dismissals

Retrenchments in Malaysia — some recent cases

Marcus van Geyzel1 Comment

COVID-19 has had a devastating impact on jobs around the world. Almost every country has experienced an economic downturn, and as businesses struggle to steady the ship and stay afloat, many employers have been doing their best to retain their employees where possible. It has been a very busy 2020 for employment lawyers and HR professionals.

Unfortunately, for employers in many industries, COVID-19 has negatively affected their revenues too significantly, and cutting jobs has become the only solution to keep the businesses going. This has also been the case in Malaysia, where the Movement Control Order crippled many businesses, and the government has been unable to provide meaningful assistance to employers. For example, the aid provided under the Prihatin wage subsidy program is very low and short-term compared to other countries, and comes with conditions attached that make it impractical for many employers.

As a result, there have already been many retrenchments carried out in Malaysia, with even more to come. Indicative of the times, in the past couple of months, we have suddenly seen a significant amount of traffic on an old article I published here in January 2016 — “What you need to know about the law on retrenchment of employees”.

But retrenchments can be tricky. Over the years I’ve seen many employers make mistakes that result in unfair dismissal claims, a messy and costly court process, and sometimes very big court awards to be paid to former employees. Often, these mistakes are made even by employers who have done their research on the law, and sometimes even by those who have obtained legal advice (which ultimately turned out to be incomplete or flawed).

Knowing how to properly carry out a retrenchment exercise — and knowing what practical mistakes and missteps to avoid — comes with experience. It also helps greatly to analyse how other businesses have implemented retrenchments (both properly and improperly), and so in this article I set out very brief summaries of a selection of retrenchment-related decisions by the Industrial Court in the past year.

Continue reading →

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

Marcus van Geyzel3 Comments

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.

Continue reading →

Case Update: What can an employer do upon discovering that an employee lied in a job application?

Marcus van Geyzel1 Comment

Case Updates - yellow

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 hiring process can often be tricky for employers. In the Malaysian job market, it is common for employers to receive hundreds of applications for certain vacancies. Employers then have to comb through these applications, shortlist candidates to be interviewed, and make a hiring decision based on fairly limited information.

To reduce the time spent on this process, many employers do not conduct thorough background checks on job applicants. The experience and employment history stated in the applications are often assumed to be accurate, with some allowance given for an expected reasonable degree of exaggeration.

What is the recourse for an employer who, soon after hiring an individual, realises that the employee had lied in his job application? Does this false information constitute just cause for an employment termination, or will the dismissal enable the employee to bring a successful unfair dismissal claim?

The Industrial Court considered these issues in two recent awards — Khoo Kim Loang v. Shock Media Studio Sdn Bhd (Award No. 51 of 2018) on 4 January 2018, and Khoo Kim Loang v. Kim Siah Electric Co Sdn Bhd (Award No. 137 of 2018) on 12 January 2018 — interestingly both involving the same Employee.

Continue reading →

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

Marcus van GeyzelLeave a comment

Case Updates - red

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).

Continue reading →

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

Marcus van Geyzel1 Comment

Case Updates - yellow

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.

Continue reading →

Case Update: Court of Appeal considers whether an employer can dismiss an employee for insubordination

Marcus van GeyzelLeave a comment

Case Updates (FB)

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.

Insubordination is where an employee wilfully disobeys or ignores an employer’s legitimate instructions. Malaysia’s Industrial Court has established via many previous decisions that insubordination is capable of being a serious misconduct which is sufficient to destroy the employment relationship and justify a dismissal.

However, as is the case for employee misconduct in general, not all instances of insubordination will amount to just cause for an employer to dismiss an employee. The Court of Appeal considered this issue in Ngiam Geok Mooi v. Pacific World Destination East Sdn Bhd [2016] 6 CLJ 395.

Continue reading →