Case Update: Federal Court decides whether punishable misconduct in employment law is distinguishable from criminal conduct

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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.

Misconduct is one of the reasons which would qualify as “just cause” for an employer to dismiss an employee.

However, it’s not straightforward to pin down an exact definition of what constitutes “misconduct”. Even in instances where actions can be broadly categorised as misconduct, there is often confusion as to whether —

  • a misconduct is serious enough to justify dismissal instead of a lighter sanction; and
  • the standards to be applied to misconduct in the context of employment law are the same as those in respect of criminal wrongdoing.

This potential for confusion was illustrated in a recent case dealing with an employee dismissal for misconduct which went from the Industrial Court (“IC”) through to the High Court (“HC”), Court of Appeal (“COA”), and was ultimately decided by the Federal Court (“FC”). The issues were fully considered in the recent grounds of judgment of the FC dated 8 January 2018 in Akira Sales & Services (M) Sdn Bhd v Nadiah Zee binti Abdullah and Another Appeal (Federal Court Civil Appeal Nos. 01-15-05/2016 and 01-16-05/2016).

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Case Update: Relevant issues when an employer uses financial difficulties as a reason for retrenchment

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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.

As explained in an earlier article (What you need to know about the law on retrenchment of employees), the basic legal position in Malaysia in relation to retrenchments is clear and settled: It is the prerogative of the management to decide on the reorganisation of it business, and the courts will not intervene unless it is shown that the employer’s decision was not in good faith.

One of the accepted reasons for a retrenchment is where the business is experiencing financial difficulties, or where a reorganisation of the workforce is deemed necessary to increase efficiency or cut costs.

What are the factors to be considered when assessing whether cost-effectiveness or financial reasons are sufficient to constitute a genuine reason for retrenching employees?

The Industrial Court considered this in Mohd Azhan Ariffin v. Ranhill Berhad (Award No. 920 of 2017). The claimant (Employee) was retrenched, and paid retrenchment benefits, on the basis that the respondent (Employer) could no longer sustain him in the business due to financial constraints.

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Case Update: Federal Court Decides on Extent of Directors’ Duties – Key Lessons for Directors

The Federal Court issued its grounds of judgment in the Tengku Dato’ Ibrahim Petra bin Tengku Indra Petra v Petra Perdana Berhad case. This is a significant decision explaining the scope of directors’ duties. It gives guidance on when a director acts in the best interest of the company and the discretion afforded to a director when the director makes a business judgment.

This case update will set out the brief background facts of the case and the legal principles that were decided by the Federal Court.  I also set out the key takeaways and points that directors should take note of. Continue reading

Case Update: Can an employee bring an unfair dismissal claim after accepting a severance payment?

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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.

Malaysian employment law is relatively pro-employee when it comes to termination of employment. Based on the fundamental principle of security of tenure, any termination by an employer must be with just cause. In practice, just cause can sometimes be difficult to establish.

To avoid having to establish just cause — and to terminate an employment relationship without being exposed to the risk of an unfair dismissal claim — many employers opt to negotiate a mutual separation with the employee.

Typically, some form of monetary compensation (and sometimes other terms as well) is negotiated between the parties, and documented in a mutual separation agreement. The agreement will usually contain a clause to the effect that the employee confirms that the separation package and terms are in full settlement of any claims the employee may have, and that the employee will not bring an unfair dismissal claim.

So what happens where a mutual separation agreement is signed, and the employer makes the agreed compensation payment, but the employee then proceeds to file an unfair dismissal claim?

The relevant legal principles were recently considered by the Industrial Court in Raul Fabrizio Casserini v. George Fischer (M) Sdn Bhd [2017] 3 ILR.

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Case Update: Winding Up Petition Cannot be Stayed Pending Reference to Arbitration

In an earlier article ‘Arbitration and Liquidation: Never the Twain Shall Meet?, I had examined the possible tension between the contractual bargain to arbitration and the statutory right to bring winding up proceedings based on a debt. Would an arbitration agreement trump the statutory winding up process?

The recent High Court decision in NFC Labuan Shipleasing I Ltd v Semua Chemical Shipping Sdn Bhd [2017] MLJU 900; [2017] 1 LNS 943 found that there cannot be a stay under the Arbitration Act 2005 (AA 2005) of a winding up petition. A winding up petition is not a claim for payment. It is a class action in the public interest as part of a statutory regime. Therefore, it was held that a winding up petition is not a ‘proceeding’ that is susceptible to a stay pending arbitration. Further, a winding up petition does not concern a matter that is subject to an arbitration agreement. Continue reading