3(28)(13)(6)/4-2082/07

INDUSTRIAL COURT OF MALAYSIA CASE NO. : 3(28)(13)(6)/4-2082/07 BETWEEN DATO' JASPAL SINGH A/L GURBAKHES SINGH AND PKTECH SDN. BHD. AWARD NO. : 211 OF 2013 Before Venue Date of Reference Dates of Mention : PUAN ANNA NG FUI CHOO - Chairman (Sitting Alone) : Industrial Court Malaysia, Kuala Lumpur : 19.9.2007 : 13.12.2007, 8.5.2008, 16.7.2008, 25.8.2008, 4.2.2009, 6.5.2009, 25.6.2009, 30.7.2009, 28.8.2009, 13.1.2010, 1.3.2010, 12.8.2010, 24.9.2010, 20.10.2010, 15.11.2010, 29.11.2010, 24.1.2011, 6.4.2011, 15.6.2011, 12.7.2011, 19.9.2011, 28.10.2011, 19.1.2012, 19.3.2012, 5.4.2012, 21.6.2012, 12.7.2012 : 18.9.2012, 5.10.2012, 10.12.2012, 11.12.2012 : 31.12.2012 : 22.1.2013, 23.1.2013

Dates of Hearing Written Submissions Submissions in Reply

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Representation

: Mr. Gurbachan Singh and Mr. Kartar Singh; From Messrs Bachan & Kartar Counsel for the Claimant Mr. K.M. Chan and Ms. Veronica Ong; From Messrs Lim Kian Leong & Co. Counsel for the Company

Reference This is a reference made under section 20 (3) of the Industrial Relations Act 1967 (the Act) arising out of the dismissal of Dato' Jaspal Singh a/l Gurbakhes Singh (hereinafter referred to as the Claimant) by PKTech Sdn Bhd (hereinafter referred to as the Company) on 22 August 2003.

AWARD
[1] The Ministerial reference in this case required the Court to hear

and determine the Claimants complaint of alleged dismissal by the Company on 22 August 2003. The Pleadings [2] The Statement of Case (SC) of the Claimant was brief (except in

paragraph 10 which set out in detail the Claimant's remuneration and benefits) and comprised of 11 paragraphs. Paragraphs 1 and 2 of the SC referred to the Ministerial reference and the parties to the reference who are the Claimant and the Company. Paragraph 3 states that the Company is a company incorporated and registered in the states of Malaysia. Paragraphs 4 and 5 averred that:

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4)

The

Claimant

was

employed

under

contract

of

employment as the Executive Chairman by the respondent Company pursuant to an agreement dated the 16 day of June 2000, a copy of which is annexed and marked C1. 5) The Claimant was employed in the position of Executive Chairman with effect from 16 day of June 2000.

[3]

The Statement in Reply (SIR) of the Company did not offer any

reply in respect of paragraphs 1 and 2 of the SC. While paragraph 3 of the SC was admitted, it was averred in paragraphs 3, 4 and 5 of the SIR:

3)

Paragraph 4 is denied. Further and/or in the alternative, Exhibit C1 (hereinafter referred to as the said Employment Contract) is clear evidence that the Claimant was employed by one PKTech International Ltd, now known as Plato Capital Ltd, (hereinafter referred to as the Singaporean Company), which is the ultimate shareholder of the respondent Company. this issue in due course. The respondent Company reserves the right to apply for a preliminary determination of

4)

In amplification of paragraph 3 above, the respondent Company states that PKTech International Ltd is a company incorporated under the laws of Singapore and accordingly not a party within the jurisdiction of the Industrial Relations Act 1967.

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5)

In addition, the said Employment Contract between the said Singaporean Company and the Claimant as evidenced by Exhibit C1 was expressly agreed by the Claimant himself to be governed by the laws of Singapore.

[4]

Paragraphs 13 and 14 of the SIR further stated:

13)

Save that the respondent Company paid the Claimant's salary for and on behalf of the Singaporean Company, the respondent Company denies that the Claimant was ever or at any material time, an employee or workman of the respondent Company.

14)

Further or in the alternative, respondent Company states that it was never a party to the terms and conditions governing the remuneration and benefits of the Claimant as set out in paragraph 10....

[5]

Learned counsel for the Company did apply to address the court

on the preliminary issue as pleaded in paragraph 3 of the SIR before this hearing commenced. However, the court had insisted to hear this case on its merits rather than having the matter delayed by hearing submissions on preliminary issues. The reminder from his Lordship Gopal Sri Ram JCA in Kathiravelu Ganesan & Anor v. Kojasa Holdings Bhd [1997] 2 MLJ 685 at page 697 is relevant:

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We are of the view that, having regard to the general scheme

of the Act, Parliament did not intend a threshold jurisdiction challenge before the Industrial Court by way of a preliminary objection, for the legislature's paramount concern in passing the Act was to ensure speedy disposal of industrial disputes. And permitting preliminary objections to the threshold jurisdiction being taken will only delay industrial adjudication..

Background Facts [6] The facts of this case are almost the reverse of Kathiravelu's case,

supra. The Claimant is a Malaysian citizen and was a co-founder of the Company in May 1992. He was a shareholder of the Company until June 2000. Some time in the year 2000, the Claimant with other shareholders sold their shares in the Company to a Singaporean company called PKTech International Ltd. (to be referred to as PKTI). PKTI was subsequently listed on the Singapore Stock Exchange. It is not in dispute that from the year 2000, PKTI was the parent company of PK Tech Sdn Bhd which is the Company referred to in this ministerial reference. [7] On 16 June 2000, the Claimant was employed as the Executive The employment

Chairman of PKTI as part of its listing exercise.

contract (the June 2000 Agreement) is seen at pages 232 to 251 of the Claimant's Bundle of Documents (CLB) and forms part of the SC as C1. On 22 June 2000, PKTI issued its prospectus for the listing in Singapore in which the Claimant was identified as the Executive Chairman of PKTI and one Mr. Yong Kwet Ong (Adrian) as the Chief Executive Officer (CEO) (page 80 of the Company's Bundle of Documents 2 (COB2)).
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These two (2) persons were the only employees from the old Company to be employed by PKTI. During cross-examination, the Claimant had agreed that he was not listed as an executive officer who had signed service contracts with the Company. Undisputed Facts [8] The Company had never disputed that it had contributed EPF and It was also not

SOCSO contributions for the Claimant in Malaysia.

disputed that on 22 August 2003 the Claimant received a letter entitled Termination of Service (C2) stating that pursuant to clause 14.2 of the June 2000 Agreement, the Claimant's service was terminated in lieu of notice with effect from 22 August 2003. It was in evidence that the termination was effected after a Board meeting in Singapore which the Claimant had attended. PKTI had also sent the Claimant a letter on 22 August 2003 entitled Resignation as a Director seeking the Claimant to resign from all offices in PKTI and its subsidiaries (page 271 of CLB) pursuant to clause 14.3 (a) of the June 2000 Agreement. This was followed by another letter dated 22 September 2003 (page 274 of CLB) in which PKTI sought the return of the company's properties such as a vehicle and a Fujitsu Notebook. [9] On 23 March 2006 the Claimant via his solicitors in Singapore sent

a letter of demand (page 1 of COB1) to Plato Capital Ltd (formerly known as PKTech International Ltd i.e. PKTI), claiming the following:

(i)

Salary for the period of 1 - 22 August 2003 (subject to the usual deductions and contributions pursuant applicable employee provident fund scheme).
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to the

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(ii)

Payment of 3 months' of salary in lieu of notice of termination.

(iii)

Payment in lieu of outstanding leave entitlement as at 22 August 2003.

(iv) Copies of insurance policies purchased in the Claimant's name and for his benefit under the said contract.

The Singapore Civil Suit [10] Sometime in the year 2007, the Claimant filed a suit against PKTI, vide Subordinate Court of Singapore DC Suit No.: 477 of 2007/T (pages 2 to 8 of COB1) referring to the June 2000 Agreement and claiming for:

a) The sum of RM87,450.00 being the 3 months' salary in lieu of notice. b) RM75,225.81 being his outstanding leave entitlement. c) Interest of the total sum of RM162,675.81.

The June 2000 Agreement [11] Some of the important terms of the June 2000 agreement which are relevant for the court's consideration are:

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2.1

The Company hereby agrees to appoint Jaspal and Jaspal agrees to serve as the Executive Chairman of the Company and in such other positions and capacities with the Company and/or Group Companies under the direction of the Board.

2.2

This

agreement

shall

commence

on

the

Commencement Date and shall continue in force for three (3) years from the Commencement Date and thereafter shall be extended annually unless otherwise terminated in accordance with the terms and conditions herein. 6. Remuneration

6.1

With effect from the Commencement Date, the Company shall procure its subsidiary in Malaysia, PKTech Sdn Bhd (formerly known as PKTechnology Sdn Bhd) (PKTech Malaysia) to pay to Jaspal a monthly salary at the rate of Ringgit Twenty Seven Thousand Five Hundred (RM27,500.00) per calender month payable in arrears on the last working day of every month. The Company provident through fund PKTech schemes Malaysia and Jaspal shall both contribute to any applicable requirement. employee according to the relevant jurisdictions statutory In addition, Jaspal shall be entitled during his employment with the Company to any annual bonus not exceeding six (6) months of his
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monthly salary which is or may be payable at a time to be determined by the Board in accordance with the Company's personnel policy which is in force at the relevant time. 14. Termination 14.2 this Agreement may be terminated by either party giving to the other three (3) months' notice of such intended termination which notice is to expire on or at any day after the end of the said period or in lieu of such notice an amount equivalent to three (3) months salary based on Jaspal's last drawn monthly salary. 14.3 Upon the termination of his employment hereunder for whatever reason Jaspal shall: (a) at the request of the Company resign from all offices (including such offices held by him by reason of his being seconded under the provisions of clause 4 hereof) held by him in any Group Company and from all other appointments or offices which he holds as nominee or representative of any Group Company, and if he should fail to do so within [seven (7)] days the Company is hereby irrevocably authorised to appoint some person in his name and on his behalf to sign any documents or to do any things

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necessary or requisite to give effect to the aforesaid. 18. AGREEMENT PREVAILS

This Agreement supersedes all previous agreements and arrangements relating to the appointment and/or employment of Jaspal by the Company or any Group Company, in particular, the Management Agreement entered into between Jaspal and PKTech Malaysia dated 6 December 1999 (which shall be deemed to have been terminated by mutual consent). Facts That Were Not Pleaded [12] A number of matters arose in the course of the hearing which were never pleaded in the Claimant's SC. The Claimant in his evidence had testified that the contract of employment referred to in both his SC and evidence in chief had referred to the June 2000 Agreement with PKTI. It was never pleaded in the SC to suggest the existence of a separate contract of employment with the Company PKTech Sdn Bhd which he had alluded to in the hearing i.e. an alleged Management Agreement. After June 2000, the court has also not found that there was a contract of employment between the Claimant and the Company. It was the Claimant's case that the Management Agreement (pages 214 to 226 of CLB) between the Claimant and the Company dated 6 December 1999 was a continuation of his employment with the Company and that after the listing exercise of PKTI, nothing had changed in respect of his employment with the Company.
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[13] Another fact which only arose during the hearing itself and was never pleaded was the Claimant's testimony that he was involved in the Company since 1992. This was in the evidence of CLW2 and CLW3 and supported by the Claimant's salary slips for the period beginning in 1992 (pages 11 to 84 of CLB). Nevertheless, the only employment contract pleaded by the Claimant was the June 2000 Agreement (C1) in the SC. Hence, as the pleading stands, the allegation of an employment relationship with the Company will be scrutinised from the date 16 June 2000. The Claimant had never pleaded in his SC that he was employed by the Company from 1992. [14] Under the listing exercise, the Company's shares were sold to PKTI and PKTI was subsequently listed in Singapore. The Claimant further testified that the Company then became the 100% owned subsidiary of the Singaporean Company PKTI. The Claimant further alleged that after the listing exercise, he had continued to work in an office in Petaling Jaya but went to Singapore to attend Board meetings and customer meetings. Again, all these claims were never pleaded in the SC but were raised for the first time in the hearing. [15] The fact that parties are bound by their pleadings, including the parties in the Industrial Court is trite law. It was emphatically stated in the Federal Court case of R Ramachandran v. Industrial Court of Malaysia & Anor. [1997] 1 CLJ 147 and in a more recent decision in Ranjit Kaur a/p S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 6 MLJ 1 the Federal Court stated:
Pleadings in the Industrial Court are as important as in the Civil Court. The appellant must plead its case and the Industrial
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Court must decide on the appellant's pleaded case. This is important in order to prevent element of surprise and provide room for the other party to adduce evidence once the fact or an issue is pleaded. Thus, the Industrial Court's duty, to act according to equity, good conscience and substantial merits of the case without regard to technicalities and legal form under s.30(5), does not give the Industrial Court the right to ignore the Industrial Court Rules 1967 made under the principle act..

The Issue [16] Before the court embarks to decide if there was a dismissal of the Claimant by the Company, the court has to examine the more crucial issue of whether the Claimant is a 'workman' under the Act vis a vis the Company. Section 2 of the Act provides that 'workman' means any person, including an apprentice, employed by an employer under a contract of employment to work for hire or reward and for the purpose of any proceedings in relation to a trade dispute includes any such person who had been dismissed, discharged or retrenched in connection with or as a consequence of that dispute or whose dismissal, discharge or retrenchment has led to that dispute. Section 2 also provides for the definitions of 'employer' and 'contract of employment'. [17] In Dr. A Dutt v. Assunta Hospital [1981] 1 MLJ 304 at pages 310 311, his Lordship Chang Ming Tat FJ said:
As for the determination whether Dr. Dutt was or was not a workman within the Act, we have, in an earlier decision Assunta Hospital v. Dr. A Dutt [1981] 1 MLJ 115, said that the question is a mixed question of fact and law and it is for the
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Industrial Court to determine this question. The fact is the ascertainment of the relevant conduct of the parties under their contract and the inference proper to be drawn therefrom as to the terms of the contract and the question of law, once the terms have been ascertained, is the classification of the contract for services or for service....

[18] The Federal Court in Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia & Anor [1996] 4 CLJ 687 held that the correct test to be applied in determining whether a claimant is a 'workman' was that as enunciated in D. A. Dutt's case, supra. It further stated:
In all cases where it becomes necessary to determine whether a contract is one of service or for services, the degree of control which an employer exercises over a Claimant is an important factor, although it may not be the sole criterion. The terms of the contract between the parties must, therefore, first be ascertained. Where this is in writing, the task is to interpret its terms in order to determine the nature of the latter's duties and functions. Where it is not then its terms must be established and construed. But in the vast majority of cases there are facts which go to show the nature, degree and extent of control. These include, but are not confined to, the conduct of the parties at all relevant times. Their determination is a question of fact. When all the features of the engagement have been identified, it becomes necessary to determine whether the contract falls into one category or the other, that is to say, whether it is a contract of service or a contract for services..

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[19] The test to determine the employer of an employee has seen much development in industrial jurisprudence. In the case of American International Assurance Co. Ltd v. Dato' Lam Peng Chong & 7 Ors [1988] 2 ILR 420, the learned Chairman enumerated several criterion in determining the employer which is not conclusive and must be applied according to the facts of the particular situation. It is with this in mind that the court makes the findings after evaluating the evidence adduced in this case. Findings [20] The Company had always maintained the position that at all times, the Claimant's employer was PKTI by virtue of the June 2000 Agreement. The Agreement had expressly listed and set out the duties and responsibilities of the Claimant to PKTI. The Claimant's contention had always been the Company that was the Claimant's employer by virtue of the EPF and SOCSO contributions, EA forms and payment of salary by the Company to the Claimant. The more important issue confronting the court is which entity had the contractual obligation to pay or had instructed for the Claimant's salary and the EPF and SOCSO contributions to be made for and to the Claimant. The answer could be explicitly found in clause 6.1 of the June 2000 Agreement in which PKTI had procured its subsidiary in Malaysia i.e. the Company to pay the Claimant's salary and statutory contributions. In the Claimant's testimony, he was also referred to the June 2000 Agreement in which he did not dispute that it had provided for the arrangement agreed between him and PKTI for the Claimant's remuneration and benefits to be paid by the Company on behalf of PKTI.

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[21] The proof of payment of salary by the Company cannot be the conclusive evidence of the employer-employee relationship between the Claimant and the Company. On this issue, the learned Chairman in the case of Mohd Firdaus Abdullah v. Hup Aik Wood Products Sdn Bhd [2012] 4 ILR 355 had decided on and is one which this court agrees with. It was PKTI that had the authority to decide on the Claimant's remuneration as evident in the Minutes of the Remuneration Committee meeting on 21 November 2001 (page 330 of COB2). Apart from the payment of salary and contributions paid by the Company, there was no documentary proof of the Claimant's employment with the Company or the extent of his involvement in the Company. [22] It was never proved that the Company had any control over the Claimant as his employer. See the Supreme Court case of Kuala Lumpur Mutual Fund Bhd. v. J. Bastian Leo & Anor. [1988] 1CLJ (Rep) 145 which decided that the power of control over the manner of doing work is still the most important indicia of a contract of service. established either. The channel of instruction from the Company to the Claimant was never It was in the Claimant's evidence that he never worked in Singapore but he had to be there to attend Board meetings and customer meetings. The documents shown in COB1 and COB2 in particular the Annual Reports and Committee meetings showed the Claimant's involvement in the business and organisation of PKTI and not the Company. The resignation letter dated 5 November 2002 (COB3) of Adrian Yong Kwet On, the CEO of PKTI who was the other personnel from the old Company, was addressed to the Claimant as the Executive Chairman of PKTI, the highest executive in office of PKTI.

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[23] Although the Claimant claimed that he was not present in Singapore to work, he had not shown any evidence to contradict the Company's position that he had at all times taken instructions from the Board of Directors in Singapore. When it was suggested by the learned counsel for the Company, the Claimant admitted that he was also given the power to enter contracts on behalf of PKTI. He also confirmed that he was given the power to hire and fire employees of PKTI as well as employees under the Group. The Claimant admitted that at all times he was under the control of the Board of PKTI. [24] In the same June 2000 Agreement, it was also provided that PKTI may instruct the Claimant to act or serve in its subsidiaries. Pursuant to that, the Claimant had served as a director of seven (7) other companies within the Group. Therefore, it is clear that but for the control and power exercised by PKTI, the Claimant could not have possibly sat on the Board of Directors of various subsidiaries within the group of companies of PKTI, of which the Company is one of the subsidiaries. This is further evidence of the extent of control that PKTI had over the Claimant. From the documentary evidence of minutes of the Board of Directors' meetings of PKTI and the meetings of the Audit Committee and Remuneration Committee, it is clear that the remuneration and claims of the Claimant were subject to the Remuneration Committee's approval. Looking at the facts in totality, the court is of the view that the Claimant was under the direction and control of PKTI's Board and not the Company. [25] To reinforce the Company's case is the Claimant's post dismissal conduct in which he had acknowledged PKTI as his employer and which was consistent with him complying with the June 2000 Agreement. His
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first reaction was the Letter of Demand sent by his solicitors to PKTI. Subsequently, it was the act of the Claimant filing the Singapore Subordinate Court suit No. DC 477/2007/T against PKTI for the payment of the three (3) months' salary in lieu of reinstatement. Page 297 of CLB shows a few emails dated 14 September 2012 exchanged between the Claimant and his solicitor in Singapore on the Claimant's instructions to withdraw the suit in Singapore because he wished to proceed with this case. As to whether the suit has really been withdrawn, it is not known to this court because the court has not got sight of a court order of that alleged withdrawal. Furthermore, it has been more than five (5) years since it was filed so why was there a delay in withdrawing it if the Claimant was really keen to proceed with this case? This case was referred to the Industrial Court by the Minister on 19 September 2007. [26] The fact that the Claimant resigned from all the subsidiary companies in the Group was also consistent with his post dismissal conduct in accordance with the June 2000 Agreement. The Claimant understood from the terms of the June 2000 Agreement that in the event of his termination from the service of PKTI, he had to do exactly that. The Claimant had complied with clause 14.3 of the June 2000 Agreement when he resigned as the director from PKTech Sdn Bhd on 16 September 2003 as evident from page 1 of COB2. There was no proof at all that the Company had dismissed him. [27] This court finds that the Letter of Termination dated 22 August 2003 was a letter sent by PKTI to the Claimant terminating the Claimant's services as the Executive Chairman of PKTI. The Company's only witness, Mr. Oh Teik Khim (COW1) explained that the letter was prepared by PKTI on a stationery (letter head) which did not
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specify the address of the sender. He testified that Susie Low was the Company Secretary of PKTI and not the Company Secretary of the Company PKTech Sdn Bhd. This material piece of evidence was never challenged by the Claimant. The evidence points to the fact that the letter was sent by the employer PKTI to the Claimant as:

(i)

The letter was prepared and signed by Susie Low, the Company Secretary of PKTI.

(ii)

The fact that Susie Low was the Company Secretary of PKTI is shown in the Companies' Search made on PKTI in Singapore located at page 11 of COB1.

(iii)

The letter further made reference to clause 14.3 of the Agreement signed on 16 June 2000 between yourself and the Company which refers to the June 2000 Agreement.

(iv)

The Claimant's own solicitor in Singapore, Messrs Seah Ong & Partners whilst acting for the Claimant, referred to PKTI as the entity which terminated the Claimant's employment vide the same letter of 22 August 2003.

[28] Having considered the oral testimonies of the witnesses and documentary evidence before the court, the court is of the considered opinion that a contract of employment had existed between the Claimant and PKTI and it had bound both the Claimant and PKTI. It was stipulated in clause 18 of the June 2000 Agreement that the June 2000 Agreement superseded all previous agreements and arrangements relating to the appointment and/or employment of the Claimant by the
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Company or any Group Company, in particular, the Management Agreement entered into between the Claimant and the Company dated 6 December 1999 (which shall be deemed to have been terminated by mutual consent). The Claimant's attempt to resurrect the 1999 Management Agreement is rejected by this court because not only was it not pleaded in the SC, it had been abrogated by clause 18 of the June 2000 Agreement. The burden was on the Claimant to prove that an employer-employee relationship had existed between the Company and the Claimant which could be inferred otherwise. The court finds that the Claimant has failed to satisfy the tests in decided cases as noted in the earlier part of this award. DECISION [29] Hence, this court will not proceed to decide on the Claimant's dismissal by PKTI which is a Singaporean Company and is not within the jurisdiction of this court to decide as the Act is not extra-territorial. To do so the court will run foul of what the Court of Appeal has decided and stated in Multicore Solders (M) Sdn Bhd v. Yeo Kuei Chwan Donny [2012] 3 MELR 767 in which his Lordship Anantham Kasinather JCA said at page 772:
With respect, in our judgement, the Industrial Court ought not to have ruled on the second issue once it had determined that the proper employer was not before the court. Once the Industrial Court ruled that MSS was the employer of the respondent, in our judgement, it had no jurisdiction to go on and ask the question 'was there a dismissal'..

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[30] Learned counsel for the Claimant has submitted that the court should not consider the label used in the 'employment contract' to prevent the jurisdiction of the court and that It is the essence of the employment terms and not the label used that the court shall consider. Having considered the law, the facts and the evidence adduced by the Company and the Claimant, there is only one conclusion by this court and that is in label and in essence, the Company was not the employer of the Claimant. Accordingly, the Claimant's claim against the Company is dismissed. In arriving at this decision, the court has acted in equity, good conscience and considered the substantial merits of the case without regard to legal technicalities and legal form.

HANDED DOWN AND DATED THIS 25th DAY OF JANUARY 2013

... ( ANNA NG FUI CHOO ) CHAIRMAN INDUSTRIAL COURT, MALAYSIA KUALA LUMPUR

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