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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Fatal flaws in Malaysia’s Legal Profession (Group Law Practice) Rules 2018

Almost five years after the first draft rules to introduce the “group practice” model to Malaysian law firms, the Legal Profession (Group Law Practice) Rules 2018 (“GLP Rules”) have been gazetted, and will be coming into operation on 30 June 2018. The GLP Rules are available here.

The group practice model — which allows law firms to band together in a larger set-up and share resources while retaining the separate firm identities — has the potential to greatly benefit smaller law firms in particular.

Unfortunately, the GLP Rules that have been finalised and put forward by the Bar Council are flawed, and this will very likely result in the interest in, and benefits from, the group practice model being severely limited.

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Case Update: Is a clause in an employee handbook effective if an employee claims not to have read it?

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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.

Identifying the terms and conditions that apply to an employment relationship is often not as straightforward as reading through an employment contract.

It is the norm, particularly in large employer organisations which span multiple jurisdictions, for these terms and conditions to be set out in several documents. As a minimum, many employers would have an offer letter, the main employment contract, and an employee handbook. These are then supplemented by further individual policies, such as those in relation to personal data, BYOD, IT, benefits, discipline, workplace conduct, grievance procedures — the list is close to endless. The difficulty in determining which terms apply is further complicated when these documents (or parts of some of these documents) are amended or updated over the years.

Problems arise when an employer seeks to apply or enforce some of the terms set out in one of those documents, and the employee claims to not be aware of it — or contends that the document does not apply. The Industrial Court recently considered one such case in Ho Seng Fatt v. Strateq System Sdn Bhd (Award No. 279 of 2018).

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Case Update: Factors considered by the Industrial Court in determining the identity of the employer in a multi-jurisdictional employment relationship

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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.

In this era of the multinational corporation, it is common for employees to be carrying out most (or even all) of their work in one jurisdiction, while technically being employed by an employer entity in another jurisdiction. This could either be because the employer does not have a local entity, or because the employee was initially employed by an entity in one jurisdiction but was subsequently assigned to a post in another jurisdiction, or for a host of other commercial reasons.

We therefore see increasingly complicated employment relationships — the core employment contract being supplemented by assignments, secondments, or some other similar arrangements both formal or otherwise — which in time can lead to confusion over who the actual employer entity is, and more importantly, which jurisdiction the employer is in. Some of these arrangements can get even more convoluted with the introduction of other structures such as third party employment or payroll service providers or local host entities.

Identifying the correct employer entity becomes important when an employee seeks recourse at the Industrial Court. It is not as straightforward as determining which entity pays the employee’s salary, or owns the office the employee spends most of his time in. Once it is determined that the employer entity is in another jurisdiction, can the Industrial Court hear the matter?

The relevant factors were recently considered by the Industrial Court in two cases — Lars Kruse Thomsen v. Hot-Can Sdn Bhd (Award No. 1629 of 2017), and John Brian Chesson v. Baker Hughes (Malaysia) Sdn Bhd (Award No. 119 of 2018).

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TheMalaysianLawyer.com: 1,000,000 views (and counting…)

TML one million

On 12 October 2015, following up on an idea that came up during a chat between lawyers (and soon-to-be TML co-founders) Lee Shih and Marcus van Geyzel over a midweek duck noodle lunch in Midvalley a few days earlier, the first post was published on TheMalaysianLawyer.com.

What started off as a fun side project with the intention of featuring practical, high-quality, and relevant legal content, has taken on a life of its own. TML has opened many doors for us as its co-founders, and earlier this week we hit another milestone — 1,000,000 views.

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