INDUSTRIAL COURT AWARD - AWARD NO : 937 OF 2003 : INTER DATA TECHNOLOGIES (MALAYSIA) SDN. BHD. v VIJAYAKUMAR A/L K. BATHUMALAI

INDUSTRIAL COURT OF MALAYSIA

CASE NO. 14/4-488/01

BETWEEN

INTER DATA TECHNOLOGIES (MALAYSIA) SDN. BHD.

AND

VIJAYAKUMAR A/L K. BATHUMALAI

AWARD NO : 937 OF 2003

Before                        : PUAN SOO AI LIN – CHAIRMAN

Venue                        : Industrial Court, Malaysia, Kuala Lumpur

Date of Reference   : 13 April 2001

Dates of Mention    : 29 June 2001 & 6 August 2001

Date of Hearing      : 1 July 2002

Date of receipt of    : 1 August 2002 (from Claimant’s counsel)

written Submissions : 27 August 2002 (from Company’s representative)

                              : 13 September 2002 (from Claimant’s counsel)

Representation       : Mr. B. Mathew, Head of Human Resources & Industrial Relations, Representative of

                               the Company

                                Mr. M. Manogar of Messrs Manogar & Company, Counsel for the Claimant

Reference               : This is a reference under section 20(3) of the Industrial Relations Act 1967 arising out
                                of the dismissal of Vijayakumar a/l K. Bathumulai (“the Claimant”) by Inter Data                                 Technology (Malaysia) Sdn. Bhd. (“the Company”).

AWARD

This reference pertains to the dismissal of the Claimant by way of retrenchment on grounds of redundancy by and from the service of the Company. The Claimant alleges that his dismissal on 1 June 1998 was without just cause or excuse.

Introduction

The Claimant commenced employment with the Company as an Accounts Clerk effective 1 July 1987 vide a letter of appointment dated 7 July 1987 (CLB p.2). The Company was then known as

Toppan Moore Paragon (Malaysia) Sdn. Bhd. With effect from 1 September 1990 until he was dismissed, the Claimant was the Shipping Officer of the Company. On 1 June 1998, the Claimant was terminated from the service of the Company vide a letter of even date (CLB p.8).

At the time of his termination, he was drawing a basic salary of RM2,480.00 per month with an additional travelling allowance of RM300.00 per month. The Company in paragraph 4 of its Statement in Reply pleaded that the Claimant’s termination was due to a direct consequence of

redundancy of the Company’s Shipping/Procurement Department in that there was a diminution of the Claimant’s core responsibilities. Vide paragraph 5, it averred that the Claimant’s termination was also due to an indirect consequence of the deplorable plunge in the

Company’s overall profitability incapacitating it from absorbing any surplus/redundant labour into other branches or divisions of the Company.

It is the Company’s contention that the Claimant was dismissed with just cause or excuse.

The Claimant disputed the genuineness of the retrenchment exercise. It is his contention vide paragraph 5 of his Statement of Case that his termination was without any just cause or excuse and was tainted with mala fides and unfair industrial practice. He therefore prays that he be reinstated to his former position without any loss of wages, allowances, commission, service,

seniority, benefits and privileges both pecuniary and non-pecuniary.

The Law

It is trite law that when an employer gives reasons for the dismissal of an employee the duty of the Industrial Court is to determine whether the reasons have been made out. If the reasons

are not proved as a fact, then the inevitable conclusion must be that the termination or dismissal was without just cause or excuse. This principle was laid down by Raja Azlan Shah CJ (as he then was) in the Federal Court case of Goon Kwee Phoy v. J & P Coats (M) Sdn. Bhd. [1981] 2 MLJ 129. It is also trite law in industrial relations jurisprudence that the burden is on the employer to prove on a balance of probabilities his case against the Claimant. In the present case, the

burden is on the Company as the employer to justify on a balance of probabilities the retrenchment exercise.

The Issue

The main issue before this Court thus is whether the reasons for the Claimant’s termination as given by the Company have been made out. In other words, whether the dismissal of the Claimant by the Company in the circumstances of the case was with or without just cause or excuse.

The Law on Retrenchment

The Court of Appeal in William Jacks & Co. (M) Sdn. Bhd. v. S. Balasingam [1997] 3 CLJ 235 speaking through Gopal Sri Ram JCA explains the term “retrenchment” as follows :

“ 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 SK Das J in Hariprasad v. Divelkar AIR [1957] SC 121 at p 132). ”.

His Lordship went on to say:

“ 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 case. It is well-settled that an employer is entitled to organize his business in the manner he considers best. So long as that managerial power is exercised bona fide, the decision is immune from examination even by the Industrial Court. However, the Industrial Court is empowered, and indeed dutybound, to investigate the facts and circumstances of a particular case to determine whether that exercise of power was in fact bona fide. ”.

In the Court of Appeal case of Harris Solid State (M) Sdn. Bhd. & Anor v. Bruno Gentil Pereira & Anor [1996] 4 CLJ 747, Gopal Sri Ram JCA at p.767 reiterated –

“ … An employer may re-organise his commercial undertaking for any legitimate reason, such as promoting better economic viability. But he must not do so for collateral purpose … … … . ”.

In the case of East Asiatic Company (M) Bhd. v. Valen Noel Yap [1987] ILR April 363, the learned Chairman stated as follows :

“ For it is the right and privilege of every employer to reorganise his business in any manner he thinks fit for the purpose of economy or even convenience; and if by implementing a reorganising scheme for genuine reasons of better management and economy the service of some employees become excess of requirements, the employer is entitled to discharge such excess. But this right of the employer is limited by the rule that he must act bona fide and not capriciously or with motives of victimisation or unfair labour practice. Nor does this right for instance entitle an employer, under the cover of reorganisation, to rid himself of employees who have offended him in some way or to promote the interests of some favoured employees to the detriment of others. ”. Applying the principle of law to the facts of the present case, this Court will have to determine –

(1) whether there existed a redundancy situation in the Shipping/Procurement Department of the
     Company;

(2) if there was a redundancy situation, whether the Claimant’s position as Shipping Officer was
     in fact redundant; in other words whether the Claimant had by reason thereof become surplus
     to the requirements of the Company;

(3) whether the retrenchment exercise leading to the Claimant’s dismissal was bona fide or
     otherwise.

Evidence, Evaluation and Findings

The Company’s Case

The following facts are not in dispute. The Company is in the business of manufacturing computer forms also known as business forms, security papers which include cheque books, and plastic cards. It also deals with the sale and service of certain office automation equipment. There were two staff members in the Company’s Shipping/Procurement Department. One was the Claimant as the Shipping Officer and the other, a Mr. Tee Hock Chai, as the Purchasing Officer.

The Company called its Managing Director, Dato’ Dr. Rueben Jayakumar a/l J Samathanam (COW 1) to give evidence on its behalf. At the material time, COW 1 was the Managing Director of the Company for the Asia Pacific region. He was also the chairman of the management committee which decided on the Claimant’s termination.

As pleaded in paragraphs 2, 3 and 8 of the Statement in Reply, COW 1 gave evidence that as the Shipping Officer, the Claimant’s core responsibilities or primary task was to source and procure raw materials for the Company’s manufacturing operations from both local and overseas vendors. His secondary task was to procure machinery spare parts from overseas for factory operations. In respect of overseas procurement, the Claimant was involved in the whole spectrum of work involving inter alia shipping documentation, freight tariffs, containerization, bills of ladings, customs clearance/exemptions, and the related quotidian duties. It is COW 1’s evidence vide his affidavit (Aff. – COW 1)and oral testimony in Court that the economic crisis or economic downturn of the country then prevailing had seriously affected the operations of the Company. The Company’s raw material imports, as seen in COB p.7, dropped from RM17,834,445 in 1996 to RM7,831,183 in 1998 approximating a drop of 60.3% in raw material procurement volume. COB p.7 is the Company’s Audited Profit and Loss Accounts for 1996 to 1999. It was submitted by Mr. B. Mathew, Head of Human Resources and Industrial Relations of the Company who represented the Company at the hearing, that because the raw material imports were pegged against the US dollar, the Company’s business and in particular the Company’s raw material imports were badly affected and drastically reduced by the nation’s 1997 currency crisis. He claimed that this fact had been adduced during cross-examination of COW 1. He also cited in support of his submission an article of Dato’ Dr. Cyrus Das entitled “Reorganisation and Retrenchment in Malaysian Employment Law” published in [1999] 2 ILR at p.i.

With due respect to Mr. B. Mathew, this Court could not find such evidence of COW 1 in the Notes of Proceedings. In its absence, this Court could only surmise that that information must have come from the Bar during the hearing and hence was not recorded. In any event, this Court is of the opinion that it could and should take cognisance or judicial notice of the economic recession which hit the country in 1997. As stated by Dato’ Dr. Cyrus Das in his article, the economic recession which came on in 1997 principally emanated from a currency crisis in the region. He wrote : “Initially the sectors most affected were those dependent on foreign exchange transactions. These were largely businesses that were dependent on foreign purchases for their operations like the purchase of raw material or equipment, which invariably was pegged on the US dollar.”. On the evidence, the Company in the present case was dependent on its raw material imports for its manufacturing operations. It also purchased on an ad hoc basis machinery spare parts from overseas. In light of the aforesaid, its contention that its raw materials imports were badly affected and drastically reduced by the nation’s 1997 currency crisis as evident in COB p.7 is therefore well supported. This Court also notes that the Claimant’s learned counsel, Mr. M. Manogar of Messrs Manogar & Company did not challenge COW 1’s evidence on the 60.3% shrinkage of raw material imports but instead accepted it. Neither had the learned counsel discredited COB p.7 during the cross-examination of COW 1.

It is the Company’s submission that as it was heavily dependent on raw material imports from overseas, it was also heavily dependent on the services of its Shipping Officer, the Claimant. But due to the drastic drop in the volume of raw material imports, COW 1 stated that the Claimant’s job volume likewise was also drastically reduced. There was a drastic 60.3% reduction or diminution of his primary job scope of raw material procurement. It is also the Company’s submission that there was also a shrinkage in the Claimant’s secondary task of spare parts procurement which function, to begin with, as pleaded in paragraph 8 of the Statement in Reply, was “occasional and/or ad hoc” in nature. It is COW 1’s uncontroverted evidence that many of the Company’s printing machinery spare parts were in fact fabricated locally. Those that were purchased overseas constituted a very small volume. COW 1 further testified during cross-examination that due to the economic downturn, the Company’s factory operation was cut from 3 shifts to 1 shift at the material time. This Court is able to accept the Company’s submission that the foregoing operational shrinkage from 3 shifts to 1 shift must have also a consequent shrinkage effect on the Claimant’s secondary task of spare part imports for factory operations. For, as submitted by Mr. B. Mathew, it is only logical to deduce that less wear and tear of factory machines due to the aforesaid operational shrinkage must have a consequent shrinkage effect on the Claimant’s secondary task of spare part imports. It is COW 1’s evidence that by reason of the drastic 60.3% drop in the volume of raw material imports and the parallel reduction or diminution of the Claimant’s job volume or scope of functions, primary as well as secondary, and the fact that Mr. Tee Hock Chai’s job volume too was also drastically reduced, the Company did not see any need to continue maintaining its Shipping/Procurement

Department nor any justification to maintain a full time Shipping or Purchasing Officer. It was the Company’s view that the Claimant’s job had thereby become redundant. Consequently, the Company decided to close down its Shipping/Procurement Department and hence the termination of the Claimant as well as Mr. Tee Hock Chai. It is also in evidence that after the closure of the Shipping/Procurement Department, the purchase of raw materials which COW 1 stated had to be sourced from local suppliers because of the Company’s tight cash flow and which were in smaller volume were distributed to existing staff, namely the Accountant and the Accounts Clerk. It is his evidence that the procurement of raw materials and spare parts from overseas nearly ceased. COW 1 had also given evidence during cross-examination and re-examination that after the closure of the Company’s Shipping/Procurement Department in June 1998, the Company had not till to date (i.e date of hearing in July 2002) hired any Shipping/Purchasing Officer nor had it revived its Shipping/Procurement Department. The foregoing, with respect, appears to be the basis for the Company’s averment in paragraph 4 of its Statement in Reply that the Claimant’s termination was due to a direct consequence of redundancy of the Company’s Shipping/Procurement Department. As mentioned earlier, vide paragraph 5 of its Statement in Reply, the Company had also pleaded that the Claimant’s termination was also due to an indirect consequence of the Company’s deplorable plunge in its overall profitability incapacitating it from absorbing any surplus/redundant labour into other branches or divisions of the Company.

With respect to the aforesaid, it is COW 1’s evidence during cross-examination that with the economic downturn, the Company’s sales volume dropped drastically. As stated earlier, the Company’s operation was cut from 3 shifts to 1 shift. COW 1 confirmed that the Company had suffered tremendous financial losses as evident from the Company’s Audited Accounts; for the year 1997, the pre-taxation losses were RM2,010,943.00 (COB p.27), for the year 1998, they were RM3,017,306.00 (COB p.27), and for the year 1999, they were RM6,443,244.00 (COB p.17). This evidence which shows progressive pre-taxation losses was elicited from COW 1 during re-examination. During cross-examination, COW 1 had given uncontroverted evidence that the net sales for the said years likewise show that the Company had incurred losses. COW 1 further testified that with the business downturn, it had to and did take various austerity measures which began in the later part of 1997. They include cutting down on wastages, cutting

down on unnecessary procurement of materials, cutting down on certain expenditures, procuring raw materials at competitive prices, reduce staff overtime, reduction in overseas trips, no renovation of offices, etc. This was followed with a reduction in staff. It is COW 1’s evidence that since 1998 till to date the manpower in the Company was reduced from 200 staff members to 98.

On the basis of all the foregoing, it is the Company’s submission that the Company’s financial distress was bona fide. Hence, as pleaded, its inability to absorb any surplus/redundant labour into other branches or divisions of the Company.

The Claimant’s Case

The Claimant disputed the Company’s case. It is his contention that he was not in fact redundant. He based his arguments on the following :

(a) his scope of functions as the Shipping Officer had not totally ceased; and

(b) the Company had hired another person by the name of Shaun to replace him after his dismissal.

The Court proposes to deal with issue (b) first. In respect of this allegation, COW 1 confirmed in cross-examination that the Company did employ Shaun after the Claimant’s dismissal. But he denied that Shaun was employed to carry out and perform the Claimant’s duties and functions. He stated that Shaun was not a Shipping or Purchasing Officer but was only an inventory clerk. It is his evidence in re-examination that Shaun was hired to assist Mr. Mohan Jayakumar, the Company Inventory Assistant who was in charge of raw materials. And Mr. Mohan Jayakumar, according to him, was never involved in the purchasing or procurement of raw materials. It is his further evidence that Shaun was with the Company for a very short while and when he left, no replacement staff was hired. COW 1’s evidence was confirmed in all respects by Mr. Vincent Thomas a/l Jacob Sigamoney, the Company’s Delivery Co-ordinator and its second witness (COW 2). COW 2 confirmed that Shaun was with the Company for only 3 months.

The Claimant, it is to be observed, was unable to respond to the aforesaid evidence. As submitted by Mr. B. Mathew, in light of his claim, the Claimant should have produced Shaun in Court so as to enable the Company to cross-examine him on the matter. But this was not done. In the premises, this Court is of the opinion that the Claimant has failed to establish issue (b) against the Company. With respect to issue (a), it is the Claimant’s contention that the Shipping/Procurement Department still continued to function after he left. It is his evidence in cross-examination that whilst Mr. Tee Hock Chai as the Purchasing Officer was in charge of purchasing local products, it was his function to source and procure local raw materials. This aspect of the job did not cease but instead continued as confirmed by COW 1. As for raw material imports, it is the Claimant’s evidence that the Company still imported cheque papers from France and Germany after his termination. This fact was not denied by the Company. COW 1 confirmed in cross-examination that the cheque papers had to come from overseas. But he also said that compared to the rest of the raw material imports, the volume of cheque paper purchases was very small almost negligible and that these purchases were done through local agents. The Claimant did not dispute that the purchases were done through local agents for according to him, that had always been the case. But it is his uncontroverted evidence during cross-examination that that notwithstanding, he still had to undertake the whole spectrum of work involved in overseas procurement, namely shipping documentation, bills of ladings, customs clearance, etc. (see paragraph 8 of the Statement in Reply). 

The Claimant also contended vide paragraph 10 of his Statement of Case and paragraphs 8 and 9 of his affidavit (Aff-CL) that although he was a Shipping Officer, he also carried out other extra functions which he claimed the Company had acknowledged vide its letter dated 3 June 1998 (CLB p.7). The extra functions were “supervising imports and exports, purchasing of paper and machine spare parts and associated administration work.”. With due respect to the Claimant, it appears to the Court that his aforesaid contention is baseless. CLB p.7 is a testimonial in his favour issued to him upon his termination by the then Managing Director, Mr. I.M. Brimble. Paragraph 2 of the letter, with respect, put paid to the Claimant’s contention when it stated : “As Shipping Officer, Mr. Kumar was in charge of import and export, purchasing of paper and spare machine parts and associated administration work.”. It is obvious that these were not extra functions but his duties as Shipping Officer. Relying on another letter of Mr. I.M. Brimble dated 18 December 1997 (CLB p.6) whereby he was given an increase in car allowance to RM300.00 per month as the Company “… … recognizes the need for greater use of your own vehicle on Company business.” and “… … management appreciates the extra effort you are putting in.”, the Claimant contended that the extra allowance was for extra jobs. He argued that since it was given to him at the time whenausterity measures were already implemented, how could the Company then reconcile with its claim of 60.3% drop in raw material procurement. It is the submission of his learned counsel that the Company’s allegations of a drop in raw material procurement volume and the ensuing financial losses were not true nor tenable. In answer to the aforesaid contention, COW 1 pointed out that the car allowance was given in December 1997 whilst the Claimant was terminated in June 1998, i.e a period of 6 months apart. According to him, in an economic crisis, there can be a lot of difference in the economic situation within a period of 6 months. He pointed out that Mr. I.M Brimble who issued CLB p.6 was, in any event, a member of the management committee which decided on the Claimant’s termination. It may be of interest to note that in CLB p.7 (testimonial letter), Mr. I.M. Brimble had written that the Claimant’s retrenchment was due to the significant downsizing of the Company’s operations due to the current economic situation. In any event, it appears to the Court, based on the evidence adduced, that the Claimant’s aforesaid contention is inconclusive and insufficient by itself to offset the documentary evidence adduced by the Company to establish redundancy of the Shipping/Procurement Department and the ensuing financial losses. In further support of his contention that he was not redundant as his job scope had not ceased, the Claimant referred to a Mr. Michael John in his evidence in chief whom he claimed had absorbed his job and who had contacted him for help on shipping matters. He also said that both of them had worked together before and that Mr. Michael John reported to him. It appears to the Court, in light of COW 1’s evidence that the Claimant’s residual job was distributed to the Accountant and the Accounts clerk, that it is unlikely that Mr. Michael John who reported to the Claimant could have been or was a member of the accounting staff. And since the Shipping/Procurement Department had totally closed down in June 1998, the existence of Mr. Michael John, with respect, remains a mystery. Since the Claimant had not produced him in Court to testify and to be cross-examined, this Court finds that the Claimant has failed to establish his contention. In the circumstances, it is not necessary for the Court to draw an adverse inference under section 114(g) of the Evidence Act 1950 against the Claimant as was suggested by the Company’s representative. In conclusion, to cap the Claimant’s case, it is Mr. M. Manogar’s argument that in view of the Company’s claim of drop of 60.3% in raw material procurement, then surely the Claimant could have continued to procure the almost 40% raw materials. He submitted that on that basis it appears, logically, that the Claimant’s position was in fact not redundant. Whether there was redundancy and the Claimant’s position was in fact redundant Having considered the Company’s case and the Claimant’s case as discussed above, this Court finds on the totality of the evidence adduced that there is ample proof to support the conclusion that there existed a genuine redundancy situation in the Company’s Shipping/Procurement Department and that the Claimant had become surplus to the Company’s requirements.

With regards to the Shipping/Procurement Department and the Claimant’s position as the Shipping Officer, this Court is satisfied that the Company has established the following :

(a) the economic downturn emanating from the nation’s 1997 currency crisis had badly affected the
     Company’s raw material imports which suffered a drop of 60.3% between the years 1996 and 1998;

(b) there was a parallel drastic 60.3% reduction or diminution of the Claimant’s primary job scope of raw
     material procurement;

(c) the sourcing and procurement of local raw materials undertaken by the Claimant was of small volume.
     COW 1’s evidence to this effect was not challenged, contradicted or rebutted by the Claimant;

(d) the sourcing and procurement of machine spare parts oversees done on an occasional or ad hoc basis by
     the Claimant was also of small volume. The Claimant did not dispute this. COW 1’s further evidence that
     many of the Company’s printing machinery spare parts were in fact fabricated locally was also not
     disputed;

(e) COW 1’s evidence that in comparison to the rest of the raw material imports, the purchase of cheque
     papers from France and Germany which was done through local agents was also of small volume was
     also not disputed by the Claimant. Correspondingly, the shipping documentation undertaken by him;

(f) as testified by COW 1, in light of the foregoing paragraphs and in view of the also drastic reduction in the
     job volume of the Claimant’s colleague, Mr. Tee Hock Chai, the Company saw no necessity to continue
     maintaining its Shipping/Procurement Department nor any justification to maintain a full time shipping or
     Purchasing Officer;

(g) the Shipping/Procurement Department was closed down in June 1998 and the Claimant’s residual jobs
     {see paragraphs (c), (d) and (e)} were distributed to the existing accounting staff;

(h) to date, the Company had not hired any shipping or Purchasing Officer or revived its Shipping/
     Procurement Department since its closure in June 1998.

From the foregoing, it is clear that the Claimant’s job did not cease to exist but that there was a severe 60.3% reduction or diminution or shrinkage of his job. This Court is also satisfied that the Company has also established that its financial distress was bona fide. This is evident from the uncontroverted evidence of COW 1 to the following effect : the progressive 3 years pre-taxation losses, the 60.3% shrinkage of raw material imports, the operational shrinkage from 3 shifts to 1 shift, the various austerity measures taken, the reduction in manpower from 200 staff members to 98, and the indefinite closure of the Shipping/Procurement Department. Based on the facts as established in regard to the Shipping/Procurement Department and the Claimant’s position, it is Mr. B. Mathew’s submission, and as also pleaded in paragraphs 11(c) and 13(a), (b) and (c) of the Statement in Reply, that the Company is entitled under industrial law to the following :

(a) on bona fide grounds of profit maximization, economy, convenience and business efficiency, the
     Company has a right to reorganize itself. It had to close down its Shipping/Procurement Department and
     distribute whatever residual aspects of the Claimant’s work to existing accounting staff. There was a
     necessity to run its operation with skeleton power;

(b) the Company has the right to shed off where necessary redundant or surplus labour. As there was a
     drastic 60.3% reduction or diminution of the Claimant’s job, it had the right to terminate him on grounds
     of shrinkage of jobs; and

(c) the right or prerogative to decide on the number of staff and that is whether it is necessary to keep a
     Shipping Officer or not in light of the drastic 60.3% drop in raw material procurement rest with the
     Company and not with the Claimant.

In light of the many authorities on the law on retrenchment in respect of these issues, this Court agrees with the submissions of the Company’s representative. On the established facts and circumstances of the case, the Company was justified to exercise such rights. Suffice for the Court to mention a few of the authorities as cited by Mr. B. Mathew. In the case of Trebor (M) Sdn. Bhd. v. Tamilselvam a/l Gopal [1987] ILR February 99, the learned chairman referred to Award No. 14/1969 which enunciated the following principles :

“ It is the right of every employer to reorganise his business in any manner for the purpose of economy or convenience provided he acts bona fide. He should not carry out the re-organisation for the purpose of victimizing any of this employees and getting rid of his services. ”. (emphasis added). The learned chairman in that case had further stated :

“ But the employer has a right to determine of his labour force consistent with his business and organisation and if by the implementation of a re-organisation scheme adopted for reasons of economy and better management of the business the services of some of the employees become excess of the requirement of the business the employer is entitled to discharge such excess. ”.

In the case of Cycle & Carriage Bintang Bhd. v. Cheah Hian Lim [1992] 2 ILR 400, the learned chairman at page 403 had diligently set out the general principles in Industrial Law on retrenchment. The salient points therein relevant to the present case are as quoted below :

(a) “It is for the management to decide the strength of its staff which it considers necessary for efficiency in its
     undertaking. When the management decides that the workmen are surplus and that there is, therefore, a
     need for retrenchment, an arbitration tribunal will not intervene unless it is shown that the decision was      capricious or without reason or was mala fide or was actuated by victimisation.”; (emphasis added).

(b) “An employer has a right to determine the volume of his staff consistent with his business and if by the
     implementation of the re-organisation scheme adopted for reason of economy and better management,      services of some employees become excess of requirements the employer is entitled to discharge such
     excess.”; (emphasis added).

(c) “Retrenchment of an employee can be justified if carried out for profitability, economy or convenience of
     the employer’s business. Services of an employee may be well become surplus if there was reduction,
     diminution or cessation of the type of work the employee was performing. ”. (emphasis added).

Finally, this Court would like to quote Nik Hashim J. in the case of Stephen Bong v. FCB (M) Sdn. Bhd. & Anor [1997] 3 MLJ 411. His Lordship had stated as follows :

“ Retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as surplusage (see Pipraich Sugar Mills v. Pipraich Sugar Mills Mazdoor Union AIR 1957 SC 95). ”.

His Lordship held in that case 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. The Industrial Court was right when it held that the applicant was redundant as there was reduced work and reduced business within the company which made the applicant’s position as an executive director in charge of one of the groups redundant. ”. (emphasis added).

The Claimant’s learned counsel, it is to be noted, in an attempt to distinguish the above cases relied upon by the Company, submitted that the latter was misapplying the case laws. It is Mr. M. Manogar’s submission that all those cases had redundancy proven and the companies were in genuine restructuring exercise. But the issue of redundancy has not been proven in the instant case and as such the Claimant’s retrenchment was unlawful.

With respect to the learned counsel, such blanket statement without condescending to particulars is insufficient to disprove the Company’s case. On the totality of the evidence adduced before the Court taking into account the Company’s case and the Claimant’s case, and after perusing and considering the submissions of the parties and applying the principles of law applicable thereto, this Court is satisfied that on a balance of probabilities, the Company has established that there was a redundancy situation in the Shipping/Procurement Department and that the Claimant’s position as the Shipping Officer was in fact redundant. This Court may add that as the Claimant was surplus to the requirements of the Company, the latter was entitled to discharge him. But this right of the Company is limited by the rule that it must act bona fide. This Court will therefore have to determine whether the retrenchment exercise culminating in the Claimant’s dismissal was bona fide or otherwise. Whether the retrenchment exercise was bona fide The Claimant contended that his termination was tainted with mala fides and unfair industrial practice. He raised three matters or issues as the basis for his contention. Vide his pleading and affidavit (Aff.-CL), he stated that firstly, he was never warned or informed verbally or in writing prior to 1 June 1998 of his termination. Secondly, the Company had ill motives towards him when it refused to accept his proposed resignation in early 1998 because of a better job offer but chose to retrench him 5 months later on 1 June 1998 without any indication of his impending termination. Thirdly, vide his oral testimony and submission in Court, he contended that the Company’s imprudent purchase of two new S Class 320 Mercedes Benz costing over RM600,000.00 each during its so-called economic crisis negated the genuineness of its austerity measures and the bona fides of its alleged financial losses. Regarding the first issue, the evidence shows that the Claimant was only officially notified of his termination on the same day i.e 1 June 1998 vide CLB p.8 of even date. Unofficially, he said that he came to know of his termination the day before through rumours

circulating in the Company. However, it is the Company’s case through its witnesses COW 1 and COW 2 that the Claimant had taken cognisance of his termination 2 months earlier. COW 2 testified in examination in chief that as the Company’s Delivery Co-ordinator in charge of the warehouse wherein the raw material imports were stored, he frequently came into contact with the Claimant. About 2 months before his termination, the Claimant had dropped by at the warehouse stating casually that his name was in the retrenchment list. In cross-examination, COW 2 stated that the Claimant had said that only once and within the month of his termination but he could not be sure as it was all so long ago. The Claimant in his evidence in chief disputed COW 2’s evidence that he had told him that his name was in the retrenchment list. It is his evidence that all he had said was that he heard that his name could be in. In cross-examination, he denied that his immediate superior, Mr. Mohanadas, the Finance Director had told him of his impending termination. He also disagreed with Mr. B. Mathew that about 2 months before his termination he had told Mr. Timothy James, the Accountant that his name was in the retrenchment list. In re-examination, he said that he came to know of his termination the day before when he was told about it verbally and unofficially by the Accounts Executive. It was then that he shared the same with COW 2. It is COW 1’s evidence vide his affidavit (Aff.-COW 1) that the Claimant had taken cognisance of his impending termination by way of the various austerity measures so implemented by the Company and his reduced scope and volume of work in the procurement of raw materials. It is to be observed that in respect of this, the Claimant had made no attempt to either deny or dispute the Company’s contention. Both he and his learned counsel chose not to address the issue at all.

Upon a consideration of the evidence as adduced, and in light of the background of the case as has been established, this Court is of the opinion that the Claimant could not in the circumstances of the case in all honesty say that he had no inkling or forewarning whatsoever of his impending termination. For as early as 18 December 1997 when he was issued with CLB p.6, he was appraised of the Company’s adverse economic situation and the austerity measures that were being implemented. CLB p.6 had also indicated that in such environment “cutbacks in staff levels are inevitable” notwithstanding that he was at the time being given an increased car allowance. He had also testified in cross-examination and reexamination that he had himself undertaken cost cutting measures. And surely in his position and experience as the Shipping Officer, it cannot be gainsaid that the Claimant was not aware of the drastic drop in raw material procurement in the Shipping/Procurement Department and the consequent drastic reduction or diminution of his core responsibilities. In any event, as testified by COW 1, as the Claimant was in the executive and managerial level, the Company’s executive terms and conditions of service which provides for one month’s salary in lieu of one months’ notice applied to him. The Company had duly complied with this as evident in the letter of termination (CLB p.8). Mr. M. Manogar’s contention that the statutory notice period under section 12 of the Employment Act 1955 should apply has no basis as the Claimant with a salary of RM2,480.00 per month is not an employee within the meaning of the Act. In the circumstances, this Court is of the opinion that the Claimant’s allegation of unfair industrial practice is not established. Regarding the second issue, it is the Claimant’s evidence vide paragraph 16 of his affidavit that in early 1998 he was offered a job as Shipping Officer by a leading company called Toplink Technologies for a higher salary and with better benefits. But the Company’s Chairman had refused to let him take up the job with a promise that he would be rewarded for his hard work if he stayed on. He also stated in cross-examination that his immediate superior Mr. Mohanadas and Mr. Tan Kwang Wah, the former Finance Director to whom he reported in 1997 had also over a lunch invitation persuaded him not to leave. In light of his subsequent termination, it is his contention that the Company bore ill motives towards him as the management should have accepted his proposed resignation.

With respect to this issue, it is only right and pertinent for this Court to highlight the good relationship existing between the parties as evident from the evidence so adduced. It was elicited in cross-examination of the Claimant that throughout his tenure of service, the Company had been generous towards him in terms of increments, promotions and bonuses. Indeed, he deserved them as according to COW 1, the Claimant was a reasonably good worker. The Claimant had also admitted that by its good treatment of him, the Company valued his services and had good intentions towards him. He also admitted that he had a good working relationship with the Company’s Chairman and the management. It is in evidence that the Chairman had attended his wedding and as a wedding gift had blessed him with a holiday trip to Macau, presumably for his honeymoon. And whenever his secretary was on leave, the Chairman would want the Claimant to take over as he had great confidence in him. Against the backdrop of the above evidence which points to an extremely good relationship between the Claimant and the Chairman/Management, this Court cannot but agree with the submission of Mr. B. Mathew that had the Chairman foreseen the closing down of the Company’s Shipping/Procurement Department 5 months down the line, on a balance of probability, he would have definitely advised the Claimant to take the aforesaid job offer. Likewise the management.

This Court also agrees with Mr. B. Mathew that if the Company had any slightest intention to get rid of the Claimant on mala fide grounds, as imputed by the Claimant, then the incident of the Claimant’s job offer with Toplink Technologies would have been a good opportunity for the Company. Since the purported job offer from Toplink was in January 1998 and the Claimant’s termination was in June 1998. Conversely, it appears to the Court that by the very fact that the Chairman and the management had persuaded the Claimant to remain at a time when austerity measures were already being implemented, and as evident also by the Company’s grant of an increase in car allowance to him also at that time, all these go to show that neither the Chairman nor the management had anticipated having to close down the Shipping/Procurement Department. For, as stated earlier by COW 1 in his evidence, in an economic crisis, there can be a lot of difference in the economic situation within a period of 5 – 6 months. In the premises, this Court is unable to accept the Claimant’s contention that the Company bore him ill will when it refused to accept his resignation.

Lastly, the issue concerning the luxury cars. COW 1 during cross-examination had admitted to the Company’s buying of the said cars, one for the Chairman and one for him as the Managing

Director, but could not justify their purchase at a time when austerity measures were being implemented by the Company. It is the submission of Mr. M. Manogar that the purchase of the two new S Class 320 Mercedes Benz only goes to show the blatant disregard for prudence and welfare of the Company and staff. He submitted that the allegation that the Company was running at a loss was untenable as the Company on the one hand ran at a loss and at the same time indulged in buying luxury cars. It is to be observed that in an attempt at offering some explanation, COW 1 lamely stated that the cars were not maintained long and were subsequently sold off. He now drives a Proton Perdana. He also said that the cars could have been bought through the Chairman’s personal funds. He stated further in re-examination that the Chairman had pumped in lots of his personal funds into the Company to sustain its losses.

This Court agrees with Mr. M. Manogar that in the absence of any proof, the Company’s claim that it was the Chairman who had purchased the luxury cars was untenable. For, as good sense would dictate, and as submitted by the learned counsel, no chairman would use his personal money and buy a luxury car for the Company use nor buy a luxury car for the Managing Director’s use. It must have been Company’s funds. In light of the Company’s purchase of the two luxury cars amidst its economic crisis, this Court appreciates the Claimant’s contention that it does put to question the genuineness of the Company’s austerity measures and the bona fides of its financial losses. On the other hand, this Court has to ask itself, in light of all the established facts and evidence in the case, whether this one adverse factor is sufficient to tilt the balance against the Company? In the Court’s opinion, on a balance of probabilities, it does not. The fact of the purchase of the luxury cars by itself cannot outweigh all the other factors found in favour of the Company nor does it alter the fact that the Claimant was indeed redundant. It is therefore this Court’s finding that based on equity, good conscience and the substantial merits of the case without regard to technicalities and legal form, on a balance of probabilities, the Company has discharged its burden of proving actual redundancy of the Shipping/Procurement Department of the Company and that the Claimant was surplus to the requirements of the Company, i.e he was redundant. This Court is also satisfied on the totality of the evidence that the Claimant had been dismissed with just cause or excuse. The Claimant’s claim that he was dismissed without just cause or excuse is accordingly dismissed.

HANDED DOWN AND DATED 31 DECEMBER 2003

( SOO AI LIN )

CHAIRMAN

INDUSTRIAL COURT