Court of Appeal: Abuse of process for an employee to claim compensation for wrongful dismissal via the civil courts instead of the Industrial Court

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There has always been an unresolved question of whether a dismissed employee could bring a civil claim against his or her former employer, instead of or even in addition to a wrongful dismissal claim at the Industrial Court.

The courts have never previously expressly ruled out the possibility of such claims — theoretically this could be a claim for damages, breach of contract, or loss of potential earnings — and the threat of such claims have also sometimes been used by high-ranking or C-suite employees as a bargaining chip when negotiating lucrative severance packages.

More confusion arose as a result several High Court decisions, and the 2020 Court of Appeal decision in Ng Kim Fong v Menang Corporation (M) Berhad [2020] MLJU 644, where the court granted the employee damages for breach of contract in the form of payment of her contractual retirement benefits.

However, the recent Court of Appeal decision in 7-Eleven Malaysia Sdn Bhd v AH Krishnan [Civil Appeal No. W-02(IM)(NCVC)-629-04/2022] has finally provided much-needed clarity on this situation. In short, the Court of Appeal ruled that a wrongful dismissal (loss of employment) claim should be brought via the Industrial Court, and that a civil suit where the employee seeks monetary compensation via a common law action ought to be struck out as being an abuse of process of the court.

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Case Update: Dismissal of employee arrested by Malaysian Anti-Corruption Commission (MACC) deemed unfair

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Employers are frequently caught off-guard when they have to respond to a sudden development that threatens to damage their corporate image or reputation. These days, a common example would be where an incident involving an employee goes viral on social media, in a negative way.

Although social media virality does spread a lot faster than traditional media, the legal issues are not new. I have advised employer-clients many times over the years on the proper process to follow when employees are the subject of negative media coverage, including instances where employees have been arrested.

Despite the urgency and sensationalism that comes with an employer being named in media reports, employers have to be clear-headed in responding to such situations (See: “Handing employee dismissals properly under Malaysian law”), as an over-reaction can have expensive consequences.

This was illustrated in the recent Industrial Court award in Abas Tuah v Malaysia Airports Holdings Bhd (Award No. 1749 of 2022).

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Anti-Sexual Harassment Act 2022: Several sections in force from 28 March 2023

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Several sections of the Anti-Sexual Harassment Act 2022 (“the Act”) have come into force from 28 March 2023.

The Act, which was first tabled in Parliament in December 2021 (“Malaysia’s Anti-Sexual Harassment Bill tabled in Parliament”), passed by the Dewan Rakyat (House of Representatives) in July 2022 (“Malaysia passes Anti-Sexual Harassment Bill with very minor amendments, despite widespread criticism”), and gazetted as an Act in October 2022, provides a right of redress for any person who has been sexually harassed, the establishment of a Tribunal for Anti-Sexual Harassment, and to raise awareness and prevent the occurrence of sexual harassment.

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Can employers insist that employees working remotely return to the office?

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One of the biggest changes to career and workplace culture as a result of the pandemic has been remote working. While the concept of remote working and the even more extreme “digital nomad” lifestyle is not new, there is no doubt that the pandemic and resultant lockdowns greatly accelerated the adoption of remote working, particularly in the more traditional industries and professions.

We have previously featured the views of employees on how remote working has changed the way their work (“Lessons from Lockdown: How COVID-19 and remote working have changed the way we work”), and also published insights from young lawyers on the legal industry’s experience with remote working (“COVID, MCO, and the Malaysian legal industry — Part 1: Money (paycuts, revenue), remote working, and technology”).

Employers now want employees back in the office

However, in the second half of 2022, this trend reversed. Employers who in 2020-21 seemed to have been convinced of the viability of allowing employees to work remotely or flexibly began to introduce policies mandating that employees needed to be in the office for a specified number of days each week.

In many industries, employees have been reluctant to return fulltime to the office, and compliance with these new directives has been mixed — it is common for employers to report that a “three days per week in the office” policy sees employees turning up for only two days each week.

It has been in the news in the past week that Apple are threatening disciplinary action against employees who fail to come into the office three days a week. Apple are reportedly tracking employee in-office attendance and will give employees escalating warnings, which could result in termination.

Many multinational businesses are similarly seeking to enforce these new directives more strictly in the different jurisdictions they operate in, and are finding that doing so can be legally complicated.

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Case Update: Retrenchment deemed unfair due to flaws in selection process, lack of cost-cutting measures

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Retrenchments and redundancies have been a regular occurrence across the world in recent years, and Malaysia has not been exempted. In the past 6 months alone, we have seen employers across various industries implementing reductions-in-force or “right-sizing” exercises in two noticeable waves — one at the end of 2022, another one in the first quarter of 2023, and one more currently in the planning stage likely to be rolled out in April/May.

While the general legal position is that the Malaysian courts acknowledge an employer’s prerogative in organising its business in the manner it considers best, this prerogative must be exercised in good faith, and carried out with the proper process. As can be seen from the many retrenchment-related articles I have published, many employers still don’t get this right. Here are some of my previous articles on the subject:

The recent Industrial Court award in Collin Toh Mer Vin v Black & Decker Asia Pacific (Malaysia) Sdn Bhd (Award No. 578 of 2023) provides another example of potentially costly missteps when carrying out a retrenchment.

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Case Update: Employees hired under a PEO or outsourcing service provider structure have limited legal protection

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

The global PEO (professional employer organisation) industry has grown significantly in the past decade. While outsourcing or manpower service providers are certainly not new, the increasing professionalism and sophistication with which these services are provided has seen their adoption grow exponentially.

PEO arrangements are particularly ubiquitous in situations where a multinational entity does not have a local presence but wants to provide services locally, or hire a small number of local employees. This structure is also very useful for businesses operating in industries where work is project-based, and they therefore do not want the commitment of taking on permanent employees, or navigating the maze of employment law obligations.

But while PEOs offer companies convenience and flexibility, what sort of protection does it offer the individuals who are employed by the PEO or service provider? The Industrial Court award in Wan Nurfaizah Wan Md Nor v Cekap Technical Services Sdn Bhd [2022] 4 ILR 282 indicates that these employees may have very limited protection under the law.

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