TERMINATION OF PROJECTS AMOUNT TO REDUNDANCY

TERMINATION OF PROJECTS AMOUNT TO REDUNDANCY

MOHD ROZI BIN OTHMAN V SURIA STRATEGIC ENERGY RESOURCES SDN BHD

AWARD NO 691 OF 2020

FACTS 

  • The Company is a wholly-owned subsidiary of the MOF and was set up with the specific intent of undertaking the Multi-Product Pipeline(MPP) and the Trans-Sabah Gas Pipeline (TSGP) projects which were petrochemical and gas pipeline projects.
  • All the Company’s employees were emplaced on garden leave until further notice due to an investigation by the Malaysian Anti-Corruption Commission (MACC). The Board of Directors (BOD) upon the instruction of MOF Inc. engaged Grant Thornton Malaysia (GTM) as management consultants to provide professional services in relation to the financial and administrative functions of the Company and thereafter suspend all contracts relating to the MPP and TSGP projects until further notice. Due to uncertainty of the fate of the Projects, the Company claimed that it had no other option but to terminate the Claimants’ employment and all the other employees on the ground of redundancy as it was no longer financially sustainable to retain them in its employ.
  • The Claimants’ contended that no redundancy situation existed to warrant their termination of employment by the Company. They alleged that the retrenchment was unfair and wrongful because the Company had full control of the decision for the execution of the Projects. The Company is 100% owned by the Government and therefore, they claimed that it has the full discretion to decide whether or not to continue with the Projects. They alleged further that no other external parties can influence the decision-making by the Company as there is only one shareholder for the Company, which is the Government of Malaysia. They further alleged that the Company had breached the Code of Conduct for Industrial Harmony in retrenching them and failed to make efforts to relocate them to its related companies.

ISSUES

  • Did a redundancy situation arise leading to the Claimants’ retrenchment; and if there was a redundancy situation, was the consequential retrenchment made in compliance or conformity with accepted standards of the procedure?

COURT EVALUATION AND FINDING 

  • In the present case, all employees were discharged from the Company and the Projects were later terminated by the Government. Effectively, the business of which the Company was formed had to be closed. It was the business (Projects) that was being closed (terminated) then and not the Company itself.
  • The Court agrees with the submission by the Company that “outsourcing” of works to the independent consultants and engaging GTM for the administrative works was the Company’s management prerogative and did not constitute mala fide on its part.
  • The Court will only intervene if it is shown that the decision to retrench was capricious or without reason or was mala fide or actuated by victimization. However, despite the Claimants, numerous assertions about the purported victimization by not continuing with their services for the Projects’ closure works, which the Court views as speculative and giving his opinion rather than based on facts, there was no evidence to suggest that the indefinite suspension and subsequent termination of the Projects by the Government through the BOD had been suspiciously or capriciously done.
  • The Court found that the Company has produced concrete evidence to convince the Court that the Claimants’ roles and job duties by the indefinite suspension and termination of the Projects, had been made redundant. After considering all the evidence available before me in respect of their complaint about the manner in which the termination was carried out, I am unable to agree with the Claimants’ submission that procedures and accepted standards have not been followed when they were terminated.

KEY TAKEAWAYS 

  • The courts have recognized that the right of the employer to reorganise its business i.e. management prerogative, is limited by the rule that the employer must act bona fide. Such acts must not be done capriciously, to victimize the affected employee or an unfair labour practice.
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