Can an employee claim unfair dismissal against a statutory body?
Before the amendments to the Industrial Relations Act 1967 (effective 1 January 2021), the right to claim unfair dismissal was not available to employees of the Government or statutory authorities. The Industrial Court recently handed down an award (Fatin Nadzirah binti Johari v Pembangunan Sumber Manusia Berhad, Award No. 1244 of 2021), explaining how the Industrial Court will deal with unfair dismissal claims against statutory authorities.
- Pembangunan Sumber Manusia Berhad (“PSMB”) was incorporated under the Pembangunan Sumber Manusia Act 2001 (“PSM Act”). The primary objective of PSMB is to manage the imposition and collection of a human resources development levy from employers in Malaysia, to promote training and development. PSMB administers the Human Resources Development Fund (HRDF).
- The Claimant was an employee of PSMB. She was dismissed, and filed a complaint of unfair dismissal against PSMB. Her complaint was referred to the Industrial Court for adjudication.
- PSMB applied to strike out the Claimant’s unfair dismissal claim, because it is a statutory authority. Under Section 52 of the Industrial Relations Act 1967 (“IRA”), the right to file a representation of unfair dismissal does not apply to “any workman employed … by any statutory authority”.
- The Claimant argued that PSMB was not a statutory authority, but was a corporatized entity.
The Industrial Court held that it did not have jurisdiction to hear the unfair dismissal claim PSMB as it is a statutory authority, and struck out the claim:
- Section 52 of the IRA excludes any representation from a workman employed by a statutory authority. The remedy of reinstatement is unavailable to those employed by the Government or any statutory body.
- “Statutory authority” is defined in Section 2 of IRA to mean “any authority or body established, appointed, or constituted by any written law, and includes any local authority”. The term “written law” was interpreted to mean any “Act of Parliament and subsidiary legislation made thereunder”.
- Here, PSMB was incorporated under the PSMB Act. PSMB was required by legislation to be incorporated under the Companies Act as a corporation limited by guarantee, and it has no shareholders. It is not a commercial entity intended for profit. PSMB is under the total control and supervision of the Minister of Human Resources. Such control would not exist unless an entity is a government body or a statutory authority.
- Further, Section 51(1) of the PSMB Act prohibits the disclosure of information by any member or officer of PSMB in the course of their duties, unless it is for “any civil or criminal proceedings”. Therefore, the legislature intended that the recourse of an aggrieved employee of PSMB lies in either a civil or criminal court, as opposed to the Industrial Court.
- The Industrial Court can decide whether it has been wrongly conferred with jurisdiction. It is not always obliged to hear the case to its conclusion and determine the case on its merits, especially if it involves threshold jurisdiction. Here, since whether PSMB is a statutory authority is a question of law, the Industrial Court can determine this issue at the threshold stage.
- Considering the factors above, the Industrial Court concluded it lacked the threshold jurisdiction to hear the Claimant’s case, and struck out the claim.
Section 52 of the IRA has since been amended and now reads:
“(3) Notwithstanding subsection (1), Part VI shall apply to any service of or to any workman employed by, a statutory authority in which the Minister, after consultation with such statutory authority, by order published in the Gazette prescribe the name of the statutory authority.”
This amendment applies to representations for unfair dismissal made after 1 January 2021. Employees of statutory authorities may now lodge representations of unfair dismissal, provided that the statutory authority has been named in an order gazetted by the Minister of Human Resources. This is a limited relaxation of the prohibition in section 52 of the IRA, as it requires a specific order from the Minister which can be made only after consultation with that statutory authority.
Practically, it is more likely that few statutory authorities will be gazetted, if any. For employees of most statutory authorities, it is likely that the status quo will remain and their recourse lies in the civil courts, not the Industrial Court.
Last year, the Industrial Court also adopted a wider interpretation of the word “Government”, extending the prohibition against unfair dismissal claims to government related entities such as Commissions established to perform extensions of services by the Government (read our earlier article about this)
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 and 2021, 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.