IN THE INDUSTRIAL COURT MLAYSIA

AT KUALA LUMPUR

CASE NO: 15/4-461/19

BETWEEN
MUHAMMAD FAIZOL BIN MOHD BAKERY

AND

CENTRAL SUGARS REFINERY SDN. BHD.

AWARD NO : 546 OF 2020

BEFORE : Y.A. PUAN REIHANA BTE ABD.RAZAK

Chairman

VENUE : Industrial Court, Kuala Lumpur

DATE OF REFERENCE : 02.04.2019.

DATES OF MENTION : 15.05.2019, 19.06.2019, 03.07.2019,

29.07.2019, 09.08.2019, 26.08.2019,
14.10.2019, 12.11.2019.

DATES OF HEARING : 09.09.2019 and 10.09.2019.

REPRESENTATION : Mr. Naveen Joshua Solomon together with

Ms. Jagesh Jay
Messrs. Gregory, Yusran & Associates
Counsels for Claimants

Mr. Alwin Rajasurya together with

Ms. Annabelle Tan Ker Ching
Messrs Koh Dipendra Jeremiah Law
Counsels for Company

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REFERENCE
This is a reference made under section 20 (3) of the Industrial Relations
Act 1967 (the Act) arising out of the alleged dismissal of MUHAMMAD
FAIZOL BIN MOHD BAKERY (Claimant) by CENTRAL SUGARS
REFINERY SDN. BHD. (Company) on 2 April 2019.
AWARD
BRIEF FACTS
[2] This case was heard jointly together with 17 cases registered as
follows: -
Case Number Claimant
15/4-441/19 Syamazir bin Azmi
15/4-448/19 Tuan Muda Bin Hj Tuan Kasim
15/4-449/19 Narayanan Ail Govindan
15/4-450/19 Abd Malek Bin Abd Aziz
15/4-451/19 Mohamad Azhar Bin Mahmud
15/4-452/19 Mohamad Rusle Bin Osman
15/4-453/19 Sahrin Bin Baharum
15/4-454/19 Lairani Bin Salingganti
15/4-455/19 Hasmawi Bin Ab Hamid
15/4-456/19 Salman Hamidi Bin Dzulkefli
15/4-457/19 Mohd Nazri Bin Ramli
15/4-458/19 Hasirun Bin Salim
15/4-459/19 Muhammad Izzat Bin Ramlan
15/4-460/19 Salim Bin Abd Samat
15/4-461/19 Muhammad Faizol Bin Mohd Bakery
15/4-490/19 Mansor Bin Sogol
15/4-506/19 Nik Sabri Bin Nik Ismail

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[3] Both parties agreed that all the 17 cases be heard together since
alleged dismissals arose from identical facts and sequence of events
leading to the termination of employment of the Claimants.

[4] As all the 17 Claimants and the Company were been represented by
the same sets of counsels and the same sets of pleadings were referred to
in the hearings, the Court will refer to the same pleadings, documents and
witness statements respectively in handing down the Awards for the 17
cases.

[5] The Company manufactures and provides fine sugar and other
sweetener ingredients for consumers, retailers, food service distributors,
food manufacturers, culinary professionals and specialty market across
Malaysia.

[6] The Company pleads that with the rising operational cost, the Company
had to look for avenues to manage or reduce the operational costs and the
Company then decided to reduce the headcount of the Security Section of
the Company by outsourcing the same to Deuma Force Sdn. Bhd.

[7] It was the Company’s contention that the Company decided to reduce
the workforce of the Security Section security guards employed by the
Company to four (4) security guards and work with the outsourced security
guards of the Company.

[8] The Company avers that due to the Right Sizing exercise when the
Company outsourced a large part of its Security section, the jobs of the 17

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security guards employed by the Company [the Claimants] became
redundant and the Company had to retrench the Claimants.

[9] The Company contended that on 19.09.2018 in a meeting, they notified

the employees including the Claimants about the Right-Sizing exercise and
the outsourcing of job function of the security section, which led to the
Claimants’, became redundant.

[10] The Company avers that on 25.9.2018. the Company proceeded to

pay all the 17 Claimants their retrenchment benefits, their salary up until
21.9.2018, the payment in lieu of notices for 1 month, their balance annual
leave encashment and retirement benefits as per the Company’s
Retirement Benefit Scheme. The respective amounts received by the
Claimants are as follows;
CLAIMANT [RM]
Syamaizer Bin Azmi 37,961.41
Tuan Muda Bin Hj Tuan Kasim 61,192.10
Narayanan Ail Govindan 44,769.42
Abd Malek Bin Abd Aziz 47,534.69
Mohamad Azhar Bin Mahmud 9,102.21
Mohamad Rusle Bin Osman 10,987.10
Sahrin Bin Baharum 15,282.55
Lairani Bin Salingganti 2,228.15
Hasmawi Bin Ab Hamid 9,982.80
Salman Hamidi Bin Dzulkefli 897.53
Mohd Nazri Bin Ramli 2,371.54
Hasirun Bin Salim 1,329.03
Muhammad Izzat Bin Ramlan 6,431.81
Salim Bin Abd Samat 33,276.48
Muhammad Faizol Bin Mohd Bakery 7,363.13
Mansor Bin Sogol 171,002.57
Nik Sabri Bin Nik Ismail 36,767.01

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[11] The Company avers that the Company had arranged the Claimants for
interview with the outsourced company but none of the Claimants attended
the said Interview.

[12] The Claimants pleaded case was as in their Statement of Case

respectively listing their employment history as security guards with the
Company and their job scopes.

[13] The 16 Claimants [except for Claimant Salim bin Abd Samat who was
not present for the meeting with the Company on 19.09.2018 as he was on
leave] alleged that on 19.09.2018 they were called up by the Company
officers for a meeting to be informed about the Right-Sizing exercise and
that the Company would be hiring outsourced guards for the Company.

[14] The 16 Claimants [except for Claimant Salim bin Abd Samat who was
not present for the meeting in the Company on 19.09.2018 as he was on
leave] avers that they were dismissed on 19.09.2018 the same day being
notified of the Right-Sizing exercise and were asked to come back to
collect the payment from the Company on 24.09.2018.

[15] The 16 Claimants [except for Claimant Salim bin Abd Samat who was
not present for the meeting in the Company on 19.09.2018 as he was on
leave] state that they did not attend the interview in the outsourcing
Company [Deuma Forces Sdn. Bhd.] because they were informed that they
won’t be stationed at the Company.

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[16] The Claimant Salim bin Abd Samat who was not present for the
meeting in the Company on 19.09.2018 because he was on leave alleged
that the Company informed him to come on 24.09.2018 to collect his letter
informing of his retrenchment due to the Company outsourcing their
security guard services and also to collect his retrenchment benefits.

[17] The Claimants avers that the Company unlawfully terminated them
from their employment under the guise of retrenchment as the Company
did not notify, warn or inform the Claimants about their job being redundant
and that their service will be terminated.

[18] The Claimants also submit that their jobs are not redundant and still
exist because the Company employed foreigners as guards to perform the
Claimants’ job functions.

[19] The Claimants also avers that the Company is still making profits and
the retrenchment is merely an excuse to remove them from the Company
claiming their jobs were redundant.

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THE LAW

[20] In the Federal Court in the case of GOON KWEE PHOY V. J & P
COATS (M) SDN. BHD. [1981] 1 LNS 30; [1981] 2 MLJ 129 where His
Lordship Raja Azlan Shah opined: -

“Where representations are made and are referred to the

Industrial Court for enquiry, it is the duty of that Court to
determine whether the termination or dismissal is with or
without just cause or excuse. If the employer chooses to give a
reason for the action taken by him the duty of the Industrial
Court will be to enquire whether that excuse or reason has or
has not been made out. If it finds as a fact that it has not been
proved, then the inevitable conclusion must be that the
termination or dismissal was without just cause or excuse. The
proper enquiry of the Court is the reason advanced by it and
that Court or the High Court cannot go into another reason not
relied on by the employer or find one for it.”

[21] The burden of proof is on the employer to prove redundancy. In

BAYER (M) SDN BHD V. NG HONG PAU [1999] 4 CLJ 155 it was stated

“On redundancy it cannot be gainsaid that the appellant must

come to the Court with concrete proof. The burden is on the
appellant to prove actual redundancy on which the dismissal
was grounded.”

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[22] Dunston Ayadurai his book entitled “INDUSTRIAL RELATIONS IN
MALAYSIA” defined redundancy as follows:

“Redundancy refers to a surplus of labour and is normally the

result of a reorganization of the business of an employer, and
its usual consequence is retrenchment, i.e. the termination by
the employer of those employees found to be surplus to his
requirements after the reorganization. Thus, there must first be
redundancy or surplus of labour before there can be
retrenchment or termination of the surplus”.

EVALUATION AND FINDINGS

[23] It was the Claimants’ case that the Company is still making profits and
the reason given by the Company that the Claimants were retrenchment
due to the "Rightsizing" exercise is merely an excuse to remove them from
the Company claiming their jobs were redundant.

[24] The Company asserts that the Company had the right to exercise its
managerial prerogative to reorganize its business in any manner they think
best and that the Company’s managerial prerogative to reorganize was
done in a bona fide manner.

[25] It was the Company’s contention that due to the challenging business
environment and financial situation faced by the company, the Company
had to manage and reduce the operational costs.
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[26] COW-2 Director of People Division of the Company stated that due to
the rising cost of raw materials, increased competition, lower consumer
spending and the government’s approval of permits for the import of sugar
by other 3rd party companies and other industrial players, the Company
had to look for avenues to manage and reduce the costs of operations.

[27] COW-2 states that in order to circumvent any further losses suffered
by the Company, the Company had to reorganize its operations to which
the Company decided to outsource a large part of its Security Section to
reduce the operational costs.

[28] COW-2 confirmed that the Company outsourced the security services
to Deuma Forces Sdn. Bhd. and by the outsourcing of the security section
of the Company, the Company managed to achieve savings of
RM413,899.00 from September 2018 to April 2019.

[29] The Claimants never challenged COW-2’s evidence neither was there
any evidence adduced by the Claimants to show that the Company’s
exercise to reorganize its business were tainted with mala fide motives
intended to victimize the Claimants or drive out the Claimants from their
employment.

[30] The Claimants never challenged neither disputed COW-2’s evidence

especially on the saving of the operational costs breakdowns of the
Security Section of the Company with the outsourcing of the security
sections as shown in Exhibit “10” COB-1.

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[31] The Court is of the view that the Company has the prerogative to
reorganize its business operations in any manner for the purpose of its
economic viability and in the manner, the Company think best.

[32] The Claimants did not challenged nor brought any evidence to the
contrary with regards to the facts that the Company manage or reduce a
huge amount of its operational costs by the outsourcing its security section.
As such, the reorganization exercise by the Company is for a genuine
necessity reason and the exercise of its managerial prerogative was bona
fide indeed.

[33] There was also not even any evidence adduced by the Claimants
before the Court to consider that the action of the Company to restructure
its security section was with mala fide motives. As such, no reason for this
Court to rule that the reorganization exercise by the Company, which led to
the Claimants’ retrenchment tainted with any mala fide motives.

[34] The Claimants also avers that the Company had violated the “Last In
First Out” (LIFO) principle in selecting employees to be retained and
retrenched when the Company selected 4 security guards to be retained
and terminated the 17 Claimants.

[35] The Company avers that it retained the 4 security guards and
retrenched the Claimants based on the Company’s “Performance
Management System” (“PMS”) and disciplinary record where the 4 security
guards retained were always amongst the top performers based on the
PMS with good disciplinary records.
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[36] Surprisingly the Claimants never challenged COW-2 during the trial
about the selection done by the Company in retaining the 4 security guards
and retrenching the 17 Claimants.

[37] All the performance data of all employees in the Security Section of
the Company extracted from the Performance Management System of the
Company marked as Exhibit “11” in COB-1 was available and served on
the Claimants before the trial. However, the Claimants never at all
challenged those records neither adduced any evidence to show that the
Company’s selection to retaining the 4 guards and retrenching the 17
Claimants was not a fair selection. As such, the Claimants are deemed to
have agreed with the Company’s selection in retaining the 4 guards and
retrenching the 17 Claimants.

[38] As the Claimants did not challenged the Company’s selections at all
neither adduced any evidence to the contrary, the Court is of the opinion
that the Claimants acknowledged that the Company’s selection was a fair
selection where the Company is seen to have acted fairly and did not
departed with the LIFO rules in retrenching the Claimants.

[39] It is trite law that the LIFO is not an absolute mandatory rule as it is not
a statutory provision, which cannot be departed from by the Company
when retrenching their employees. The Court is satisfied that the
Company’s selection based on the Company’s “Performance Management
System” (“PMS”) and disciplinary record was a justifiable way of selecting
the retention of employees during a retrenchment exercise

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[40] The Claimants further contended that the Company had never
informed or consulted the Claimants with regards to the Rightsizing
exercise neither did the Company notified or warned the Claimants or make
attempt to inform the Claimants about their position job functions being
redundant before the meeting on 19.09.2018.

[41] The Claimants submitted that the reason given by the Company for the
short notice in terminating the Claimants was just a lame excuse to remove
the Claimants from their employment as the Company wanted to derive
maximum benefits by employing outsourced security guards to perform the
job functions of the Claimants.

[42] With regards this issue, the law is clear in that there is no legal
obligation on the part of the employer to consult his employee before
retrenchment or give advance warning to the employee on the possibility of
retrenchment.

[43] On the Claimants allegation that the entrenchment was not genuine as
they were not offered any alternative position or been redeployed into the
Company, the Claimants never put to the witnesses of the Company
especially to COW-2 or adduced any evidence about any suitable position
in the Company where they could be deployed.

[44] The Claimants confirmed during cross examination that they did not
attended the interview arranged by the Company with Deuma Forces Sdn.
Bhd. [the outsource company] one day after been retrenched.

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[45] The Claimants too did not denied that the Company’s representative in
the meeting on 19.09.2018 informed the employees including the
Claimants that Deuma Force Sdn. Bhd. would be agreeable to absorb and
re-employ the retrenched employees provided they attended an interview
with Deuma Force Sdn. Bhd. at the Company’s premises. As such, the
Claimants’ allegation against the Company of not being fair to them is
merely an afterthought and is baseless as the Claimants made their own
choice by not attending the interview arranged by the Company for their
employments.

[46] Furthermore when the Claimants took the retrenchment payments

made by the Company without raising any concerns and dissatisfaction to
the Company regarding the retrenchment, the conduct of the Claimants
clearly imply that the Claimants have no issues with the termination.

[47] The Claimants’ allegation that the Company had terminated them and
appointed foreigners as security guards replacing them seem baseless too.
COW-1 in her evidence states that the Company at all material times has
not directly employed any foreigners to perform the functions of security
guards for the Company.

[48] COW-1’s evidence that it was Deuma Force Sdn. Bhd. [the outsource
company] which engaged the foreigners as it employees. The Claimants
never challenged this facts neither showed any evidence that the Company
had directly employed any foreigners to perform the functions of security
guards in the Company.

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[49] The Claimants too confirmed that the outsource company was already
servicing the Company Security Section together with them when the
Claimants were still in employment with the Company. As such the
Claimants were well aware about the existence of foreigners as security
guards and that the foreigner security guards was employed by the Deuma
Forces Sdn. Bhd. and not directly employed by the Company.

[50] A perusal on Exhibit “8” in COB-1 shows that the Company had signed
a contract with Deuma Force Sdn. Bhd. on 01.01.2018 to provide security
services to the Company some 8 months prior to the Right Sizing and
retrenchment exercise by the Company.

[51] This Court finds that the Company was consistent in taking steps to
restructure its business. The Company’s decision to outsource large part of
the Security Section of the Company and managing to achieve
considerable savings on a monthly basis by reducing the Security Section
operational costs of the Company was a genuine exercise.

[52] Given this facts, the Court is satisfied that the re-organization by the
Company was a bona fide exercise of its managerial prerogative to run the
business operations as it deemed fit in order to successfully continue the
Company’s overall business operations. As such, the Company had just
and proper reasons to terminate the employment of the Claimants.

[53] Based on the evaluation of evidence before this Court, the Court finds
the Company had established on a balance of probabilities the reasons for
the Claimants’ termination on redundancy.
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[54] Taking into consideration the totality of the evidence adduced by both
parties and bearing in mind section 30(5) of the Industrial Relations Act
1967 to act according to equity, good conscience and the substantial merits
of the case without regard to technicalities and legal form, this Court finds
that the Claimants’ dismissal was with just cause or excuse.

The Claimants’ case is hereby dismissed.

HANDED DOWN AND DATED THIS 2 MARCH 2020

-Signed-
( REIHANA BTE ABD.RAZAK )
CHAIRMAN
INDUSTRIAL COURT MALAYSIA
KUALA LUMPUR

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