industrial court malaysia - Malaysian Legal and Tax Information Centre

INDUSTRIAL COURT MALAYSIA
CASE NO: 24/4-906/10
BETWEEN
ENCIK THOMAS JUERGEN SCHNITKER
AND
DIGI TELECOMMUNICATIONS SDN. BHD.
AWARD NO: 396 OF 2012
BEFORE : Y.A. PUAN YAMUNA MENON
CHAIRMAN - ( Sitting Alone )
VENUE : Industrial Court, Kuala Lumpur
DATE OF REFERENCE : 26.07.2010.
DATES OF MENTION : 15.10.2010, 16.11.2010, 10.01.2011,
21.02.2011, 14.03.2011, 04.04.2011,
05.05.2011, 09.09.2011, 09.12.2011,
10.01.2012.
DATES OF HEARING : 20.05.2011, 25.05.2011, 09.06.2011,
10.06.2011.
DATE OF LAST SUBMISSIONS : Company's Further Submissions in
Reply 10.1.2012.
REPRESENTATION : Mr Trevor George, Counsel for
Messrs. Yong Weng Foong
representing the Claimant.
Mr R. Harikannan, Counsel for
Messrs. Jayadeep Hari & Jamil
representing the Company.
1

REFERENCE:
This is a reference made under Section 20(3) of the Industrial Relations Act,
1967 pertaining to the dismissal of Encik Thomas Juergen Schnitker (the
Claimant) by DIGI Telecommunications Sdn. Bhd (the Respondent).
AWARD
This is a reference made under Section 20(3) of the Industrial Relations Act,
1967 pertaining to the dismissal of Mr Thomas Juergen Schnitker (the Claimant)
by DIGI Telecommunications Sdn. Bhd (the Respondent or “the Company”).
The Claimant's Last Drawn Salary was RM102,850.00 (See page 33 of
Company's Bundle of Documents, COB1).
The Issues
The Issues in this case are as follows:
First Issue: Whether the dismissal was with just cause and excuse.
Second Issue: Whether the Claimant's contract of employment was a fixed term
contract.
Third Issue: If the dismissal was without just cause and excuse, whether the
Claimant should be reinstated.
Fourth Issue: What would be the quantum in terms of backwages.
2

The Pleadings
The Pleadings in this case comprised the following:
a) Statement of Case dated 15.11.2010 (“SOC”);
b) Statement in Reply dated 12.2.2011 (“SIR”);
c) Rejoinder dated 14.3.2011 (“Rejoinder”).
The Documents
The Documents pertaining to this case were as follows:
a) Claimant's Bundle of Documents-1 marked as “CLB-1”;
b) Company's Bundle of Documents marked as “COB-1”;
c) Company's Supplementary Bundle of Documents marked as “COB-2”.
The Witnesses
The Witnesses were:
1. The Company's sole witness Mr. Chan Nam Kiong (COW1, Witness
Statement dated 25.5.2011 marked as “COW-S1”);
2. The Claimant was sole witness in his case (CLW1, Witness Statement
dated 25.5.2011 marked as “CLW-S1”).
Claimant's Case
The Contract of Employment
The Claimant was appointed as the Chief Commercial/Marketing Officer
(CCO/CMO) of the Company by virtue of the Letter of Offer of Employment dated
3

4.4.2008 (page 20-25, Exhibit 3 attached to SOC, see also COB1 p1-6). He
commenced employment on 1.5.2008.
The material express terms of employment are as expressed in the Offer of
Employment which the Claimant signed and accepted on 7.4.2008. This
document stipulates his basic monthly salary and contractual benefits as follows:-
a) Performance bonus;
b) Special Incentive;
c) Housing;
d) Company Car;
e) Children Education Expenses;
f) Home Leave;
g) Club Membership;
h) Relocation Expenses;
i) Australian Medical Benefits for Wife; and
j) Employee Provident Fund (EPF).
Claimant's Task
It was submitted on behalf of the Claimant that he was given the mission, as
one of the four (4) top Management Officers/Chiefs “to bring change to the
Company owing to the insufficiencies it faced at the material time” (para 7 SOC
and para 5 SIR, see also COB p7-8, ”Main objectives and responsibilities of the
Claimant”, and Q & A 4 - 7, CLWS1).
The mission entrusted to him by the Ex-Chief Executive Officer of the Company
(“the Ex-CEO”) Johan Dennelind, is reflected in the Memo dated 16.4.2008 from
4

Bjorn Magnus Kopperud to him (page 26, documents attached to the SOC) and
the Ex-CEO's Write-Up of his expectations (pages 27-29, documents attached to
the SOC).
The Claimant pointed out that throughout his tenure with the Company, he had
achieved milestones for the Company (see paragraph 8, SOC and also
Claimant's testimony Q&A 13, CLW-S1). In other words the Claimant's position
was that he had contributed much to the Company and there certainly were no
performance issues as claimed by the Company in the termination letter.
The Termination
The Claimant was handed a Letter of Termination of Contract dated 9.7.2009
terminating his contract with immediate effect (pages 18-19, Exhibit 2, SOC, see
also COB1 p31-32).
The letter reads as follows:
“Dear Tom,
Termination of Contract
Reference is made to the above matter. We wish to advise that we hereby
exercise our right under the terms of your contract to terminate your services for
cause. Accordingly we hereby pay you 3 months salary in lieu of 3 months
notice.
We wish to advise that we have made this decision after consulting with you and
after making reasonable efforts to establish a viable alternative course of action.
However it is evident that these efforts which have been undertaken in good faith
have proven to be abortive.
5

Our decision to terminate your contract is premised on the following:-
1. We have examined your performance in the position of Chief Commercial
Officer and measured the same against the job size and deliverables. It is
evident to us that either your performance does not meet the expectations
of the Company in terms of the market position we seek or there is a need
for us to review the viability of the said position and to approach the
marketing requirements and solutions differently. The details of this have
been discussed previously and/or are a matter of record.
2. We have taken the above into account during the general review of the
organizational structure. In line with the above we have decided to devolve
the commercial and marketing functions. It is our view that these steps are
necessary in order to provide a more effective marketing and commercial
solution. It is clear to us that the current arrangements do not adequately
meet the Company's requirements in a market environment that is only
expected to become more and more challenging in the foreseeable future.
3. As a result of this review we have decided to abolish the position of Chief
Commercial Officer in its present form.
4. We had attempted to explore alternative positions with you and this had
been communicated previously with. It is evident that these have been
rejected. We deny the suggestion that this was put to you out of the blue
and we are unable to agree with your characterization of your performance
which does not represent the true position. It is our position that you have
been duly appraised of the unfolding events that have culminated in the
above decision.
6

We wish you well in your further undertakings. Kindly liaise with the Head of
HRD to facilitate the handover of company belongings and outstanding
assignments.
Please be advised accordingly,
Johan Dennelind
CEO”
The said letter stated the reasons for the termination as follows:-
1. the Company's restructuring that led to the Claimant's position being
abolished and
2. poor performance on the part of the Claimant.
First Issue: whether the dismissal was with just cause and excuse
The Law
It is trite law that the Company does not have the right to terminate the services
of the Claimant for no valid reason.
In Tip Top Motorcade Sdn. Bhd. v. Johnny Chong Choong Keong (Award
114 of 1994), the learned Chairman of the Industrial Court stated the basic
principles as follows:-
“The Industrial Court is obliged to act upon the evidence and on the basis of
settled principles of industrial jurisprudence. In particular, it takes into account
these well-established principles of industrial law:
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(a) That in order to safeguard a workman's security of tenure, a dismissal
must be grounded on just cause or excuse (Dr. A. Dutt v Assunta
Hospital [1981] 1 MLJ 304).
(b) That there is no material difference between a termination and a dismissal.
And further:
The term employed in the act of bringing a workman's employment to an
end is inconsequential; it is the Court's duty to determine whether that act,
whatever the label attached to it, was for just cause or excuse.”
“ (d) That the burden of proof of the facts which would constitute just
cause or excuse is on the employer. The employer discharges his
burden by adducing evidence either oral or documentary, to prove
the facts which he alleges as constituting just cause or excuse.
(e) That the Court's duty is to enquire whether the reason or excuse
advanced by the employer has or has not been made out. If the Court
finds as a fact that it has not been proven, then the inevitable conclusion
must be that the termination or dismissal was without just cause or
excuse.”
Claimant's Arguments
The Claimant submitted that the Company had terminated his employment
simpliciter under the guise of poor performance and restructuring.
The Claimant pointed out that after the fact of termination on 9.7.2009, the
Company alleged other “grounds” for the Claimant's dismissal, such as,
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'misbehaviour', 'inappropriate behaviour', 'detrimental to ...reputation' and/or
'abuse of trust and confidence' (paragraphs 15, 16, 17 and 23 of the SIR).
It was submitted on behalf of the Claimant that at no time did these allegations
feature as part of the Company's grounds for termination as stated in its
Letter of Termination dated 9.7.2009 (page 18-19, Exhibit 2, SOC).
Company Witness
The CEO Johan Dennelind, who had issued the letter of termination did not come
as a witness. Instead the Company relied solely on the evidence of the
Claimant's subordinate Mr. Chan Nam Kiong (“COW-1”), the Company's sole
witness who obviously had no personal knowledge pertaining to the Claimant's
termination. As aptly pointed out by Claimant's Counsel, his evidence was purely
based on his opinion and/or view.
His evidence under cross examination was as follows:
“Q : Prior to the Claimant's termination, you were not in the Digi
A : Agree.
Management Team?
Q : In terms of the hierarchy, you have the following:
CEO
A : Yes.
CTO (Chief Technology Officer)
CFO (Chief Financial Officer)
CMO/CCO (Chief Marketing Officer / Chief Commercial Officer)
(Claimant)?
9

Q : These 4 C's are part of the DMT?
A : Yes.
Q : But the rest of the DMT is not from the C's?
A : That's right.
Q : Before the Claimant was terminated, and you were not part of
A : Yes.
the DMT, Management decisions pertaining to the positions
and the running of the Company would have been done by the
DMT members?
Q : You would not be able to give evidence on the policy decisions
as considerations made by the Company pertaining to the
Claimant's termination?
A : I have no information on the decision.”
It is evident from the above that COW1 had no personal knowledge pertaining to
the decision to terminate the Claimant. COW1 agreed in cross examination that
the Ex-CEO, Mr. Johan Dennelind was the one person who was in a position to
throw some light on the decision to dismiss.
COW1 testified as follows:
“Q : Mr. Johan Dennelind was supposed to come but he is not coming?
A : I was made aware that he can't come.”
10

Decision on the First Issue
The burden of proof is on the Company to prove that the dismissal of the
employee is with just cause or excuse which the Company has failed to do
in this case.
As observed in the Tip Top Motorcade case, “the burden of proof of the facts
which would constitute just cause or excuse is on the employer. The employer
discharges his burden by adducing evidence either oral or documentary, to prove
the facts which he alleges as constituting just cause or excuse”
In our case the reasons given for the dismissal were that the Company's plans
of restructuring had led to the Claimant's position being abolished and also poor
performance on the part of the Claimant. The Company's sole witness, COW1,
who acknowledged that the Claimant had been his boss, confirmed under oath
that he had no personal knowledge or information pertaining to the reasons for
the dismissal in question.
The inevitable conclusion is that the dismissal of the Claimant was without just
cause or excuse.
The Court has carefully and meticulously considered and evaluated the totality of
the evidence before it on a balance of probabilities, bearing in mind s 30(5) of the
IR Act 1967. Having considered all the facts, the totality of the evidence both oral
and documentary and the submissions, and being guided by the principles of
equity and good conscience and the substantial merits of the case, without
regard to technicalities and legal form, this Court finds that the dismissal of the
Claimant in this case was without just cause and excuse.
11

Second Issue: Whether the contract of employment is a fixed term contract
The Pleading Issue
Neither the Claimant nor the Company in this case pleaded the issue of fixed
term contract in their respective pleadings.
IN the case R. Rama Chandran v The Industrial Court Malaysia & Anor
(1997) 1 MLJ 145, it was held that:
“It is trite law that a party is bound by its pleadings. The Industrial Court must
scrutinize the pleadings and identify the issues, take evidence, hear the
parties' arguments and finally pronounce its judgment having strict regards to
the issues.”
The Company submitted that it was the Claimant's burden to plead (and
prove) that his contract was permanent and not a genuine fixed-term
contract.
It was argued on behalf of the Company that the Claimant had failed to plead
that he was not on a fixed term contract and that instead his employment was on
a permanent basis.
The case of Pernas OUE (KL) Sdn Bhd v Choi Wai Ki [1997] 2 ILR 439 was
referred to, where the Court held:-
“Furthermore the Court agrees with the Company that the contention of the
Claimant that he was on a permanent contract was not pleaded.
12

It was argued on behalf of the Claimant as follows:
It was pointed out on behalf of the Claimant that the issue here is as to who is
relying on the fixed term employment contract. It was argued that the Claimant
is not relying on it but the Company is, especially to pre-empt any issue of
reinstatement.
It was submitted further that as the primary remedy under s.20 IRA 1067 is
reinstatement, it must follow that it is for the Company to plead, or lead evidence
on it being a fixed-term.
The Claimant also submitted that it is trite law that he who asserts must prove
(S.101&102 evidence Act 1950).
Hence it was submitted that as it is the Company that is alleging the fixed term, it
is incumbent on them to plead, and prove.
The Court's View
The Court is of the view that the failure to plead this issue as a specific item is
not fatal in this case. Although it would have been far better for this fact to have
been addressed specifically by the Claimant in the SOC and then responded to
in reply in the SIR by the Company, the failure to plead this is not fatal. It must
not be forgotten that the Claimant's claim seeks for reinstatement as a remedy,
and in lieu of it, compensation. The facts (whatever facts are available) are
before this Court to decide.
Furthermore the Company in its Statement in Reply would normally address
issues raised by the Claimant in the Statement of Case (SOC).
13

It is after all a Reply. The Claimant failed to plead in the SOC the issue that his
was not a genuine fixed term contract and the Company did not address this
issue in the SIR. Such failure in this case is not fatal to either party.
The Han Chiang Principle
In M Vasagam a/l Muthusamy v Kesatuan Pekerja-Pekerja Resort World,
Pahang & Anor [2003] 5 MLJ 262. the Industrial Court dealt with the issue of
whether the contract of employment was a genuine fixed term contract. The
applicant in that case relied on the case of Han Chiang School, Penang Han
ChiangAssociated Chinese Scholls Association v National Union of
Teachers in independent Schools, W Malaysia [1988] 1 ILR 611 (“the Han
Chiang case”). In the Han Chiang case the Industrial Court held that the system
of fixed term contracts in the school was employed as a means of control of the
teachers concerned. The intention of the school was to rid itself of the union,
Hence the school relied on the fixed term contracts to get rid of the teachers who
were members of the union. The Court held on the facts that the contracts of
employment were not genuine fixed term contracts. In this case some of the
teachers had taught at the school for more than 20 years and “had their
contracts renewed unfailingly during those years without the need to
reapply whenever their fixed term contracts expired. The teachers
therefore claimed that they had the right to automatic renewals of their
contracts upon their expiry because all along that had been the practice of
the school in the past”.
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The principle in Han Chiang appears to be that there must be clear facts to
establish permanency of employment and to rebut the outward appearance of
the fixed term nature of the contract. The Han Chiang situation is the exception
to the rule.
The Han Chiang case was distinguished in M Vasagam case. The Industrial
Court in M Vasagam case upon examining the facts of the case found that
there was a genuine fixed term contract.
Fixed Term -The Arguments
Burden of Proof
The Company submitted that it was the Claimant's burden to prove that his
contract was permanent and not a genuine fixed-term contract.
The Claimant submitted that the burden was on the Company to adduce
evidence to show that it was a genuine fixed-term contract.
The Court is of the view that it is the duty of the Court to ascertain from the
facts before it whether the case comes within the exceptional situation as
in Han Chiang case. There must be clear facts to establish permanency of
employment and to rebut the outward appearance of the fixed term
nature of the contract.
The Claimant's Arguments
It was submitted on behalf of the Claimant that it was not the intention of the
parties that the Claimant's employment with the Company was to be only for a 2
15

years fixed term. It was submitted that although the Claimant's contract was
stipulated to be for 2 years, it was a permanent contract in disguise. According to
the Claimant he was assured by the Company's HR Head, and the Ex-CEO of
this .
The Claimant also pointed out that he was “head-hunted” from his previous
position in Maxis to join the Company (Q&A 4, CLWS-1) to bring change.
According to the Claimant he was even promised the possibility of being CEO
after a stint as CMO. The Memo dated 16.4.2008 from Bjorn Kopperud (p.26,
Exh 4, SOC) was referred to where it was stated “As CMO in Digi Tom will be
part of the yearly processes. If his performance and potential proves good
Telenor has the intention to find other challenges/roles for Tom in
accordance with his ambitions and preferences and Telenor needs”.
The Court noted that there were several contingencies. It was not a sure
thing both ways, meaning for the employer and the employee.
The Court finds that the above statements are not sufficient to establish that the
parties had really intended permanency in the employment relationship. These
matters are not sufficient to prove that it was not a genuine fixed term contract.
The Decision on the Second Issue
Whether the Claimant's contract of employment was a fixed term contract:
The Court finds that in this case, based on the facts, it was a genuine fixed term
contract .
16

Third Issue: If the dismissal was without just cause and excuse, whether
the Claimant should be reinstated
Reinstatement -The Legal Principles
1. Claimant being a foreigner is not a bar to reinstatement. This was made
clear by the Federal Court in Assunta Hospital v Dr. A.Dutt (1981) 1 MLJ
105 [TAB B of Claimant's Additional Bundle of Authorities], where the Court
held that:
“As for the non-citizens status of Dr. Dutt, we share the astonishment of
the judge at the relevance of this point. Our views can be stated shortly,
whether Dr. Dutt can get an extension of his visit-pass so as to be able to
say in this country or the issue of a work-permit in order to be able to take
up the appointment are not matters that can influence the Court in proper
exercise of the jurisdiction conferred on it by the minister's reference of
the representations for reinstatement. If an order is made ordering
reinstatement and the workman is unable to obtain either the visit-pass or
the work permit, the employer would not be in contempt of the order. It is
for the workman to make the order effective. All that the hospital had to
do is to make the post available to the workman. As for any suggestion
that the order for reinstatement would influence the ministry of Home
Affairs to issue the visit-pass or the work permit, there cannot be any truth
in it, and it cannot possibly be said that the ministry of Home Affairs is
bound to comply with the order for instatement. In any event, it is of no
concern to the hospital.”
17

In the case of Dr. A Dutt, the Court weighed the evidence carefully and ordered
for the Claimant to be reinstated.
In Microsoft Malaysia Sdn Bhd v Michael Brian Davis [2002] 2 ILR 453 it was
held:
“The Industrial Court has jurisdiction to order reinstatement to a foreigner if at the
end of the day, the court comes to the finding that his dismissal is without just
cause and excuse. Section 20 of the Industrial Relations Act 1967 applies to all
workers be they Malaysians or foreigners”.
Reinstatement is intended to restore the status quo prior to dismissal (See
Kumpulan Jerai Sdn. Bhd., Rengam v. National Union of Plantation
Workers & Anor [1993] 3 MLJ 221, 238 and also Harris Solid State (M) Sdn.
Bhd. & Ors. v. Bruno Gentil Pereire & 21 Ors. [1996] 4 CLJ 747).
It is trite law that reinstatement is the primary remedy for unjustified dismissal.
In Kumpulan Peransang Selangor Bhd. v. Zaid bin Haji Mohd Noh [1997] 1
AMR 1008 at (page 1033) the Federal Court referred to Malhotra's “The Law of
Industrial Disputes, Fourth edition, Volume 2 page 942 (to be referred to as
Malhotra) where it was stated:-
“In each case, keeping the objectives of industrial adjudication in mind, and in a
spirit of fairness and justice, the Tribunal has to deal with the question, whether
the circumstances of the case require that an exception should be made and
compensation would meet the ends of justice. If, on taking these principles and
18

the relevant factors into consideration, the Tribunal comes to the conclusion that
reinstatement would not be desirable or expedient in the circumstances of the
case, it may Award compensation instead of reinstatement to the workman in
spite of the fact that his discharge or dismissal was invalid owing to some
infirmity in the impugned order”.
In Fung Keong Rubber Manufacturing (M) Sdn. Bhd. v. Lee Eng Kiat & Ors
[1981] 1 MLJ 238, the Federal Court observed:
“Reinstatement, a statutorily recognized form of specific performance, has
become a normal remedy and this coupled with a full refund of his wages could
certainly far exceed the meagre damages normally granted at common law. The
speedy and effective resolution of disputes or differences is clearly seen to be in
the national interest, but it is also apparent that any attempt to impose a legal
obligation without a prior exploration for a voluntary conciliation could aggravate
rather than solve the problem. To this end the Director General is empowered by
section 20 of the Act to offer assistance to the parties to the dispute to expedite a
settlement by means of conciliatory meetings”.
Reading Malhotra further at page 941, the following passage states the matter
clearly:-
“No hard and fast rule can however be laid down for the exercise of the discretion
of the Tribunal, as in each case, it must, in a spirit of fairness and justice in
keeping with the objective of industrial adjudication, decide whether it should, in
the interest of justice, depart from the general rule. Fair play towards the
19

employee on the one hand, and interest of the employer including the
consideration of discipline in the establishment, on the other, require to be duly
safeguarded. This is necessary in the interest of both security of tenure of the
employee and smooth and harmonious working of the establishment. Legitimate
interest of both of them have to be kept in view, if the order is expected to
promote the desired objectives of industrial peace and maximum possible
production. Proper balance has to be maintained between the conflicting claims
of the employer and the employee without jeopardising the larger interests of
industrial peace and progress”.
The Court at this juncture would like to reiterate what it observed in the case of
Teh Cheng Hock v Lilly Industries Sdn Bhd, Award 209 of 2010, that in
making its decision “the Court has to bear in mind the need to maintain this
proper balance between the conflicting claims. The reality of the present day
situation is that whilst it is true that it was intended that the primary remedy for
unjust dismissal is reinstatement, it cannot be denied that the reality is that it is
no longer the usual remedy”.
In the oft quoted case of Nestle Food Storage (Sabah) Sdn. Bhd. v. Terrence
Tan Nyang Yin [2002] 1 ILR page 283 (Nestle case) the Industrial Court (Y.A.
Lim Heng Seng, since retired) made a pertinent observation that reinstatement
though being the primary remedy under the law, was no longer the usual remedy
and that there were valid reasons for this. Making reference to the Court of
Appeal decision of Koperasi Serbaguna (quoted above) in which the Court of
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Appeal had observed that in industrial jurisprudence, reinstatement is the usual
or primary remedy, Y.A. Lim Heng Seng (at that time) made the observation that
the principle that reinstatement is the primary remedy must “be seen in the
context of the statutory emphasis on expedition in the conciliation process and
the stipulation of the statutory aspiration for the conclusion of the adjudication
without delays and where practicable within 30 days of the reference to the
Court. It cannot be gainsaid that Parliament did not contemplate that the whole
process will take too much time, and that hence the expediency of the remedy of
reinstatement would not be negated by long delays in the dispute resolution
processes provided by the Act”.
He went on to observe that “in practice, reinstatement in industrial adjudication is
no longer the normal, or the usual and the general remedy regularly granted by
the Court”.
Hence in making its decision the Court has to bear in mind the need to maintain
this proper balance between the conflicting claims.
The reality of the present day situation is that whilst the primary remedy for
unjust dismissal is reinstatement, it cannot be denied that it is no longer
the usual remedy.
As observed by this Court in the case of Teh Cheng Hock v Lilly Industries
Sdn Bhd, Award 209 of 2010:
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“It is clear therefore that in reality reinstatement is not readily granted for various
reasons. It is granted only in fit and proper cases. In deciding this issue, there is
no hard and fast rule of universal application. In each case, keeping the
objectives of industrial adjudication in mind, and in a spirit of fairness and justice,
bearing in mind that a proper balance between the conflicting claims of employee
and employer needs to be maintained, the Industrial Court should decide as to
the appropriate remedy to be granted in each case”.
The Company in its Submissions in Reply dated 10 January 2012 stated
that reinstatement was not appropriate for several reasons including the
fact that the Claimant's position prior to his termination was a very senior
position as the Chief Commercial/Marketing Officer (CCO/CMO) of the
Company.
In cases where reinstatement was not granted, among the factors taken
into account was the fact that the Claimant was in a high ranking or
managerial position:-
In Jutajaya Holding Bhd v. Lim Poh Sim Award 397 of 2007 for instance, the
Chairman of the Industrial Court at that time, Y.A. Puan Amelia Tee (presently in
the High Court), stated the following:-
“The Court has carefully considered the question of whether reinstatement would
be the correct remedy in this case. It must be borne in mind that at the time of
her dismissal, the Claimant was the CEO of the Company. It need not be
22

gainsaid that this is a very senior position”. The above statement underlines the
fact that the position of the Claimant in a management position or senior position
is an important and relevant consideration.
In Gold Coin Specialities Sdn. Bhd. v. Matheswaran a/l Paspanathan [2004]
3 MLJ, the High Court (on judicial review), observed that the Claimant's position
was a high ranking one. It also noted that the post he had earlier held in the
Company had been filled up as the Company could not be expected to keep the
position vacant for a long period as it would be detrimental to the Company's
operation. The High Court also observed that the Claimant was relatively young
and able. These were all relevant factors to be taken into account in considering
whether to grant reinstatement in any particular case.
Decision On The Issue of Reinstatement
This Court finds that in our case reinstatement is clearly not the appropriate
remedy. The Court has considered all the relevant factors, including the
Claimant's length of service in the Company, his position being a top position,
the intervening period after the dismissal etc. Bearing in mind the objectives of
industrial adjudication and the competing claims of employer and employee, and
the need to maintain the proper balance, in the spirit of fairness and justice,
bearing in mind s.30(5) of the IRA, this Court is of the considered view that
reinstatement is not the appropriate remedy in this case.
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Fourth Issue: What would be the quantum in terms of backwages.
Remedy: The Practice
In the Industrial Court case of Coca-cola Far East Limited (Malaysian Branch)
v. Warren J Carey [2006] 4 ILR p 2399, the Industrial Court Chairman, Y.A.
Tuan Franklin Goonting (since retired), observed:-
“...it has been the normal practice of the court, where reinstatement is not
ordered, to award backwages limited to twenty-four months and compensation in
lieu of reinstatement at the rate of one month's salary for each completed year of
service.”
In that case the Claimant who was an expatriate, had sought compensation
based on various contractual terms. The learned Chairman made the following
pertinent observations:
“In seeking the other items of relief the Claimant is in fact asking the court
to enforce contractual terms and conditions and to assess loss of income
or damages, something within the province of the civil courts.
The learned Chairman went on to say:
“If all these other remedies sought by the Claimant were granted by this Court
the effect would be to convert the Industrial Court into a civil court and the word
“reinstatement” inserted into the statement of case would be reduced to a mere
password to gain entry to the IRA system and thereafter seek civil remedies.”
The above observation is clearly a pertinent one. This Court is in full
agreement.
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In Robert John Reeves v Southern Bank Bank Berhad [2010 2 LNS 1608]
the Industrial Court held that “the court states that it does not think that it is
proper that the Claimant should be allowed his prayer for all other contractual
benefits that was accorded to him in the form of housing allowances,
performance based rewards and other benefits as claimed pursuant to Clause
28 of his statement of case'.
Issue Of Bonus
a) In the case of UMW Toyota (M) Sdn. Bhd. v. Chow Weng Thiem [1996]
5 MLJ 678, the High Court held as follows:
“A bonus is a gift or gratuity as a gesture of goodwill, and not
enforceable, or it may be something which an employee is entitled to on
the happening of a condition precedent and is enforceable when the
condition is fulfilled. But in both cases it is something in addition to or in
excess of that which is ordinarily received. Since bonus was a form of
gratuitous payment of a discretionary nature, the respondent was not
entitled to it as of right.”
b) In the Industrial Court's case of Felda Palm Industries Sdn. Bhd. v.
Mansor Pratiman [2006] 2 LNS 0948, the court followed and affirmed the
above case of UMW Toyota (M) Sdn. Bhd.:
'In the case of UMW Toyota (M) Sdn. Bhd. v. Chow Weng Thiem
(1996) 5 MLJ 678. His Lordship Abdul Malik J. said, “In my judgment
bonus was a form of gratuitous payment of a discretionary nature, the
respondent was not entitled to it as of right”. This Court agrees with the
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views of his Lordship and also the contention of the Company's Counsel in
that it is the prerogative of the Company to declare bonus for its workers
or employees.'
It was submitted that bonus was not a benefit which the Claimant was entitled to
claim as of right. Bonus was discretionary and based upon the performance of
the Company and the Claimant, and the Claimant was not entitled to bonus as of
right.
The Court agrees with Company's submissions that indeed bonus was
discretionary and that the Claimant was not entitled to it as of right.
Fixed Term
The unexpired period of his fixed term contract.
On the issue of backwages, the Company submitted a number of cases, all of
which were fixed term contract cases. The Company submitted that any
exposure would be the balance of the unexpired portion or balance of the
contract period .
a) In the case of Ranhill Worley Sdn Bjd. (formerly known as Jacobs
Construction Management (M) Sdn Bhd.) v. Franz Jozef Marie
Schefman & Anor [2008] 6 MLJ 823, the Court noted the following:
“There is a consistent trend of cases which decided that an
expatriate who had been unfairly dismissed was awarded backwages for
the unexpired period of his fixed term contract. In the present case it
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was only reasonable that the first respondent be awarded backwages for
the remainder of the unexpired term of his fixed term contract, which was
what the chairman of the Industrial Court did.”
b) In the case of Shapadu Energy & Engineering SB b. Stuart Ashley
Eban [1999] MLJ 250, the High Court affirmed the decision of the
Industrial Court as follows:
“The Court holds that it is a breach of the Company to disallow the
Claimant to work out of the unexpired duration of the twelve months fixed
term contract.
Therefore, the Claimant's remedy in this dispute is the
unexpired period of his fixed term contract. There is no question of
reinstatement. This Court will only make an order of compensation of loss
of employment from the date of termination to the expiry date of the twelve
months' contract.”
The Company has submitted (paragraphs 48 to 57, Company's Submission) that
the Claimant should only be awarded 10 months back-wages (i.e the balance of
his unexpired contract period). Their reasoning is that it's fixed-term contract
(Exh 3, SOC), which contract, on the face of it, stipulates “Your employment
shall start on 1 May 2008 and shall be for a period of two (2) years from the
start date”.
Payment of 3 months salary
When the Claimant's employment was terminated he was paid a payment of 3
month's salary in lieu of 3 months notice, which will be deducted.
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Remedy
Having considered all the relevant factors, this Court awards the following:-
1. Backwages:
RM 102,850.00 x 7 months - RM 719,950.00
Deduction
1% deduction for post dismissal earnings:
1 x RM 719,950.00 - RM 7,199.50
100
The total sum to be paid is RM 719,950.00 – RM 7,199.50 = RM 712,750.50
The total sum of RM 712,750.50 less any statutory deductions shall be paid to
the Claimant through his solicitors within 30 days from the date of service of this
Award.
HANDED DOWN AND DATED THIS DAY 22 TH OF MARCH 2012
sgd
( YAMUNA MENON )
CHAIRMAN
INDUSTRIAL COURT, MALAYSIA
KUALA LUMPUR
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