Section 52 of the Industrial Relations Act 1967 (“Act”) does not allow unfair dismissal claims to be filed against any government or statutory authority. Ambiguity may arise as to whether a particular entity is a “Government” entity or performing government service, especially when there is government involvement in the management of its affairs.
In the recent case of Ng Boon Leh v Malaysian American Commission on Educational Exchange (Award No. 284 of 2020), the Industrial Court examined when an employer is considered to be a government entity that is protected by Section 52 of the Act.
- The Claimant was employed by the Malaysian American Commission on Educational Exchange (“Commission”)
- The Commission is an entity created pursuant to an agreement between the Government of Malaysia and the Government of the United States of America. It is recognised by both governments as a bi-national organisation established to facilitate educational exchange programs to citizens of both countries
- The Claimant filed an unfair dismissal complaint against the Commission, which was referred to the Industrial Court for adjudication
- The Commission objected to the jurisdiction of the Industrial Court to hear this matter, alleging that it is a government entity pursuant to Section 52 of the Act
- In opposing the objection, the Claimant submitted that no challenge may be taken on the threshold jurisdiction of the Industrial Court except where the unfair dismissal complaint was filed out of time. Further and in any event, the Claimant also alleges that the Commission is not a statutory body or a government entity as defined under Section 52 of the Act
A challenge may be taken on the threshold jurisdiction of the Industrial Court at the outset of a hearing at the Industrial Court. The Court has to examine it as a preliminary issue, since the finding of which will decide whether the Industrial Court has the jurisdiction to deal with the merits of the main dispute.
Upon considering all the evidence, the Court agreed that the Commission was a government entity dealing in government service, and Section 52 of the Act excludes the Claimant from filing a complaint of unfair dismissal against the Commission:
- The fact that the Commission was created pursuant to an agreement entered into by two governments is clear that the Commission was intended to be a government entity to be controlled by both governments. This is also supported by an analysis of the governing board of the Commission, which consists of 10 regular members with 5 from each country and two honorary chairmen being the US ambassador to Malaysia and the Minister of Higher Education of Malaysia;
- The existence of the Commission is not perpetual and is subject to renewals and extensions between the governments. As such, the Commission is deemed to be a government entity of Malaysia and it can choose to dissolve or decide not to continue the Commission at any material time;
- Salaries for employees of the Commission were borne by the governments of Malaysia and the United States of America. As such, employees engaged by the Commission are employed by the government as their salaries are borne from government funds;
- The Commission facilitates educational and training opportunities for citizens of both governments. It is therefore an extension of services provided by the Higher Education Ministry of Malaysia. Based on the activities performed by the Commission, the Commission is therefore about government service;
- Section 52 of the Act does not limit its applicability to “government servants”. As such, it operates to prevent claims from any workman employed by the Government or by any statutory authority
Based on the above, the Court held that it did not have jurisdiction to determine the Claimant’s unfair dismissal claim, and struck off the claim for lack of jurisdiction.
Under Section 2 of the Act, “Government” is defined as the Malaysian Federal Government, or the government of a state.
The Industrial Court’s ruling in the Ng Boon Leh case above has adopted a wider interpretation of the word “Government”, as it has interpreted the Commission to be a government entity upon an examination of its incorporation and governing Board, its funding, and the objectives and activities performed by the Commission.
This may open the door for other government related entities to attempt to claim protection under Section 52 of the Act, although each case will still be determined on its merits and will probably involve a meticulous examination of the extent of the relationship between the employer entity and the Malaysian government.
Amendments to the Act have recently been passed, which will loosen the restrictions under Section 52. Under the amended Section 52, a workman employed by a statutory authority that is named by the Minister in a gazetted order (after the Minister consults with the said statutory authority) can lodge a representation of unfair dismissal. As at the time of writing of this article, the amendment to the Act has been gazetted but is not yet in force.
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 and 2020, 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.