IN THE INDUSTRIAL COURT OF MALAYSIA

[CASE NO: 4/4-1485/19]

BETWEEN

MOHAMAD NAZLY NASIR MOHAMAD

AND

MMSB CONSULT SDN BHD

(Heard together with Industrial Court Case Numbers : 4/4-1483/19, 4/4-1484/19
and 4/4-1486/19)

AWARD NO. 834 OF 2021

BEFORE : Y.A. TUAN AUGUSTINE ANTHONY -

CHAIRMAN

VENUE : Industrial Court, Kuala Lumpur

DATE OF REFERENCE : 07.08.2019

DATE OF RECEIPT OF
ORDER OF REFERENCE : 16.08.2019

DATES OF MENTION : 17.09.2019, 23.10.2019, 15.11.2019,

05.12.2019, 09.01.2020, 24.02.2020

DATES OF HEARING : 07.09.2020, 08.09.2020, 07.10.2020

REPRESENTATION : For the claimant - Muhammad Azraai
Mohamed Yunos & Muhammad Amir
Sharipuddin; M/s Razif Abdul Aziz &
Partners
For the company - Dato’ T Thavalingam C
Thavarajah & David Tan Seng Keat; M/s T
Thavalingam & Co

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THE REFERENCE

This is a reference dated 07.08.2019 by the honourable Minister of Human Resources

pursuant to section 20 (3) of the Industrial Relations Act 1967 (“The Act”) arising out
of the dismissal of Mohamad Nazly Bin Nasir Mohamad (“Claimant”) by MMSB
Consult Sdn. Bhd. (“Company”) on the 31.10.2018.

AWARD

[1] It was mutually agreed by all parties that the instant case be heard together
with Case No: 4/4-1483/19 (between Yap Chin Wah v. MMSB Consult Sdn. Bhd.),
Case No: 4/4-1485/19 (between Mohamad Nasly Bin Nasir Mohamad v. MMSB
Consult Sdn. Bhd.) and Case No: 4/4- 1486/19 (between Chairil Bahari Bin Ibrahim v.
MMSB Consult Sdn. Bhd.). As these cases had not been consolidated but only heard
together, this Court will hand down separate and distinct Awards for each individual
cases which highlights the distinct facts of each of the cases. For convenience the
Claimants may also be referred to in the following manner whenever the need arises:-

(i) Mr. Yap Chin Wah (CLW2/1 st Claimant)

(ii) Mr. Lee Khurn Ying (CLW1/2 nd Claimant)

(iii) Encik Mohamad Nazly Bin Nasir Mohamad (CLW3/3 rd Claimant)

(iv) Encik Chairil Bahari Bin Ibrahim (CLW4/4 th Claimant)

[2] The parties in this matter filed their consolidated written submissions dated
25.11.2020 (Claimant’s Written Submissions), 25.02.2021 (Company’s Written
Submissions), 26.03.2021 (Claimant’s Written Submissions in Reply), and
26.03.2021 (Company’s Written Submissions in Reply).

[3] This Court considered all the notes of proceedings in this matter, documents
and the cause papers in handing down this Award namely:-
(i) The Claimant’s Statement of Case dated 01.10.2019;
(ii) The Company’s Statement in Reply dated 21.11.2019;
(iii) The Claimant’s Rejoinder dated 26.12.2019;
(iv) The Claimant’s Bundle of Documents (Mohamad Nazly Bin
Nasir Mohamad) - CLB5;
(v) The Claimant’s Additional Bundle of Documents (Mohamad
Nazly Bin Nasir Mohamad) - CLB6;
(vi) CLW1’s Bundle of Documents (Lee Khurn Ying) - CLB3;
(vii) CLW1’s Additional Bundle of Documents (Lee Khurn Ying) -
CLB4;
(viii) CLW2’s Bundle of Documents (Yap Chin Wah) - CLB1;
(ix) CLW2’s Additional Bundle of Documents (Yap Chin Wah) -
CLB2;
(x) CLW4’s Bundle of Documents (Chairil Bahari Bin Ibrahim) -
CLB7;
(xi) CLW4’s Additional Bundle of Documents (Chairil Bahari Bin
Ibrahim) - CLB8;
(xii) The Company’s Bundle of Documents (Yap Chin Wah) - COB1;
(xiii) The Company’s Supplementary Bundle of Documents - COB2;
(xiv) The Company’s Bundle of Documents (Lee Khurn Ying) - COB3;
(xv) The Company’s Bundle of Documents (Mohamad Nazly Bin
Nasir Mohamad) - COB4;
(xvi) The Company’s Bundle of Documents (Chairil Bahari Bin
Ibrahim) - COB5;
(xvii) Organisation Charts (Reproduction of pages 130-131 of COB1;
(xviii) Claimant’s Witness Statement - CLW1-WS (CLW-1) (Lee Khurn
Ying);
(xix) Cross-Examination Questions for Lee Khurn Ying - CO-6;
(xx) Claimant’s Witness Statement - CLW2-WS (CLW-2) (Yap Chin
Wah);

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 (xxi) Cross-Examination Questions for Yap Chin Wah - CO-7;
(xxii) Claimant’s Witness Statement - CLW3-WS (CLW-3) (Mohamad
Nazly Bin Nasir Mohamad);
(xxiii) Cross-Examination Questions for Mohamad Nazly Bin Nasir
Mohamad - CO-8;
(xxiv) Claimant’s Witness Statement - CLW4-WS (CLW-4) (Chairil
Bahari Bin Ibrahim);
(xxv) Cross-Examination Questions for Chairil Bhari Bin Ibrahim -
CO-9;
(xxvi) Company’s Witness Statement - COW1-WS (COW-1) (Augustine
Maria Arokiasamy); and
(xxvii) Company’s Witness Statement - COW2-WS (COW-2)
(Balenderan Atchalingam).

INTRODUCTION

[4] The dispute before this Court is the claim by Mohamad Nazly Bin Nasir
Mohamad (“Claimant”) that he had been dismissed from his employment without just
cause or excuse by MMSB Consult Sdn. Bhd. (“Company”) on the 31.10.2018.

[5] MRCB - George Kent Sdn Bhd (MRCB-GK / the Client) was appointed as the
Project Delivery Partner (“PDP”) for the Proposed Design, Construction, Completion,
Testing and Commissioning of the Light Rail Transit Line 3 (LRT3) from Bandar
Utama to Johan Setia (“the Project”) by Prasarana Malaysia Berhad (Employer). The
Company was then appointed as a consultant for the rail structure design for the
Project. The Project was divided into packages and departments.

[6] The Claimant was employed by the Company to work as the resident engineer
for the Project with a fixed term contract of employment for 2 years commencing on
the 01.07.2017 to 30.06.2019 with a basic salary of RM11,000.00.

[7] The Malaysian Government had on or about June and July 2018 implemented a
review of the Project and as a consequence MRCB-GK had instructed the Company to
hold all reviews and approvals for the shop drawings and submissions and stop
overtime and shift duty work. On the 12.07.2018, the Ministry of Finance made an
announcement that the Project would continue but however with significant changes
namely to the timeline for the completion of the Project which will be revised from
2020 to 2024, further there will be reduction in the overall construction size and
design of the LRT train depot and LRT stations, the construction of 5 stations to be
cancelled due to very low projected passenger ridership and cancelling an
unnecessary 2KM tunnel for the LRT together with an underground station at
Persiaran Hishamuddin, Shah Alam. The Project was also restructured from the
“PDP” model to a “Fixed Price Contract” with the view to avoiding cost overrun.

[8] It is the Company’s contention that arising from the above review of the
Project by the Government of Malaysia, the Company was given directive by MRCB-
GK to restructure the Project organisation chart and site supervision staff to support
the review which meant that the Company was expected to work with MRCB-GK
with fewer staff overall. The Company was also facing delays in payments from
MRCB-GK which caused strain in the Company’s financial resources and which
resulted in the Company having difficulties in paying its staff assigned to the Project.
Following this, the Company had also implemented a salary deferment scheme for all
staff earning above RM5,000.00 which impacted all the Claimants. Thereafter in view
of the difficulties encountered by the Company due to the review of the Project by the
Malaysian Government, the Company had no option but to reconsider its manpower
requirements. After the Company had assessed various employees in the restructuring
exercise, 10 employees were found to be redundant including all the 4 Claimants
herein. By letters dated 29.08.2018, the Claimants were duly informed that their
services will be terminated effective 31.10.2018 as part of the cost optimization
exercise of the Project undertaken by the Government of Malaysia.

[9] The Claimants however claim that there was no genuine redundancy that had

5
arisen in their services to the Company and the decision taken by the Company to
terminate their services on account of the alleged redundancy was a mala fide act on
part of the Company as their jobs, positions and functions in the Company still
existed despite the review by the Government of Malaysia. The Claimants also argue
that the Company’s retrenchment exercise was premature. The Claimants also state
that the Company had failed to produce any financial statement to show that the
Company was facing financial difficulties which gave reasons for the retrenchment
exercise carried out on all the Claimants. In the circumstances all the Claimants now
claim that the dismissal from employment by way of retrenchment due to redundancy
were dismissals without just cause or excuse and prays that they be reinstated to their
former positions without any loss of seniority, wages and other benefits. The
Company however contends that the dismissal of the Claimants from their
employment by way of retrenchment due redundancy was as a result of a bona fide
restructuring of the Company’s operations due to cost optimisation exercise
implemented by the Government of Malaysia and pray that the Claimants cases be
dismissed.

[10] All the Claimants gave evidence under oath in support of their cases and also
in support of one another’s case that the retrenchment exercise carried out by the
Company against them due to redundancy was a dismissal without just cause or
excuse. The Company’s evidence was led by COW1 (Augustine Maria Arokiasamy,
who was the Chief Operating Officer [COO] of the Company at the material time and
still held the same position even during the proceedings before this Court. This
witness was responsible for the assessment of all documents pertaining to the
Claimants’ employment with the Company and was also a person who had knowledge
of the financial situation of the Company at the material time) and COW2 (Balendran
Atchalingam, who was the Technical Director of the Company. This witness had
access to the Claimants’ employment records with the Company and who had also
assisted the Human Resources Department in the restructuring exercise).
THE COMPANY’S CASE

[11] The Company’s case can be summarised as follows:-

(i) The Company is a firm of consulting engineers which is

contracted by its clients on a project basis and primarily employs,
engages staff in respect of the needs and requirements of each
project.

(ii) The Claimant was employed as a Resident Engineer, Light Rail T

ransit 3 - Western Corridor , for a two-year fixed period from
01.07.2017 until 30.06.2019, with a basic salary of RM11,000
.00 per month.

(iii) The Company was contracted to work on the LRT3 Project

through MRCB-George Kent Sdn Bhd (“MRCB-GK” or the
“then-PDP”). The ultimate owner of the LRT3 Project was and is
the Malaysian Government.

(iv) Following the 14 th General Elections on 09.05.2018, the new

Malaysian Government had implemented a review of the LRT3
Project and due to the review, MRCB-GK had instructed the
Company (as well as all other sub-contractors involved in the
LRT3 Project) to hold all reviews and approvals for shop
drawings and submissions and to stop overtime and shift duty
site work.

(v) Thereafter, there was an announcement made by the Ministry of

Finance on 12.7.2018 that while the LRT3 Project would
continue, there would be significant changes made to the Project
including the following:-

(a) the timeline for completion of the LRT3 Project was

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 revised from 2020 to 2024;

(b) there would be a reduction in the overall construction size

and design of the LRT train depot and LRT stations due to
the change from 42 sets of 6 -car trains to 22 sets of 3-car
trains;

(c) the construction of five stations would be shelved and the

2km underground tunnel and underground station at
Persiaran Hishamuddin, Shah Alam would be cancelled.

(vi) The changes due to the Ministry of Finance’s announcement

entailed major changes whereby the LRT3 Project was changed
from a PDP model to a fixed price “Design and Build” contract.

(vii) Thereafter the Company held meetings with MRCB-GK to

discuss the cost optimisation exercise, including the omission of
six stations.

(viii) In view of the cost optimisation exercise, in October 2018

MRCB-GK gave directive for the collective restructuring of the
LRT3 Project organisation chart and site supervision staff to
support the new “Design and Build” model. This meant the
Company, together with the other Detailed Design Consultant
(“the DDCs”) were expected to work with MRCB-GK with fewer
staff overall.

(ix) The Company was also facing delays in payments from MRCB -
GK which caused strain in the Company’s financial resources and
which resulted in the Company having difficulties in paying its
staff assigned to the Project.

(x) Following the financial strain due to delay in payments, the

 Company had also implemented a salary deferment scheme for
all staff earning above RM5,000.00 which impacted all the
Claimants.

(xi) Thereafter in view of the difficulties encountered by the

Company due to the review of the Project by the Malaysian
Government, the Company had no option but to reconsider its
manpower requirements.

(xii) After the Company had assessed various employees in the

restructuring exercise, 10 employees were found to be redundant
including all the 4 Claimants herein since the functions of the
Claimants were reduced and were absorbed by other Resident
Engineers.

(xiii) The Company had conducted the selection process fairly and in
good faith before selecting all the 4 Claimants for retrenchment.

(xiv) By a letter dated 29.08.2018 , the Claimants were duly informed

that their services will be terminated effective 31.10.2018 as part
of the cost optimization exercise of the Project undertaken by the
Government of Malaysia.

(xv) The dismissal of the Claimants from their employment by way of

retrenchment due redundancy was as a result of a bona fide
restructuring/reorganisation of the Company’s operations due to
cost optimisation exercise implemented by the Government of
Malaysia.

(xvi) In the circumstances the dismissal of the Claimant was done with
just cause or excuse and prays that the Claimant’s case be
dismissed.

9
THE CLAIMANT’S CASE

[12] The Claimant’s case can be summarised as follows:-

(i) There was no genuine redundancy or surplus of labour that was

proven by the Company and that the role and functions of all the
Claimants/Claimant still existed and were taken over by either
their contemporaries or their respective subordinates.

(ii) The Company failed to prove that the Claimants’ role and job
functions were diminished in the Project but which however were
taken over by other resident engineers or respective subordinates.

(iii) Despite the Company’s contention that the Claimants were

redundant, the number of employees working on the Project
remained the same even after the retrenchment of the 10 chosen
employees for retrenchment which included the Claimants.

(iv) There was no freeze on the hiring of new employees for the
Project despite the Company’s reason for retrenchment was for
the purposes reducing the manpower in the Company.

(v) Due to the there being no freeze on the hiring of new staff, it
clearly shows that the Company was not in dire financial
situation as claimed by the Company.

(vi) Despite the Company stating that it was not in a financial

position to retain the Claimants due to the delays in payment by
MRCB-GK, the Company failed to produce any financial
statements to show that there was financial strain resulting in the
retrenchment of the Claimants.

(vii) The Claimants were retrenched even before the cost optimization
 exercise was yet to materialize making the retrenchment exercise
a premature exercise.

(viii) The retrenchment exercise was in contravention of the

Company’s letter of appointment dated 08.08.2016 from
Prasarana Malaysia Berhad as the changes to the Project were
only official and binding upon the parties only when the
Novation Agreement between Prasarana Malaysia Berhad ,
MRCB-GK and the Company was signed on the 22.02.2019 and
until the Novation Agreement was signed, the terms of the letter
of appointment dated 08.08.2016 and the Consultant Agreement
remain in effect thus no downsizing and retrenchment was
necessary.

(ix) The retrenchment exercise was not bona fide in that the
Claimant’s/s termination from employment was not a
retrenchment exercise as reflected in the termination letter issued
to all the Claimants but for other reasons pursuant to clause 14 of
the employment contract.

(x) The Company had used appraisal score as an excuse for the
retrenchment of the Claimants.

(xi) The appraisals carried out on the employees were irregular in that
only 7 out 9 Resident Engineers were appraised and the others
were spared from appraisal with no reason given by the
Company.

(xii) The purported retrenchment exercise had taken into account a

comparison of the experience and knowledge of the Claimants
with other Resident Engineers who were not appraised and not
retrenched.

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 (xiii) The conduct of the Company in selecting the Claimants for the
purposes of the retrenchment exercise was an unfair labour
practice and an act of victimisation.

(xiv) The dismissal of the Claimant/s was a dismissal without just

cause or excuse.

(xv) That the Claimant here be reinstated to his former position

without any loss in service, wages and other benefits.

THE LAW
Role and function of the Industrial Court

[13] The role of the Industrial Court under section 20 of the Industrial Relations
Act 1967 is succinctly explained in the case Milan Auto Sdn. Bhd. v. Wong Seh Yen
[1995] 4 CLJ 449. His Lordship Justice Mohd Azmi bin Kamaruddin FCJ delivering
the judgment of the Federal Court had the occasion to state the following:-

“As pointed out by this Court recently in Wong Yuen Hock v. Syarikat Hong
Leong Assurance Sdn. Bhd. & Another Appeal [1995] 3 CLJ 344; [1995] 2
MLJ 753, the function of the Industrial Court in dismissal cases on a reference
under s. 20 is two-fold firstly, to determine whether the misconduct
complained of by the employer has been established, and secondly whether the
proven misconduct constitutes just cause or excuse for the dismissal. Failure
to determine these issues on the merits would be a jurisdictional error...”

[14] The above principle was further reiterated by the Court of Appeal in the case
of K A Sanduran Nehru Ratnam v. I-Berhad [2007] 1 CLJ 347 where his lordship
Justice Mohd Ghazali Yusoff, JCA outlined the function of the Industrial Court:-

“[21] The learned judge of the High Court held that the Industrial Court had
adopted and applied a wrong standard of proof in holding that the respondent
has failed to prove dishonest intention and further stating that the respondent
has not been able to discharge their evidential burden in failing to prove every
element of the charge. He went on to say that the function of the Industrial
Court is best described by the Federal Court in Wong Yuen Hock v. Syarikat
Hong Leong Assurance Sdn Bhdand Another Appeal [1995] 3 CLJ 344 where
in delivering the judgment of the court Mohd Azmi FCJ said (at p. 352):

On the authorities, we were of the view that the main an d only function
of the Industrial Court in dealing with a reference under s. 20 of the Act
(unless otherwise lawfully provided by the terms of the reference), is to
determine whether the misconduct or irregularities complained of by the
management as the grounds of dismissal were in fact committed by the
workman, and if so, whether such grounds constitute just cause or
excuse for the dismissal”

[15] It will not be complete this if this Court fails to make reference to the decision
of the Federal Court in the case of Goon Kwee Phoy v. J & P Coats (M) Bhd [1981] 1
LNS 30 where His Lordship Raja Azlan Shah, CJ (Malaya) (as HRH then was)
opined:

“Where representations are made and are referred to the Industrial Court for
enquiry, it is the duty of that Court to determine whether the termination or
dismissal is with or without just cause or excuse. If the employer chooses to
give a reason for the action taken by him the duty of the Industrial Court
will be to enquire whether that excuse or reason has or has not been made
out. If it finds as a fact that it has not been proved, then the inevitable
conclusion must be that the termination or dismissal was without just cause or

13
 excuse. The proper enquiry of the Court is the reason advanced by it and that
Court or the High Court cannot go into another reason not relied on by the
employer or find one for it.”

Burden Of Proof

[16] Whenever a Company had caused the dismissal of the workman, it is then
incumbent on part of the Company to discharge the burden of proof that the dismissal
was with just cause or excuse. This Court will now refer to the case of Ireka
Construction Berhad v. Chantiravathan a/I Subramaniam James [1995] 2 ILR 11 in
which case it was stated that:-

“It is a basic principle of industrial jurisprudence that in a dismissal case the

employer must produce convincing evidence that the workman committed the
offence or offences the workman is alleged to have committed for which he has
been dismissed. The burden of proof lies on the employer to prove that he has
just cause and excuse for taking the decision to impose the disciplinary
measure of dismissal upon the employee. The just cause must be, either a
misconduct, negligence or poor performance based on the facts of the case.”

Standard Of Proof

[17] In the case of Telekom Malaysia Kawasan Utara v. Krishnan Kutty Sanguni
Nair & Anor [2002] 3 CLJ 314 the Court of Appeal had laid down the principle that
the standard of proof that is required to prove a case in the Industrial Court is one
that is on the balance of probabilities wherein his lordship Justice Abdul Hamid
Mohamad, JCA opined:-

“Thus, we can see that the preponderant view is that the Industrial Court, when
hearing a claim of unjust dismissal, even where the ground is one of dishonest
act, including “theft”, is not required to be satisfied beyond reasonable doubt
that the employee has “committed the offence”, as in a criminal prosecution.
 On the other hand, we see that the courts and learned authors have used such
terms as “solid and sensible grounds”, “sufficient to measure up to a
preponderance of the evidence,” “whether a case... has been made out”, “on
the balance of probabilities” and “evidence of probative value”.

In our view the passage quoted from Administrative Law by H.W.R. Wade &
C.F. Forsyth offers the clearest statement on the standard of proof required,
that is the civil standard based on the balance of probabilities, which is
flexible, so that the degree of probability required is proportionate to the
nature of gravity of the issue. But, again, if we may add, these are not
“passwords” that the failure to use them or if some other words are used, the
decision is automatically rendered bad in law.”

The Law On Redundancy And Retrenchment

[18] In the case of William Jacks & Co. (M) Sdn. Bhd v. S Balasingam [1997] 3 CLJ
235 his lordship Justice Gopal Sri Ram JCA delivering the judgment of the Court of
Appeal had the occasion to define the term “retrenchment” as an exercise by the
Company when dealing with excess labour supply that does not include dismissal by
way of punishment for misconduct. His lordship had this to state: -

“The issue before that Court was whether there was a genuine retrenchment
exercise vis-a-vis the respondent. Retrenchment means: “the discharge of
surplus labour or staff by the employer for any reason whatsoever otherwise
than as a punishment inflicted by way of disciplinary action ” (per S.K. Das J
in Hariprasad v. Divelkar AIR [1957] SC 121 at p. 132).

Whether the retrenchment exercise in a particular case is bona fide or

otherwise, is a question of fact and of degree depending for its resolution upon
the peculiar facts and circumstances of each cas e. It is well-settled that an
employer is entitled to organise his business in the manner he considers best.
So long as that managerial power is exercised bona fide, the decision is

15
 immune from examination even by the Industrial Court. However, the
Industrial Court is empowered, and indeed duty-bound, to investigate the facts
and circumstances of a particular case to determine whether that exercise of
power was in fact bona fide”.

[19] The process of retrenchment can arise in a Company due to redundancy where
there exist a surplus of labour or where a business requires fewer employees of
whatever kind as explained in the following cases below.

[20] In the case of Vithylingam Letchumanan v. Ice Room Food & Beverage
Management Sdn. Bhd. [2015] 4 ILR 655, the learned chairman Eddie Yeo Soon Chye
(as he then was) had opined that:-

“The term “redundancy” has been defined by Dunston Ayudurai in “Industrial

Relations in Malaysia, Law & Practice”, 3 rd edn at pp. 255 and 256 as
follows:

Redundancy refers to a surplus of labour and is normally the result of a

reorganisation of the business of an employer, and its usual
consequence is retrenchment, ie, the termination by the employer of
those employees found to be surplus to his requirements after the
reorganisation. Thus, there must first be redundancy or surplus of
labour before there can be retrenchment or termination of the surplus.”

[21] In the case of Stephen Bong v. FCB (M) Sdn. Bhd. & Anor [1999] 1 LNS 131
his lordship Nik Hashim J had this to say:-

“With respect, I agree with Mr N Sivabalah’s submission that it is not the law
that redundancy means the job or work no longer exists. Redundancy
situations arise where the business requires fewer employees of whatever kind
‘(Harvey on Industrial Disputes)’. In the case before me, it is the Company’s
case that there was reduced work and reduced business, which made the
 applicant’s position as an executive director in charge of one group
redundant. The Industrial Court is right when it held that the applicant was
redundant.”

[22] In determining whether the Claimant was dismissed with just cause or excuse
by the retrenchment exercise undertaken by the Company this Court will ask these
pertinent questions:-

(i) Whether there was a genuine need for the reorganization exercise by the
Company;

(ii) Whether a genuine redundancy situation had arisen which led

(iii) to the retrenchment of the Claimant; and

(iii) Whether the Company had complied with the accepted standards and
procedure when selecting and retrenching the Claimant.

[23] To this effect this Court is guided by the reasoning contained in the case of
Mohd Nor Hassan & Ors v. Continental Sime Tyre Pj Sdn. Bhd. [2014] 3 ILR 144. If
the Company is able to answer all the above three questions in the affirmative, then
this Court must come to a conclusion that the retrenchment exercise undertaken by
the Company against the Claimant was a bona fide exercise of the managerial powers
of the Company.

[24] Further in the case of Bayer (M) Sdn. Bhd. v. Ng Hong Pau [1999] 4 CLJ 155
the his lordship Justice Shaik Daud Ismail JCA, delivering the judgment of the Court
of Appeal had the occasion to opine as follows:-

“The burden is on the appellant to prove actual redundancy on which the

dismissal was grounded. (See Chapman & Others v. Goonvean & Rostawvack
China Clay Co. Ltd. [1983] 2 All ER). It is our view that merely to show
evidence of a re-organisation in the appellant is certainly not sufficient. There

17
 was evidence before the court that although sales were reduced, the workload
of the respondent remained the same. After his dismissal his workload was
taken over by two of his former colleagues. Faced with these evidence, is it
any wonder that the court made a finding of fact that there was no convincing
evidence produced by the appellant that the respondent ’s functions were
reduced to such an extent that he was considered redundant. ”

EVALUATION OF EVIDENCE AND THE FINDINGS OF THIS COURT

[25] The dispute before this Court revolves around the dismissal of the Claimants
from their respective employment with Company which had been appointed as the
Consultant for the Infrastructure Detailed Design for the Light Rail Transit Line 3
(LRT3) Project from Bandar Utama to Johan Setia (the Project). The total
Consultancy fees was in access of RM100 Million.

[26] The letter of appointment dated 08.08.2016 from Prasana Malaysia Berhad (the
Employer) to the Company stipulates amongst other by clause 1(k) that :-

“The Consultant’s Project Director shall head the key personnel to provide the
Consultancy Services. Any changes to the list of key personnel and
appointment of new key personnel shall require the Employer ’s and/or
PDP’s prior written approval. The safety and well being of the personnel are
the responsibility of the Consultant and the Consultant shall indemnify the
PDP for any out goings, losses or costs arising out of any claims or action
made by them for any reason whatsoever. The Consultant shall also provide
and be responsible for all necessary insurances relating to them and their
employment and all works relating to the Consultancy Services to be carried
out by the Consultant and the Consultant’s staff.” (emphasis is this Court’s)

[27] In line with the terms and conditions contained in the letter of appointment
dated 08.08.2016, the Company in appointing all the Claimants as the Resident
Engineers had incorporated in their letters of appointment a clause reflecting
consistency with the terms contained in the letter of appointment dated 08.08.2016.
Clause 14 of the letter of appointment of all the Claimants expressly states the
following:-

“14. Termination

Termination is upon completion of the assignment or where the client instructs

a change of person due to incompetence or non-performance on yourself or if
the Project does not complete its course or is terminated by the client ahead of
schedule whichever is earlier. Either party maintains the right to terminate
this appointment by giving not less than two months notice in writing.

Gratuity shall not be paid to you if you opt to terminate your services with the
Company prior to completion of the Project and subject to the proper handing
over of all documents, etc.”

[28] To put it clearly, as the appointment of all the Claimants were on a fixed term
contract of employment, pursuant to clause 14 of the Claimants appointment letters,
the Company can only terminate their services for the following reasons or grounds :-

(i) Upon the completion of the assignment namely the Project or ,

(ii) Where the Client instructs a change of person due to incompetence or

non performance on part of the Claimants or

(iii) If the Project does not complete its course or is terminated by the Client
ahead of schedule whichever is earlier.

[29] By incorporating the various grounds or reasons for which the Claimants can
be terminated from their employment, the Company makes it abundantly clear that the
Company will not terminate the Claimants if the 3 conditions listed above had not

19
materialised or crystallised and will continue to keep them in employment until the
expiry of their fixed term contract or the fulfilment of the condition expressed in
clause 14 above.

[30] It is clear from the evidence before this Court that at the date of the
termination of all the Claimants on the 31.10.2018, the Project had not been
completed and in fact the Project completion timeline had been revised from the
original date of completion in 2020 to a later date in 2024. This can be seen from the
Media Release of the Ministry of Finance dated 12.07.2018. All the Claimants’ fixed
term contracts were also schedule to expire in line with the original date of
completion of the Project through effluxion of time. So it is clear from the wording of
the letter of appointment dated 08.08.2016 from Prasarana Malaysia Berhad and the
letters of appointment of all the Claimants , the Claimants will be kept in their
respective employment until the expiry of their fixed term contract unless the
conditions stated in Clause 14 is invoked for their termination.

[31] The evidence before this Court does not show that the Project had been
completed which would give rise to the termination of the Claimants from their
respective employment with the Company or through the expiry of their contract of
employment by the effluxion of time. Further the evidence before this Court also
clearly shows that the Project had not failed to complete its course or was terminated
by the Client ahead of schedule whichever is earlier. In th e event the Project had
failed to complete its course or was terminated by the Client ahead of schedule then
the Company could possibly succeed in its contention that in view of the failure of
the Project to complete its course or that it was terminated by the Client ahead of
schedule, a genuine redundancy situation had arisen giving reason for the Company to
reorganise or restructure its organisation which may likely lead to retrenchment of the
Claimants if there was surplus of labour.
[32] Now this Court will move to the contents of the letters of termination issued to
all the Claimants. The reasons given by the Company for the termination of all the
Claimants were the same. For convenience the salient part of the letters of
termination of all the Claimants is produced here which states that :-

“………… wish to inform you that we will be terminating your employment

with MMSB. This is due the client’s instruction to us to hold all works on
stations, long span, depot buildings changes, etc as part of the LRT3 Cost
Optimisation exercise by the Malaysia Government.

Therefore in accordance to clause 14 of your employment contract, the

Company is giving you two months’ notice with effect from 1 st September
2018. As such, your last working day with the Company would be 31 st October
2018.

As per Clause 4 of your contract, you are eligible to prorated gratuity. You
will be required to close out and submit handover Report to the satisfaction of
your supervisor.

Kindly note that it is with much regret that we had to resort to this action as
there is no similar position at MMSB Consult at this point in time ………….

[33] Having perused the contents of the letters of termination, it is apparent to this
Court that the Company had caused the termination of the Claimants due to the
Client’s instruction to hold all works on stations, long span, deport buildings changes
etc as part of the LRT3 Cost Optimisation exercise by the Malaysia Government. By
making this statement the Company naturally concedes that it is bound by the
conditions laid down in the appointment letter dated 08.08.2016 and the Ministry of
Finance media release. However nowhere in the instruction from the Client for the
Cost Optimisation exercise by the Malaysian Government, there were any instructions
for the Company to terminate any of his key personnel. The Company was also not
able to show to this Court any such instructions from the Client or Employer that

21
permission had been obtained for the termination of any of its employee. This runs
contrary to the very condition imposed by the Employer as stated in the letter of
appointment dated 08.08.2016. While the Company is shown to be complying with
the instruction of the Client in holding all works on stations, long span, depot
changes, in the absence of the any instruction from the Client or Employer as
envisaged in the letter of appointment dated 08.08.2016 on the changes to the list of
key personnel without any prior written approval will run contrary to the letter of
appointment dated 08.08.2016 and clause 14 of the appointment letters of the
Claimants. In any event the plain reading of the termination letters of the Claimants
clearly shows that the Company itself cannot demonstrate with unequivocal and clear
circumstances giving rise to a genuine redundancy of the Claimants warranting their
termination by way of retrenchment. At the time of issuing the termination letters on
the 29.08.2018, it was the Company’s position that the Client had instructed the
Company to hold the works carried out due to cost optimization exercise by the
Government of Malaysia but nowhere in the said lettersit was intimated by the
Company that such instruction to hold the works had directly caused the redundancy
of all the Claimants. The 3rd Claimant had given evidence that he had successfully
completed his probation period imposed on him by the Company and had 8 months
left before the expiry of his fixed term contract of employment. The 3rd Claimant had
also given evidence that only certain parts of the Project were put on hold and the rest
of the work on the Project proceeded as usual and the majority of the package was not
affected and his job scope never ceased to exist. The 3rd Claimant had also given
evidence that the LRT3 Cost Optimisation meeting and the design optimisation did
not affect his job scope. In any even the actual cost optimisation exercise had also not
taken place at the time the Claimants were terminated and this was confirmed by both
COW1 and COW2. The Company had acted in haste in causing the retrenchment of
the Claimants when there is no clear proof or cogent reason that cost optimisation
exercise must necessarily involve the termination of its employees especially the
Claimants in this cases. In fact the Letters of termination were issued on the
29.08.2018 but the Client’s discussion with the Company for the cost optimisation
involving site staff reduction only took place on the 29.10.2018 way after the
Claimants were informed that they will be terminated on the 31.10.2018 and this can
be seen from an email sent by one Wong Chan Keong of the Client to one Dato’
Ashok Kumar Sharma of the Company.

[34] The Company was not able to show that at the time of the termination of all
the Claimants, a genuine redundancy or surplus of labour had existed. There is no
doubt that the Claimants roles and function remained and existed at the time or even
after the termination of the Claimants from their employment as these roles were
taken over by other employees of the Company.

[35] The Company was clear in its intention when effecting the termination of all
the Claimants in that the reason for such termination was on account of clause 14 of
the appointment letter of all the Claimants yet the evidence before this Court quite
clearly cannot justify the termination of the Claimants pursuant to clause 14 as none
of the condition laid down in clause 14 were triggered justifyin g the termination of
all the Claimants. The conduct of the Company in terminating the Claimants pursuant
to clause 14 of the appointment letters was clearly in breach of the Claimants’
contract of employment with the Company that ensures security of tenure for the
duration of their fixed term contracts of employment.

[36] The Company is perfectly entitled to organise its business in the manner that it
considers best but it must be done in a bona fide manner without engaging in unfair
labour practices. The need for the termination of the key personnel/employees of the
Company and in particular the Claimants here on genuine grounds must have been a
fundamental terms of the appointment of the Company by the Empl oyer for otherwise
the Employer would not have inserted a key and important clause namely clause 1(k)
as stated above for the protection and well being of the key personnel of the
Company. The Claimants’ letters of appointment also further placed emphasis on the
genuine and acceptable reasons for the termination of the Claimants ’ services in the

23
Company which the Company must strictly comply.

[37] In selecting the Claimants for the retrenchment exercise, the Company had
argued that it had conducted a selection process of all the Claimants fairly based on
their performance by way of appraisals conducted and that all the Claimants were
found to have scored low scores compared to other resident engineers. The points
scored suggest that the Claimants were poor performers. This Court is not convinced
in the circumstances of these cases before this Court that the assessment and
appraisals were conducted fairly as none of the Claimants were informed that the
assessments were done as corollary to COW2 having identified all the Claimants for
the purposes of retrenching them making the assessment and appraisal itself suspect.
COW2 had himself identified the Claimants as the target of termination by way of the
retrenchment exercise and the appraisal and assessment done subsequently giving the
Claimants low score, underscore the Company’s conduct to find justification for
selecting the Claimants for the retrenchment exercise and this speaks volumes why 2
Resident Engineers were spared of the appraisal process with no cogen t reasons given
by the Company.

[38] This Court had also perused the email from the Chief Resident Engineer, one
Mr. Siew Kam Leong, the person whom was referred to by COW2 as the person who
had identified the Claimants for the retrenchment exercise. The email from Siew Kam
Leong dated 16.08.2018 very plainly does not reflect or demonstrate that a genuine
redundancy situation had arisen giving reasons for the retrenchment of the Claimants.
The email plainly says that reductions of staff was for reason other than redundancy
in that the employees identified were not performing their respective jobs. The
Company cannot use retrenchment process due to alleged redundancy in disguised to
remove employees who are alleged to be poor performers or non performers. For poor
performance or non performance a different sets of criteria must be satisfied by the
Company before the affected employees can be dismissed from their respective
employment.
[39] Further to the above findings by this Court, the Company had also argued that
the performance of the 3 rd Claimant was unsatisfactory in that he was not reviewing
documents, that all documents were passed on to “ARE” to review and the 3 rd
Claimant was acting as postman. The 3 rd Claimant however had dismissed these
allegations of the Company as baseless and maintained that he had performed his job
professionally. Despite there being some complaints, the 3rd Claimant was able to
offer explanations on all the matters raised. In any event the Company or the Client
could have easily availed itself the conditions under clause 14 of the 3rd Claimant’s
employment letter if there were sufficient reason to believe that the 3rd Claimant had
been incompetent or found to be not performing his job to the satisfaction of the
Client which was not the case here.

[40] It is also the Company’s stance that there had been delays in payment from
MRCB-GK which had seriously strained the Company’s resources and which had
caused extreme difficulties for the Company to pay its staff assigned to the LRT3
Project and this was also one of the reason for the Company to restructure its
operations in accordance with the cost reduction directives of the Malaysian
Government. Despite the Company stating that it was facing financial strain that was
a factor taken into account for the restructuring exercise, the evidence before this
Court shows that the purported financial strain on the Company did not prevent the
Company from hiring or recruiting new employees for the project and this was
admitted by the Company’s witnesses. The Company’s version on its financial
difficulties was not convincing enough to this Court to demonstrate its inability to
maintain the workforce that included the 4 retrenched Claimants. This Court had
taken into account that the total consultancy fees for the Project that the Company is
entitled under the letter of appointment date 08.08.2016 was in access of RM100
Million and how much of the said amount had been revised or reduced by a
subsequent Novation Agreement dated 22.02.2019 is uncertain. The Novation
Agreement itself was only signed after the Claimants had been terminated from their
respective employment from the Company. The Company was unable to show a

25
breakdown of its total operating cost and the extent of the financial burden that it
must shoulder if the 4 Claimants were not retrenched.

[41] Having considered the evidence adduced before this Court, this Court is of the
view that the evidence of the Company’s witnesses on the alleged bona fide
restructuring and reorganisation of the Company’s business that led to the
retrenchment of the Claimants is not convincing. The selection of the Claimants and
in particular the 3 rd Claimant here for retrenchment due to redundancy reveals unfair
labour practices.

[42] Pursuant to Section 30(5) of the Industrial Relations Act 1967 and guided by
the principles of equity, good conscience and substantial merits of the case without
regard to technicalities and legal forms and after having considered the totality of the
facts of the case, the evidence adduced and by reasons of the established principles of
industrial relations and disputes as stated above, this Court finds that the Company
had failed to prove on the balance of probabilities that the dismissal of the Claimant
from his employment with the Company was with just cause or excuse.

REMEDY

[43] This Court having ruled that the Claimant was dismissed without just cause or
excuse, will now consider the appropriate remedy for the Claimant. The combined
facts of this case suggest that this case is not one that is suitable for the reinstatement
of the Claimant to his former position in the Company. The Claimant’s contract of
employment was a genuine fixed term contract of employment for a two year period.
The Claimant’s fixed term contract of employment commenced on the 01.07.2017 and
was to end on the 30.06.2019. However the Claimant was dismissed from his
employment on the 31.10.2018. Had the Claimant not dismissed without just cause or
excuse, the Claimant would have served the Company for a remaining period of 8
months of the total fixed term contract period.

[44] In the case of Malayan Banking Bhd v. Mahkamah Perusahaan Malaysia &
Anor [2017] 2 CLJ 70, his lordship Collin Lawrence Sequerah, JC (as he then was)
delivering the judgment of the High Court had opportunity to deal with the question
of an employee on probation and employed on a fixed term contract wherein it was
opined by his lordship that:-

“[48] The issue for determination now is whether the second respondent
should be treated as a probationer or one employed upon a fixed term contract
for the purpose of back wages. If the former, then she would, in line with the
Second Schedule to the IRA be entitled to a maximum of 12 months back wages
which was what she had been awarded, but if the latter, then she would only be
entitled to back wages for the remaining balance contract period of five
months and two weeks …………

[54] Therefore although the second respondent was also placed on

probation, her entitlement to back wages upon being unfairly dismissed has to
be limited to the unexpired term of her fixed term contract. Any other
construction would render the whole intent and purpose of having a fixed term
contract meaningless. In light of this, I find that the case of Thangasamy
Brown is still relevant in determining the issue of back wages due to an
employee employed on a fixed term contract who has been unfairly dismissed
before the expiration of the said fixed term.”

[45] In the case of Thangasamy Brown DN Gnanayutham v. Pelabuhan Tanjung

Pelepas Sdn. Bhd. & Anor [2009] 6 CLJ 144, his lordship Justice KN Segara JCA
delivering the judgment of the Court of Appeal had the occasion to state the
following: -

“[12]………….. The Industrial Court’s decision on the issue of fix contract is

consistent with established principles of law. Having found that the appellant
was engaged for a fixed term period of six months (commencing 1 July 2000-
31 December 2000) and the contract terminating by effluxion of time on 31

27
 December 2000, there is no question of reinstatement, but only compensation
to be considered by the Industrial Court for the premature termination arising
from the constructive dismissal which occurred on 25 September 2000. In the
circumstances, we are unanimous that the Industrial Court correctly awarded
compensation consisting of the remuneration the appellant would have earned
for the balance sum of the contract…….”

[46] Based on the above cases referred, this Court holds that the computation of
compensation in the form of back wages that can be awarded to the Claimant be
limited to the remainder unexpired period of the fixed term contract with the scaling
down of the compensation if necessary for any post dismissal earnings of the
Claimant.

[47] The Claimant was paid a monthly salary of RM11,000.00. The Claimant’s
unexpired duration of the fixed term contract was 8 months. The Claimant had
confirmed that that he had been unemployed from the date of dismissal from
employment until March 2019 and had secured a job on the 23.03.2019 and continues
to be in the same employment until the date of hearing. The Claimant salary in his
new employment is RM11,125.00 per month.

[48] The Claimant is entitled to back wages upon being dismissed without just
cause or excuse which has to be limited to the unexpired term of his fixed term
contract.

[49] In assessing the quantum of back wages, this Court is bound by the principle
laid down in the case of Dr James Alfred (Sabah) v. Koperasi Serbaguna Sanya Bhd
(Sabah) & Anor [2001] 3 CLJ 541 where his lordship Justice Steve Shim CJ (Sabah &
Sarawak) in delivering the judgment of the Federal Court opined: -

“In our view, it is in line with equity and good conscience that the Industrial
Court, in assessing quantum of backwages, should take into account the fact, if
established by evidence or admitted, that the workman has been gainfully
 employed elsewhere after his dismissal. Failure to do so constitutes a
jurisdictional error of law. Certiorari will therefore lie to rectify it. Of course,
taking into account of such employment after dismissal does not necessarily
mean that the Industrial Court has to conduct a mathematical exercise in
deduction. What is important is that the Industrial Court, in the exercise of its
discretion in assessing the quantum of backwages, should take into account all
relevant matters including the fact, where it exists, that the workman has been
gainfully employed elsewhere after his dismissal. This discretion is in the
nature of a decision-making process” (emphasize is this Court’s).”

[50] This Court must take into account the post dismissal earnings of the Claimant
if there were any in order to make an appropriate deduction from the back wages to
be awarded.

[51] Having considered all the facts of case on the appropriate sum to be awarded
and after taking into account the Claimant’s evidence on earnings or income after his
dismissal from employment with the Company, this Court hereby orders that the
Claimant be paid backwages amounting to 5 months of his salary of RM11,000.00.
This will amount to:-

(i) Backwages ordered:

RM11,000.00 x 5 months = RM 55,000.00

Total amount ordered by this Court: RM 55.000.00

FINAL ORDER OF THIS COURT

[52] It is this Court’s order that the Company pays the Claimant a sum of Ringgit
Malaysia Fifty Five Thousand (RM 55,000.00) only less statutory deduction (if any)
within 30 days from the date of this Award.

HANDED DOWN AND DATED THIS 22 nd DAY OF APRIL 2021

29
 (AUGUSTINE ANTHONY)
CHAIRMAN
INDUSTRIAL COURT OF MALAYSIA
KUALA LUMPUR