The Concept of Termination Simpliciter
An Overview of This Essay
This essay was written for an
assignment of the subject the Labour Law in Malaysia. The original instruction
was: Apakah yang dimaksudkan dengan
termination simpliciter? Bincangkan pendirian mahkamah di
On the Relation of Employer and Employee and Its Problems
The employer-employee relationship is both inevitable and odd. Inevitable because when society became industrialized, there is no other way for man to maintain his enterprise but by eliciting the services of others. Thus began the master-and-worker engagement, in which also gave birth to a struggle between the two. This is the oddity of the bond; the tension of opposing aims, i.e. the symbiotic nature of the relationship and the egocentric character of both parties.
“With its [the workers’] birth begins its struggle with the masters.”
That the employer-employee relationship is symbiotic is no doubt. Both the employer and employee provided considerations to receive gains and thus each complementing the lack of the other in order that a win-win situation prevails. Nonetheless, this symbiosis is far from perfect. In former times, it was even less than acceptable – the workers were considered hired-slaves rather than professed tradesmen. Discriminations and abuses were not uncommon, but one must be reminded that those were days before workers’ rights were invented. When the Leftists had garnered enough political influence in the society, the pressure increased on the Industrialists, the workers’ rights cannot be ignored anymore. Consequently, the conditions of the workers improved and were guaranteed by the law. This, however, had not solved the problem of self-serving ambitions of both the employer and the employee. The two tried to gain advantage over how much it ought to be given away. “How much can I not provide for the worker?” the employer would conspire while the employee is wont to consider what extras may he gotten from his employer. Employment then became a ground of competition between opposing ambitions, played by the manipulations of loopholes in the law and encouraged by greed.
Believing that the struggle goes on, this essay looks at the issue in the current Malaysian context, of which today is most apparent in cases that were arbitrated in the industrial courts, the mahkamah perusahaan. The subject discussed, however, is narrowed to the contract of employment, and is further narrowed to the issue regarding its termination, which finally boils down to the practice of termination simpliciter.
Part I. On Contracts In Employment
Contract of Employment
“The workers go through various stages of development.”
If anything, one of the greatest achievements of the said development must have been the creation of the Contract of Employment. As mentioned heretofore, in the old epoch, the antagonism of classes was very much unequal with the power of control reposing in the hands of the employers, or rather, the masters. It was then a progress when the employee is considered a party to a contract upon the engagement of hire. To be so considered would mean that the employee is finally regarded as a person of respectable, if not equal, standing and this indeed is a positive evolution from the days of the feudal lords’ rule over their vassals. Now the servant may come to the round-table to bargain his terms before considering to work with the master. The contract of employment then is not only a valuable document, but also a monumental achievement in the struggle of classes, especially that of employer-employee.
The Contract of Employment, or
more popularly, Contract of Service (now referred as
The Ending of the Contract of Service
If the terminus a quo of the engagement of hire is the formation of the
The abovementioned provisions were created to serve the convenience of both contracting parties. Nonetheless, it can be seen from many actual practices (or rather malpractices) that these provisions beget injustice. There were instances when the employer had purportedly terminated the service of his employee on contractual terms, when in fact it was an unjust dismissal. The law being thus manipulated ceases to secure the rights of the workers, baring them to the arbitrary decisions of their employers. Plus c'est la même chose, this render the state of our society no different from that of the former epoch when the servants lived at the mercy of the masters. That which we call termination simpliciter, that is, “a termination by contractual notice and for no reason”, must not stand at all if it does not stand on just ground.
Part II. On The Trend of The Malaysian Courts in Approaching The Practice of Termination Simpliciter
The vindications for the
stance taken by the Malaysian courts towards the practice of termination simpliciter are embodied in
the learned opinions of Gajendragadkar J. in R.B. Diwan Badri Dass & Ors v.
“The doctrine of the absolute freedom of contract has to yield to the higher claims for social justice…the right to dismiss an employee is controlled subject to well recognized limits in order to guarantee security of tenure to an (industrial) employee…”
And also the
“An employee shall have the right not to be unfairly dismissed by his employer.”
The judicial conscience of the sacred court would not allow such injustice to prevail as that of the unjust termination of an employee ostensibly in accordance to contractual terms. Common sense had aided the common law to see through the disguise of termination simpliciter. Gunn Chit Tuan J and Raja Azlan Shah CJ (MALAYA), sitting on the bench of the Federal Court in Goon Kwee Phoy emphasized that there is not “any material difference between a termination of the contract of employment by due notice and unilateral dismissal of a summary nature”. Their eminences further observed that the consequence of the former is the same as the latter and hence the results they yield must also be alike.
The following section is the analysis of four cases which occurred in the period of about seven years (1980 – 1987) to determine the persuasion of the Malaysian courts regarding the practice of termination simpliciter in details.
The Claimant, Dr. Dutt, an
Indian national was working as a Radiologist in
This ratio as pronounced by the Federal Court in Dr. A Dutt’s case would later become a landmark on which to base future like cases. Not only did it became a well-worn guiding mantra in industrial law – termination simpliciter, i.e. a termination by contractual notice and for no reason, if not grounded on any just cause or excuse would still be a dismissal without just cause or excuse – it also became a protective mantra to the employees against unfair terminations of service. The principle laid called for accountability on part of the employer in exercising of his powers and rights in the engagement of hire. He cannot, by the operation of the law, and indeed he must not, by the operation of human conscience,
“claim an absolute right to ‘hire and fire’ any of his employees [even] in accordance with the terms of contract of employment.”
Goon Kwee Phoy v. J & P Coats (M) Bhd.
This case involved Mr. Goon Kwee Phoy (the Claimant) who was dismissed by J & P (the Company) on the ground of redundancy of personnel. The Claimant challenged the justification provided in the industrial court, won the case and was awarded by means of compensation for being unjustly dismissed. The Company appealed to the High Court. The High Court concurred with the industrial court’s decision regarding redundancy, i.e. there was no redundancy, but overruled that it was the right of the Company to terminate the service of the Claimant in accordance to the CoS consistent with s12 (1) of the EA 1955 without incurring liability under the IRA 1967 to an order of reinstatement or compensation in lieu of reinstatement.
On appeal to the Federal Court which shortly before had just decided on the case of Dr. A Dutt, the decisions of the High Court were reversed on the ground that the termination simpliciter was the same as the unilateral dismissal of summary nature. Thus, it was held that because there was no ground to believe the justification (to dismiss the Claimant) given by the Company to be true, the Claimant was dismissed without a just cause or excuse following the ratio in Dr. A. Dutt’s case. The court, per Raja Azlan Shah CJ made a very invaluable observation that had also subsequently served as a landmark rule for future decision regarding termination simpliciter. The court explicitly mentioned that there is no “material difference between a termination of the contract of employment by due notice and a unilateral dismissal of a summary nature. The effect is the same and the result must be the same.” Hereinafter, the two actions were treated to be alike and this provided a solid guideline to both the legal fraternity and the employer-employee.
Federal Aluminium Sdn. Bhd., Prai v. Kochunni a/l Kuttan Nair
This case was refered to the
Mahkamah Perusahaan under the provisions of s20 (3) of the IRA 1967, arising
out of Mr. Kochunni’s (the Claimant) dismissal by the Federal Aluminium Sdn.
Bhd. (the Company). The Company had alleged that the Claimant’s dismissal was
due to his breach of the
Indeed a most beautiful embodiment of “justice to the labourers”, Datuk Wong Chin Wee’s statement seemed so appropriate to proceed from the bench of the Mahkamah Perusahaan:
“…in dismissal cases this court (
The persuasion of the
Malaysian courts, therefore, is inclined towards labourers’ welfare rather than
the employers’ profitability. The court in Kochunni even pointed out, obiter, in reference to Harun J that
there was clearly an inequality in the treatment rendered by the EA 1955 to the
employer and the employee. It was noted that under the EA 1955, the employer
commits an offence if he does an action contrary to s15, i.e. breach of the
This case was referred to the
Mahkamah Perusahaan under the provisions of s20 (3) of the Industrial Relations
Act 1967. Mr. Ng Chee Meng (the Claimant) claimed that he was unjustly
dismissed from his post as the General Manager of Malaysia Milk (the Company)
and sought either reinstatement or compensation as the court deemed appropriate.
The Company argued that the action taken upon the Claimant was not dismissal
but rather termination of service in accordance to Clause 2 of the
Datuk Wong Chin Wee, sitting alone on the bench, held that the action taken was termination simpliciter and that such practice “is no longer acceptable as valid if challenge in industrial law”. The court then went on to hear the justifications of the Company in taking such action, of which there was found none to be reasonable. The termination was, therefore, in effect a dismissal without just cause or excuse as envisaged in s20 of the IRA 1967. Datuk Wong decided the case was for the Claimant.
If Ng Chee Meng is anything, it is a reinstatement of the well established rule – the termination simpliciter is no longer acceptable as valid if challenged in industrial law. The dicta of Raja Azlan Shah in Goon Kwee Phoy still echo in the court in Ng Chee Meng. Justice refused to give way to inequity even after half a decade. Quoting Raja Azlan Shah CJ, Datuk Wong emphasized once again that termination simpliciter is but a veiled unjust dismissal. In order that such abuse does not occur,
“the right of an employer to terminate the employment of a workman is now subject to industrial adjudication in this Court.”
Part IV Conclusion and Summary
The bourgeois-proletariats struggle was set in the epoch of the war between Socialism and Democracy. This present time, however, is the age of social democracy, there is a tinge of socialism and some measures of democracy. We have learnt the lesson after paying a huge cost; communism cannot bring harmony and laissez faire will only promote disorder. Now we are learning to graft the two Branches together. It may not yield much result very soon, for we are still pruning, and are learning to prune.
There is, however, already ripen, one of the first fruits of our labour from the Tree. Of this Fruit, the Court said,
“…an employer cannot any longer base his right to discharge an employee purely on contract and he cannot be allowed to say that under contract he has an unfettered right to hire and fire his employee. That right is now subject to industrial adjudication…The employer can no longer rest his case merely on the contract of service or standing order and he cannot be allowed to say that having taken action under the powers so confirmed upon him, there is nothing more to be said by him to justify his action”
And the jurist said,
“…now that the age when management could ‘hire and fire’ at will is gone, it is possible to assert that the employer has a legal duty to treat his employees with due respect and consideration, mindful of their needs and problems and sympathetic of their difficulties. It is no longer possible to treat an employee as an expendable chattel or object without feelings and emotions”
The harvest of this Fruit is the termination of termination simpliciter, an occasion that calls for celebration and the looking forward to the next Season of Change.
When the errant employer
terminates an employee, simpliciter, there
is a public outcry asking, in the words of Emily Bronte’s character in
 Karl Marx and Friedrich Engels, The Communist Manifesto
 Gascol Conversion Ltd v Mercer  ICR 420,  IRLR 155, CA
Ibid. per Sir Hugh Griffiths, dissenting, in the
 Act 265 (as at 15th March 2004)
per. cur. The Federal Court in Dr. A Dutt v.
  2 MLJ 136
  1 MLJ 309
 L.C. Malhotra, Dismissal, Discharge, Termination of Service And Punishment
  2 MLJ 136
 Award No: 123 of 1986
 Award No: 55 of 1982
  1 ILR 175; Award No: 59 of 1987
 U.N. Dutt & Co Private Limited v. Its Workmen, A.I.R 1963 (S.C.) 411
 N.M. Selwyn, The Law Of Employment
 per. cur. Pembenaan Hashbudin (M) Sdn. Bhd. v. Thambipillai Sivagnanam (Award No: 247 of 1987)