Case Update: Insufficient justification and improper handling of Voluntary Separation Scheme may give rise to unfair dismissal

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 are an ever-present issue in the Malaysian industrial relations landscape. The Malaysian Employers Federation has forecast that 30,000 employees will be laid-off this year. The proper handling of retrenchments is a constant challenge for employers, and disputes often arise. The Ministry of Human Resources recently announced that terminations due to retrenchment were the most common reason for unfair dismissal cases received by the Industrial Relations Department over the past 10 years, accounting for 30% of all cases.

Many employers make the mistake of assuming that implementing a retrenchment exercise is a straightforward way of getting rid of unwanted employees, or downsizing the workforce to cut costs. I’ve written about some of the legal issues related to retrenchment in two earlier articles:

  1. In “What you need to know about the law on retrenchment of employees”, I summarised the key Malaysian legal principles in relation to retrenchments. Essentially, it is the prerogative of the management to decide on the reorganisation of its business, and the courts will not intervene unless it is shown that the employer’s decision was not in good faith.
  2. In an earlier article in this Case Update series — “Case Update: Relevant issues when an employer uses financial difficulties as a reason for retrenchment” — I wrote about a case where the Industrial Court held that an employer relying on financial difficulties to justify retrenchment had to prove it was experiencing financial difficulties, and to show the financial savings it made through the retrenchment.

In the recent case of Suseela Devi Balakrishnan v. Inti International College Kuala Lumpur Sdn Bhd (Award No. 343 of 2019), the Industrial Court considered a scenario where the employment relationship ended based on a voluntary separation scheme (“VSS”) arising from a redundancy scenario, and the employee subsequently claimed that she was dismissed without just cause and excuse.

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Case Update: One Day Late, Adjudication Decision Void

The recent High Court decision Skyworld Development Sdn Bhd v Zalam Corporation Sdn Bhd (see the grounds of judgment dated 8 February 2019) stresses the critical importance of the statutory timelines under the Construction Industry Payment and Adjudication Act 2012 (CIPAA). This is more so when the adjudication papers can be served electronically.

In this case, the Adjudicator had issued his Adjudication Decision one day out of time and this rendered the decision void.

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Case Update: Court of Appeal on Staying the Dismissal of Judicial Management Application

The Court of Appeal in the Wellcom Communications case has decided on certain significant issues relating to a judicial management application (see the grounds of judgment dated 13 February 2019). This is Malaysia’s first appellate decision relating to judicial management.

In summary, upon the filing of a judicial management application, an automatic moratorium applies. This will stay all legal proceedings from continuing or from being commenced against the applicant company. The Court of Appeal has held that once the judicial management application is dismissed, there cannot be a grant of any stay order to stay the dismissal of the application in order to revive the moratorium effect. Continue reading

Case Update: Court of Appeal Clarifies Leave for Bankruptcy against Guarantors under the Insolvency Act 1967

The Court of Appeal decision in Hong Leong Bank Berhad v Ong Moon Huat [2018] 1 LNS 1612 has clarified two important points under the new Insolvency Act 1967 on bankruptcy actions against guarantors.

The first issue is to clarify the protection for guarantors where all modes of execution and enforcement must be first exhausted against the principal debtor alone. The second issue is that when seeking leave to proceed against the guarantor, the judgment creditor can apply for leave to proceed either upon the issuance of the bankruptcy notice or even prior to that, up to and immediately prior to the filing of a creditor’s petition. Continue reading

Case Update: Federal Court Rules on Scope of An International Arbitration under Malaysia’s Arbitration Act 2005

In its recent grounds of judgment dated 31 October 2018, the Federal Court in the Jan De Nul decision clarified the effect of an international arbitration and the applicability of certain provisions of the Arbitration Act 2005 (AA 2005). The Federal Court also overruled the decision in the Court of Appeal AJWA case. The dispute gave rise to two separate appeals, one in relation to section 42 of the AA 2005 and another relating to the setting aside under section 37 of the AA 2005. This decision only deals with the section 42 aspect.

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