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Industrial Court clarifies the “intention of the parties” principle in the law of genuine Fixed Term Contract

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Wong Keat Ching, Teoh Alvare and Loh Qiao Wen from ZUL RAFIQUE & partners’ Employment & Industrial Relations team succeeded in defending Putrajaya Properties Sdn Bhd (the “Company”) in an unfair dismissal claim in the case of Mohd Azmil bin Abd Shukor (the “Claimant”) v Putrajaya Properties Sdn Bhd (Award No 42 of 2021), Industrial Court.

The Company, a subsidiary of Putrajaya Holdings Sdn Bhd (“PJH”) is a special purpose vehicle set up to oversee the development of the Sepang Land Development. The Claimant commenced his employment with the Company as Head of Division of Sepang Land Development initially on a Fixed Term Contract (“FTC”) for 2 years and then another FTC for a further 2 years, without any break in between. He was employed to lead the team to come up with a Master Plan and concept for the Sepang Land Development and then to lead the said development thereafter. In 2018, the Claimant was terminated from his position due to the structure reorganisation of developments within PJH which led to the cessation of the Company’s operation.

On the issue of whether there were genuine Fixed Terms Contracts in this case, the Industrial Court (the “Court”) followed the three factors laid down by the Federal Court in Ahmad Zahri bin Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd [2020] 6 CLJ 557 to determine whether an employer had a genuine need for the service of an employee for a fixed term, namely:- (i) The intentions of the parties; (ii) Employer’s subsequent conduct during the course of employment; and (iii) Nature of the employer’s business and the nature of work which an employee is engaged to perform. The Court further stated that in establishing a genuine fixed term contract, the court must determine: (i) whether the claimant was aware that the contract of employment was for a fixed term, and understood, agreed and accepted the same; and (ii) whether the employee had raised any dispute or protest, objection or disagreement to the fixed terms contracts offered to him by his employer at the material time.

Based on these considerations, the Court found that by acknowledging the two Fixed Terms Contracts without any protest, the Claimant had agreed and accepted the terms and conditions of the said contracts. The fact that these contracts were renewed without any break in between does not amount to a permanent employment contract. The Court also highlighted that the contrast between the terms on annual leave, sick leave, medical benefits, EPF, Socso and Income Tax in the Claimant’s FTC compared to such terms in a permanent employment contract further clarified that he was not employed as a permanent employee of the Company. Furthermore, the Court held that the intention of the Claimant’s fixed terms contracts was for the purpose of the Sepang Land Development Project. It was a genuine project-based employment with no ulterior motive. There is no evidence to show that the Company intended to give any permanency of employment to the Claimant or vice versa.

The Court concluded that the Claimant’s FTC was a genuine FTC that had been terminated due to structure reorganisation and cessation of the Company’s operations. Thus, the Court held that the Claimant’s dismissal was with just cause or excuse.



For more insight into this area of law, please contact our Partners in the Employment & Industrial Relations Practice Group:
P Jayasingam
Wong Keat Ching
Thavaselvi Pararajasingam
Teoh Alvare