Borneo Pulp & Paper Sdn Bhd v.

Rajan Chellaiah
[2002] 3 ILR Amelia Tee Hong Geok Abdullah 1227

BORNEO PULP & PAPER SDN BHD a

v.
RAJAN CHELLAIAH
INDUSTRIAL COURT, KUALA LUMPUR b
AMELIA TEE HONG GEOK ABDULLAH
AWARD NO. 1075 OF 2002 [CASE NO: 4/4-403/00]
30 DECEMBER 2002
CONTRACT OF EMPLOYMENT: Employment - Offer of employment
- Whether constitutes a contract of employment - Whether claimant c
an employee of company
INDUSTRIAL RELATIONS: Employee status - Whether a workman
under s. 2 Industrial Relations Act 1967
The claimant was employed elsewhere when he learnt that the company d
was looking for an experienced plantation manager. He duly submitted a
resume and after a successful interview, he was offered employment with
the company. He then resigned from his former company and at his own
expense went to Bintulu to check out his new workplace on 19 January
1997. The company further advised claimant to sign all the papers and e
contract documents so that he could start work on 1 March 1997. The
claimant accepted the offer of employment on 4 February 1997.
On 18 February 1997, the company contacted the claimant and informed
him that the company was unable to offer him a position and would not
f
be issuing him a contract of employment. The claimant alleged that he
was unfairly and unjustly dismissed by the company.
The company denied dismissing the claimant on the basis that since the
claimant was not in the employment of the company, he could not be
dismissed. The claimant argued that so long as there was a valid and g
binding contract, then the claimant should be held to be engaged or
employed.
The court was satisfied from the evidence adduced that when the claimant
accepted the company’s offer of employment, there was in existence a
h
contract of employment between the parties. However the contract clearly
stated that the starting date was 1 March 1997, which is the date for
claimant’s commencement of employment with the company. Thus,
although the contract of employment was in existence between the parties,
the claimant in this case could not be considered a workman within the
i
 Industrial Law Reports
1228 2002 [2002] 3 ILR

a context of s. 20(1) of the Industrial Relations Act 1967. Since the

contract of employment was terminated on 19 February 1997 before he
could commence employment, the company was at best only a prospective
employer of the claimant.
The issue was whether claimant a workman who had been dismissed
b
without just cause and excuse by the company in the context of s. 20
of the Industrial Relations Act 1967
Held [for the company]:
Whilst a contract of employment had existed between the parties, the
c
company had expressed an intention not to honour that contract. Since
the termination of the contract was before the stated date of
commencement of employment, the claimant was not a workman within
the contract of s. 20(1) of the Industrial Relations Act 1967.
d [Claim dismissed.]
Award(s) referred to:
Hana International Sdn Bhd v. Tan Thien Cheng [2002] 1 ILR 551 (Award No. 123
of 2002)

e Case(s) referred to:

Hong Leong Equipment Sdn Bhd v. Liew Fook Chuan & Other Appeals [1996]
1 CLJ 665
Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia [1996] 4 CLJ 687
Weltex Knitware Industries Sdn Bhd v. Law Kar Toy [1988] 7 MLJ 359
Wong Chee Hong v. Cathay Organisation (M) Sdn Bhd [1988] 1 CLJ 45; [1988]
f 1 CLJ (Rep) 298

Legislation referred to:

Industrial Relations Act 1967, ss. 2, 20(1)

For the claimant - S Siva & PY Au Yong; M/s Cheah Teh & Su
g For the company - A Ramadass; M/s Ramadass & Assocs

AWARD
(NO. 1075 OF 2002)
The dispute between the claimant and the company arose out of the alleged
h dismissal of the claimant by the company. The claimant alleges that he was
dismissed by the company whilst the company disputes the dismissal.
Preliminary Issues
At the outset of the case, the question arose as to who should begin the case.
The claimant’s case is that he was dismissed by the company. The company,
i
 Borneo Pulp & Paper Sdn Bhd v. Rajan Chellaiah
[2002] 3 ILR Amelia Tee Hong Geok Abdullah 1229

on the other hand, contends that there was no dismissal, and as such the a
claimant should start the case.
The court relied on the case of Wong Chee Hong v. Cathay
Organisation (M) Sdn Bhd [1988] 1 CLJ 45; [1988] 1 CLJ (Rep) 298 as
cited by learned counsel for the company where YAA Salleh Abas, LP had
b
this to say at p. 49 (at p. 302):
When the Industrial Court is dealing with a reference under section 20, the first
thing that the Court will have to do is to ask itself a question whether there was
a dismissal.

And at pp. 50, 51 (p. 303): c

The next question is this. Is the dismissal with just cause or excuse? Since the
appellant has succeeded in showing that he was dismissed, it is for the
respondent company to show that the dismissal was with just cause and excuse.

The case of Weltex Knitware Industries Sdn Bhd v. Law Kar Toy d
[1988] 7 MLJ 359 adds further light when Abdul Kadir Sulaiman J had this
to say at p. 363:
The law is clear that if the fact of dismissal is not in dispute, the burden is on
the Company to satisfy the Court that such a dismissal was done with just cause
or excuse ... . However, where the fact of dismissal is in dispute, it is for the e
workman to establish that he was dismissed by his employer.

Reading these two authorities together, the court is satisfied that since the
company is disputing the fact of dismissal, the burden of proof falls on the
claimant who must prove the dismissal. That being the case, the court had f
directed the claimant to start the case.
The Facts.
The facts of the case, which are by and large undisputed, appears from
the evidence of the claimant who was the sole witness called in this case.
g
Around November 1996 the claimant, who was then employed at Riau Andalan
Pulp & Paper (RAPP) learnt that the company was looking for an experienced
plantation manager. He was encouraged by Peter Whitehead who was then
the regional manager of the company to apply for the job. Claimant duly
submitted a resume and was called for an interview. After the interview he
h
was offered employment with the company. The company’s offer of
employment dated 9 January 1997 (COE2) offers claimant employment as
a forestry area manager at a monthly gross salary of RM10,000. It is noted
that the starting date of employment is stated as 1 March 1997.

i
 Industrial Law Reports
1230 2002 [2002] 3 ILR

a Upon receipt of this letter of offer, the claimant told the court that he decided
to accept the offer. The court notes that before the decision to accept the
offer was officially notified to the company, the claimant sent a letter dated
13 January 1997 to his then employer, RAPP, tendering his resignation with
effect from 15 January 1997 (CLE 31). It is further noted that RAPP
b subsequently on 1 February 1997 issued an employment certificate to
claimant wherein it is stated inter alia that claimant was employed with
RAPP from 2 August 1994 to 31 January 1997 (CLE4).
The claimant stated in evidence that he, relying on the company’s letter of
offer of employment (COE2), paid a visit to Bintulu on 19 January 1997, at
c his own expense, to check out his new workplace. In court the claimant went
into considerable detail on the warmth with which he was welcomed at Bintulu.
Peter Whitehead picked him up at the airport. He was brought to the district
office of the company where claimant was given a briefing. He was driven
around the town as part of the familiarisation process. The next day, Peter
d Whitehead picked claimant up from his hotel and brought him to the district
office of the company where claimant was introduced to all the staff and
management. In his evidence claimant said that Peter Whitehead further
advised claimant to sign all the papers and contract documents so that
claimant could start work once he arrives on 1 March 1997.
e
After the trip to Bintulu, claimant wrote a letter dated 4 February 1997 (CLEJ3)
accepting the offer of employment. The last sentence on CLE6 reads as
follows:
If I am considered I will be starting work on 1 March 1997.
f
When nothing was heard from the company, the claimant wrote a letter dated
17 February 1997 seeking a response so that he could make preparations
to reach Bintulu on 28 February 1997 (CLE7). Thereafter claimant received
the following responses:

g (i) on 18.2.1997 Mr. Warren Ellis, the Manpower Development and Training
Manager of the Company called the Claimant on the telephone to inform
him that the Company was unable to offer him a position;

(ii) on the same date, 18.2.1997 Claimant received a faximile from the Company
confirming that “at this point BPP cannot offer you a position in the
h Company” (CLE 8); and

(iii) on 19.2.1997 he received a letter from the Company stating that they “will
not be issuing you with a contract of employment”. The reason given for
this is stated as “... due to the reported problems with labour and stores
control that allegedly occurred in operations under your control in Indah
i Kiat.”.
 Borneo Pulp & Paper Sdn Bhd v. Rajan Chellaiah
[2002] 3 ILR Amelia Tee Hong Geok Abdullah 1231

The claimant states in his witness statement that the company did not give a
him a chance to explain what had happened during his previous employment
with Indah Kiat. The claimant went on to clarify that on or about
18 August 1992 when he was employed as camp manager at Indah Kiat,
some roundup insecticide was stolen from the plantation store under his care.
He was asked to and did submit a report to his superiors on the incident. b
Claimant said that he was never issued with any warning letter in respect
of the matter. Subsequently, in April 1993 his designation was changed from
camp manager to vice section head of plantation quality control and this was,
according to claimant, a promotion. He tendered reports prepared by him
pertaining to the incident (CLE10A & 5 CLE10B) in support of his evidence. c
The claimant states that he was unfairly and unjustly dismissed by the company
on 19 February 1997. He agreed in cross-examination that he reported to
the IR Department that he was dismissed on 19 February 1997.
The company did not call any witnesses but relied on its submissions at the d
close of the case. In brief, the company’s contention is that since the claimant
had not commenced work on 19 February 1997, he cannot be said to have
been dismissed from the company. The company denied dismissing the claimant
on the basis that since the claimant was not in the employment of the
company on 19 February 1997, he could not be dismissed, and neither could
e
he seek reinstatement.
Counsel for the claimant submitted at great length and attempted valiantly
to urge the court towards a liberal meaning of the word “employed”. He
argued that so long as there is a valid or binding contract, then the
claimant should be held to be engaged or employed. It was submitted that in f
light of the fact that the Industrial Relations Act, 1967 is a piece of social
legislation, to give the word a restricted meaning would tantamount to denying
security of tenure to the claimant during the period between his resignation
from his current employment and before the date of commencement of his
new employment. g
The Issues
Basically the issue before the court is whether the claimant is a workman
who had been dismissed without just cause or excuse by the company
in the context of s. 20 of the Industrial Relations Act, 1967.
h
Findings
The court finds that the claimant has established that following an interview,
he was offered employment with the company vide a letter containing
an offer of employment (CLE2). The starting date as stated in CLE2 is “1/3/
97”. The claimant vide CLE6 dated 4 February 1997 accepted the offer and i
 Industrial Law Reports
1232 2002 [2002] 3 ILR

a stated that “I will be starting work on 1 March 1997”. Based on the company’s
offer of employment and the claimant’s acceptance of the offer, the court can
conclude that upon the claimant accepting the offer, the parties had entered
into a contract of employment, and that the said employment would commence
on 1 March 1997.
b
It has also been established that the company subsequently renegaded on this
agreement. This was done on 18 February 1997 when Warren Ellis telephoned
the claimant to inform him that the company was unable to offer him a
position. On the same day, as a follow-up, the said Warren Ellis sent a faximile
to the claimant saying essentially the same thing. And the next day, ie, on
c 19 February 1997 the company issued a formal letter stating that the company
“will not be issuing you with a contract of employment for a position in its
Sarawak operations.”.
From this the court can draw the inescapable conclusion that on
d 18 February 1997 the company no longer intended to honour their offer
of employment which had been accepted by the claimant.
The claimant admits in cross-examination that the company terminated the
contract of employment before he commenced employment or reported for work
on 1 March 1997.
e
As such the burning question in this case is this : Can the claimant in the
circumstances of this case be termed a “workman” in the context of s. 20(1)
of the Industrial Relations Act, 1967?
Section 20(1) reads as follows:
f
(1) Where a workman, irrespective of whether he is a member of a trade union
of workmen or otherwise, considers that he has been dismissed without just cause
or excuse by his employers, he may make representations in writing to the
Director General to be reinstated in his former employment; the representation
may be filed at the office of the Director General nearest to the place of
g employment from which the workman was dismissed.

The phrase “contract of employment” in s. 2 is defined as:

any agreement, whether oral or in writing and whether express or implied, whereby
one person agrees to employ another as a workman and that other agrees to
h serve his employer as a workman.

And workman is defined as:

... any person, including an apprentice, employed by an employer under a
contract of employment to work for hire or reward and for the purposes of any
i proceedings in relation to a trade dispute includes any such person who has
 Borneo Pulp & Paper Sdn Bhd v. Rajan Chellaiah
[2002] 3 ILR Amelia Tee Hong Geok Abdullah 1233

been dismissed, discharged or retrenched in connection with or as a consequence a

of that dispute or whose dismissal, discharge or retrenchment” has led to that
dispute.

A careful study of these two definitions bearing always in mind the preamble
of the Act which states that the Act was enacted “to provide for the regulation
of the relations between employers and workmen and their trade unions and b
the prevention and settlement of any differences or disputes arising out of that
relationship....” leads the court to the inevitable conclusion that there is a real
and appreciable difference between the existence of a contract of employment
and the state of being employed under a contract of employment.
c
In the instant case the court is satisfied from the evidence adduced that when
the claimant accepted the company’s offer of employment, there was in
existence a contract of employment between the parties. However the contract
clearly stated that the “starting date” is 1 March 1997. The starting date can
only refer to the date for claimant’s commencement of employment with the
d
company.
As such on 18 February 1997 when claimant was informed via telephone that
the company was no longer offering him a position with the company, followed
with a faximile as well as a letter confirming the said decision, the court notes
that the claimant had, at that point in time, yet to commence employment with e
the company.
Can a person in such circumstances be considered an employee? More
specifically, can the claimant who has confirmed that he had never worked
as a forestry area manager for the company even for one minute be said to
be a workman employed by the company? f

S Siva, the learned counsel for the company has valiantly urged the court to
adopt a liberal and wide interpretation for the term “workman”. He has
painstakingly taken the court through a whole spectrum of cases designed
no doubt to show that the term “workman” is to be liberally interpreted g
in light of the fact that “the Act is a piece of beneficent social legislation
by which Parliament intends the prevention and speedy resolution of disputes
between employers and their workmen”, (as per YA Gopal Sri Ram, JCA
in Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia & Anor [1996]
4 CLJ 687 at p. 707.
h
However in all the cases cited by counsel except one, there is no question
that the claimants had all been in the employment of the companies when
the question of their dismissal or termination arose. The only exception
was the case of Hana International Sdn Bhd v. Tan Thien Cheng [2002]
i
 Industrial Law Reports
1234 2002 [2002] 3 ILR

a 1 ILR 551 where the Industrial Court held that since that claimant did not
report for work or assume office at the company, it could not be said
that he was “employed” by the company on a contract of employment
as his services had yet to commence. As such the learned chairman held
that the claimant was not a “workman” within the meaning of s. 2 of the
b Industrial Relations Act.
The facts of the case in Hana International is the closest to the facts
of the instant case. There is no decision of a superior court on the
issue of whether a person who has yet to commence employment with
a company can be said or considered to be a workman employed by the
c said company within the context of s. 20(1) of the Industrial Relations Act,
1967.
The court is ever mindful of the provisions of s. 30(5) of the Industrial
Relations Act as well as the decision of the Court of Appeal in Hong Leong
d Equipment Sdn Bhd v. Liew Fook Chuan & Other Appeals [1996] 1 CLJ
665 which held that:
... section 20 must, as a whole, receive an interpretation that will have the effect
of advancing the purpose for which Parliament passed the Act. To invert the
proposition, this Court should not, in determining the true nature and scope of
e section 20, apply a rule of construction that will have the effect of thwarting the
object for which Parliament has enacted the legislation ... .

The section is obviously a remedial provision, housed in an Act that is itself a

piece of beneficent social legislation. It should, therefore, based on the rule in
Heydon’s case receive a broad and liberal interpretation. (Per YA Gopal Sri Ram
f JCA at page 509-510).

Siva, in his submissions has stressed that the position in which the
claimant finds himself is not a one-off case and that everyone who changes
jobs would be caught in such a position. Invariably a worker would first
have to resign from his current employment and the date of commencement
g with his new employer would be on a future date.
But was the Act meant to cover such a situation? Would the giving of a liberal
meaning to the word “workmen” so as to encompass even a potential employee
who has yet to commence employment be against the spirit and intent of
h the legislation to regulate “the relations between employers and workmen”.
After full consideration, the court finds that although these exists a contract
of employment between the parties, the claimant in this case cannot be
considered to be a workman within the context of s. 20(1) of the Industrial
Relations Act 1967. Had he commenced work on 1 March 1997 as per the
i letter of offer he would have been a workman. Since the contract was
 Borneo Pulp & Paper Sdn Bhd v. Rajan Chellaiah
[2002] 3 ILR Amelia Tee Hong Geok Abdullah 1235

terminated on 19 February 1997 before he could commence employment, the a

company was at best only a prospective employer of the claimant. My finding
on this is reinforced by the fact that if claimant had been held to be a workman
even before he commenced employment, it would lead to a ludicrous and
unacceptable situation where claimant would have been entitled to
reinstatement if the dismissal was held to be without just cause or excuse. b
Reinstatement means to restore or replace in a lost position, according to.
The Concise Oxford Dictionary 6th Edition). The claimant cannot conceivably
be reinstated to a position that he has not held for even a day.
In conclusion, the court is satisfied and finds that whilst a contract of
employment had existed between the parties, the company had expressed an c
intention not to honour that contract. Since the termination of the contract on
19 February 1997 was before the stated date of commencement of
employment, ie, 1 March 1997, the claimant is not a workman within the contract
of s. 20(1) of the Industrial Relations Act, 1967.
d
The remedy for the claimant lies not in a claim in the Industrial Court for
reinstatement to a position which he has never held but in a claim for
damages for breach of contract in a civil court.
The claimant’s claim is therefore dismissed.
e