Case Updates

Case Update: Industrial Court deems High-Salary Targeting discriminatory

Share:

Print
16 July 2024

EMPLOYMENT LAW
Retrenchment – Redundancy – Financial difficulties – Dismissal – Industrial Court

Tam Sheh May v Taylor’s University Sdn. Bhd.
Case No: 14/4-891/20 | Industrial Court of Malaysia
- see the grounds of judgment here

Facts Taylor’s University Sdn. Bhd. (the ‘Company’) is a private educational institution. Tam Sheh May (the ‘Claimant’) started working with the Company in February 2012 as a Senior Lecturer I and was promoted to Associate Professor II by the time of her dismissal. In September 2019, the Claimant received an email from the Human Resource (HR) Department inviting her to a meeting without providing details. During this meeting, the Head of the School of Biosciences informed the Claimant that the Company was experiencing financial difficulties and had decided to undertake cost-cutting measures. Consequently, the Claimant was handed a notice of redundancy without prior warning, stating her employment would end on 31 December 2019. The Claimant was asked to sign and return the notice to HR. The Claimant appealed the termination, arguing that the decision was unjustified and that no actual cost-cutting measures were implemented by the Company. In November 2019, during another meeting with the Executive Dean of the Faculty of Health and Medical Sciences, the Claimant was shown slides purportedly demonstrating the Company’s financial difficulties. However, some slides were unclear, and she was not given a copy for review. Dissatisfied with the Company's actions, the Claimant filed a case under Section 20(3) of the Industrial Relations Act 1967, which was subsequently brought before the Industrial Court.

Issue Whether there was an actual and bona fide redundancy that constituted just cause or excuse for the dismissal of the claimants.

Held In delivering the judgement, Y.A. Puan Eswary Maree, Chairman of the Industrial Court, found that the Company failed to prove actual redundancy and did not produce full financial accounts to substantiate their claims of financial difficulties. Thus the Industrial Court drew an adverse inference against the Company under s. 114(g) of the Evidence Act 1950 upon its failure to produce the full set of the profit and loss accounts. Further, it was held that the Company's decision to select employees for retrenchment based solely on their high salaries was deemed unfair. This approach disproportionately targeted more experienced employees and was seen as discriminatory. The Company did not follow the proper procedures outlined in the Code of Conduct for Industrial Harmony, in which the Industrial Court held that The Code of Conduct is not statute law, nevertheless has some legal sanction as a document that this Court should have regard to when making its award. This included failing to provide early warnings to the affected employees and not exploring alternative cost-cutting measures before deciding on retrenchment. The Industrial Court concluded that the dismissals were not bona fide as the redundancy was not genuine and the process lacked fairness and proper justification. The Court ordered the Company to pay backwages of 24 months’ salary minus 20% of post dismissal earnings. 

Zul Rafique & Partners
{16 July 2024}

Please email your details to [email protected] if you would like to subscribe to our Knowledge Centre.

Let's Connect!
➭ LINKEDIN: Zul Rafique & Partners
➭ INSTAGRAM: @zrplaw