Some organisations offer management trainee or graduate programmes as a structured route to nurture and develop the skills required for that industry. Candidates may be offered fixed term employment (throughout the period of the programme) and if they successfully complete the programme they may be offered permanent employment with the organization.
Does the training programme itself amount to an employment relationship? Does a trainee have the same rights as an employee, for example if they are unjustly removed from the programme? A recent case that discusses this extensively is Yong Pui Yee v CIMB Investment Bank Berhad (Award No. 4 of 2021).
- The claimant enrolled under the CIMB Fusion Programme with PricewaterhouseCoopers (“PwC”) (“CIMB Fusion Programme”).
- As part of the CIMB Fusion Programme, the Claimant entered into an ACA Tripartite Training Contract (“Training Contract”), whereby it was indicated that she would be employed by both PwC and CIMB (“Bank”) for a period of 4 years. This was to satisfy one of the requirements for the Claimant’s ICAEW membership which required her to complete a minimum of 36 months’ training.
- The arrangement of her employment was on a rotational basis, where she would serve the first and second year with PwC (“First Stage”), the third year with the Bank (“Second Stage”) and the fourth year with PwC (“Third Stage”).
- Under the CIMB Fusion Programme, if at any time the Claimant’s performance fails to meet the PwC and/or the Banks’s expectation, PwC and/or CIMB would inform the Claimant and decide on the appropriate course of action.
- Due to unsatisfactory performance in her Second Stage, the Bank informed her that she was to be removed from the CIMB Fusion Programme and need not report to PwC for the Third Stage.
- The claimant contended that the entire Training Contract was an employment contract by itself and she filed an unfair dismissal claim to be reinstated to the CIMB Fusion Programme so that she can commence her employment with PwC under the Third Stage.
The Nature of the Training Programme
The Claimant claimed that the entire CIMB Fusion Programme was in essence an employment contract by itself, and her removal from the programme amounted to a dismissal.
PwC’s position was:
- The CIMB Fusion Programme is a training programme and was never meant to be an employment contract. For the purposes of the training, the Claimant was placed under separate and individual fixed term employment contracts with PwC and the Bank respectively. As such, her employment is governed by the terms of those contracts.
- At the time the Claimant was removed from the CIMB Fusion Programme, her contract of employment with the Bank had expired by effluxion of time. At the time of her removal, there was no contract of employment between the Claimant and PwC.
The Court held that:
- The CIMB Fusion Programme is a training programme wherein the trainees were given the requisite trainings via job rotations under two different working environments, i.e. one with PwC and the other with CIMB, to assess their suitability for full time employment.
- In order for the trainings to be carried out, the trainees were placed under fixed term employment contracts with PwC and CIMB respectively. Thus, the only employment contracts that existed were the separate fixed term employment contracts entered into by the Claimant with PwC, and that with the Bank.
- The CIMB Fusion Programme and the Training Contract were not employment contracts. They merely spelt out the trainings to be provided to the Claimant. In fact, the terms of the Training Contract specifically said that it is not an employment contract.
Decision to remove the Claimant from the CIMB Fusion Programme
The Court held that the Claimant, being a trainee, had to satisfy both PwC and the Bank with regards to her performance and job suitability. It is best left to them to assess the Claimant’s performance and they have the management prerogative to decide on the appropriate course of action.
PwC is not obliged to employ the Claimant under the Third Stage when a decision had already been taken to remove the Claimant from the CIMB Fusion Programme. The Claimant cannot compel PwC to employ her by relying on the fixed term employment contracts in the First Stage and the Second Stage.
There is no requirement for a warning letter to be issued to the Claimant, as that requirement is only applicable to permanent employees and not for trainees. The Claimant’s employment with either the Bank or PwC was not even guaranteed at that point in time, as it fell to be assessed at the completion of the entire CIMB Fusion Programme. The Claimant, being a trainee under a graduate programme, was constantly assessed, as she had no previous working experience.
In any event, as the CIMB Fusion Programme is not an employment, her removal from the programme is not a dismissal. Since there was no dismissal in the first place, the issue whether it was done with just cause and excuse does not arise.
The Court held that the CIMB Fusion Programme and the Training Contract did not amount to employment which the Claimant could assert her rights under Section 20 of the Industrial Relations Act 1967. Therefore, the remedy of reinstatement is not applicable to the training programme. The Claimant’s employment, if any, would have been dictated by the separated fixed term contracts she entered into with PwC and the Bank, and undergoing a training programme in itself doesn’t create an employment relationship.
Under the Employment Act 1955 (“EA”), there is a category of contract known as the “apprenticeship contract”. An apprenticeship contract is a written contract entered into by an apprentice with an employer, who undertakes to employ the person and train the apprentice systematically for a trade for a period which shall not be less than 2 years, in the course of which the apprentice is bound to work in the employer’s service. Under the EA, a contract of service (i.e. employment agreement) can include an apprenticeship contract, and therefore an apprentice is considered an employee under the EA. Similarly, “workman” is defined under the Industrial Relations Act 1967 to include an apprentice.
The Industrial Court’s decision did not consider whether the training programme fell within the definition of an apprenticeship contract, presumably because the Claimant’s nature of work and wages would not have brought her under the scope of the EA. It would be interesting to see if the Courts one day construe training programmes for EA positions as apprenticeships, and therefore employment.
For organisations implementing training programmes, this Industrial Court decision lends support to the position that in the absence of an actual employment agreement during that period, a training programme in itself is not a guarantee of employment. The organization retains the prerogative to assess the candidate’s suitability and performance throughout the programme, and the legal obligations towards a trainee are far lower than that of an employee.
This article was written by Donovan Cheah with assistance from Tiffany Chin (Intern). 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.