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Case Update: Industrial Court awarded MYR1.8 million to former CEO for being unfairly dismissed

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LABOUR LAW
Government of Malaysia’s development financial institution – Fixed term contract for highest executive position – Allegation of abuse of position and breach of duty – Dismissal without just cause or excuse – Compensation in the form of back wages

Shaharuddin bin Zainuddin v Bank Pembangunan Malaysia Berhad
Award No 1249 of 2020, Industrial Court
- see the grounds of judgment here

Facts The dispute before this Court is the claim by Shaharuddin Bin Zainuddin (“Claimant”) alleging that he had been dismissed from his employment without just cause or excuse by Bank Pembangunan Malaysia Berhad (“Bank/Company”) in 2018. The Bank is a development financial institution governed by the Development Financial Institutions Act 2002 and owned by the Government of Malaysia. The Claimant was appointed as a member of the Bank’s Board of Directors (BOD) in 2017 as an independent Non-Executive Director for a term of 2 years. Following to this, the Claimant was appointed as the President/ Group Chief Executive Officer (P/GCEO) of the Bank for a fixed term contract of 3 years effective from 2017 to 2020. Following the concerns raised by the Bank Negara Malaysia (BNM) that had highlighted several allegations of breaches of integrity and governance against the Claimant, the Bank had issued the Claimant with a show cause letter setting out three charges of misconduct involving issues relating to political donation, van sponsorship to FELDA and permitting an individual not being an employee of the Bank to participate and involve himself in the affairs of the Bank. Dissatisfied with the Claimant’s reply to show cause, the Bank terminated his employment with immediate effect. In furtherance to this, the Claimant claimed that he had been dismissed from his position without proper inquiry or investigations and that it was done in haste, bad faith and without just cause or excuse. The Claimant also claimed that he had suffered victimization and further pleaded for reinstatement to his former position without any loss of wages, allowances, seniority, privileges and benefits, on top of exemplary compensation. The Bank on the other hand contended that the dismissal of the Claimant was carried out with just cause or excuse.

Issue The main issue in this case was whether the Claimant was dismissed without just cause or excuse?

Held The Industrial Court held, in favour of the Claimant, that the Claimant being the highest ranking executive of the Bank is responsible for the dealings of the Bank which involves vast sums of monies to the tune of billions of Malaysian Ringgit, yet all the unproven charges and allegations against the Claimant could not pinpoint a single ringgit of abuse what more where the Bank is unable to show that the Claimant had any personal gain or interest in whatever decision making process that he was involved in. None of the Claimant’s actions relating to all the unproven allegations against him benefited the Claimant personally or benefited any person in close relationship with him. The Court further stated that the unproven charges against the Claimant and the manner in which the Bank treated the Claimant had caused the Claimant to lose more than his job as he was blacklisted by BNM. There was ample evidence of the act of victimization against the Claimant and must be corrected by this Court. Hence, the Court ruled that the Claimant was dismissed without just cause or excuse and awarded MYR1.8 million compensation capped to a maximum of 24 months back wages.

ZUL RAFIQUE & partners
{17 September 2020}