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We examine the recent case of Adam Husein Bin Yusop v CIMB Bank Berhad (Award No. 2410 of 2019) (“the Adam Husein case”), which deals with the novel issue of whether an employee can “reopen” an unfair dismissal claim after reaching a settlement with their employer.

Not all complaints of unfair dismissal are litigated all the way to the Industrial Court; parties may at any stage settle the dispute and resolve the matter without going through litigation which is often costly and acrimonious. To this end, legal mechanisms are put in place which are designed to facilitate the process of conciliation and settlement. For instance, when an unfair dismissal claim is filed, a conciliation meeting is arranged by the Industrial Relations Department which parties are required to attend, to explore the possibility of settling the case. If settlement is reached, the IRD will record the terms of the agreement which will be binding on both parties; if no settlement is reached, the case will take its natural course and will eventually end up in the Industrial Court.

Can parties change their mind after reaching a settlement at the IRD?

In the Adam Husein case, a settlement was reached between the claimant and the company at the IRD whereby it was agreed that, among other things, neither parties will make any claims against each other, and that the company shall make certain payments to the claimant (“Settlement Agreement”). The claim was therefore not referred to the Industrial Court in light of the settlement.

The claimant subsequently claimed that the company breached the terms of the Settlement Agreement and sought to have the case heard by the Industrial Court pursuant to Section 20 of the Industrial Relations Act 1967 (“IRA”).

When the case was referred to the Industrial Court, the company raised a preliminary objection which challenged the court’s jurisdiction in hearing the case, by arguing that (among other things) the Minister of Human Resources was functus officio as the case was already settled and therefore could not refer the matter to the Industrial Court.

What did the court say?

The court agreed that it did not have jurisdiction to hear the case, on the grounds that:

  • The court’s duty under section 20 of the IRA is to determine whether there is just cause or excuse for the dismissal. However, the issue currently before the court was in relation to the company’s non-compliance with the Settlement Agreement, and was not whether the claimant was unfairly dismissed. As such, the Claimant’s current complaint would be outside the scope of section 20 of the IRA.
  • The Settlement Agreement was binding on both parties under which the Claimant waived the right to file a complaint under section 20 of the IRA.
Commentary

Pursuant to the above decision, in the event of breach of a settlement agreement recorded before the IRD, the employee is not allowed to resume the case and have it litigated before the Industrial Court under section 20 of the IRA. However, this is not to say that the innocent party is left without any remedies; the innocent party may enforce the agreement through the usual civil court process (e.g. for the recovery of monies under the agreement, etc).

This case should not be taken to override the basic principle that waivers are generally not enforceable in the Industrial Court. An employee cannot be prevented from filing an unfair dismissal claim even if they have signed a waiver; however if the waiver is signed before the IRD after the unfair dismissal claim is already filed and the claimant agrees to not to pursue the claim further in consideration of agreed settlement terms, the Adam Husein case suggests that the employee no longer has any recourse at the Industrial Court and may have to pursue a civil claim for breach of the settlement agreement.

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This article was written by Donovan Cheah (Partner) and Adryenne Lim (Legal Executive). Donovan has been named as a recommended lawyer for Labour and Employment by the Legal 500 Asia Pacific 2017, 2018 and 2019, 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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