In unfair dismissal claims, the primary remedy is reinstatement. While it is generally rare for an employer to offer reinstatement to a recently dismissed employee, there are still some reported instances where employers do make such offers. 

The recent High Court decision of Shankarkumar Sanpathkumar v Ketua Pengarah Jabatan Perhubungan Perusahaan [2023] 1 LNS 1116 dealt with an employee’s refusal of an offer for reinstatement.

Brief Facts

  • The Employee was dismissed for committing a misconduct. 
  • During the conciliation meeting at the Industrial Relations Department (“IRD”), the Company offered the Employee reinstatement to his former position with payment of backwages from the date of dismissal.
  • The Employee refused, as he feared he would be victimised after he reports back to duty.
  • The Director General of Industrial Relations (“DGIR”) did not refer the Employee’s complaint to the Industrial Court, as the Employee refused reinstatement.
  • Dissatisfied with the DGIR’s refusal to refer the complaint to the Industrial Court, the Employee filed for judicial review of the DGIR’s decision.

Court’s Findings

After analysing the statutory scheme of the Industrial Relations Act 1967, the High Court observed that reinstatement is the primary remedy in industrial law. As such, the Employee’s acceptance or unreasonable rejection of the offer to reinstate during the conciliation stage must be treated as having put an end to the dispute.

Here, the offer for reinstatement was with backwages and without loss of benefits and privileges. As such, the High Court viewed that the Employee’s refusal of this offer meant there was nothing left to refer to the Industrial Court.   The High Court was of the view that the Employee’s rejection of the offer was unreasonable since likelihood of victimisation is an irrelevant factor.

As such, the High Court upheld the DGIR’s decision not to refer the complaint to the Industrial Court.

 

Analysis

The High Court’s decision in Shankarkumar (supra) does not appear to have considered Section 54 of the Industrial Relations Act 1967, which renders evidence of anything that arose during the conciliation meeting to be inadmissible in court. 

This issue was explored in another earlier High Court case of Grand Universal Trading Sdn Bhd v YB Menteri Sumber Manusia & Ors [2016] 1 LNS 1014. There, the Company challenged the decision to refer the unfair dismissal complaint to the Industrial Court after the employee refused an offer for reinstatement during the conciliation process. The High Court refused leave for judicial review, holding that the Court was statutorily barred from receiving evidence of what had transpired in the conciliation meeting. As such, evidence of an offer (and the employee’s refusal of such an offer) was inadmissible, and there was no basis for a judicial review application at all.

Additionally, Shankarkumar (supra) may be interpreted as giving the DGIR a “discretion” to decide whether a complaint ought to be referred to the Industrial Court. This runs counter to the wordings of the recently amended section 20(3) of the Industrial Relations Act 1967, in which the DGIR shall refer the complaint to the Industrial Court if there is no likelihood of the complaint being settled. This is unlike the previous incarnation of section 20(3) where the Minister of Human Resources was given a discretion whether to refer complaints to the Industrial Court, and could refuse to refer complaints which he viewed were frivolous or vexatious.

 

Key Takeaways

Shankarkumar (supra) should not be interpreted to mean that employers can easily avoid an unfair dismissal claim by just offering reinstatement, even if the intention to reinstate is not genuine.

An amicable resolution out of court can be beneficial for both the employee and the employer. The purpose of section 54 of the Industrial Relations Act 1967 in excluding such evidence is to encourage parties to reach an amicable resolution at the conciliation meeting. If parties are free to discuss any good faith offers for settlement without fear that what they say will be used against them in court proceedings, a settlement may be more likely.

***

This article was written by Leow Ho Eng (Associate) from Donovan & Ho’s employment law practice. 

Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations.  Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation. Have a question? Please contact us.

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