IN THE INDUSTRIAL COURT OF MALAYSIA

CASE NO: 15/4 - 729/12

BETWEEN

SANKERPILLAI A/L SELVARAJOO DAN 2 ORANG PERAYU LAIN

AND

FRAMCO SDN. BHD./

DHL GLOBAL FORWARDING(M) SDN. BHD

AWARD NO: 289 OF 2016

Before : Y.A. PUAN ONG GEOK LAN - Chairman

(Sitting Alone)

Venue : Industrial Court Malaysia, Kuala Lumpur.

Date of Reference: 23.04.2012.

Dates of Mention: 06.07.2012; 03.08.2012; 07.09.2012; 27.04.2012;

01.11.2012; 05.12.2012; 17.01.2013; 18.02.2013;
19.04.2013; 27.05.2013; 17.06.2013; 25.11.2013;
13.01.2014; 19.02.2014; 19.03.2014; 09.04.2014;
07.07.2014; 18.08.2014; 02.12.2014; 09.06.2015;
09.07.2015.

Dates of Hearing : 24.09.2013; 05.01.2015; 06.01.2015; 21.04.2015;

Representative : Mr. Arun Kumar

of Messrs Murugavell Arumugam & Co.
Counsel for the Claimant.

Miss Lisa Tan Yu Wan

of Messrs Lee Hishammmuddin Allen & Gledhill
Counsel for the Company.
Reference:
This is a reference made under Section 20(3) of the Industrial
Relations Act, 1967 arising out of the dismissal of Sankerpillai a/l
Selvarajoo Dan 2 Orang Perayu Lain by Framco Sdn. Bhd./DHL
Global Forwarding (M) Sdn. Bhd.

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 AWARD

1. This dispute arose from the dismissal of Sankerpillai a/l Selvarajoo

(“the 1st Claimant), Abraham a/l Sami Das (“the 2nd Claimant”) and
Paranjothi a/l Kannan (“the 3rd Claimant”) by Framco Sdn. Bhd. (“the
Framco”).

2. It is noted that in the Ministerial Reference dated 23.4.2012 only

Framco was mentioned. However, the Industrial Relations Department
has in its covering letter forwarding the Ministerial Reference to the
Industrial Court added in brackets “DHL Global Forwarding” after
Framco Sdn. Bhd. This Court will rely only on the Ministerial Reference.

3. Pursuant to a notice of application filed by the 2nd and 3rd

Claimants, DHL Global Forwarding (M) Sdn. Bhd. (“DHL”) was joined as a
party to this dispute under the Award No. 1886 of 2013.

4. The 1st Claimant did not attend any of the mentions fixed by the
Court. On the application of the Counsel for DHL the claim by the 1st
Claimant was struck off.

Background facts

5. It is not disputed that the 2nd Claimant commenced employment

with Framco on 2.9.2002 as an export clerk. He was confirmed in his
position on 1.3.2003. He was paid bonus and increment over the years
by Framco upon Framco being notified by DHL. By its letter dated
24..3.2009, Framco retrenched the 2nd Claimant with effect from
1.4.2009, and paid him termination benefits including indemnity in lieu
of notice. The said letter is reproduced herein below:

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“24th March 2009
Abraham a/l Sami Das
Present.

Dear Abraham

RETRENCHMENT

We have been directed by the management of DHL Global Forwarding to

retrench you with effect from 1 April 2009. It appear that the reason for
the retrenchment is the continuing business slowdown.

In view of your retrenchment, you will be entitled to the following benefits

1) Indemnity in lieu of notice of 56 days (8 weeks) wages amounting

to RM4,537.68
(total earnings for last 12 months i.e. RM29,574.77/365 days x 56
days)
2) Termination benefits at a rate of 20 days’ wages per year of service
amounting to RM10,695.96.
(total earnings for last 12 months i.e. RM29,574.77/365 days x
132 days)

The indemnity and termination benefits, together with overtime claims

and annual leave pay, if any, will be credited to your Public Bank
account shortly.

We regret this action that we have had to take but under the
circumstances, we are left with no alternative.

We wish to thank you for the services you have rendered to the company
in the past and wish you all the best in the future.

Thank you.

Yours faithfully
FRAMCO SDN. BHD.

Signed
MARAN ANTHONY A/L FELIX ANTHONY
Director”

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6. The 3rd Claimant commenced employment with Framco around
October 2001 as a warehouse clerk and later designated as Operations
Clerk. Like the 2nd Claimant, Framco, upon being notified by DHL, paid
him over the years bonus and increment. By a similar letter dated
24.3.2009 the 3rd Claimant’s services was terminated by Framco and he
was paid termination benefits including indemnity in lieu of notice.

7. The Claimants pleaded in their Amended State of Case as follows:

(i) Framco and/or DHL did not hold any discussion with them
prior issuing their dismissal letters dated 24.3.2009;

(ii) Framco and/or DHL did not give them early notice of their
retrenchment.

(iii) Framco and/or DHL did not hold any discussion with them
on the possibility of alternative employment.

(iv) Framco and/or DHL did not comply with the provisions of
the Code of Conduct for Industrial Harmony as a whole nor
did Framco and/or DHL attempt to explore any alternative
solution to leave retrenchment as a last resort.

8. DHL denied that the Claimants were its employees. DHL

maintained that it has entered into a Contract For Service with Framco
where Framco has agreed to supply manpower services to DHL on the
terms and conditions therein contained.

9. The Claimants themselves admitted that they were employed by

Framco. It is clear from the documents tendered in CLB-1 that the

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Claimants’ appointment (2nd Claimant), confirmation and termination of
service were carried out by Framco and all related letters were issued to
them on Framco’s letterhead.

10. The Claimants did not produce any evidence to show that they
were employees of DHL. They did not even produce their individual
payslips. However, during cross-examination both Claimants admitted
that they received payslips which were issued by Framco. When asked to
produce annual leave form, the Claimant not produce annual leave forms
from DHL. The Claimants merely made allegations that they were
employees of DHL; the documents tendered by them all showed that their
employer was Framco.

11. The termination letters were issued by Framco and the termination
benefits including indemnity in lieu of notice were paid by Framco to the
Claimants

12. Framco’s representative did not bother to attend Court on any of

the mention dates or the hearing dates. Framco did not file any
Statement-in-Reply.

13. DHL denied that the Claimants were its employees. Its sole
witness was Rajasegaran Rajagopal, the Senior Director, Human
Resources. He said that DHL involved in air and ocean freight services.
He testified DHL and Framco had on 15.12.2004 entered into a contract
for services where Framco was to supply to DHL manpower services for
the period of 1 year with effect from 1.10.2004 and shall continue
thereafter until terminated under the relevant provisions in the contract.

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14. Under Clause 2 of the Contract For Services, Framco undertook to
provide manpower services to DHL for its utilisation and deployment. In
effecting the foregoing, Framco undertook to comply with the following in
respect of all its employees:

a) prompt payment of all wages due in accordance with the

relevant Labour Laws;

b) prompt submission of all statutory contributions to the

relevant authorities like EPF, SOCSO, LHDN, HRDF etc;

c) preparation and submission of periodic returns to LHDN;

d) proper preparation and maintenance of a register of

employees and other employee records;

e) maintenance of proper time sheets and other work records of

it’s employees;

f) compliance with any statutory requirements for the

insurance of employees against any injury, costs of which
shall be borne by the DHL;

g) liaise with the DHL on staff performance prior to the

granting of any increments or benefits, including annual
bonuses;

h) advise and assist the DHL in all aspects of its services to its
clients;

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 i) maintain cordial and effective relations between the DHL
and its clients; and

j) keep the DHL advised on all developments that woud or

could affect the DHL business activities.

15. Clause 3 sets out the commitment of Framco as the Contractor.

They are as follows:

1. To comply with the requests and directions of the DHL and

its clients and shall channel its best efforts towards the
promotion of the DHL interests.

2. To devote such time and attention and exercise such

diligence and skills as may be necessary to provide the
services necessary to DHL and its clients. Framco shall not
engage, in any arrangement, for personal gain with the DHL
clients during the tenure of this Agreement and for a period
of twelve (12) months following the termination of this
contract.

3. To fulfil all commitments in respect of the requirements of all

statutory authorities in particular matters relating to the
Employee Provident Fund and ensure such requirements in
particular contributions due on behalf of employees and
Framco are in current status.

16. DHL on its part undertook in Clause 5 to provide Framco with the
following payments as tabulated:

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 a) The amount of wages and allowances due to the employees
of the Framco involved in providing the services mentioned
above.

b) The amount of contributions due by the Framco in respect of

Employees Provident Fund, Employees Social Security
schemes and any other dues that may be imposed on the
Framco.

c) The amount of payments in respect of overtime work, and

work on rest days and public holidays carried out by the
Framco.

d) The amount of annual bonuses payable to the Framco

employees. The quantum of bonus shall be determined
pursuant to discussions with the management of DHL.

e) The amount of payments of premiums in respect of

insurance protection taken by the Framco in respect of
employees and equipment used in providing the services
mentioned above.

f) A management fee based on 10% of total salary costs.

17. It is further provided that Framco shall by the 22nd day of each
month, submit to DHL a claim indicating the payments due and DHL
shall forthwith credit Framco’s bank account with the amount due,
within 3 days of the receipt of the claims.

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18. If any of Framco’s employees is terminated at the insistence of
DHL, DHL shall under Clause 9.2.1 reimburse to Framco all expenses
involved in the litigation of and all compensation payable to such
employee, pursuant to the employee taking legal action against Framco.
DHL’s aforesaid liability shall include payment of termination benefits in
the event of retrenchment of Framco’s employees on ground of
redundancy caused by DHL’s inability to deploy Framco’s employees or
reduction in the manpower requirement of DHL.

19. It is expressly stated in the Contract For Services that the

relationship between DHL and Framco was that of Principal and
Independent Contractor and was in no way construed to make either
party a partner, employee, agent, franchise or attorney of the other party
for any purpose whatsoever.

20. DHL’s witness testified that DHL had, pursuant to the Contract
For Services, at all times made lump sum payments (including a
management fee of 10%) to Framco for the manpower services provided
by them. Framco would then pay its employees including the Claimants
accordingly. DHL tendered into Court the payroll summary report (pages
9 and 10 of COB) which showed that the Claimants were on Framco’s
payroll and their monthly salaries were paid by Framco and not by DHL.

21. It was the DHL’s submission that DHL and Framco are 2 separate
legal entities and there is no legal or administrative nexus between them.
DHL neither owned any shares nor had any interest in Framco. Both
companies do not have common shareholders, registered address or
company secretary.

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22. The Claimant had conducted a company search on Framco. The
search report (pages 4 to 9 CLB-2) showed that Framco was registered on
5.9.2002 and its status as at 27.5.2013 was “Existing”. Among others,
the search report revealed that one of its shareholders is Maran Anthony
a/l Felix Anthony; he was the person who signed the
retrenchment/termination letter on behalf of framco.

23. DHL has shown from the evidence adduced that the only link
between DHL and Framco is the Contractor For Services dated 15.12
2004 where it was agreed that Framco was to supply DHL manpower
services.

24. It has been established in industrial jurisprudence that a company

has the right to outsource its work or part of its work to third parties
(Muhamad Yusuf Awang & Ors v. Guiness Anchor Berhad [2012] 4ILR
134 and Hume Industries (M) Berhad v. Mohamed bin Shafie & 48
Ors [2005] 3 ILR 421).

25. Having considered the evidence adduced and being enjoined to act
according to equity and good conscience on substantial merits of the
case without regard to technicalities and legal form, this Court finds that
the facts showed clearly that the Claimants were not employees of DHL.
Under a contract of services entered into between DHL and Framco, the
Claimants were sent by Framco to work with DHL; they remained at all
times employees of Framco.

26. The Claimants’ claim against DHL is hereby dismissed.

27. As regards the Claimants’ claim against Framco, the Claimants’

alleged that they were not given early notice of retrenchment and there

10
was no discussion held with them to discuss the possibility of alternative
employment.

28. From the evidence before this Court, it is noted that the Claimants
were paid an indemnity in lieu of notice. It is good industrial relations
practice to discuss possibility of alternative employment but an employer
is not legally bound to do so. In fact it is noted that the hearing before
the Court the Claimants’ main focus was on making DHL liable as the
Claimants’ employer. The case against Framco was only based on those
bare allegations. In fact, the Claimants have stated in their submissions
that they have pleaded in their Amended Statement of Case to be
reinstated and have testified under cross-examination that they want to
be reinstated to DHL! Having regard to the evidence and circumstances
of this case, the Claimants’ claim against Framco is hereby dismissed.

HANDED DOWN AND DATED THIS 16TH DAY OF MARCH, 2016.

( ONG GEOK LAN )

CHAIRMAN
INDUSTRIAL COURT MALAYSIA
KUALA LUMPUR.

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