On 3 January 2022, the Industrial Court in Jayaprakas a/l Ramadass v Anytime Sdn Bhd (Award 24 of 2022) upheld the dismissal of a redundant retail employee.  Here, the Industrial Court examined the impact of the pandemic on the employer’s business and held there was a genuine redundancy.

Brief Facts

  • The Claimant was working with the Company as a retail supervisor, where he was stationed at the Anytime Johor Premium Outlet (“JPO”).
  • The Company’s operations at the JPO was a new branch which started operations on 31 December 2019. Less than 3 months later, the country was placed under a Movement Control Order (“MCO”) due to the pandemic.
  • The Company was required to close its retail outlet during the MCO, and faced financial difficulties.
  • On 3 May 2020, the Company decided to cease operations at the JPO. The Claimant was dismissed with effect from 17 June 2020.
  • The Company’s JPO outlet was closed completely in June 2020.
  • The Claimant claimed unfair dismissal.

Court’s Findings

  • The Claimant’s dismissal was due to redundancy given the MCO. The Company faced financial losses as their outlet at the JPO could not open and there were no customers. There was therefore a need for the Company to reduce its headcount or retrench its employees in stages.
  • The Company produced its profit and loss statements from 1 January 2020 to 30 June 2020. While there were sales, the Company was still loss making as at June 2020. The Court was satisfied that the Company had established it was facing financial difficulties based on the profit and loss statements; even though there were funds coming into the accounts through sales every month, the Court observed that it has to consider the costs of managing and operating the retail outlet.
  • The Court held that the Company’s decision to retrench its employees by stages and not simultaneously was not done capriciously or intending to victimise anyone. This was within the Company’s prerogative and the Court refused to interfere with the Company’s managerial decision.
  • The Claimant’s dismissal on grounds of redundancy was with just cause and excuse, done in good faith, and not done with any intention to victimise the Claimant. The dismissal was upheld.

Key Takeaways

In upholding the dismissal, the Court commented that although the pandemic has caused hardship across the country, not only employees were affected. Many employers were facing difficulties, too. The Court recognised that:

  • the Company did its best to delay the retrenchment until June 2020, notwithstanding that they could not operate the outlet from March to May 2020; and
  • The Company also paid the Claimant’s salary in full during this period

In evaluating retrenchment cases, especially those that arose during the pandemic, the Industrial Court will consider all factors including the employer’s hardships, and their good faith efforts to safeguard the welfare of their employees (even if retrenchment ultimately could not be avoided).

While the Industrial Court is sympathetic to the plight of employees who have lost their livelihoods, unfair dismissal claims are still looked at through the lens of equity and good conscience. This is so decisions reached are fair for both employees and employers, especially if they are to be used as precedents. Here, even though the Claimant’s unfair dismissal claim was dismissed, there were no winners. The Company still had to go through a financial hardship and close its retail outlet.

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This article was written by Donovan Cheah. Donovan has been named as a Recommended Lawyer for Labour and Employment by the Legal 500 Asia Pacific 2017, 2018, 2019, 2020, 2021 and 2022, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work.

Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory.  Have a question? Please contact us.

 

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