Case Background & Strategy

Successfully represented a senior journalist with nearly 28 years of unbroken service against a major Malaysian media group following his purported retrenchment under a wider headcount reduction exercise. The Claimant, who held the position of News Editor in the online desk of the Content Department, was issued one month’s notice of termination on the stated ground that his function was no longer required.

The defence advanced by the employer rested on three principal pillars commonly invoked in retrenchment proceedings:

• A claim of significant decline in business and market share attributable to industry disruption and the Covid-19 pandemic
• A purported genuine restructuring of the Content Department resulting in the elimination of the News Editor position in the online desk
• The contention that the affected employee’s job functions were not exclusively performed by him

Legal Framework and Strategy

The claim was prosecuted under Section 20(3) of the Industrial Relations Act 1967, with the case strategy anchored on the principles laid down by the Court of Appeal in William Jacks & Co (M) Sdn Bhd v. Balasingam and reaffirmed in the recent Court of Appeal authority of Yap Chin Wah v. Mahkamah Perusahaan Malaysia & Anor and Other Appeals. The framework adopted was that articulated in Mohd Nor Hassan & Ors v. Continental Sime Tyre PJ Sdn Bhd, requiring the Court to determine:

• Whether there was a genuine need for the reorganisation or realignment exercise
• Whether the Claimant was in fact redundant, and if so, whether the selection for retrenchment was made in accordance with established principles

The strategy was to dismantle the employer’s narrative on each limb through documentary evidence, sustained cross-examination, and reliance on the employer’s own audited financial statements.

Key Arguments and Evidentiary Findings

Absence of a genuine redundancy: Through cross-examination, the Claimant’s immediate superior conceded that the decision to identify the Claimant as redundant was reached during an informal corridor conversation with the Chief Content Officer, without any formal meeting, departmental review report, or minutes. There was no written report identifying the Claimant for retrenchment, no documentary basis for the alleged 20% manpower cost reduction target, and no contemporaneous record of any restructuring deliberation involving Human Resources.

Job functions continued to exist: Duty rosters for February 2020 and February 2021 — produced by the employer itself — established that eight other editors continued to perform identical job functions before and after the Claimant’s termination. None of those eight was retrenched. The principle in Bayer (M) Sdn Bhd v. Ng Hong Pau, Lim Chai Hock v. Chevron Malaysia Limited, and Chapman & Others v. Goonvean & Rostowrack China Clay Co Ltd — that no redundancy can arise where the work continues to be performed by remaining employees — applied squarely.

Breach of the LIFO principle: Employee identification numbers tendered through the duty rosters demonstrated that the Claimant was demonstrably senior in service to each of the eight retained editors. The employer was unable to produce any written justification for departing from the Last-In, First-Out principle. Reliance was placed on the Court of Appeal decision in Ng Chang Seng v. Technip Geoproduction (M) Sdn Bhd & Anor, which treats the Code of Conduct for Industrial Harmony as the gold standard against which the bona fides of a retrenchment exercise are measured.

No proven economic necessity: The employer’s claim of declining market share collapsed under cross-examination of the Senior General Manager (Group People). No evidence of total or relative market share decline in the print segment was placed before the Court. On the contrary, the employer’s own audited financial statements showed a net profit of RM26.9 million in the third quarter of 2020, cash reserves exceeding RM283 million as at 31 December 2020 (the date of retrenchment), and a 2% improvement in digital revenue for 2020 over 2019 — the very segment in which the Claimant was deployed.

No prior consultation or warning: In line with Looi Tuck Keong v. New-Ell Stationery Products (M) Sdn Bhd, Lim Soon Pheng v. Cima SE Asia Sdn Bhd, and Nor Aini Sabil v. Murphy Sarawak Oil Co Ltd, it was established that the Claimant was given no prior warning, consultation, or offer of alternative employment — a clear breach of Clause 21 of the Code of Conduct for Industrial Harmony and an aggravating factor given his 28 years of service.

Unilateral removal of contractual retrenchment benefits: It was further established that the employer had unilaterally removed the retrenchment benefit clause (Clause 23) from its 2017 Supplementary Terms and Conditions for Executives in a purported 2018 update, without notice to or agreement from the Claimant. Under cross-examination, the employer’s witness conceded that there was no written communication informing the Claimant of the change. The Court accepted that the 2017 terms remained valid and enforceable.

Industrial Court Findings

The Learned Chairman accepted the Claimant’s case in its entirety and held that the retrenchment was without just cause or excuse on the following grounds:

• The employer was unable to justify its reasons for the Claimant’s dismissal
• The audited financial statements showed that the employer was financially viable, with cash reserves exceeding RM283 million
• The Claimant’s job functions continued to be carried out by other employees, negating any genuine redundancy
• The employer breached the Code of Conduct for Industrial Harmony, including the LIFO principle and the duty of prior consultation

Reinstatement was deemed inappropriate as the Claimant had attained the minimum retirement age. In its place, the Court awarded compensation under Section 30(6) of the Industrial Relations Act 1967.

Breakdown of the Award

Plus interest at 8% per annum pursuant to Section 30(1A) of the Industrial Relations Act 1967, accruing from the thirty-first day after the award.

Significance for Employees and Employers

This award reinforces several principles of enduring importance in Malaysian employment and industrial relations law:

• A retrenchment exercise must be supported by contemporaneous, documented decision-making; informal conversations and undocumented exchanges will not satisfy the burden of proof
• Where the job functions of a terminated employee continue to be performed by retained colleagues, no genuine redundancy arises, regardless of the elimination of a particular job title
• Audited financial statements showing profitability and substantial cash reserves can be fatal to an employer’s claim of economic necessity
• Departures from the LIFO principle require objective, documented justification — particularly where long-serving employees are selected for termination over more junior colleagues
• Contractual retrenchment benefits cannot be unilaterally withdrawn by the employer through a subsequent policy revision without notice and consent
• Long-serving employees are owed the courtesy of prior consultation under the Code of Conduct for Industrial Harmony before any decision on retrenchment is finalised