Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd

[2013] 1 ILJ (Aslina Joned Ch) 213

A Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd

INDUSTRIAL COURT (KUALA LUMPUR) — AWARD NO 1293 OF

2012 (CASE NO 5/4–332 OF 2010)
B
ASLINA JONED CH
28 SEPTEMBER 2012

C Labour Law — Employment — Dismissal — Redundancy — Restructuring

exercise that led to claimant’s redundancy — Whether restructuring exercise was
bona fide — Whether claimant had sufficient notice of retrenchment — Whether
there was redundancy — Whether dismissal with just cause or excuse

D Measat Broadcast Network Systems Sdn Bhd (‘the company’) embarked on a

re-organisation and retrenchment exercise to optimise productivity and
efficiency as the company was disproportionately sized. This exercise led to 63
employees being identified as surplus in various divisions of the company. The
claimant, who held the position of IT architect in the company, was one of the
E identified surplus employees dismissed by the company on grounds of
redundancy. The company paid the claimant a sum of RM197,016.55, which
comprised of retrenchment benefits, contractual bonus, leave pay and payment
in lieu of notice less statutory deductions up until the termination date. The
claimant refuted the company’s basis for warranting the termination by reason
F of redundancy and contended that his dismissal was without just cause or
excuse. This was a Ministerial reference to the Industrial Court under s 20(3) of
the Industrial Relations Act 1967 (‘the Act’) in respect of this dismissal. The
claimant contended that the termination was carried out as an act of
victimisation, discriminatory and contrary to the rules of natural justice and
G thus prayed for an order that he be reinstated to his former position without
any loss of seniority, wages or benefits. The company maintained that the
dismissal of the claimant was part of a bona fide exercise to restructure and that
it had no other option but to pursue this course of action.

H Held, dismissing the claim:

(1) The decision to make the claimant’s post redundant was consistent
with the Hay Report’s Work Force Strategy proposal in flattening the
organisation levels in respect of the reporting structures. The Director
of IT Department and the claimant’s superior, who had testified on the
I selection process for candidates that were made redundant in his
department, had explained how the role of IT architect held by the
claimant was identified as redundant. This witness had also
highlighted that the claimant was not the only employee to be
retrenched from his department. Further, the organisation chart of the
214 Industrial Law Journal [2013] 1 ILJ

company also showed that no one had replaced the claimant’s position A
as it no longer existed (see para 22 & 32).
(2) The manner in which the company carried out the re-organisation
exercise was systematic and in accordance to good labour practice. On
a balance of probabilities the company was acting bona fide in B
embarking on the re-organisation exercise. As such, the claimant’s
redundancy situation leading to retrenchment was bona fide (see para
48).
(3) Pertaining to the contention of the claimant that he was not consulted,
it was found that there was no legal obligation on the company to C
consult or warn its employees before the retrenchment exercise. Given
the circumstances of this case, the claimant had sufficient notice of his
retrenchment and the company had exhausted all possible avenues to
retain the claimant including considering alternative positions for him.
There was no evidence that the company had acted mala fide in D
retrenching the claimant. As such, the company had dismissed the
claimants with just cause and excuse (see para 54-55).

[Bahasa Malaysia summary

Measat Broadcast Network Systems Sdn Bhd (‘syarikat tersebut’) telah E
memulakan amalan penstrukturan semula dan pembuangan kerja untuk
memoptimumkan produktiviti dan keberkesanan kerana syarikat tersebut
tidak seimbang saiznya. Amalan ini menyebabkan 63 orang pekerja yang
dikenalpasti sebagai lebihan di pelbagai bahagian syarikat tersebut. Penuntut,
yang memegang jawatan arkitek teknologi maklumat di syarikat tersebut, F
adalah salah seorang daripada pekerja lebihan yang dipecat oleh syarikat
tersebut atas alasan lebihan pekerja. Syarikat tersebut telah membayar
penuntut sejumlah RM197,016.55, yang terdiri daipada faedah pembuangan
kerja, bonus kontraktual, cuti gaji dan bayaran menggantikan notis yang
kurang potongan statutori sehingga tarikh penamatan. Penuntut membantah G
asas syarikat tersebut mewajarkan penamatan itu oleh sebab lebihan pekerja
dan berhujah bahawa pemecatannya adalah tanpa sebab atau alasan yang adil.
Ini adalah rujukan Menteri ke Mahkamah Perusahaan di bawah s 20(3) Akta
Perhubungan Perusahaan 1967 (‘Akta tersebut’) berkaitan pemecatan ini.
Penuntut berhujah bahawa penamatan itu dilaksanakan sebagai perbuatan H
yang menindas, diskriminasi dan bertentangan dengan rukun keadilan asasi
dan dengan itu memohon perintah agar dia dikembalikan jawatan asalnya
tanpa apa-apa kehilangan kekananan, gaji atau faedah. Syarikat tersebut
menegaskan bahawa pemecatan penuntut adalah sebahagian daripada amalan
bona fide untuk penstrukturan semula dan bahawa ia tiada pilihan lain tetapi I
untuk meneruskan tindakan tersebut.
Diputuskan, menolak tuntutan:
(1) Keputusan untuk menjadikan jawatan penuntut lebihan adalah
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 215

A konsisten dengan cadangan Laporan Hay berhubung Strategi Tenaga

Kerja dengan mendatarkan tahap-tahap organisasi berkaitan
struktur-struktur pelaporan. Pengarah Jabatan Teknologi Maklumat
dan ketua penuntut, yang memberi keterangan berhubung pemilihan
proses untuk calon-calon yang dijadikan lebihan dalam jabatannya,
B telah menjelaskan bagaimana peranan arkitek teknologi maklumat
yang disandang oleh penuntut dikenalpasti sebagai lebihan. Saksi ini
juga telah menekankan bahawa penuntut bukan satu-satunya pekerja
yang dibuang kerja daripada jabatannya. Selanjutnya, carta organisasi
syarikat tersebut juga menunjukkan bahawa tiada sesiapa yang
C menggantikan kedudukan penuntut kerana ia tidak lagi wujud (lihat
perenggan 22 & 32).
(2) Cara syarikat tersebut melaksanakan amalan penstrukturan semula itu
adalah sistematik dan menurut amalan buruh yang baik. Atas
D imbangan kebarangkalian mahkamah telah bertindak bona fide dalam
memulakan amalan penstrukturan semula tersebut. Oleh itu, keadaan
lebihan penuntut yang membawa kepada pembuangan kerja adalah
bona fide (lihat perenggan 48).

E (3) Berhubung hujah penuntut bahawa dia tidak diberi nasihat, adalah
didapati bahawa tiada tanggungjawab sah ke atas syarikat tersebut
untuk memberi nasihat atau amaran kepada pekerja-pekerjanya
sebelum amalan pembuangan kerja. Berdasarkan keadaan kes ini,
penuntut mempunyai notis mencukupi berhubung pembuangan
F kerjanya dan syarikat tersebut telah sedaya upaya yang mungkin untuk
mengekalkan penuntut termasuklah mencadangkan jawatan alternatif
untuknya. Tiada keterangan bahawa syarikat tersebut telah bertindak
mala fide dalam membuang penuntut. Oeh itu, syarikat tersebut telah
memecat penuntut dengan sebab dan alasan yang adil (lihat perenggan
G 54-55).]

Notes
For cases on dismissal, see 8(1) Mallal’s Digest (4th Ed, 2011 Reissue) para
1037-1098.
H
Awards referred to
National Union of Cinema & Amusement Workers v Shaw Management Services
Sdn Bhd (Award No 27 of 1978), IC (refd)

I Cases referred to
Bayer (M) Sdn Bhd v Ng Hong Pau [1999] 4 MLJ 361; [1999] 4 CLJ 155, CA
(refd)
Boey Saw Foong v Antah Drilling Sdn Bhd & Anor [1998] MLJU 312; [1998] 1
LNS 448, HC (refd)
216 Industrial Law Journal [2013] 1 ILJ

Chapman and Others v Goonvean & Rostowrack China Clay Co Ltd [1983] 2 All A
ER 1063, CA (refd)
David Francis v QBE-MBI Insurance Bhd [2009] 2 LNS 0541, IC (refd)
Firex Sdn Bhd v Ng Shoo Waa [1990] 1 ILR 22, IC (refd)
Goon Kwee Phoy v J & P Coats (M) Sdn Bhd [1981] 2 MLJ 129, FC (refd)
Harris Solid State (M) Sdn Bhd & Anor v Bruno Gentil Pereira & Anor [1996] 3 B
MLJ 489; [1996] 4 CLJ 747, CA (refd)
Jeyaraj Kanapathipillai v Ranhill Bersekutu Sdn Bhd [2012] 2 ILJ 213; [2012] 2
LNS 0134, IC (refd)
Malaysia Shipyard & Engineering Sdn Bhd Johor Bharu v Mukhtiar Singh [1991]
C
1 ILR 627, IC (refd)
Ong Lean Phaik v CF Sharp & Company (M) Sdn Bhd, Penang [1980] 1 ILR
284, IC (refd)
Ong Lean Phaik v CF Sharp & Co (M) Sdn Bhd [1980] 1 ILR 284, IC (refd)
Pook Li Ping v Mahkamah Perusahaan Malaysia & Anor [2012] 1 MLJ 536, HC D
(refd)
Stephen Bong v FCB (M) Sdn Bhd & Anor [1999] 3 MLJ 411; [1999] 1 LNS
131, HC (refd)
Telekom Malaysia Kawasan Utara v Krishnan Kutty Sanguni Nair & Anor
[2002] 3 MLJ 129; [2002] 3 CLJ 314, CA (refd) E
Thor Meng Tatt v Informatics Training Techonology Sdn Bhd [2011] ILJU 567;
[2011] 2 LNS 0759, IC (refd)
William Jacks & Co (M) Sdn Bhd v S Balasingam [2000] 7 MLJ 1; [1997] 3 CLJ
235, CA (refd)
F
Legislation referred to
Industrial Relations Act 1967 ss 20, 20(3), 30(5)
Redundancy Payments Act 1965 [UK] s 1(2) (6)
Teh Hong Jet (Tan Kim Siong & Teh Hong Jet) for the claimant. G
Thavalingam Thavarajah (Lee Hishammuddin Allen & Gledhill) for the
company.

REFERENCE
This is a reference made under s 20(3) of the Industrial Relations Act 1967 (Act H
177) arising out of the dismissal of Encik Choy Kian Sin (‘the claimant’) by
Measat Broadcast Network Systems Sdn Bhd (‘the company’) on 31 March
2009.

Aslina Joned Ch: I

[1] The matter was referred to the Industrial Court through a reference
ordered by the honourable Minister of Human Resources dated 15 March
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 217

A 2010 and duly received by the court on 1 April 2010.

THE FACTS

B
[2] The claimant commenced employment with the company as senior
manager, systems and network operations department with effect from 2
February 2001. At the time of his retrenchment the claimant held the position
of IT architect.

C [3] The company engaged a firm of independent advisors to advise on its

workforce strategy. This was explained in a detailed report by the Hay Group
known as ‘Workforce Strategy for Astro TV’. The main intention of the
reorganisation was to optimise productivity and efficiency as the company was
disproportionately sized.
D

[4] As a result of this report, the company embarked on a reorganisation and

retrenchment exercise that led to 63 employees being identified as surplus in
various divisions of the company. The claimant was one of the identified
E surplus employees.

[5] Vide a letter dated 27 March 2009, the claimant was informed by the
company that his position was identified as being redundant and that is the
circumstance, the company had no alternative but to terminate his
F
employment effective 31 March 2009.

[6] The company paid the claimant a sum of RM197,016.55 which

comprised of retrenchment benefits, contractual bonus, leave pay and payment
G in lieu of notice less statutory deductions up until the termination date.

[7] The claimant had refuted the company’s basis for warranting the
termination by reason of redundancy. The claimant also contended that the
termination was carried out as an act of victimisation, discriminatory and
H
contrary to the rules of natural justice. The claimant prayed for an order that he
be reinstated to his former position without any loss of seniority, wages or
benefits.

I [8] The company had maintained throughout the trial that the termination
of the claimant’s services stemmed from a bona fide retrenchment owing to the
fact that the claimant’s position in the company had become redundant.

[9] The company had also contended that the claim brought by the claimant
218 Industrial Law Journal [2013] 1 ILJ

is misconceived in law and is an abuse of the process of court. A

THE LAW

[10] The law on retrenchment is now well settled. The function of the
B
Industrial Court in a reference under s 20 of the Industrial Relations Act 1967
(Act 177) has been clearly stated by the Federal Court in the case of Goon Kwee
Phoy v J & P Coats (M) Sdn Bhd [1981] 2 MLJ 129 where His Lordship Raja
Azlan Shah CJ (Malaya) (as HRH then was) stated at p 136:
C
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 D
termination or dismissal was without just cause or 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. (Goon Kwee
Phoy)
E
Redundancy does not necessarily mean that the job or work no longer exists.

[11] At p 121 of his book entitled Industrial Relations in Malaysia, Dunston

Ayadurai had defined redundancy as follows:
F
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. G

[12] The law recognises that a company has the right to organise its business
in the manner it considers best. However in doing so, the company must act
bona fide and not capriciously or with motives of victimisation or unfair labour H
practices. In the Court of Appeal case of William Jacks & Co (M) Sdn Bhd v S
Balasingam [2000] 7 MLJ 1; [1997] 3 CLJ 235. His Lordship Gopal Sri Ram
JCA had this to say:

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

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
organise its 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. (William Jacks)
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 219

A 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.

[13] Retrenchment in its ordinary meaning connotes that the business itself
B is being continued but that a portion of the staff or the labour force is
discharged as surplus.

[14] In the Court of Appeal case of Harris Solid State (M) Sdn Bhd & Anor
v Bruno Gentil Pereira & Anor [1996] 3 MLJ 489; [1996] 4 CLJ 747. His
C
Lordship Gopal Sri Ram JCA at p 511 (MLJ), p 767 (CLJ) held that:
… An employer may reorganise his commercial undertaking for any legitimate
reason, such as promoting better economic viability. But he must not do so for
collateral purpose … (Harris Solid State)
D

[15] In the case of Stephen Bong v FCB (M) Sdn Bhd & Anor [1999] 3 MLJ
411; [1999] 1 LNS 131 the High Court had articulated as thus:
It is not the law that redundancy means that the job or work no longer exists.
E
Redundancy situation arise when the business required fewer employer of whatever
kind. (Stephen Bong)

[16] In Firex Sdn Bhd v Ng Shoo Waa [1990] 1 ILR 22, the learned Chairman
F Steve LK Shim (as he then was) after restating the principles as found in Ong
Lean Phaik v CF Sharp & Company (M) Sdn Bhd, Penang [1980] 1 ILR 284
stated:
… It is well established that it is for management to decide the strength of its staff
G which it considers necessary for efficiency in its undertaking. The court will not
intervene unless it is shown that the decision was capricious or without reason or
was mala fide or was actuated by victimisation or unfair labour practice. Those
principles have been consistently applied by the Industrial Court in numerous
cases. (Firex)
H
[17] It is a settled principle that in selecting employees for retrenchment an
employer should resort to the ‘last in first out’ rule unless the employer can
show sound reasons why they had to depart from it. Where it is necessary for
some employees to be dismissed because of redundancy the court will require
I the employer to show how, by whom and on what basis the selection was made
(see National Union of Cinema & Amusement Workers v Shaw Management
Services Sdn Bhd (Award No 27 of 1978)).

[18] It is trite that the burden of proof lies on the employer to prove the
220 Industrial Law Journal [2013] 1 ILJ

redundancy. In Bayer (M) Sdn Bhd v Ng Hong Pau [1999] 4 MLJ 361; [1999] A
4 CLJ 155 the Court of Appeal enunciated as follows:
On redundancy it cannot be gainsaid that the appellant must come to the court
with concrete proof. The burden is on the appellant to prove actual redundancy on
which the dismissal was grounded (see Chapman & Others v Goonvean & B
Rostawrack China Clay Co Ltd [1983] 2 All ER 1603). It is our view that was
sufficient. There 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 C
extent that he was considered redundant?. (Bayer)

[19] The Court of Appeal approved Chapman and Others v Goonvean &
Rostowrack China Clay Co Ltd [1983] 2 All ER 1063 where s 1(2)(b), English D
Redundancy Payments Act 1965 was construed by the English Court of
Appeal. That provision reads:
… an employee who is dismissed shall be taken to be dismissed by reason of
redundancy if the dismissal is attributable wholly or mainly to … (b) the fact that
the requirements of that business for employees to carry out work of a particular E
kind in the place where he was so employed, have ceased or diminished or are
expected to cease or diminish.

THE STANDARD OF PROOF

F
[20] The burden of proof rests on the company as employer to prove on a
balance of probabilities that the dismissal of claimant as employee was with just
cause or excuse. The question of standard of proof is closely connected with the
question of finding of facts. The Court of Appeal in Telekom Malaysia Kawasan
G
Utara v Krishnan Kutty Sanguni Nair & Anor [2002] 3 MLJ 129; [2002] 3 CLJ
314 decided as follows:
Thus in hearing a claim of unjust dismissal, where the employee was dismissed on
the basis of an alleged criminal offence such as theft of company property, the
Industrial Court is not required to be satisfied beyond a reasonable doubt that such H
an offence was committed. The standard of proof applicable is the civil standard, ie
proof on a balance of probabilities — which is flexible so that the degree of
probability required is proportionate to the nature and gravity of the issue.
(Krishnan Kutty)
I
THE COMPANY’S RE-ORGANISATION EXERCISE

[21] The reason stated in the claimant’s termination letter dated 27 March
2009, was that his position was identified as being redundant and in the
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 221

A circumstance, the company had no alternative but to terminate his

employment effective 31 March 2009. The said letter is reproduced below:

I
222 Industrial Law Journal [2013] 1 ILJ

[22] COW1 the change and talent manager and author of the above letter,
testified that the decision that the claimant was redundant was his superior’s. H
COW1 went on to explain that the company had highlighted to the various
department the rationale behind the restructuring. He intimated to all affected
units as early as October 2008 of the management’s position on the impending
retrenchment. He emphasised the fact that the company’s headcount as at April
2008 of 2333 was well in excess of its approved headcount of 2234. The I
claimant is well aware of the memo as early as October 2008. COW1 further
testified that he has had detailed out the urgency of the matter and emphasised
the following:
(a) HOD to identify redundancy in their respective organisations;
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 223

A (b) phase out non-performers;

(c) flatten the organisation to not more that four levels;
(d) de-layer and eliminate duplicating and non value adding roles;

B
(e) consolidate job functions; and
(f ) consider outsourcing.

[23] COW1 sent a subsequent memo in December 2008 explaining the Hay
Group feasibility study which revealed the company’s:
C
(a) heavy operating core (people who delivered the work);
(b) heavy support staff; and
(c) thin middle management.
D
[24] To this end he said, the Board of Directors directed them to take
immediate steps to right size the organisation by:
(a) flattening the organisation to four levels to increase efficiency and
E communication;
(b) to clearly demarcate authority and responsibility to foster greater
accountability within function;
(c) clearly segregate duties to eliminate conflict of interest; and
F (d) phase out redundant and poor performers.
He reiterated that he did not make the decision to retrench the claimant. It was
decided by COW2 and COW1 merely implemented it.

G [25] He also confirmed that pursuant to Hay Group report, a total number
of 63 employees were made redundant. Pursuant to this independent report,
COW1 had also communicated to all managers in the company and divisional
heads on the possibility of downsising and the claimant had early notice of this
eventuality.
H
[26] COW2, the director of IT department and the claimant’s superior
testified on the selection process for candidates that were made redundant in
his department. He highlighted the fact that the claimant was not the only
employee to be retrenched from his department, the others being Rithauddin
I bin Ramli and Claudina Antoinette Oliveiro.

[27] COW2 explained that the IT Management team opted to implement

the right sizing plan by looking at both the possibility of combining roles as
well as flattening the organisation structure. Based on the current
224 Industrial Law Journal [2013] 1 ILJ

organisational charts at the material time, two teams ie business analysis and A
solution architect reported to the claimant. The claimant will then report to the
head of IT strategy and systems. He explains the position as follows:

The claimant’s position was made redundant as it was decided that the two teams
should be reporting to the head of IT strategy and systems directly instead of going B
through the claimant as a conduit between his superior and his subordinates. I was
of the view that Jaya could actually manage the team directly rather than managing
them through the claimant.

[28] COW2 supported COW1’s testimony that a circular was sent out to all C
managers in the company on 28 October 2008 followed by a second circular to
all divisional heads on 19 December 2008. The claimant was in the loop of the
first circular on 28 October 2008.
D
[29] The circular stated that due to the economic situation to prepare for any
eventualities, it has been decided that the company will reduce headcount by
20% by 31 June 2009. The circular also mentioned that the company decided
it has to be flattened to not more than four levels. Among the suggestions to
implement the flattening of the organisational structure was to eliminate
E
duplicating and non-value adding notes and also the possibilities of
consolidating job functions.

[30] COW2 explained that they started of the process of retrenchment by

identifying the positions that can potentially be made redundant. The claimant F
position was one of the positions identified. Heads of division was asked to
review any position under their department that can be made redundant by
consolidating the roles and also to look at possibilities of further flattening the
organisation structure.
G
[31] He went on to explain that the role of IT architect was one of the
positions identified where both the business analyst and solution architect
teams can report directly to the head of IT strategy and systems instead of going
through the IT architect as a conduit.
H
[32] COW2 had explained that organisational chart as at 31 July 2009,
clearly illustrates that no one had replaced the claimant’s position as the same
no longer exists. The claimant’s previous reporting line, being those in
application architecture (business analyst) and application architecture
(solution architecture) are currently reporting directly to Jaya Shanker, the I
Head of IT Strategy and Systems. This was also confirmed by COW1 under
cross-examination that he had no records of any request from the IT
department to fill up the claimant’s previous position. COW2 also confirmed
that two other employees from IT department namely Rithauddin bin Ramli
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 225

A and Claudina Antoinette Oliveiro were also retrenched from the company.

THE CLAIMANT’S EMPLOYMENT HISTORY

[33] The claimant narrated his employment history with the company
B
commencing from his first posting as senior manager, systems and network
operations department within the information technology division (IT
division) of the company with effect from 2 February 2001. He had 50 staffs
reporting to him. The next six years following a few re-organisation in the
C company, saw the claimant being re-designated as senior manager, promoted as
head to systems and operations department to later as head of IT operations
and support. In April 2007, the company had created a new department in the
IT division and named it as innovation department which the claimant was
assigned to head. In July 2007, the claimant was assigned to work on the
D company’s wide Transformer project. The Transformer project is the biggest
project that the company had ever undertaken. The project is to ensure that the
operations of business of the company had run smoothly and efficiently in view
of the high growth of the number of subscribers and new services. This project
was expected to be completed in the year 2011.
E
[34] The claimant admitted receiving a company circular dated 28 October
2008 addressed to all heads of department on the impending proposed
re-organisation of the company. On 26 November 2008, COW2, the director
of IT division, sent an e-mail to all his staff including the claimant pertaining
F to the briefing on the revised IT organisation chart. In the e-mail COW2
informed his staff that he was planning to announce the revised organisational
chart and had it published on the intranet within the same week or latest next
week. COW2 further assured all his staff that IT division was not affected in
the company downsizing exercise as the revised IT headcount had been
G approved and there were still vacancies to be filled.

[35] On 1 December 2008, the company announced the revised

organisational chart of IT division and there were five departments within the
IT division as follows:
H

(a) IT strategy and system;

(b) IT delivery;
I

(c) IT operations and support;

(d) IT administration; and

226 Industrial Law Journal [2013] 1 ILJ

(e) transformer programme. A

[36] The claimant was appointed as the IT architect with effect from 1
December 2008 and was in charge of the application architecture which was a
section in strategy and system department. As IT architect, the claimant had
ten subordinates comprising, eight business analyst and two solution architect B
assisting and reporting to him.

[37] However on 27 March 2009, the claimant was shocked to receive a

letter dated 27 March 2009 informing him, inter alia, that his position was
identified as being redundant and hence the company decided to terminate his C
services and last employment date was on 31 March 2009. The claimant was
further told not to report to work anymore after 27 March 2009.

THE EVALUATION OF EVIDENCE AND FINDINGS

D
[38] This court appreciates the research put in by both learned counsels for
the company and the claimant through their written submissions. Guided by
trite authorities, two issues are to be addressed by this court:
(a) was the claimant’s redundancy situation leading to retrenchment bona E
fide? (William Jacks); and
(b) was the retrenchment exercise in accordance to accepted practice thus
constituting just cause or excuse for the dismissal? (Goon Kwee Phoy).
F
[39] Having heard evidence from both parties, this court now proceeds to
investigate the facts and circumstances of this case to determine whether that
exercise of power was in fact bona fide (see William Jacks).

Redundancy
G

[40] The claimant’s learned counsel submitted that the company had failed
to prove redundancy on which the dismissal was grounded. The company had
also failed to prove (a) the fact that the company has ceased, or intends to cease,
to carry on the business for the purpose of which the claimant was employed by H
it, or has ceased or intends to cease, to carry on that business in the place where
the claimant was so employed or:

[41] Counsel relied on a decision made by this court in the case of Thor Meng
Tatt v Informatics Training Techonology Sdn Bhd [2011] ILJU 567; [2011] 2 I
LNS 0759 where it was stated:
This court follows Bayer’s case and Credit Corporation (M) Bhd’s case which applied
the English statutory definition of redundancy. The material words are ‘work of a
particular kind … have ceased or diminished or are expected to cease or diminish.
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 227

A The application of this principle was discussed and adopted in Looi Ah Heng v
Malayan Law Journal [2010] 2 ILR 422 where the learned President of the
Industrial Court, following Bayer and Credit Corporation’s case held at p 433:
The court found that the functions, duties and responsibilities of the claimant had
not ceased or diminished even though the position of manager for credit and
B fulfillment had been abolished. The position which the claimant had held had been
abolished and the functions, duties and responsibilities which he had performed
had been moved to three other departments. …
The court found that the claimant was not redundant at the material date as he had
been redeployed as credit control leader.
C
Likewise in the instant case this court holds that the functions, duties and
responsibilities of the claimant had not ceased or diminished as they were absorbed
by Victor Chan and Ong Bee Leng even though the position of senior business
development manager was abolished. (Emphasis added.) (Thor Meng Tatt)
D
(b) the fact that the requirement of the business to carry out work of the
particular kind, or for the claimant to carry out work of a particular kind in the
place where he was so employed, have ceased or diminished or are expected to
cease or diminished.
E
[42] The company’s learned counsel contended that the purpose of the
retrenchment of the claimant was merely to reduce the multiple layers of
management and as such his role had been absorbed into that carried out by the
head, IT strategy and systems, Mr Jaya Shanker to whom the claimant was
F reporting to the claimant in fact acted as a conduit between his subordinates
and Mr Jaya Shanker. He relied an another decision of this court in Jeyaraj
Kanapathipillai v Ranhill Bersekutu Sdn Bhd [2012] 2 ILJ 213; [2012] 2 LNS
0134 where it was held:
In consonance with trite authorities this court recognises the management’s
G prerogative in deciding the strength of its staff which it considers necessary for
efficiency in its undertaking (see Firex Sdn Bhd v Ng Shoo Waa). The redundancy
situation in the company resulted in the claimant’s job being absorbed by other
engineers. In deleting the claimant’s post the company considered the claimant’s
workload which were all at initial stage as put by COW1. This is consistent with the
H decision in Stephen Bong v FCB (M) Sdn Bhd & Anor, that it is not the law that
redundancy means that the job or work no longer exists. Redundancy situation
arise with the business required fewer employee of whatever kind.
The court also takes into consideration that upon deletion of the claimant’s post,
his duties were absorbed by the remaining staff and not taken by someone from
I outside. This practice was approved by the High Court in Boey Saw Foong v Antah
Drilling Sdn Bhd & Anor [1998] MLJU 312; [1998] 1 LNS 448;. (Emphasis
added.) (Jeyaraj)

[43] He also cited the case of Firex Sdn Bhd v Ng Shoo Waa [1990] 1 ILR
228 Industrial Law Journal [2013] 1 ILJ

(Rep) 292 which quoted and affirmed Ong Lean Phaik v CF Sharp & Co (M) A
Sdn Bhd [1980] 1 ILR 284 (Award No 121/80), where the court stated, inter
alia:

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 B
carry out the reorganisations for the purpose of victimising any of his employees
and getting rid of his services. Victimisation in this context means punishment by
way of dismissal of an innocent workman who has in some way incurred the
displeasure of his employer … In other words, if the employer goes through the
exercise of a reorganisation only for the purpose of providing himself with an excuse C
to get rid of the services of an innocent workman who had incurred his displeasure,
he would be acting mala fide. But the employer has a right to determine the volume
of his labour force consistent with his business and organisation and if the
implementation of a reorganising 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 each D
excess. (Emphasis added.)

[44] It must be pointed out that, Thor Meng Tatt’s case was decided on its
own peculiar fact. The court found there was mala fide on the restructuring E
exercise and the retrenchment that followed suit as the company wanted to get
rid of the claimant whose job functions were absorbed by two newcomers to
the company. In Jeyaraj’s case his job functions were absorbed by the remaining
engineers and not taken by someone from outside. In sum both cases were
decided by this court on two separate occasions based on their own separate F
facts. This is consistent with William Jack’s principle which held that the issue
of bona fide of a retrenchment exercise is a question of fact.

[45] The claimant’s counsel argued that he could not be made redundant
because as IT architect the claimant’s functions were important as he was G
responsible to design, develop technical plans for installing new and managing
existing IT infrastructure used by the company. The claimant was also in
charge of integrated marketing platform for the transformer programme. With
respect this court disagrees with the submission.
H
[46] This court has heard explanation at length by both COW1 and COW2
in respect of the company’s decision to reorganise the company by reducing
headcount by 20% and flattening the organisation to not more than four levels.
To this end an independent consultant, the Hay Group was brought in to
analyse the situation and offer proposal to right size the company to optimise I
productivity and increase efficiency. This court observes that the decision to
make the claimant’s post redundant was consistent with the Hay Report’s Work
Force Strategy proposal in flattening the organisation levels in respect of the
reporting structures. The selection process conducted by COW2 was done
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 229

A after comprehensive review of the position in his department by consolidating

roles. The role of IT architect which the claimant holds at that time was one of
the positions identified.

[47] The court also considers that the claimant’s job function in respect of
B his reporting authority was absorbed by Jaya Shanker, his superior and not by
someone from outside. This court also examines the organisation chart as at 31
July 2009 which shows no one replaces the claimant’s position as it no longer
exists (see Boey Saw Foong v Antah Drilling Sdn Bhd & Anor [1998] MLJU 312;
[1998] 1 LNS 448).
C
[48] Based on the foregoing scenario this court concludes that on a balance
of probabilities the company is bona fide (see Krishnan Kutty and William Jacks)
in embarking into a re-organisation exercise as it makes effort to engage
independent consultant to evaluate the company’s position which advised
D
proposals to right size the company in order to be more efficient. Throughout
the trial, this court heard how the company’s management took action to
implement the Hay Group’s proposal by adhering strictly to the letters in
identifying roles that could be consolidated and made redundant. The
selection was made in a professional manner as it was the role that was made
E
redundant and not the body. The manner in which the company carried out
the re-organisation exercise was systematic and in accordance to good labour
practice. It was preceded with a general announcement by circular to all
managers in the company on 28 October 2008. A second circular to all
divisional heads on 19 December 2008 followed suit. On the face of this
F
genuine exercise this court could not find any evidence of mala fide on the part
of the company. In conclusion this court holds that the claimant’s redundancy
situation leading to retrenchment bona fide.

Just cause or excuse

G

[49] This court now proceeds to look at the retrenchment exercise to see
whether the retrenchment exercise was in accordance to accepted practice. The
accepted practice would be as per the guideline in articles 21–22 of the Code of
H Conduct for Industrial Harmony 1975 (CCIH 1975).

[50] The claimant was paid three months salary in lieu of notice. He was also
amply compensated with a retrenchment package of RM197,016.56. This
court agrees with the submission by counsel for the company that there was no
I selective discrimination towards the claimant to render him redundant as he
was not singled out. This court agrees the selection was based on roles and not
on personal preference.

[51] The court also heard COW2’s testimony that the Transformer project
230 Industrial Law Journal [2013] 1 ILJ

handled by the claimant was not a substantive aspect of the claimant’s position A
as IT architect. This function could be done by Jaya Shanker. COW2’s
testimony to that effect is as follows:

No. In fact prior to the first restructuring exercise in November, the Claimant could
have been retrenched as he was project based and had completed most of the B
assignments especially on the Integrated Marketing Platform design. We however
decided to give him the opportunity to carry on by re-designating him as IT
Architect to manage the business analysts and solution architects. Subsequently,
upon receiving the second circular from En. Aziz dated 19.12.2008, we reviewed
surplus roles and the Claimant’s position was identified. He was not the sole person C
to be made redundant, in fact there were two others from the IT Division namely
Rithauddin bin Ramli and Claudina Antoinette Oliveiro. Please refer to pages 33 to
37 of the Company’s Bundle for the details.

D
[52] The court observes that the job function was absorbed by people inside
the company and not taken by someone from outside. This practice was
approved by the High Court in Boey Saw Foong v Antah Drilling Sdn Bhd &
Anor [1998] MLJU 312.
E
[53] The court was also informed by COW2 that discussions were carried
out with selected department heads in IT who had vacancies in their
department. However, due to the claimant’s seniority and the senior position
he held, the company was unable to place the claimant in a position lesser than F
he currently was at. Furthermore any lesser position would tantamount to a
demotion.

[54] The counsel for the company submitted that there was no obligation on
the company to consult the claimant on the reorganisation or to offer G
alternative employment. He finds support in the following cases. In Pook Li
Ping v Mahkamah Perusahaan Malaysia & Anor [2012] 1 MLJ 536 (Judicial
Review No R1-25–175 of 2010) Aziah Ali J (as Her Ladyship then was) held:

Counsel for the applicant submits that the second respondent is obliged to warn H
and/or consult the applicant before retrenching her and to offer the applicant
suitable alternative employment. From the evidence the alternative employment
would be the post of finance director or finance manager. The evidence of the
second respondent’s witnesses that these two posts carried lesser roles and job
responsibilities compared to the post of commercial director has not been I
challenged. I find the contention that the respondent is obliged to warn/consult the
applicant and to offer the applicant suitable alternative employment devoid of
merit. In Tuan Syed Hashim bin Tuan Long v Esso Production Malaysia Inc [1998] 5
MLJ 535 Abdul Kadir Sulaiman J (as he then was) said:
 Choy Kian Sin v Measat Broadcast Network Systems Sdn Bhd
[2013] 1 ILJ (Aslina Joned Ch) 231

A The company after all was not obliged to make any offer for any further alternative
employment of account of the exercise properly carried out. Further, it was not mala fide
on the part of the respondent not to consult or discuss with the applicant its
determination to reorganise its company.

B In Firex Sdn Bhd v Ng Shoo Waa Steve LK Shim referred to the Law of Industrial
Disputes (OP Malhotra) as follows:

For instance, retrenchment cannot be said to be unjustified merely for the reason that the
employer could have transferred the workmen to another unit in any part of the Country
and the Tribunal therefore, cannot infer that the failure of the employer to transfer the
C
retrenched employees to other units renders the retrenchment unjustified. (Emphasis
added.)

This court whilst agreeing with this submission takes note of the decision in
Yamaha v FEC International (M) Sdn Bhd [2010] 2 LNS 589, whereby the learned
D chairman in citing observation made in Said Darmalingam v Makyan Brownies (M)
Sdn Bhd [1997] 1 CLJ 646 held at pp 5–6 that even though articles 20–21 of the
Code of Conduct for Industrial Harmony (CCIH) has no legal force but it is a
relevant factor for the purpose of determining the overall reasonableness of the
employer’s actions in dismissal cases.
E
[55] Given the circumstance of this case, though no personal consultation
was done with the claimant, the notice of impending retrenchment showed it
was issued in October 2008. Whereas the claimant’s termination letter was
F dated 27 March 2009 giving him two months to prepare for any eventualities.
The claimant did not dispute this. This, to my mind serves as sufficient notice
for claimant to prepare himself to look for another job elsewhere. Furthermore
the company is not obliged to discuss the retrenchment with the claimant (see
article 20 CCIH 1975, Malaysia Shipyard & Engineering Sdn Bhd Johor Bharu
G v Mukhtiar Singh [1991] 1 ILR 627 and David Francis v QBE-MBI Insurance
Bhd [2009] 2 LNS 0541).

[56] Having evaluated the foregoing, the court is minded to agree that the
company has exhausted all possible avenues to retain the claimant including
H considering alternative position for him, in tandem with good labour practice
propagated by the CCIH 1975 and therefore justified in releasing him from the
company. There is no evidence before thiscourt that the company had acted
mala fide in retrenching the claimant. The answer to the second question posed
must therefore be answered in the affirmative.
I
THE CONCLUSION

[57] In conclusion, acting according to equity, good conscience and

substantial merit of the case without regard to technicalities and legal form, (
232 Industrial Law Journal [2013] 1 ILJ

s 30(5) of the Industrial Relations Act 1967 (Act 177)) this court is satisfied A
that the dismissal had been with just cause or excuse. The claimant’s case is
accordingly dismissed.

Claimant’s claim dismissed.

B
Reported by Kohila Nesan