IN THE INDUSTRIAL COURT OF MALAYSIA

CASE NO: 7/4-903/20

BETWEEN

1. JOHN ASHLEY ETHERINGTON

2. MOHD AZAM BIN SAAT

AND

OCEANEERING SERVICES (MALAYSIA) SDN. BHD.

AWARD NO: 162 OF 2024

BEFORE : Y.A. PUAN VANITHAMANY SIVALINGAM

- Chairman

VENUE : Industrial Court of Malaysia, Kuala Lumpur.

DATE OF REFERENCE : 05.07.2020.

DATE OF MENTION : 14.08.2020.

DATES OF HEARING : 22.03.2021 (PH), 23.03.2021 (PH),

10.01.2022 (PH), 11.01.2022 (PH),
12.01.2022 (PH), 13.01.2022 (PH),
10.03.2022) (PH), 23.05.2022 (PH),
16.11.2022 (PH), 17.11.2022 (PH).

REPRESENTATION : Mr. Stephen Soong Kok Hong

From Malaysian Trades Union Congress
(MTUC), (Representative for the Claimant)

Mr. Eddie Chuah together with Ms. Joanne Lim

of Messrs. Wong & Partners
(Counsel for the Company)
REFERENCE

This is a reference by the Honourable Minister of Human Resources under Section

20(3) of the Industrial Relations Act 1967 (“The Act”) for an award in respect of the

dispute arising out of the alleged retrenchment of JOHN ASHLEY ETHERINGTON

AND MOHD AZAM BIN SAAT (“the Claimants”) by his employer, OCEANEERING

SERVICES (MALAYSIA) SDN BHD (“Company”) .

BRIEF FACTS

The Court takes cognizance of the followings papers and documents files;

i) Statement of case of 1st Claimant dated 5.9.2020

ii) Statement of case of 2nd Claimant dated 18.9.2020

iii) Statement in Reply dated 25.1.2021

iv) Claimant’s Bundle of Documents (CLB1, CLB2, CLB3, CLB4, CLB5)

v) Company’s Bundle of Documents (COB1,COB2 and COB3)

vi) Company’s Supplementary Bundle Documents – COB 5

vii) Witness Statement of Claimant (CLWS1, CLWS2, CLWS 4 (A), CLWS 4 (B))

viii) Witness Statement of WAHEEDAH BINTI ABDUL JABAR (COWS1a),

COWS2 (A), COWS 2 (B)

ix) Company Written Submission 17.4.2023

x) Company’s Bundle of Authorities 1 & 2

xi) Company’s Bundle of Authorities Volume 2

xii) Claimant’s Joint written Submission 02.06.2023

xiii) Submission in reply of Company dated 2.5.2023

xiv) Rejoinder dated 07.03.2021

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This case has been consolidated pursuant to a Court Award No. 1389 of 2020.

THE CLAIMANTS’ CASE

[1] The 1st Claimant was employed effective from 24.07.2017 as Manager Asia

Pacific Asset Integrity (APAC) one of the Senior Manager positions in the Company

reported to the Senior Vice president Asset Integrity. The 1st Claimant was

responsible for the leadership and management of all aspects of the Oceaneering

Asset Integrity business in the geographical region to meet the Company’s short-

and long-term business objectives. It is stated in the 1st Claimant’s job description

that personnel of various region should report to the 1st Claimant.

[2] The 1st Claimant’s job description requires him to supervise 336 subordinates

excluding the SGA (6 employees) across APAC region. On 10.10.2019, COW3

met the 1st Claimant in the 1st Claimant’s office and informed orally that as a result

of Path to Profit (P2P) exercise, the 1st Claimant’s position became redundant. On

18.10.2019, the 1st Claimant received a notice of retrenchment of his position which

stated that his last working date will be on 30.10.2019 which means the 1st Claimant

was served with 14 days notice.

[3] The 1st Claimant’s last drawn salary was RM107,924.02 on October 2019. On

10.10.2019, Cameron Burchell being the Company’s Human Resource Manager

(“COW3”) and verbally informed the 1st Claimant that as a result of the “Path to

Profitability” (“P2P”) exercise undertaken by the Company, the 1 st Claimant’s

position was made redundant. When the 1st Claimant inquired with regards to the

notice period , COW3 said that this takes effect on immediate basis.

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[4] The 2nd Claimant was employed on 24.06.2019 as Advanced NDT (Non-

Destructive Testing) Manager SEA (South East Asia) (SIS- Specialized Inspection

Services) with a salary of RM31,250.00 per month. The 2nd Claimant was under

the probation of 6 months when he was prematurely terminated on 06.11.2019 on

grounds of redundancy. The 2nd Claimant was recruited to setup, formulate and to

develop, organize and acquire the manpower and other resources (machinery and

equipment) of the NDT and SIS with the aim to expand its revenue and business

activities.

[5] The 2nd Claimant in the span of less than 3 months of his employment service,

had secured service contracts from new clients namely, Lott Inspection Sdn Bhd

(“Lott ”), Heng Yuan Refining Company Berhad (formerly known as Shell Refining

Company (Federation of Malaya) Berhad), Pulse Eddy Current (“PEC”), Long

Range Ultrasonic Testing (“LRUT”) and etc. Lott’s Inspection Work would have

taken a year to be completed. Lott is also the main contractor for inspection in

Malaysia Liquid Natural Gas (“MLNG”) and Bintulu which is the largest Liquid

Natural Gas Plant (“LNG”) in the world. The 2nd Claimant had in fact, written

business proposals to the Company on 09.07.2019 ( details illustrated in the 2nd

Claimant’s Statement of Case).

[6] There was no Performance review/ evaluation made by the Company. The

Company served the Notice of retrenchment dated 04.11.2019 on 06.11.2019. The

Company’s justification for the termination was that the Company has wrongly

invested in the NDT and SIS.

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THE COMPANY’S CASE

[7] The Company avers that the 1st Claimant was the APAC Regional Manager of

Asset Integrity Segment. The Company has been announcing the APAC

restructuring exercise to all APAC employees therefore the Company avers that the

1st Claimant would have reasonably expected this impending retrenchment.

[8] The decision to discontinue of NDT and SIS work resulted in redundancy the

Claimant’s position. In the absence of alternative role which required the 1 st

Claimant’s skill, the Company was left with no choice but to retrench him. On

10.10.2019, Mr. Cameron had a meeting with the 1st Claimant to informally

communicate the 1st Claimant’s retrenchment in the notion of giving the 1 st

Claimant an early notice and further stated that the notice period will not commence

until the written Notice of Retrenchment is served on him. However according to

the Cameron, it seems the 1st Claimant indicated that he prefers to leave the

Company as early as possible.

[9] As such the Company issue the Notice of Retrenchment on 18.10.2019 and

informed the 1st Claimant that his employment will cease effective form the close

of business on 31.10.2019. The 1st Claimant was paid RM126,989.62 as severance

payment and offered an outplacement service. The Company also avers that the

removal of 1st Claimant’s position saved cost for the Company as he was the

highest paid employee of the Company. The 1st Claimant residue duties was

absorbed by APAC Operation Manager, Roy Andrich (“Roy”) who was based in

Australia and responsible for always managing the operations of APAC Asset

Integrity business.

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[10] As far as the 2nd Claimant is concerned, the Company avers that the 2nd

Claimant was not recruited to personally set up the NDT and SIS business in

Malaysia but to contribute to the Company’s efforts in establishing these businesses

as a team member. Service contracts with the Company’s client are merely

agreements for the Company to service the client. The Company had discontinued

NDT and SIS wok in Malaysia which was served by the 2nd Claimant therefore, the

2nd Claimant’s position became redundant.

THE LAW

[11] As held in the case of WONG CHEE HONG v. CATHAY ORGANIZATION

(M) SDN BHD [1988] 1 CLJ 45; [1988] 1 CLJ (Rep) 298 where the Court had

stated the followings:

‘ When the Industrial Court is dealing with a reference under s. 20, the

first thing that the court will have to do is to ask itself a question (of)

whether there was a dismissal, and if so, whether it was with or without

just cause or excuse’.

[12] In a case involving retrenchment, the issues before the Court essentially are

whether there existed circumstances which justified the retrenchment exercise

undertaken by the Company and whether the Company had acted bona fide in

retrenching the Claimant. (ARKITEK AKIPRIMA SDN BHD v. LIANG SIEW

FATT & ANOR [2002] 1 ILR 150) . It is an established principle that the burden

is on the employer to prove their case against the Claimant and to justify the

retrenchment exercised is genuine and bonafide on a balance of probabilities.

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(LIEW SOON CHEONG v ALJAZEERA INTERNATIONAL (MALAYSIA) SDN

BHD [2016] 4 ILR 360 and BAYER (M) SDN BHD -v- NG HONG PAU( 1999) 4

CLJ 155).

THE LAW OF RETRENCHMENT

[13] Retrenchment connotes in its ordinary meaning an acceptance that the

business itself is being continued, but that a portion of the staff or the labour force

is discharged as a result of surplusage (HOTEL JAYA PURI v. NATIONAL

UNION OF HOTEL, BAR & RESTAURANT WORKER [1980] 1MLJ 109). It is

part of what sometime called as the employer’s prerogative to reorganise its

business in a manner it thinks fit. By implementing a reorganising scheme for

genuine reason for better management and economy, if the services of some

employees become excess to what is necessary for efficient management of the

Company, the employer is entitled to discharge such surplus labour. (EAST

ASIATIC COMPANY (M) BHD v. VALEN NOEL YAP [1987] 1 ILR 363).

[14] When the Company decides that workmen are surplus and therefore there

is a need for retrenchment, an arbitration tribunal should not intervene unless it

is shown that the decision was capricious and without reason or was mala fide

or was actuated by victimisation or unfair labour practise. (CYCLE &

CARRIAGE BINTANG BHD v. CHEAH HIAN LIM [1992] 2ILR 400). In

WILLIAM JACK & CO SDN BHD v. S.BALASINGHAM [1997] 3 CLJ 235 the

Court stated as follow:

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 “Whether the retrenchment exercise in a particular case is bona fide, is

a question of fact and of degree depending for its resolution upon

peculiar fact and circumstance of each case. It is well settled that an

employer is entitled to organise his business in the manner he

considered best. So long as that managerial power is exercised bona

fide, the decision is immune from examination even by the Industrial

Court. However, the Industrial Court is empowered and indeed duty

bound, to investigate the fact and circumstances of a particular case to

determine whether that exercise of power was in fact bona fide”.

[15] Beside this element, the Court will consider whether the consequential

retrenchment was made in compliance or in conformity with acceptable standard

and principles of good industrial relation practise in accordance with the Code of

Conduct for Industrial Harmony to ensure that whole proses of retrenchment is done

on certain minimum standard of fairness and is just. (EXCELLA WOOD

INDUSTRIES SDN BHD v. MOHD ZIKRI BINYAMIN [2000] 1 ILR 643).

[16] Redundancy is a connotation best to describe a situation where there is a

surplus of manpower to the business requirement, a situation where the positioner

job is not required by the Company anymore. The test for redundancy was

enunciated in the case of CHAPMAN & ORS v. ROSTWRACK CHINA CLAY CO

LTD (1973) 3 ALL ER 1063, and applied in the case of BRIDGECON

ENGINEERING SDN BHD v. TOH YUAN KAIT(2000) 3 ILR 512., whereby the test

applied was “whether a workman was redundant was depend on whether there

has been a cessation of, or diminution in, the requirement of Company’s

8
business for employee to carry out the kind of work which the employee had

been engaged”.

[17] It is the employer’s duty to prove that there exists a situation of redundancy.

(SISTEM TELEVISYEN MALAYSIA BERHAD & ANOR v. SUZANA ZAKARIA

(2005 1 ILR 853). In the case of STEPHEN BONG v. FCB (M) SDN BHD & ANOR

(1999) AMEJ 0218, the Court held that :

“ It is not the law that redundancy means that the job or work no longer

exists. Redundancy situation arises when the business requires fewer

employees of whatever kind.”

[18] It must be noted that in law of redundancy, it is the services of the

Employee that must be redundant as opposed to her or his position or title as

was held in the case of ALUMINIUM COMPANY OF MALAYSIA BHD v. JASPAL

SINGH (1987) 2 ILR 558. In other words, mere reorganisation is insufficient to

justify the retrenchment.

[19] In the case of BAYER (M) SDN BHD v. NG HONG PAU (1999) 4 CLJ 155, it

was held that;

“ The burden is on the Appellant to prove the redundancy on which the

dismissal was grounded. It is our view that merely to show evidence of

re-organisation in the Appellant is certainly not sufficient. There was

evidence before ethe Court that although sales were reduced, the

workload of the respondent remained the same. After the dismissal his

9
 workload, was taken over by two former colleagues. Faced with these

evidence, it is any wonder that the Court made a finding of fact that

there was no convincing evidence produced by the Appellant that the

Respondent’s functions were reduced to such an extent that he was

considered redundant.”

EVALUATION AND FINDINGS

[20] Both Claimants alleged that the Company had retrenched them without just

cause or excuse and without considering the natural principle of labour practice.

Claimants also alleged that there was never exist a situation of redundancy in the

first place, therefore the Company unlawfully terminated both Claimants in the

disguise of retrenchment.

[21] In deciding this case based on the facts presented, the Court would ask the

following questions:

b) Whether there existed circumstances which justified the retrenchment

exercise undertaken by the Company and,

c) Whether the Company had acted bona fide when retrenching the

Claimants from their positions in the Company.

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 (A) Whether there existed a circumstance which justified the

retrenchment exercise undertaken by the Company

[22] The Company may exercise restructuring of its business as it wishes in the

best interest of the Company, under the wing of managerial prerogative. (See

WILLIAM JACK & CO SDN BHD v. S.BALASINGHAM [1997] 3 CLJ 235.

(supra)). The Industrial Court will be slow in intervening with that managerial power

of the Company, however the Court still has the power to analyse, based on the

evidence adduced before the Court, whether the exercise of retrenchment was

conducted in a bonafide manner to ensure that no employee is victimised during

this exercise. (See BAYER’s case-supra).

[23] The Company submitted that the employers are in the best position to decide

on the size of workforce that his business requires, and the Courts should be slow

to intervene in any such business reorganisation. However, when the Court receives

a reference and the employee alleged that there was a malafide exercise of the

termination on grounds of retrenchment, the Court has a duty to look into the

retrenchment exercise if it was done in good faith and the reason given by the

Company is genuine and bonafide. The Court derives its power under Section 30(5)

Industrial Relations Act 1967, to consider the substantial merit of the case and

any evidence thereof in arriving to its decision. See WOO VAIN CHAN v.

MALAYAWATA STEEL BHD ( 2016) 10 CLJ where the Court of Appeal held that;

“The issue is whether the work continues to exist requires fewer

employees to carry it out. It is essential that it is the job functions and

duties that are affected and not merely the job title or designation. If the

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 same or essentially same work is found to be carried out under a

different name or manner, there is no redundancy.”

[24] The Company claimed that it has not been profitable for the past several

years and the closure of KL Office is the measure the Company indulge into to save

cost. Therefore, as a result, the Claimant’s position became redundant. It is not for

the Courts to direct or investigate how the Company run its business. The Courts

will not interfere with the managerial powers of the Company. However, the Court

will look into the manner in which this power and right been exercised and to ensure

that no employees has been victimised in due course.

[25] The Company’s decision to retrench the Claimants following the P2P Project

exercised by the Company which includes the restructuring of business across

APAC region which led to the decision to close the KL Office by December 2019.

According to the Company, the Company submitted that it has not been making any

profit for the past several years, therefore the Company indulge into the

implementation of P2P in order to make the Company profitable again.

[26] The Company averred that restructuring was implemented to support

operating effectively and efficiently while simplifying footprint in the region, to rebuild

brand and improve customer retention, to streamline business operations and

prevent and eliminate duplication of effort and exit from markets that do not support

the business goal and the Company claimed that this information had been shared

in the townhall presentation deck. However, this Court noticed that the Company

had failed to adduce evidence to show the list of the attendees of the town hall

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meeting and the information shared in the meeting. The minutes of the townhall

meeting was not submitted as evidence in the Company’s Bundles of Documents.

[27] The email dated 27.09.2019 (pages 1-3 of COB1), carries the information

of the Townhall meeting to Oceaneering Group employees. In the FAQ, it was

mentioned at page 3 of COB1 the followings “As we look at the challenges that

have prevented the APAC region from being profitable, we will look at all options.

At this point nothing is off the table. However, keep in mind that we are still in the

early stages of this initiative. We want to be very thoughtful around the changes we

make and how these changes will impact our people and their daily activities”. Never

anywhere in the townhall meeting, it was mentioned about the redundancy or

retrenchment. It is apparent that the townhall meeting was just a platform for the

Company to inform the exercise of the P2P plan without mentioning anything about

the retrenchment or reduce in workforce.

[28] The Company has adduced evidence to show that the KL Office was closed

(page 5-13 in COB 2). It was submitted that the cost to maintain the KL office was

very high and some functions were transferred to other entity within the

Oceaneering Group. The KL Office was closed to support the overhead cost.

Therefore, the Company decided to discontinue the NDT and SIS work in Malaysia

for the reason being that small scale work with secondary customers did not justify

the costs incurred.

[29] COW2 testified that he has never seen any notices sent to the clients to

discontinue the NDT and SIS works. No such evidence had been adduced by the

Company to prove the same. COW2 was asked in the cross examination whether

13
having business in Australia, United States or Malaysia was cost effective and he

answered that Malaysia was cost effective. On the same token, the Claimants

submitted that it is not logic, and it leads to a unfair labour practice to retrench the

Claimants on the grounds of closure of business due to cost effective. Claimants

further submitted that traveling from Australia and Houston to Malaysia to perform

the duties of the Claimants is far more costly compared to having the business in

Malaysia and duties performed by the Claimants in Malaysia. The fact that the

Claimants duties were performed by another employee of the Company or the

Claimants’ colleagues shows that Claimant’s duties and responsibilities are not

diminished.

[30] It was submitted that the overhead cost for KL Office was high and therefore,

the Company decided to close the KL Office, however COW1 testified that the

Claimants’ positions were redundant when the KL Office was closed. COW1 further

stated that 1st Claimant’s residual duties were absorbed by the APAC’s Operational

Manager Roy Andrich (“Roy”) who was based in Australia. The Company submitted

that it has decided to close the KL office as a measure to save cost however, COW2

and COW1 stated that Roy travelled from Australia to perform the 1st Claimant’s

residual work. This Court is puzzled on how the Company’s employee who travels

from Australia could help the Company to save cost? COW1 explained that the

residual duties are the balance of duties need to be taken care in order to run the

department.

[31] Furthermore, it was stated by the Company that the 1st Claimant’s salary was

the highest among the Company employee and by removing the 1 st Claimant, the

Company could save cost. On the other hand, COW2 testified that his annual salary

14
package would be RM650,000.00 and he was also entitled for a bonus scheme

once a year. COW2 was based in Houston, Texas United States. COW2 has been

relocated to Houston. COW3 testified that “Yes, I can confirm that the removal of

the John’s position was for the purpose of saving cost”. The Claimants had cited

the case of MOHD KHAIR BIN MOHD v. FLOWCO (MALAYSIA) SDN BHD

(Award No 296 of 2023), whereby the Industrial Court held that a balance must be

struck between the competing interest between employee in search of his livelihood

and security of tenure and the need of the Company to carry out its business without

interference by the Court. COW2 had confirmed that the removal of 1st Claimant

was to save cost as he was the highest paid employee in Malaysia.

[32] The Company alleged that the Claimants’ jobs were redundant as the

Company decided to close its business on the grounds of cost effective and the

Company also alleged that it did not make profit for the last few years. According to

COW2, COW1, Bret Smith and COW2 himself was the employee of the Company

Malaysian entity until COW3 and Brett Smith became employee of Australian entity

and COW2 became the employee of United States entity. COW2 also confirmed

that Roy held 2 positions including the 1st Claimant’s position. COW2 had confirmed

that Roy reported to the 1st Claimant which means the 1st Claimant is Roy’s superior.

It is puzzled why the Company took the step to retrench the 1st Claimant but decided

to retain Roy and directed Roy to hold the 1st Claimant’s position and to perform the

1st Claimant’s ‘residual duties’.

[33] The Company claimed that the Company did not make any profit for the past

few years. COW2 confirmed that CLW2 received bonus for year 2020 and COW2

and COW3 received their bonusses for year 2019 respectively. It is whimsical to

15
learn that the Company was able to pay bonuses for year 2018, 2019 and year 2020

when it claimed to have sustained losses for the past few years. The 1st Claimant

was paid 4% increment in July 2019. The act of Company to pay bonuses ad

increment does not substantiate its arguments that the Company was doing well

financially.

[34] COW2, COW1 and Bret Smith has been transferred to Australian and

Houston’s entity which shows that the Company, regardless of concept separate

legal entity, operated as one entity. Therefore, the profit earned by the Company

must been seen as the Group’s profit collectively and not as each one of the entity’s

profit and loss. Although the Company submitted its financial report and claimed

that the Malaysian entity did not make any profit for the pats few years, and that

being the reason the Malaysian business was closed, yet the Company still can

afford to fly its employee form Australia to perform the residual duties of the 1st

Claimant.

[35] This Court finds it unable to believe the Company’s assertion that it suffered

losses for the past several years and that being the reason for the retrenchment of

the Claimants. Be it as it may, it is not the Court’s duty to check if the financial

reports submitted by the Company is valid or not. Nevertheless, it is the Court’s duty

to ensure that the Company in exercising the retrenchment, did complied with the

relevant Industrial practice and that the exercise retrenchment was done in the

bonafide manner without the Claimants being victimised.

16
 (B) whether the Company had acted bona fide when retrenching the

Claimant from her position in the Company

[36] This Court makes an account to articulate the importance of Article 5 of the

Federal Constitution which talks about the right to life. In the case of DELHI

TRANSPORT CORPORATION v. DTC MAZDOOR CONGGRESS & OTHERS

(AIR 1991, SC 101), the Court held that ;

“The right to life includes the right to livelihood. The right to livelihood

therefore cannot hang on to the fancies of individuals in authority.

Employment is not a bounty for them not can be survival be at their

mercy. Income is the foundation of many fundamental rights and when

work is the sole source of income the right to work becomes as much

fundamental. Fundamental rights can ill afford to be consigned to the

limbo of undefined premises and uncertain applications. That will be

mockery of them…”.

[37] The Company submitted that COW1 confirmed that PK Form and the CP22A

(tax clearance form) had been filed to the relevant authority. However, it is noted

that Company had submitted a blank PK Form and CP22A in Court as evidence.

(refer to pages 378-398 of CLB1). This Court is unable to accept the submission

by the Company that the above-mentioned Forms had been filed without any

evidence been adduced to substantiate its claim. This Company failed to prove that

the relevant authorities had been duly informed of the Claimants retrenchment

pursuant to Section 83 (3) of the Income Tax Act 1971, Section 63 of the

Employment Act 1955 and the Notification of Retrenchment of Employees

17
2004, which stipulates that employers are required to submit PK Form within 30

days prior to the retrenchment exercise Therefore, in the absence of relevant

evidence, this Court will presume that the relevant authorities were not informed of

the retrenchment and this Court invokes Section 114(g )of the Evidence Act 1950

to the effect.

[38] The Company submitted that it had complied with the Code of Conduct for

Industrial Harmony 1975. On this account, the Company submitted that the principle

of Last In First Out (“LIFO”) does not apply since the 1st Claimant was the only

employee in that particular position and as far as the 2nd Claimant is concerned, he

was the last employee recruited by the Company and he was under probation

period. Therefore, this Court rules that the principle of LIFO does not apply to the

present case.

[39] In DYNACRAFT INDUSTRIES SDN BHD v. KAMARUDDIN BIN KANA

MOHD SHARIF & ORS [2019] 9CLJ 21, The Federal Court had this to say about

the application of LIFO principle:

“We will deal with the first question posed in this appeal, it concerns the

correctness of the application of the LIFO principle by - the Industrial

Court. The LIFO (last in first out) or "last come first go" principle requires

the most junior employee to be retrenched before the more senior ones

in the same category. The principle is intended to afford a healthy

safeguard against discrimination of workmen in the matter of

retrenchment (see SWADESAMITRAN LTD v. THEIR

WORKMEN, [1960] (SC) 762)”.

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[40] The Company averred in its Statement In Reply that as a mitigating factor, it

has offered outplacement services to the 1st Claimant. COW1 being the Senior

Human Resource Advisor of Oceaneering Services (Malaysia) Sdn Bhd stated that

she was not aware of the principle of Code of Conduct for Industrial Harmony,

however on the other hand the Company claimed that Code of Conduct had been

complied with. COW1 also admitted that no outplacement had been offered to the

1st Claimant.

[41] From the fact of the case, the Company unable to show any real or significant

cost cutting measure was taken in order to avoid the retrenchment. In the case of

KILBY JACOBS ATTICUS v. HALLIBURTON BUSINESS SRIVICE SDN BHD

[2022] 3 ILR 281, the learned Industrial Court chairman said as follow:

“ Employer has to show that it has taken positive steps ie, cost cutting

measures to avert or minimise reductions of workforce and there was

real necessity for the retrenchment in order to justify retrenchment on

account of the COVID-19 pandemic, lest the retrenchment would be

perceived as not done in good faith.”

[42] The Company claimed to have complied with the Code of Conduct of

Industrial Harmony on the advisable steps to be taken before a retrenchment can

be exercised in fair and bona fide manner. Article 20 of the Code as provided as

follows:

“In the circumstances where redundancy is likely an employer should,

in consultation with his employees’ representatives or their trade

19
 union, as appropriate, and in consultation with the Ministry of Labour

and Manpower, take positive steps to avert or minimise reductions of

workforce by the adoption of appropriate measures such as:

(i) limitation on recruitment;

(ii) restriction of overtime work;

(iii) restriction of work on weekly day of rest;

(iv) reduction in the number of shifts or days worked a week;

(v) reduction;

(vi) re-training and/or transfer to other department/work.

[43] Although the Code of Conduct does not have the force of law, Section 30

(5A) of the Industrial Relations Act 1967 provides that the Court in making

award may take into consideration any agreement or code relating to employment

practices. From the fact of this case, the Company served the notice of

retrenchment to the 1st Claimant on 18.10.2019 and informed that the last day will

be on 31.10.2019. As for the 2nd Claimant, the notice was served on him on

06.11.2019. No prior notification with regards to the impending retrenchment was

issued by the Company to its employees especially the Claimants.

[44] As per the termination clause in the contract of employment between the

Company and the 1st Claimant, the Company stipulated that a 6 weeks notice of

termination will be served on the 1st Claimant. The Company has failed to comply

with its own terms. The Claimant were issued with a short retrenchment notice.

The Claimants should be given a sufficient time to look for an alternative job and

to manage his family without livelihood. The Company alleged that it has not been

20
making profits for the past several years and the Plan P2P was enunciated as a

cost cutting measure. If is true that the Company has been suffering from a decline

in revenue, the decision to retrench the Claimant would not be taken overnight. It

would not have been sudden decision to close the KL Office and retrench the

Claimants. However, the Company’s action of giving the Claimants a short notice

is not fair for the Claimants.

[45] The Company failed to prove that it has complied with the Code of Conduct

for the industrial Harmony. None of the guideline in the Code has been proven to

have complied with by the Company in exercising the retrenchment. There

Claimants were not offered an alternative jobs like other expatriates namely

COW2, COW3 and Bret Smith and other employees listed in the Statement of

Claim. COW2 did not deny all these employees were transferred to country of the

Company’s entity except the Claimants.

[46] In the case of KHALIAH ABBAS v. CAPITAL CORPORATION SDN BHD

(1997) 3 CLJ 827, the Court 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 or excuse. The requirement of bonafide

is essential in the dismissal on an employee on probation but if the

dismissal or termination is found to be coloured exercise of the power

to dismiss or as a result of discrimination or unfair labour practice, the

Industrial Court has the jurisdiction to interfere and set.”

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[47] COW3 testified that the job ceased to be required as a result of the

restructure not prior to the restructure. COW3 also admitted that restructure

could mean adding positions. He also stated that he was not aware of any

diminishment of the roles prior to the restructure. When COW3 was asked in

cross examination if the Company could provide any proof to show that the NDT

and SIS works had been discontinued which led to the closure of business in KL

Office, COW3 stated that is unable to provide proof of these things.

[48] COW3 further crossed as to whether a notice of the impending retrenchment

was issued to the Claimants as the retrenchment capable of threatening their

livelihood. On this point COWs referred to the townhall meeting. The minutes of

the townhall meeting which is the vital evidence to show that the Company had

warned the Claimants of the impending retrenchment that capable of threatening

their livelihood was not submitted as evidence in Court.

[49] COW1 and COW3 stated that nearby 100 redundancies occurred in the

Oceaneering Group however the list of the 100 employees was not adduced as

evidence. Furthermore, COW3 stated that with the help of the 1 st Claimant,

COW3 had recruited Praveen Kumar to run the Batam operations. The employees

of the Oceaneering Group who were listed in the Claimant’s Submission page

167 were transferred to other entities within the Oceaneering Group.

[50] COW3 further admitted that on one instance, the Company tried to stop

working with the clients and they threatened the Company with a legal cation,

which means whether the Company wish to discontinue or not, they continued

working with the clients. It was established that the work in NDT and SIS was still

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going on when the Claimants were retrenched although the KL Office was closed.

Therefore, there is no redundancy when the retrenchment was exercised. (see

BAYER’s case - supra and Woo Vain Chan’s case - supra).

[51] For the bonusses that the 1st Claimant’s argued to be entitle to, as per page

46, 47 and 48 of the CLB1, the 1st Claimant received bonus of USD 39, 748.49

and for year 2019, his name was listed for the payment of bonus. CLW1 and

CLW2 had received their bonuses respectively for the year 2019. The 1st Claimant

were given the calculation for the bonus payment that he was entitle to. COW3

stated that the bonus is contractual. Nothing to contrary was sent to the 1st

Claimant until he was retrenched. There was never any dispute arose between

the Company and the 1st Claimant as far as the bonus was concerned. The 1st

Claimant did not resign voluntarily for the bonus although the Company denied

his bonus on the grounds that firstly, he left the Company before the payout month

and secondly that the bonus is contractual and not automatic. The Company paid

the bonus to the 1st Claimant in year 2018 without referring to any the contract of

employment. In the absence of any clause with regards to the bonus in the

Contract of Employment and based on the fact that the Claimant was notified that

he was entitled for the bonus for year 2019, this Court opine that the notice sent

to the 1st Claimant about his bonus is a form of contract that the Company entered

into with the 1st Claimant for the bonus payments. Therefore, the 1st Claimant is

entitled for the bonus as stated by the Company. As far as the 2nd Claimant is

concerned, he was still under the probation period, therefore he is not entitled for

any bonus payments until his employment contract is confirmed by the Company.

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[52] When both Claimant were retrenched on the basis of redundancy and closure

of KL Office due to cost saving measures as the Company was not doing well for

the past several years. It appears to this Court that, the Company did not exercise

the retrenchment exercise genuinely and in bonafide manner.

[53] As such, this Court finds that, the Claimants’ retrenchment purportedly

pursuant to the restructuring exercise was lacking in good faith, improper and unfair

for reasons which I have enumerated herein above. Accordingly, the Court finds

that the Claimants were dismissed without just cause or excuse. Therefore, the

Claimants’ claim hereby allowed.

REMEDY

[54] The Claimants has prayed for reinstatement. Considering the facts of this

case, the Court finds that reinstatement may not be an appropriate remedy.

Therefore, the monetary award of compensation in lieu of reinstatement would be

more suitable (KOPERASI SERBAGUNA SANYA BHS (SABAH) v. DR. JAMES

ALFRED (SABAH) & ANOR [2000] 3 CLJ 758. This Court will thereby order

compensation in lieu of reinstatement of one month salary for each year of

completed service to the 1st Claimant.

[55] The 1st Claimant’s last drawn salary was RM107,924.02 and the 2nd

Claimant’s last drawn salary was RM31,250.00. For the purpose of calculation, this

Court disregard variable figures such as reimbursement and commissions. The

Court is also mindful of the provisions of Section 30(5), Section 30(6A) and

The Second Schedule of the Industrial Relations Act 1967 in considering the

24
appropriate relief to be awarded to the Claimants. Having considered all the above

items and items 1 and 3 of the Second Schedule of the Act, the Court hereby orders

that the 1st Claimant be allowed the relief of back wages equivalent to 24 months of

his last drawn salary. For the 2nd Claimant, as he was under probation, he will be

awarded 6 months as back wages. However, the back wages for the Claimants are

subject to a deduction as the Claimants has been gainfully employed.

[56] After considering the above, this Court Orders the following to be awarded to

the Claimants:

1st Claimant

Back wages of 24 month:

RM107,924.02, x 24 months = RM2,590,176.48

Deduction of 20% for post dismissal earning = RM518,035.29

----------------------
TOTAL RM2,072,141.18
==============

Compensation in lieu of reinstatement of one month pay for each year of

service:

RM107,924.02 X 2 month = RM215,848.04

Deduction of Retrenchment benefit paid = RM50,479.19

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Bonus entitlement as promised for year 2019 = RM311,029.29
(USD 72,501.00 x 4.29 (exchange rate as of 2019))
--------------------------
Total = RM2,548,539.32
===============

2nd Claimant

Back wages of 6 month:

RM31,250.00 x 6 months = RM187,500.00

Deduction of 20% for the post dismissal earning = RM37,500.00

Deduction of severance payment paid = RM4,250.55

------------------------
TOTAL = RM145,749.45
==============

[57] It is hereby ordered that the total sum of RM2,548,539.32 (Ringgit

Malaysia Two Million Five Hundred Forty Eight Thousand Five Hundred Thirty

Nine And Thirty Two Cents Only) after statutory deductions if any, is to be paid

by the Company to the 1st Claimant and a total sum of RM145,749.45 (Ringgit

Malaysia One Hundred Forty Five Thousand Seven Hundred Forty Nine and

Forty Five Cents Only) are to be paid by the Company to the Claimants through

26
the Claimants’ representative the MALAYSIAN TRADE UNION CONGRESS

(MTUC) within 30 days from the date of this Award.

HANDED DOWN AND DATED THIS 23rd JANUARY, 2024

-signed-

( VANITHAMANY SIVALINGAM )
CHAIRMAN
INDUSTRIAL COURT OF MALAYSIA
KUALA LUMPUR

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