of the Applicant’s challenge is that the First Respondent had misconceived the law and/or committed an error of law when it ruled that the Second Respondent should have been given retrenchment benefits after she was terminated because:

1. the First Respondent failed to appreciate that retrenchment benefits are only payables to an employee who at time of the termination was earning RM1,500.00 or less in accordance with the Employment (“Termination and Lay off Benefits Regulation 1980);

2. the Second Respondent was earning RM2,400.00 at the time of her termination and thus that she is not eligible for such benefits; and

3. there is nothing in the contract of employment providing for such benefits.

Impugned Award

[4] In the Impugned Award, the First Respondent found as follows:

1. that the Applicant had not acted bona fide in its exercise of its legal right to organize its business in the manner it considered best;

2. the Second Respondent’s security of tenure of employment was unjustly put to an end;

3. the Second Respondent was terminated by giving two (2) months notice without any retrenchment benefits;

4. the Second Respondent sought reinstatement or in lieu of reinstatement, adequate compensation; and

5. there was a contract of employment (Letter of Contract of Service dated 16^th April 2003).

Finding of the Court

[5] It is trite that whether the retrenchment exercise in a particular case is bona fide or otherwise is a question of fact and degree depending on the peculiar circumstances of the case. It is well settled that the employer is entitled to organize his business in the manner he consider best. So long as the 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 facts and circumstances of the case to determine whether the exercise of the power is in fact bona fide. (See William Jacks & Co (M) Sdn Bhd v S. Balasingam [1997] 3 CLJ 235).

[6] In “Soonavala’s the Supreme Court in Industrial Law”, Vol. II 2^nd Edition at p. 424; the author DS Chopra states:

“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 decision are:

1. Whether the retrenchment was justified by the circumstances of the case;

2. Whether the grounds for the retrenchment given by the employer are true, that is whether a reduction in the business of the company has in fact occurred due to circumstances such as scarcity of raw material or in the availability of a commodity the running of the factory depends on, or stoppage of works under the order of the Government or changes in economy which make it impossible to continue the business except at a loss or with meager profits; and

3. Whether the order of retrenchment was motivated by bad faith and a desire to victimize or harass the workmen whom for some ulterior reasons the employer wants to discharge or dismiss”.

[7] In determining whether retrenchment is justified in a particular case, the important issue being taken into consideration by the Court is whether the retrenchment workers was fairly conducted and the retrenchment was bona fide and untainted by unfair labour practice.

[8] Although it is open to the affected workers to prove mala fide, it is for the employee to justify the retrenchment. Thus, if it is due to a reorganization exercise, the employer must prove the facts and circumstances of the exercise and the justifying reasons for it.

[9] For example, in the case of Food Specialities (M) Sdn. Bhd. v Esa Bin Haji Mohamad, Award No. 74 of 1989 in [1989] 1 ILR 502, the company was unable to justify the retrenchment because it was unable to prove that the work for which the claimant was employed had ceased or diminished. The Industrial Court reasoned as follows:

“What then is the real reason attributable to the claimant’s dismissal…? Had the company’s retrenchment for his particular kind of work ceased or was it about to cease? Had demand for his particular kind of work by then become diminished in the company’s requirements at the place of employment? The facts, as culled from the meager evidence produced in Court by both sides, appear to give a negative answer to the questions posed”.

[10] Likewise in the case of Credit Corporation (M) Bhd. v. Choo Kam Sing, Award No. 465 of 1997 in [1997] 3 ILR, the company failed to prove the work had ceased or that there was diminution in the workload. The company maintained that there was a decline of profits and an increase in staff costs. A cost-cutting exercise was implemented, including withdrawing certain benefits and retrenching some of the management staff who were regarded as “top-heavy”. The company alleged that the claimant had to be retrenched because he was unable to effectively discharge his function vis-â-vis the products of the company. The undisputed evidence, however, was that there were other managers handling the same duties as the claimant. The claimant was, however, retrenched as his job functions as regional sales manager were shared and performed by other managers. The Court found that reorganisation was not for the sole purpose of ensuring the cost efficiency of the business but more towards getting rid of senior managers who had been recruited by the previous management.

[11] On this issue, the First Respondent in the Impugned Award stated as follows:

“The Company called two witness to prove its case. The Managing Director of the Company (“COW-1”) in his examination if chief Q9, stated:

The Company’s financial performance in the year 2006 was very poor, wherein all its branches were making a loss. As a result of this management of the Company decided to re-structure and re-organise the Company’s overall operations in Malaysia by carrying out manpower realization which involved the closing down all its branches around Malaysia and centralizing its business in Kuala Lumpur.

At that time had 20 branches around Malaysia and with the restructuring and reorganizing which is being learned out in stages all its branches will be eventually closed by the year 2009. There are remaining educational courses conducted by the Company in its branch which will continue until the year 2009. As for Kuantan branch first four people were laid off at the end of 2006 because all the educational courses they were involved in ended

either before or at the end of 2006 whilst the remaining four people were laid off on 31.5.2007 as their services were still required until 31.5.2007.

COW-1 also testified that for the finances at year 2007, the Kuantan branch total revenue amounting RM185,642.57, and the total lost incurred by the Company RM257,698.29.

However, he testified that Mdm Liviawathy Gadarn who was Lecturer at Kuantan branch was terminated on 31.5.2007 but re-employed as coordinator for three month beginning 1.6.2007.

COW-2, Mdm Wendy Tan Siew Leng was the Human...