The Concept of Termination
Simpliciter
And Issues Concerning It in the Malaysian Courts
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.”[1]
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.”[2]
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”[6],
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.
Industrial Tribunal,
“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[7]
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.
Dr. A
Dutt v.
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.”[9]
Goon
Kwee Phoy v. J & P Coats (M) Bhd.[10]
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[11]
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[12] 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”[14]
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”[15]
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
[1] Karl Marx and Friedrich Engels, The Communist Manifesto
[2] Ibid.
[3] Gascol Conversion Ltd v Mercer [1974] ICR 420, [1974] IRLR 155, CA
[4]
Ibid. per Sir Hugh Griffiths, dissenting, in the
[5] Act 265 (as at 15th March 2004)
[6]
per. cur. The Federal Court in Dr. A Dutt v.
[7] [1982] 2 MLJ 136
[8] [1981] 1 MLJ 309
[9] L.C. Malhotra, Dismissal, Discharge, Termination of Service And Punishment
[10] [1982] 2 MLJ 136
[11] Award No: 123 of 1986
[12] Award No: 55 of 1982
[13] [1987] 1 ILR 175; Award No: 59 of 1987
[14] U.N. Dutt & Co Private Limited v. Its Workmen, A.I.R 1963 (S.C.) 411
[15]
N.M. Selwyn, The Law Of Employment
[16] per. cur. Pembenaan Hashbudin (M) Sdn. Bhd. v. Thambipillai Sivagnanam (Award No: 247 of 1987)