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Written by Maverick Hoo Vern Dit
Case Facts
Three months subsequent to being designated as a Consultant in AIMS Data Center 2 Sdn Bhd (‘ADC’), the Appellant was given a contract for consultancy services by ADC for a fixed term of one year, which qualified him to partake in a performance bonus scheme. From there on, the contract was renewed every year for over three sequential years during which time ADC’s merger with AIMS Cyberjaya Sdn Bhd (‘Respondent‘) saw the Appellant’s job position being reclassified. When it was time for the Appellant’s agreement to be renewed for the fourth year, the Respondent chose to eliminate the Appellant’s privilege to the performance bonus scheme. The Appellant indicated disagreement to this and the Respondent proceeded to offer him a three-month employment contract which stated would supersede all previous contracts the Appellant had with ADC and was also determinable of giving a two months of notice. In the alleged exercise of that provision, the Respondent gave the Appellant two months’ notice for the agreement. Hence, the Appellant reported to the Industrial Relations Department that he had been unfairly dismissed from employment.
Industrial Court's (IC) Decision
The Industrial Court (‘IC’) found that the Appellant had been a permanent employee of the Respondent from the beginning and that he had been dismissed without a reasonable cause; the alleged ‘fixed term contracts’ were pretences. The IC pierced the corporate veils of ADC and the Respondent, the court then found as a fact that the Appellant worked for a ground of companies as one enterprise; that his contract of employment had never been one of a fixed term but a permanent and uninterrupted one, which the Respondent had renewed annually without the Appellant having to apply for its renewal. The IC granted the Appellant back-wages and pay in lieu of reinstatement.
High Court's Decision
The High Court (‘HC’) upheld the IC’s decision and dismissed the Respondent’s judicial review application to quash the IC’s award
Court of Appeal's Decision (2nd Appeal)
The Court of Appeal (‘COA’), however, set aside both the HC’s decision and the IC’s award holding, inter alia, that: (a) the Appellant was appointed under a three-month fixed-term contract (the COA disregarded the earlier contracts the appellant had had with ADC and the Respondent) which was determinable by the giving of two months’ notice; (b) the Appellant never had continuity of employment because ADC and the Respondent were separate legal entities; (c) in the absence of any allegation of fraud or unconscionable conduct, the IC and the HC were wrong in piercing the corporate veils of ADC and the Respondent to find that they were, in effect, a single unit; and (d) an expatriate who required a work permit to work in Malaysia could never be a permanent employee in Malaysia.
Issue of Law
(i) whether a need for a work permit was a material consideration in determining whether an employment contract was a genuine fixed-term contract; and
(ii) whether an employment contract which was renewed successively without application by the employee and without any intermittent breaks in between, was in reality a permanent employment .
The Federal Court's Decision
The Federal Court (‘FC’) had set aside the COA’s decision and reinstated the IC’s award, answering the first leave question in the negative and the second leave question in the affirmative:
(1) The Appellant’s agreement of employment was a lasting agreement and not a fixed-term contract. The COA wasn’t right in treating ADC and the Respondent as two separate substances and in neglecting to regard the Appellant’s contract of employment as a continuous one from ADC to the respondent. The COA’s inability to recognise the employer-employee relationship contradicted the fundamental purpose of the Industrial Relations Act 1967.
(2)The COA made a mistake in reversing the findings of fact by the IC and in ruling that the Appellant had accepted a three-month contract that was offered to him. The facts clearly illustrated that the appellant did not accept the offer because the company had removed his entitlement to the performance bonus scheme which he had participated in since 2009. The COA provided no reason for reversing the IC’s finding that the Appellant did not accept the three-month contract that was offered to him. There was no material error in the IC’s findings of fact which justified the COA’s revision of its decision.
Reasons for the Law Applied
The fact that the Appellant was a foreign national was irrelevant in the decision of whether he was in permanent employment or employed under a fixed-term contract. According to the Industrial Relations Act 1967, it made no distinction between the citizen and non-citizen of Malaysia. Moreover, since Malaysia is a member of the ILO Migrant Workers (Supplementary Provision) Convention 143 of 1975, all workers had to be treated with fairness, dignity and equality regardless of whether they were locals or foreigners. This is also consistent with Article 8(1) of the Federal Constitution, which stated that all persons are equal before the law and are entitled to equal protection of the law. Thus, it was held that the Appellant’s was a permanent contract and not a fixed-term contract. The COA’s judgment that a foreign citizen was not eligible for a permanent contract of employment could not withstand judicial scrutiny and was therefore liable to be reversed. The fact that the Appellant was a foreign national made no difference in evaluating whether his dismissal was justified or not.
The Appellant’s work permit was a non-issue; it was neither argued in the Respondent’s statement in reply, nor was it brought up in its submissions before the IC. The Appellant’s proof of having a substantial Malaysian Working Pass and didn’t need a work license from the Respondent was not tested. Further, the Respondent’s witness admitted that the Respondent never needed to apply any work license for the Appellant. Since the work license issue was rarely brought up as a topic of discussion, it was ideal for the IC and the High Court to not have thought about the issue. Additionally, the issue also had no bearing in deciding if the Appellant was a permanent employee or employed on a fixed-term contract.
Conclusion
In a nutshell, I absolutely agree with the Federal Court decision, as it has clearly explained the reason why the Industrial Court made the decision above. The locus classicus case of a genuine fixed term contract is the Han Chiang High School case; the material facts were similar to this case and the Industrial Court held that the fixed term contracts in the school was not out of genuine necessity, but was a means of controlling and subjugating its employees. Therefore, from my point of view I am glad that justice was served and the Appellant was able to receive restitution.
Conclusion
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Han Chiang High School/Penang Han Chiang Associated Chinese School Association v National Union of Teachers in Independent Schools, West Malaysia & Industrial Court of Malaysia [1990] 1 ILR 473
Legislation
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Industrial Disputes Act 1947 [IND]
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Industrial Relations Act 1967 ss 2, 20, 30(5)
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Interpretation Acts 1948 and 1967 s 3
Bibliography