WONG FON FAH v.

WVT TIMBER INDUSTRIES SDN BHD

[2021] MELRU 1588

The Hearing
The Claimant (CLWs-2) alleged he was dismissed by the Company from his position as a manager.
He averred that by a Management Agreement dated 26 April 2017 (
he was appointed as a manager for a probation period of six (6) months from 1 May 2017 to 31
October 2017 with a monthly salary of RM10,000.00 and with the expectation of a yearly contract
thereafter.
The Claimant further averred that the Company is a timber-based company catering for Chinese
market for swan timber that is processed from rubber wood.
He has assisted one Li Wenqiang (COWs-1) to incorporate the Company.
The Company was incorporated on 5 April 2017 (see Certificate of Incorporation at p 20 of CLB- 2).
a Trust Deed was executed between COWs-1 and the Claimant on 26 April 2017.
Under the Trust Deed, he was appointed as a director of the Company and also as a trustee to hold
the shares of the Company for the benefit of COWs-1.
COWs-1 is a Chinese national and was an actual person who controlled and managed the Company.
COWs-1 was very much involved in the daily operations of the Company and made all decisions of
the Company. The Claimant reported duty to COWs-1.
The Claimant in his evidence stated that he was appointed as Manager by COWs-1 and in
consideration of his service he was paid RM10,000 a month. His salary was remitted directly to his
Maybank Account by the Company.
He has produced Maybank Statements showing salary payment from May till October 2017.
His duties include general office administration and certain office operation of the Company's
business like sourcing the rubber wood and those matters stipulated in cls 1 and 2 of the
Management Agreement.
The Claimant also stated that he was introduced by COWs-1 to others as the Manager of the
Company and all the industries know about this. He further stated that he has signed all the
documents of the Company and he paid salary to the staff of the Company.
The Claimant averred that the Company had vide a letter dated 30 October 2017 which states the
termination of his service without just cause and excuse.
His termination took effect on 31 October 2017 which was the date of expiration of his probation
period.
The letter was signed by COWs-1.
He said there was no complaint regarding his performance was raised by the Company during the
probation period.
He has collected the cheque of RM10,000 being last salary of October 2017 from the Company's
solicitor, Ms Judy Hiew Mui Nyuk from Messrs Koh Hiew & Partners (CLWs-1) as instructed in the
said letter. He further stated that the Company did not pay his EPF at 11 % of his salary for the entire
period.
The hearing part 2
The Claimant further averred that he was asked to pre-sign a letter dated 19 September which was
prepared by CLWs-1.
The said letter was a letter of resignation as director of the Company and not as an employee of the
Company.
Therefore, it did not affect his position as an employee of the Company.
The Claimant has called one witness, Ms Judy Hiew Mui Nyuk (CLWs-1), a lawyer who has prepared
the Management Agreement (p 1 -5 CLB-1) and the Trust Deed (p 27-29 CLB-1).
She had averred that COWs-1 has instructed her to prepare those documents and to her
understanding COWs-1 signed the Management Agreement as the person behind the Company and
he is the person who came up with the capital of the Company as owner or investor of the Company.
She has witnessed the signature of COWs-1 and the Claimant on those documents.
CLWs-1 averred that she was instructed by COWs-1 to prepare a letter dated 30 October 2017 and
the letter was signed by COWs-1.
Based on the letter, there was a remittance of RM20,000 to the legal firm of which RM6600 was
supposed to be deducted as EPF contribution.
However, this amount was not deducted. CLWs-2 has taken RM10,000 and the balance of RM10,000
was still remain in her office till now.
CLWs-1 explained why the terminology "Principal" was used to describe COWs-1 in the Management
Agreement and Trust Deed as COWs-1 was the person behind the Company and came up with the
capital.
She said both the documents need to be read together.
She further state that COWs-1 was the shareholder of the Company and CLWs-2 was holding the
shares on behalf of COWs-1.
Mr Li Wenqiang (COWs-1) was called as the Company's witness.
He explained that sometime end of 2016 or early January 2017, his son wanted to start their own
business for round wood products in Sabah since Sabah Government allowed licence exemption for
round wood products exports to other countries. Since he knows some friends in Malaysia and he
volunteered to find local people in Sabah to help them.
Subsequently, the Claimant (CLWs-2) who was also known as Terry, was introduced by his friend to
COWs-1. COWs-1 agreed to engage the Claimant to set up a new company for him and to hold the
Company's shares under his name and appointed the Claimant as director of the Company.
He also agreed to appoint the Claimant as a Manager for a probation period of 6 months with the
salary of RM10,000 per month.
He has engaged CLWs-1 to prepare the Management Agreement to be executed between the
Claimant and him.
 He further averred that under the Management Agreement, the Claimant has to find and buy not less
than 6000 tonnes of round woods every month.
However, the Claimant did not meet the minimum standard for even one month.
They felt cheated and at the end of the 6 months' probation period which was until October 2017,
they decided to discontinue his services.
He has informed the Claimant of his decision at the end of October 2017. He has instructed CLWs-1
to prepare a letter of termination.
The Claimant vide letter dated 19 September 2017 resigned as director of the Company and
transferred his shares to COWs-1's son.
COWs-1 also informed that he has paid the Claimant RM10,000 as October 2017 salary and another
RM10,000 in lieu of the notice.
He said that the Claimant was not the employee for the Company as the Company is under the
Claimant's name and care. The Claimant's duty was to handle day to day operation of the Company.
COWs- 1 stated that he was never agree that he will pay the EPF contribution for the Claimant.
The Function Of The Industrial Court And The Burden Of Proof
The Claimant has made his representation under s 20 of the Act for inquiry, it is a duty of the Court
as stated by the Federal Court in the case of Wong Yuen Hock v. Syarikat Hong Leong Assurance
Sdn Bhd.& Another [1995] 1 MLRA 412; [1995] 2 MLJ 753; [1995] 3 CLJ 344; [1995] 2 AMR 2145 is
to determine whether there is a dismissal on the facts and if so, whether the termination or dismissal
is with or without just cause or excuse.
The burden is on the Claimant to prove there existed an employment contract with the Company,
making the Company his employer before the Court can pursue further to hear and determine the
ministerial reference on his alleged dismissal by the Company. This was highlighted in the
case Weltex Knitwear Industries Sdn Bhd v. Law Kar Toy & Anor [1998] 4 MLRH 774; [1998] 7
MLJ 359 where his Lordship Dato' Haji Abdul Kadir Bin Sulaiman (as he then was) stated:
"The law is clear that if the fact of dismissal is not in dispute, the burden is on the Company to satisfy
the Court that such dismissal was done with just cause or excuse. This is because by the 1967 Act, all
dismissal is prima facie done without just cause or excuse. Therefore, if an employer asserts
otherwise the burden is on him to discharge. However, where the fact of dismissal is in dispute, it
is for the workman to establish that he was dismissed by his employer. If he fails, there is no
onus whatsoever on the employer to establish anything for in such a situation no dismissal
has taken place and the question of it being with just cause or excuse would not at all arise...".
In the case of Telekom Malaysia Kawasan Utara v. Krishnan Kutty Sanguni Nair & Anor [2002] 1
MELR 4; [2002] 1 MLRA 188; [2002] 3 MLJ 129; [2002] 3 CLJ 314; [2002] 3 AMR 2898, the Court
laid down the principle that the standard of proof that is required is on the balance of probabilities-
"Thus in hearing a claim of unjust dismissal, where the employee was dismissed on the an alleged
criminal offence such as theft of company property, the Industrial Court is not required to be
satisfied beyond reasonable doubt that such an offence was committed. The standard of proof 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.".
Issue
Before the Court decide whether there was a dismissal of the Claimant by the Company, the Court
has to determine-
(a) whether the Claimant is an employee of the Company; and
(b) if the answer is affirmative, whether the termination of the Claimant by the Company was with
just cause and excuse?
In order for Claimant to bring an action at the Industrial Court under s 20 of the Act, he has to be
qualified as a workman before he can make a claim and if the circumstances warrant, be reinstated
in his former employment for dismissal without just cause or excuse. Section 2 of the Act define
"workman" as any person, including an apprentice, employed by an employer under a control of
employment to works for hire or reward and for the purpose of any proceedings in relation to a
trade dispute includes any such person who has been dismissed, discharged or retrenched in
connection with or as a consequences of that dispute or whose dismissal, discharge or retrenchment
has led to that dispute." Further, s 2 of the Act also define "contract of employment" as "any
agreement, whether oral or in writing and whether express or implied, whereby one person agrees
to employ another as a workman and that other agrees to serve his employer as a workman."
In this case, the Parties do not dispute the following facts:
(a) the Company was incorporated on 5 April 2017 and the Claimant was appointed as a director
cum shareholder of the Company;
(b) the Claimant and COWs-1 had executed the Management Agreement and Trust Deed, both dated
26 April 2017; and
(c) the Claimant was terminated from his position as Manager pursuant to the Management
Agreement and the letter of termination was signed by COWs-1.
However, the parties dispute as to who was the employer of the Claimant.
In this case, the learned counsel for the Company, Mr Ian Vun Chit Khen contended that there was no
privity of contract between the parties as the Management Agreement and the Trust Deed were
executed between the Claimant and COWs-1.
Secondly, he argued that the Claimant was employed by COWs-1 vide the Management Agreement
dated 26 April 2017 and also be appointed as director and shareholder of the Company to hold the
shares for COWs-1. The salary of the Claimant was paid by COWs-1 or COWs-1 will reimburse the
Company if the Company paid the salary of the Claimant.
On the other hand, the counsel for the Claimant Mr S.K. Vanugopal contended that the Claimant was
appointed as the Manager of the Company vide that Management Agreement and the Company had
paid the salary of RM10,000 per month from June 2017 till October 2017.
Therefore, the Claimant was the employee of the Company.
The learned counsel also contended that the Company failed to tender any evidence to support its
pleaded case and COWs-1 testified on his individual capacity and therefore could not represent the
Company.
The Court is of the view that there is a nexus between COWs-1 and the Company as COWs-1 was the
person who was behind the Company and has established the Company. Further he was the person
who executed the Management Agreement and Trust Deed with the Claimant. Therefore, the
evidence of COWs-1 is relevant and can assist the Court in determining the issue.
In order for the Court to determine the first issue, the Court has to look beyond the four corners of
the Management Agreement and the conduct of the parties under the Agreement and the inferences
proper to be drawn therefrom.
Evaluation Of Evidence And Findings on Whether The Claimant Is An Employee Of The Company
The sole witness for the Company was COWs-1 had testified that he had appointed the Claimant to
manage the Company vide the Management Agreement executed between him and the Claimant.
COWs-1 averred that the Company will pay the salary to the Claimant and then he will reimburse the
said sum to the Company. However, there is no supporting document to support his evidence that
the salaries were made advance by the Company on behalf of COWs-1.
Based on the Claimant's Maybank Statement, the salaries of the Claimant from June till September
2017 were paid by the Company, except the salary for the month of May 2017 was paid by COWs-1.
Therefore, the Court is of the view that the party who paid the Claimant's salaries is an indication of
who the employer is. In the case of Rajathurai Suppiah v. Starship Agencies Sdn Bhd [2015] 6
MLRH 216, the High Court has decided that-
"The defendant tried to argue that rather disingenuously that the payment of salaries from the
defendant from February 2011 to December 2012 does not make the defendant the employer of the
plaintiff and that it was merely an internal arrangement for accounting purpose. The defendant also
pointed out that there were times in the past the plaintiff's salaries were paid for a couple of months
from Starship Emirates, another company in the Starship Group of Companies. I accept the facts that
when Starship Singapore had some cash flow problem, the plaintiff's salaries may be paid by another
entity in the Group without making that entity the employer of the plaintiffs... and when his salaries
had been paid for the past 2 years from 2011 to 2012 from the defendant, Starship Malaysia,
the plaintiff is entitled to treat the defendant as his employer for all practical purpose.".
Therefore, based on the case, the Court is of the view that the Company paid all the salaries of the
Claimant from June till October 2017, except for May 2017, the Claimant is entitled to treat the
Company his employer for all practical purpose.
In the case of Dr A Dutt v. Assunta Hospital [1981] 1 MLRA 472; [1981] 1 MLJ 304, his Lordship
Chang Ming Tat FJ in deciding the case had stated the following:
"In settling the dispute between the employers and the workmen, the function of the Tribunal is not
confined to administration of justice in accordance with law. It can confer rights and privileges on
either party which it considers reasonable and proper, though they may not be within the terms of
any existing agreement. It has not merely to interpret or to give effect to the contractual rights
and obligations of the parties. It can create new rights and obligations between them which it
considers essential for keeping industrial peace...".
Further, his Lordship in deciding whether Dr Dutt was a workman within the meaning of the Act had
stated that-
"As for the determination whether Dr Dutt was or was not workman within the Act, we have, in an
earlier decision Assunta Hospital v. Dr Dutt [1980] 1 MLRA 66; [1981] 1 MLJ 115, said that the
question is a mixed question of fact and law and it is for the Industrial Court to determine this
question. The fact is the ascertainment of the relevant conduct of the parties under the
contract and the inference proper to be drawn therefrom as to the terms of the contract and
the question of law, once the terms have been ascertained, is the clarification of the contract for
service or of service...".
In the present case, the Court found that the mere fact the "Management Agreement" is executed
between the Claimant and COWs-1 is not conclusive that there is no nexus between the Claimant and
the Company. Likewise, the fact that there is no deduction for EPF, SOSCO etc in the Management
Agreement is not conclusive that the said contract is a contract for services. The reality of the
contract needs to look at.
The Court refers to the provisions in the Management Agreement and the following provisions in
the Management Agreement provides that the Claimant was appointed as a Manager of the
Company:
(a) Recital C of the Management Agreement stated that "In addition to the Manager holding the
shares of the Company in trust for the Principal, the Principal wishes to appoint the Manager and
the Manager wishes to be appointed as the Company's Manager on the terms hereinafter
contained.";
(b) Clause 1 of the Management Agreement inter alia, states that "For the consideration hereinafter
appearing, the Principal hereby appoint the Manager (the Claimant) as its manager to manage
the Company among others....";
(c) Clause 2 of the Management Agreement with regards to the Duties and Responsibilities of the
Manager had stated the Claimant as "Manager of the Company";
(d) the letter of termination (p 19 of CLB-2) issued by COWs-1 using the letterhead of the Company
and the caption of the said letter stated as follows:
"Termination of Engagement/Services/Management
Principal: Li Wenqiang
Company: WVT Timber Industries Sdn Bhd.
Manager: Wong Fon Fah".
[Emphasis Added]
[33] In the case of Hoh Kiang Ngan v, Mahkamah Perusahan Malaysia & Anor [1995] 1 MELR
1; [1995] 2 MLRA 435; [1995] 3 MLJ 369; [1996] 4 CLJ 687; [1996] 3 AMR 3693, the Federal Court
held that-
"In our judgment, the correct test to be applied in determining whether a claimant is a
workman under the Act is that enunciated by Chang Ming Tat FJ in Dr A. Dutt v. Assunta
Hospital [1981] 1 MLRA 472; [1981] 1 MLJ 304 at p 311, we accordingly hold that a workman
under the Act is one who is engaged under a contract of service. An independent contractor who is
engaged under a contract for service is not a workman under the Act. We take this view because it
provides, as earlier observed, for a flexible approach to the determination of the question. It is a
fairly plain to see why flexibility is achieved by having resort to this test.
In all cases where it becomes necessary to determine whether a contract is one of service or
for service, the degree of control which an employer exercise over a claimant is an important
factor, although it may not be the sole criterion. The terms of contract between the parties
must, therefore, first be ascertained. Where there is in writing, the task is to interpret its
terms in order to determine the nature of the latter's duties and functions. Where it is not
then its terms must be established and construed. But in the vast majority of cases there are
facts which go to show the nature, degree and extent of control. These include, but are not
confined to, the conduct of the parties at all relevant times. Their determination is a question of
fact. When all the features of the engagement have been identified, it becomes necessary to
determine whether the contract falls into one category of the other, that is to say, whether it is a
contract of service or a contract for service.".
Further, in the English case of Ready Mixed Concrete (South East) Ltd v. Minister of Pensions and
National Insurance [1968] 2 QB 497, it was held that-
"I must now consider what is meant by a contract of service.
A contract of service exists if these three conditions are fulfilled.
(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his
own work and skill in the performance of some service for his master.
(ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the
other's control in a sufficient degree to make that other master.
(iii) The other provisions of the contract are consistent with its being a contract of service.
I need say little about (i) and (ii).
As to (i). there must be a wage or other remuneration. Otherwise there will be no consideration, and
without consideration no contract of any kind. The servant must be obliged to provide his own work
and skill. Freedom to do a job either by one's own hands or by another's is inconsistent with a
contract of service, though a limited or occasional power of delegation may not be: see
Atiyah's Vicarious Liability in the Law of Torts (1967) pp 59 to 61 and the cases cited by him.
As to (ii). control includes the power of deciding the thing to be done, the way in which it shall
be done, the means to be employed in doing it, the time when and the place where it shall be
done. All these aspects of control must be considered in deciding whether the right exists in a
sufficient degree to make one party the master and the other his servant. The right need not
be unrestricted.
"What matters is lawful authority to command so far as there is scope for it. and there must always
be some room for it, if only in incidental or collateral matters." - Zuijs v. Wirth Brothers Proprietary,
Ltd [1955] 93 CLr 561, 571
To find where the right resides one must look first to the express terms of the contract, and if they
deal fully with the matter, one may look no further. If the contract does not expressly provide which
party shall have the right, the question must be answered in the ordinary way by implication...
... I can put the point which I am making in other words. An obligation to do work subject to the
other party's control is a necessary, though not always a sufficient, condition of a contract of
service. If the provisions of the contract as a whole are inconsistent with its being a contract
of service, it will be some other kind of contract, and the person doing the work will not be a
servant. The judge's task is to classify the contract (a task like that of distinguishing a contract of
sale from one of work and labour). He may, in performing it, take into account other matters besides
control.".
In the case of Bata Shoe Company (Malaya) Ltd v. Employees Provident Fund Board [1966] 1
MLRH 263; [1967] 1 MLJ 120 Gill J held:
"A contract of service is one in which a person undertakes to serve another and to obey his
reasonable orders within the scope and the duty of the undertaking. Whether or not a particular
contract is a contract of service is a question of fact, depending upon the terms of the
engagement, the method of remuneration, and the power of controlling and dismissing the
workmen, although none of these factors is by itself conclusive. (See Halsbury, 3rd End, vol 25, p
448, para 872).
In Short v. J & WHenderson, Ltd [1946], 174 LT 417, 427, Lord Thankerton recapitulated with
approval the four indicia of a contract of service derived by Lord Justice Clerk in Park v. Wilsons and
Clyde Coal Co Ltd, [1928] SC 121, 134 from the authorities referred to by him. These are: (a) the
master's power of selection of his servant; (b) the payment of wages or other remuneration;
(c) the master's right to control the doing of the work; and (d) the master's right of
suspension or dismissal. Lord Justice Clerk had gone on to say that a contract of service may still
exist if some of these elements are absent altogether, or present only in an unusual form, and
that the principal requirement of a contract of service is the right of the master in some
reasonable sense to control the method of doing the work, and that this factor of
superintendence and control has frequently been treated as critical and decisive of the legal
quality of the relationship.
It is to be observed that the relationship of master and servant is characterized by a contract of
service, express or implied, between the master and the servant. A contract of service is to be
distinguished from a contract for services because a person who contracts to provide services for
another person is not a servant but an independent contractor. To distinguish between an
independent contractor and a servant, the generally accepted test is whether the employer
retains the power, not only of directing what work is to be done, but also of controlling the
manner of doing the work. In Stevenson Jordan & Harrison, Ltd v. MacDonald and Evans [1952] 1
TLR 101, 111, Lord Justice Denning said:
One feature which seems to run through the instances is that, under a contract of service, a man is
employed as part of the business, and his work is done as an integral part of the business; whereas,
under a contract for services, his work, although done for the business, is not integrated into it but is
only accessory to it. ".
[Emphasis Added]
The Court found that COWs-1 was the person behind the Company who hold the shares of the
Company. It can be seen in the Trust Deed where he appoints the Claimant to hold the shares on his
behalf. This has been confirmed by CLWs-1 and the Claimant. Further, cl 2 of the Management
Agreement, inter alia, state that COWs-1 will be deciding the following matters:
(i) any commitment to expenditure whether of cash, capital nature or otherwise;
(ii) the employment or dismissal of any employee;
(iii) the design/quality of products of the Business of the Company (until such time as required by
the Municipal).
Therefore, the Court is of the view that COWs-1 is the person behind the Company who has full
control over the Company and also a person who will decide on the important matters of the
Company. Therefore, the Court rules that the Company is the employer of the Claimant. The Court is
not able to agree with the contentions of the Company's counsel that the Claimant was a sole
director and shareholder of the Company and therefore the Company was not the employer of the
Claimant.
Upon determining the first issue that the Company was the employer of the Claimant, the Court now
moves on to decide whether the termination of the service of the Claimant at the end of his
probation period was without just cause or excuse.
Whether The Termination Of The Claimant By The Company Was With Just Cause And Excuse
In the case of Goon Kween Phoy v. J & P Coats (M) Bhd [1981] 1 MLRA 415; [1981] 2 MLJ 129, the
Federal Court held that-
"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 of 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 the 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 excuse. The proper enquiry of the Court is the
reason advanced by it and the Court or the High Court cannot go into another reason not
relied on by the employer or find one for it.".
The Court of Appeal in the case of Omar Othman v. Kulim Advanced Technologies Sdn Bhd [2019]
6 MLRA 756; [2019] 1 MLJ 625; [2019] 7 CLJ 18 where Hamid Sultan Bin Abu Backer, JCA, delivering
the decision of the Court Appeal held that-
"It is now well established that 'termination simplicitef a concept of common law is not part
of industrial jurisprudence of Malaysia - under the Industrial Relations Act 1967 (IRA 1967).
The concept may be relevant in limited circumstances under the Employment Act 1955.
Termination simpliciterrelates to the absolute common law right of an employer to terminate the
employee pursuant to the terms of the contract. This common law right has been arrested by virtue
of s 20 of IRA 1967 which reads as follows:
"20. (1) Where a workman, irrespective of whether he is a member of a trade union of workmen or
otherwise, considers that he has been dismissed without just cause or excuse by his employer, he
may make representations in writing to the Director General to be reinstated in his former
employment; the representations may be filed at the office of the Director General nearest to the
place of employment from which the workman was dismissed.
The respondent had argued and the learned Judicial Commissioner had agreed that the appellant
had not 'objected' to the termination and had in fact proceeded to accept the payment given in lieu of
notice. We agreed with the appellant that in the law of industrial relations, pleas of estoppel, res
judicata, acquiescence, waiver or laches, are regarded as technicalities which are passed over in
favour of the substantive merits in the case and where principles of equity and good conscience
prevail. [See Telekom Malaysia Kawasan Utara v. Krishnan Kutty Sanguni Nair & Anor [2002] 1
MELR 4; [2002] 1 MLRA 188; [2002] 3 MLJ 129; [2002] 3 CLJ 314; [2002] 3 AMR 2898].
The notice of termination impinges on s 20 of IRA 1967 as well as settled principles enunciated by
case laws. Whether it is probationary period, fixed term contract, etc. where termination takes
place before the expiry of the term, etc., it was incumbent on the employer to demonstrate
that the dismissal was based on just cause and excuse. Otherwise, the termination is unlawful
and cannot stand.".
Further, it is trite law that an employee cannot be terminated from his employment whilst under
probationary period, except for misconduct. In all other cases, a probationer would have to be
assessed on his performance to gauge his suitability to be confirmed as a permanent employee in the
company. In the High Court case of Sulnayah Mohd Isa v. Sekolah Kanak-Kanak Pekak Selangor &
Anor [1999] 2 MELR 378; [1999] 2 MLRH 566; [1999] 6 CLJ 234 it was held by Azmel Maamor J:
"The main issue that arose from this application concerned with the right of an employer to dismiss
its employee during the period of probation. It was not disputed that the applicant was dismissed by
respondent No 1 during the currency of her probationary period. At p 3 of the award the Industrial
Court had quite rightly stated the legal principle concerning this issue ie:
In other words, the employer has no right to terminate the service of an employee before the period
of probation has expired, except on the ground of misconduct or other sufficient reasons in which
case even the service of a permanent employee could be terminated.
This principle means that an employee cannot be terminated by the employer during the
currency of his probationary period. However there is an exception to the rule, ie the
employee can be terminated if he commits an act of misconduct for which reason even the
services of a confirmed employee can be terminated.".
The Court refers to a letter dated 30 October 2017 (see p 19 of the CLB- 2) which serve as a notice of
termination to the Claimant. COWs-1 argued that the Company had the right to terminate the
Claimant at the end of the 6 months' probation period under cl 3 of the Management Agreement as
the Claimant did not meet the minimum standard for even one month, ie, failed to get 6000 tonnes of
the timber raw materials every month. However, the Court found that that reason was not stated in
the notice of termination. The Company failed to produce any evidence to show that there was any
warning or show cause letter issued to the Claimant for failure to meet the minimum standard prior
to termination. Therefore, the Court found that the Company failed to prove that the Claimant was a
poor performer or even that he had been found guilty of misconduct. The Notice of Termination is
simply devoid of any reason for termination whatsoever.
COWs-1 had exercised its right under cl 3 of the Management Agreement to issue notice to terminate
the Claimant's service (as he was a probationer), the onus is still on them to show that such a
termination was done with just cause or excuse. In this case, COWs-1 has failed altogether to give
any reason for the termination.
As enunciated in the case Omar Othman v. Kulim Advanced Technologies Sdn Bhd [2019] 6 MLRA
756; [2019] 1 MLJ 625; [2019] 7 CLJ 18, termination simpliciter is not applicable in Malaysian
industrial jurisprudence. The Company, whilst relying on the provisions of the Management
Agreement to terminate the Claimant's employment, nevertheless still has to prove that such a
termination was done with just cause and excuse. This they have failed to do.
Therefore, this Court finds that the termination of the Claimant's employment by the Company was
done without just cause and excuse.
Remedy
Despite being a probationer, the Claimant is equally entitled to similar protection as that accorded
to confirmed employees under s 20 of the Act. In the case of Khaliah Abbas v. Pesaka Capital Corp
Sdn Bhd [1996] 1 MELR 315; [1996] 2 MLRA 654; [1997] 1 MLJ 376; [1997] 3 CLJ 827 the Court of
Appeal held that-
"It is our view that an employee on probation enjoys the same rights as a permanent or
confirmed employee and his services cannot be terminated without just cause and excuse.".
However, there can be no order for reinstatement. The Claimant, being a probationer, holds no lien
to the appointment and reinstatement would not be the appropriate remedy under the
circumstances. In the case of RO Marketing Sdn Bhd v. Abdul Halim Ibrahim [1998] 2 MELR 262;
[1998] 3 ILR 1037 (Award No 655 of 1998) the learned Industrial Court Chairman, Abu Hashim Abu
Bakar, held that-
"As regards remedies available to the claimant, it is odd and in fact presents a peculiar
difficulty to the Court, that if an order of reinstatement is made, there is no law that
empowers the Court to reinstate the employee as a confirmed employee. The Court is unsure
any more than the claimant himself is unsure that if he had continued in employment whether he
would be confirmed or terminated even after several extensions of the probation. Because of that
uncertainty, the Court has decided not to reinstate him, but to compensate him instead.".
In the case of Dr A Dutt v. Assunta Hospital [1981] 1 MLRA 472; [1981] 1 MLJ 304 the Federal
Court had held that the Industrial Court is authorised to award monetary compensation if it is of the
view that reinstatement is not appropriate. The Claimant in this case had merely worked for 6
months with the Company and had not completed even one whole year of service. As such, the Court
is not inclined to award any compensation in lieu of reinstatement as he had not served the Company
for at least one completed year.
Subsection 30(6A) of the Act inter alia, provides that the Court in making an award in relation to a
reference to it under subsection 20(3) of the Act shall take into consideration the factors specified
in the Second Schedule. Paragraph 2 of the Second Schedule of the Act provides that in the case of a
probationer who has been dismissed without just cause or excuse, any back wages given shall not
exceed 12 months' back wages from the date of dismissal based on his last drawn salary.
The Claimant's last drawn salary was RM10,000 a month. Since the dismissal, the Claimant could not
find suitable employment and to support himself he has worked as a Grab Driver. Later in November
2019, he has been working as a real estate negotiator for the IQI Agency and he has yet to earn any
income as a real estate negotiator. The Court determines that the Claimant's post dismissal earning
will not be considered in calculating his back wages.
Having considered all the facts of case on the appropriate sum to be awarded, the Court acting in
accordance with the principles of equity, good conscience and substantial merits of the case without
regard to technicalities and legal forms will now make an order that the Claimant is to be paid a sum
of RM60,000 as back wages being 6 months of RM10,000 per month.
Award
The Court awards and directs that the Company pays to the Claimant a total sum of RM60,000 which
is derived from the following calculation:
RM10,000 x 6 months... RM60,000
Total... RM60,000
The payment of the award sum, subject to statutory deductions (if any), must be made within 30
days from the date of this Award.