The Court of Appeal in Sanbos (Malaysia) Sdn Bhd v Gan Soon Huat [2021] MLJU 498 recently held that the Industrial Court still has jurisdiction to determine a complaint of unfair dismissal, even if the employee does not plead reinstatement or pursue it at the hearing. The Court of Appeal also considered issues relating to constructive dismissal.
Background facts
- The employee was a sales representative with the Company
- The employee’s duties included sales and distribution, and the employee was paid a monthly salary and sales commission.
- The employee’s sales commission rate and sales coverage area were subsequently revised.
- The employee claimed this amounted to constructive dismissal, and lodged a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967.
- At the Industrial Court, the employee did not plead or request for reinstatement in his Statement of Case.
Court’s Findings
The main issues that were considered were:
- Whether the Industrial Court had substantive jurisdiction given that reinstatement was not pleaded
- Whether the employee was constructively dismissed.
Failure to plead reinstatement
The Court of Appeal held that the Industrial Court still has jurisdiction to hear the dispute once the reference is made under Section 20(3) of the Act.
The court applied the view of the High Court’s decision in the Borneo Post Sdn Bhd v Margaret Wong [2001] 8 CLJ 758 (the “Borneo Post case”) which held that:
- The omission to beg for reinstatement is a point of procedure and does not affect the jurisdiction of the court.
- The Industrial Court derives its jurisdiction from the order of reference by the minister (now Director General).
In summary, the Court of Appeal found:
- The Industrial Court does not cease having jurisdiction for the reasons given in the Borneo Post case;
- The requirement to plead reinstatement as a remedy is only material at the stage of making a representation to the Director General under section 20(1) of the Act (unfair dismissal claim);
- Once the case is referred to the Industrial Court, there is no longer a specific requirement in the Act for the employee to plead the remedy of reinstatement;
- The Industrial Court Rules 1967 which governs the procedure of the Industrial Court does not impose the obligation to plead the remedy of reinstatement in the Statement of Case.
Constructive dismissal
While the decision is pegged on the facts of the case, what can be distilled from the Court of Appeal’s decision is that reduction in earnings alone does not invariably mean that there is constructive dismissal.
Here, the Court of Appeal held that the revision of the sales commission rate and change in the employee’s sales coverage area do not constitute constructive dismissal even though it resulted in reduction in the employee’s earning because:
- The sales commission is an incentive for good performance that is based on sales volume. It is not a fixed allowance;
- The sales commission rate was revised before but the employee did not raise it as an issue with the company. This was taken to mean that the employee had accepted that the sales commission rate can be varied by the company;
- The sales coverage area was not a term of the employment contract as the area in question was not included in the contract;
- There was no evidence placed before the court that the employee was victimised by the company as it affected all sales representatives.
Further, the court also took into account the factor of delay in alleging constructive dismissal, since there was 9 months of delay. The employee had also accepted extra benefits that were offered to him after he complained about the revised commission rate, and the evidence also showed he condoned the revision of the sales commission rate and wanted to carry on with his employment.
Key takeaways
The remedy of reinstatement is the primary relief sought in unfair dismissal claims. This is because of the wordings in Section 20(1) of the Industrial Relations Act 1967:
“Where a workman, irrespective of whether he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director General to be reinstated in his former employment; the representations may be filed at the office of the Director General nearest to the place of employment from which the workman was dismissed.”
(emphasis added)
This has led some employers to take the position that where the dismissed employee does not want reinstatement, the Industrial Court cannot hear the unfair dismissal claim. In practice, this has resulted in employees being very careful about what they plead and say in Industrial Court – most are advised to insist on reinstatement even when the circumstances logically do not make reinstatement a viable remedy.
This recent Court of Appeal decision clarifies that once an unfair dismissal claim is referred to the Industrial Court, the Industrial Court can hear the case on its merits, even if the employee does not plead reinstatement or pursue this remedy at the hearing. An employee may, for example, in trial say that they no longer want to be reinstated because they already have a better job elsewhere. What is important is that the employee must want reinstatement at the time they lodge the representation at the Industrial Relations Department.
***
This article was written by Donovan Cheah (Partner) and Adryenne Lim (Senior Legal Executive). 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.
