Koperasi Rakyat BR2.0 Malaysia Berhad v 1. ) Farah Nisha Binti Parman (BA-16-44-09/2024)

DAN FARAH NISHA BINTI PARMAN

ZAKARIA BIN ALANG HASSAN

AZRUL HISYAM BIN MUNAP (NO. K/P: 721115-14-5163) RESPONDEN-RESPONDEN DISATUKAN BERSAMA DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN RAYUAN SIVIL NO.: BA-16-45-09/2024 ANTARA KOPERASI RAKYAT BR2.0 MALAYSIA BERHAD PERAYU DAN ZOLKIFLI BIN MD ALI (NO. K/P: 611027-02-5869) RESPONDEN

These appeals are from the decision of the Assistant Director of Labour where the Appellant (“Koperasi BR2.0”) is aggrieved with the decisions of the learned Assistant Director of Labour on 16 June 2024 in respect of Director General of Labour Summons Case Nos. KBR11004/2023/1187 (“Summons No. 1187”) and KBR11004/2023/1236 (“Summons No. 1236”).

The appeal against the decision of the learned Assistant Director of Labour in respect of Summons No. 1187 was registered under case No. BA-16-44-09/2024 (“Appeal No. 44”). Under this summons, Koperasi BR2.0 was ordered to pay an amount totalling RM284,003.89 to the Respondents within 30 days from the date of the Order failing which, a late payment penalty at the rate of 8% per annum would be imposed on the outstanding amount calculated from the 31st day of the Order until the full settlement thereof. The said total sum of RM284,003.89 was to be paid in the following manner:

Farah Nisha binti Parman (“Farah Nisha”) Outstanding Wages (06.09.2022 -

08.02.2023) 97,766.16 Balance Annual Leave (9 days) 8,446.15 Subtotal 106,212.31

(ii) Zakaria bin Alang Hassan (“Zakaria”) Outstanding Wages (06.09.2022 -

08.02.2023) 79,361.65 Balance Annual Leave (9 days) 7,061.54 Subtotal 86,423.19

(iii) Azrul Hisyam bin Munap (“Azrul Hisyam”) Outstanding Wages (06.09.2022 -

08.02.2023) 83,960.70 Balance Annual Leave (9 days) 7,407.69 Subtotal 91,368.39 Total 284,003.89

Appeal in respect of Summons No. 1236 was filed as case No. BA- 16-45-09/2024 (“Appeal No. 45”) under which Koperasi BR2.0 was ordered to pay to Zolkifli bin Md Ali (“Zolkifli”) an amount in the sum of RM90,039.49 being the total sum for the outstanding wages from 6 September 2022 until 27 February 2023 (RM76,416.41), balance annual leave of 10 days (RM5,923.08) and payment in lieu of 14 days’ notice (RM7,700.00). The Order too provided that should Koperasi BR2.0 fail to comply with the same, a late payment penalty at the rate of 8% per annum will be imposed on the outstanding amount from the 31st day of the Order.

Both Appeal No. 44 and Appeal No. 45 were consolidated and heard together before this Court at the mutual consent of both parties.

Before the learned Assistant Director of Labour, Summons No. 1187 and Summons No. 1236 were heard together. Pending the disposal of both the aforementioned summons, Farah Nisha, one of the Complainants in respect of Summons No. 1187, passed away on 3 April 2024. The inquiry nonetheless proceeded.

Through Summons No. 1187, Farah Nisha, Zakaria and Azrul Hisyam each claimed against Koperasi BR2.0 for:

arrears of wages for the period between September 2022 until January 2023;

(ii) arrears of wages for the period between 1st February 2023 until 8th February 2023; and

(iii) payments for the balance unutilised annual leave.

The cause of action of the Respondents/Complainants under Summons No. 1187 was based on an Offer of Appointment to Service of Koperasi Rakyat BR2.0 Malaysia Berhad (“Appointment Letter”) issued to each of them respectively. The Appointment Letters issued to the Respondents/Complainants were all with effect from 6 September 2022. The salient terms of the Appointment Letters in respect of each of the Respondents/Complainants were as follows:

Farah Nisha was offered the position of Special Officer to Managing Director / Vice President (Corporate Service) with a monthly salary of RM20,000.00 and fixed allowance of RM4,400.00 per month. She was entitled to 21 days of annual leave in total;

(ii) Zakaria was offered the position of Vice President (Finance) with a monthly salary of RM18,000.00 and fixed allowance of RM2,400.00 per month. He was entitled for a total 21 days of annual leave; and

(iii) Azrul Hisyam on the other hand was offered the position of Vice President (Business Development). He was offered a monthly salary of RM19,000.00 and monthly fixed allowance of RM2,400.00. He was entitled for a total 21 days of annual leave.

In the calculation of the amount claimed by them in the Department of Labour, the respective Respondents/Complainants had accounted for and deducted 20% of the total outstanding which they had received on 5 April 2023.

Under Summons No. 1236, Zolkifli claimed for arrears of wages for the months of September 2022 until January 2023, arrears of wages from the 1st of February 2023 until 8th February 2023; payment for the balance unutilised annual leave and payment in lieu of two weeks’ notice. The amount Zolkifli received from Koperasi BR2.0 had also been deducted from the total amount he claimed.

Based on the Appointment Letter dated 6 September 2022, Zolkifli was offered the position of Vice President (Corporate / Government Liaison) with a monthly salary of RM13,000.00 and monthly fixed allowance of RM2,400.00. He was entitled to a total of 21 days annual leave.

On 28 February 2023, Zolkifli received a fresh Appointment Letter which stated inter alia with effect from 1 March 2023, he was offered the position of Executive with a monthly salary of RM3,000.00. It was this abrupt purported termination of his earlier Appointment Letter and the reappointment thereof under this fresh Appointment Letter which formed the basis of Zolkifli’s claim for payment in lieu of two weeks’ notice.

The fact revealed that all the Respondents/Complainants herein were appointed on 6 September 2022, which was the date of registration of Koperasi BR2.0.

Relying on their respective Appointment Letter, Farah Nisha, Zakaria and Azrul Hisyam continued to be in employment until 8 February 2023. Their appointment was purportedly terminated on 9 February 2023. This was the day Koperasi BR2.0 underwent an Extraordinary General Meeting (“EGM”).

The EGM was conducted at the presence of the members of the Koperasi BR2.0 as well as representative from the Malaysia Co-operative Societies Commission (“the Commission”). One of the agendas of the EGM was for the members of Koperasi BR2.0 to elect and fill the seven-remaining positions in the Board of Koperasi BR2.0 (“the Board”). Based on the minutes, Farah Nisha, Zakaria and Azrul Hisyam were all elected as members of the Board of Koperasi BR2.0. Therefore 9 February 2023 marked the end of the Appointment Letter in respect of Farah Nisha, Zakaria and Azrul Hisyam.

Zolkifli on the other hand, was not elected into the Board during the EGM. His appointment under his earlier Appointment Letter therefore remained to be effective even after 9 February 2023, until a fresh Appointment Letter was issued to him on 28 February 2023.

The Respondents/Complainants argued that they had served Koperasi BR2.0 prior to its inception on 6 September 2022. Some of them served from as early as May 2022. During the course of their purported employment, they worked at the house of one Dato’ Syed Abdul Aziz Syed Hassan (“Dato’ Syed”), the then Managing Director of Koperasi BR2.0. This was due to the financial predicament of Koperasi BR2.0 before its operation office was later being shifted to Conezion Commercial.

The inquiry before the learned Assistant Director of Labour revealed that the Respondents/Complainants were involved in the establishment, policy-making, development and direction planning, sourcing of opportunities, financial planning and the overall management and operation of Koperasi BR2.0.

The Respondents/Complainants claimed to have worked every day and received no wages during the interim except on two occasions where they received certain payments from Koperasi BR2.0. The first one was on 27 February 2022 where each of the Respondents/Complainants received an amount of RM5,000.00 as pendahuluan penggajian. Later on 5 April 2023, each of them received 20% of the outstanding salary as follow:

Farah Nisha: RM22,138.60;

(ii) Zakaria: RM20,066.92;

(iii) Azrul Hisyam: RM20,586.92; and

(iv) Zolkifli: RM7,866.92.

The Appointment Letters of the Respondents/Complainants were signed by Dato’ Syed as Managing Director (Pengarah Urusan). One notable feature of the Appointment Letters was that a Declaratory Letter was annexed therewith and to be executed by each of the Respondents/Complainants, which contained the following paragraph: “Saya juga maklum bahawa BR2.0 merupakan suatu penubuhan baharu dan bersetuju supaya pembayaran gaji dibuat selaras dengan keupayaan kewangan BR2.0 dan segala tunggakan gaji akan dibayar balik setelah BR2.0 berkemampuan.” Koperasi BR2.0’s case

Before the learned Assistant Director of Labour, Koperasi BR2.0 denied any liability to pay for the amount the Respondents/Complainants claimed for. The crux of its contention was that each of the Appointment Letters was not enforceable. This was because only the Board of Koperasi BR2.0 had the authority to appoint employees and to issue letters containing the terms and conditions for that purpose.

Koperasi BR2.0 argued that when the Appointment Letters were given on 6 September 2022, there was no valid and authoritative Board for Koperasi BR2.0. Koperasi BR2.0 at that moment did not have any authority to issue any Appointment Letter due to insufficient quorum in the Board.

To recapitulate, the full and authoritative twelve-members-Board of Koperasi BR2.0 was only formed pursuant to the EGM on 9 February 2023 and Farah Nisha, Zakaria as well as Azrul Hisyam were elected at that time. Before the EGM, the Board only consisted 5 members and did not have sufficient quorum to enter into any agreement including the Appointment Letters.

Koperasi BR2.0 further contended that the involvement of the Respondents/Complainants was on a voluntary basis for the purpose of establishment of the co-operative society. It claimed that the Appointment Letters of the Respondents/Complainants were on the other hand defective as nothing was attached therewith stating the Job Description of their respective position.

Koperasi BR2.0 took the position that there was no control by it over the Respondents/Complainants’ attendance to work, and similarly the Respondents/Complainants had failed to adduce any evidence confirming their daily attendance. Koperasi BR2.0 claimed that the Respondents/Complainants were therefore never its employee.

It was also Koperasi BR2.0’s contention that the email through which the Respondents/Complainants received the Appointment Letters was dated 18 November 2022 (which was later than the date of Appointment Letter dated 6 September 2022). Coupled with the factual background at the time the Appointment Letters were issued namely there was an impending 15th General Election on the following day on 19.11.2022 (“15th GE”), the Appointment Letters were an afterthought issued to protect the interest of Respondents/Complainants, in case there was a change in the administration of the Government following the 15th GE. Other than that, the Appointment Letters were prepared by and given to the Respondents/Complainants by Farah Nisha herself.

In relation to the claim of Zolkifli, Koperasi BR2.0 took the position that his claim for payment in lieu of notice was unfounded. The Decision of the learned Assistant Director of Labour

In finding that the Respondents/Complainants were employees of Koperasi BR2.0, the learned Assistant Director of Labour acknowledged Koperasi BR2.0’s position that the Appointment Letters were there to “salvage” the position of the Respondents/Complainants from any possible unwanted consequence of the 15th GE, the Managing Director of Koperasi BR2.0 in signing the Appointment Letters at that moment should understand the impact of a contract being executed. Therefore, the Appointment Letters should be given due weight.

It was also acknowledged by the learned Assistant Director of Labour that there was no specific working hours binding the Respondents/Complainants. She however took into consideration that the attendance of the Respondents/Complainants to work was required by the Managing Director of Koperasi BR2.0 and the place of meeting or discussion was one which was provided by the employer. Based on this the learned Assistant Director of Labour held that the Respondents/Complainants were under the control of the management. In relation to the contention that the Respondents/Complainants were using their personal belongings for the purpose of employment, the learned Assistant Director of Labour found that such fact did not negate the position of the Respondents/Complainants, in light of the then financial position of the Koperasi BR2.0.

It was further found that the Appointment Letters contained elements stipulated in the paragraph 5(b) of the Employment Regulations 1957. The learned Assistant Director of Labour took the position that if one was to accept the contention of Koperasi BR2.0 that the Respondents/Complainants contributed on a voluntary basis, the conduct of the Koperasi BR2.0 in preparing the Appointment Letters and not contract for service as volunteer or freelancer in the first place was questionable.

The learned Assistant Director of Labour had also rejected Koperasi BR2.0’s reliance on the issue of insufficient quorum in the Board of Koperasi BR2.0 at the time the Appointment Letters were issued for such issue being irrelevant. She cited as reason the appointment into the Board of Koperasi BR2.0 and the employment of the Respondents/Complainants based on the Appointment Letters were two distinct matters, and the invalidity of appointment as member of the Board had no bearing over the contract of service entered.

It was further found that the Enclosures 3 and 4 to the Budget for year 2023 and year 2024 which was tendered as “Exhibit 13” was prepared by Koperasi BR2.0’s itself and entitled “arrears staff salaries (Sep’22 – Dec’22)” and it contained the names of the Respondents/Complainants. The same document too employed the wordings “employer”, “employee”, “EPF”, “SOCSO” and “EIS”. This finding according to the learned Assistant Director of Labour, lent credence to the position that the Respondents/Complainants were indeed employees of Koperasi BR2.0.

On the other hand, the learned Assistant Director of Labour examined the payment records tendered by Koperasi BR2.0 and found that they were payments made to the Respondents/Complainants as member of the Board. Based on this finding, she questioned the position taken by Koperasi BR2.0 in making payments on two earlier occasions, one on 27 February 2023 and the other on 5 April 2023. She found that it was not logical for the Respondents/Complainants to work on voluntary basis for a period of 6 months without any wages in return.

On the issue of payment in lieu of 2 weeks’ notice to Zolkifli, the learned Assistant Director of Labour found that there was no any evidence which was able to indicate the existence of any agreement by both parties to absolve Koperasi BR2.0 from the payment thereof.

At the crux of this appeal is the question of whether the Respondents were employees of the Appellant. To determine this issue this court alluded to the Federal Court decision of the case of Hoh Kiang Ngan v Mahkamah Perusahaan Malaysia & Anor [1995] 3 MLJ 369 where the court stated: “In all cases where it becomes necessary to determine whether a contract is one of service or for services, the degree of control which an employer exercises over a claimant is an important factor, although it may not be the sole criterion. The terms of the contract between the parties must, therefore, first be ascertained. Where this is in writing, the task is to interpret its terms in order to determine the nature of the latter's duties and functions. Where it is not then its terms must be established and construed. But in the vast majority of cases there are facts which go to show the nature, degree and extent of control. These include, but are not confined, to the conduct of the parties at all relevant times. Their determination is a question of fact. When all the features of the engagement have been identified, it becomes necessary to determine whether the contract falls into one category or the other, that is to say, whether it is a contract of service or a contract for services. There is not a single satisfactory test that is available for the determination of the issue. However, most academics are agreed that the well-known pronouncements of Lord Thankerton in Short v J & W Henderson Ltd (1946) TLR 427, of Denning LJ in Stevenson, Jordan & Harrison Ltd v Macdonald (1952) 1 TLR 101, and of MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497; [1968] 2 WLR 775 come fairly close to the point.”

The facts of these appeals demonstrate that the Respondents/Complainants were involved in the establishment, policy-making, development and direction planning, sourcing of opportunities, financial planning and the overall management and operation of Koperasi BR2.0. The Respondents contend that they have served Koperasi BR2.0 since before its inception on 6 September 2022. Some of them served from as early as May 2022. During the course of their purported employment, they worked at the house of one Dato’ Syed Abdul Aziz Syed Hassan (“Dato’ Syed”), the then Managing Director of Koperasi BR2.0. This was due to the financial predicament of Koperasi BR2.0 before its operation office was later being shifted to Conezion Commercial.

Koperasi BR2.0’s case that when the Appointment Letters were given on 6 September 2022, there was no valid and authoritative Board for Koperasi BR2.0. Koperasi BR2.0 at that moment did not have any authority to issue any Appointment Letter due to insufficient quorum in the Board. The full and authoritative twelve-members-Board of Koperasi BR2.0 was only formed pursuant to the EGM on 9 February 2023 and Farah Nisha, Zakaria as well as Azrul Hisyam were elected at that time. Before the EGM, the Board only consisted 5 members and did not have sufficient quorum to enter into any agreement including the Appointment Letters.

Koperasi BR2.0 further contended that the involvement of the Respondents/Complainants was on a voluntary basis for the purpose of establishment of the co-operative society. It claimed that the Appointment Letters of the Respondents/Complainants were on the other hand defective as nothing was attached therewith stating the Job Description of their respective position.

The Assistant Director of Labour had made the following findings:

the appointment Letters as Valid Contracts: The Assistant Director acknowledged Koperasi BR2.0’s claim that the Appointment Letters were issued to “salvage” the Respondents/Complainants’ positions after the 15th General Election. However, she held that by signing these letters, the Managing Director must have understood their contractual effect. Thus, the letters carried legal weight and supported the existence of employment; and

(ii) in concluding that the Respondents/Complainants were employees of Koperasi BR2.0, the learned Assistant Director of Labour acknowledged Koperasi BR2.0’s position that the Appointment Letters were issued as a measure to “salvage” the positions of the Respondents/Complainants from any potential adverse consequences arising from the 15th General Election;

In this regard, the act of the Managing Director of Koperasi BR2.0 in executing the Appointment Letters must be regarded as a conscious acceptance of the legal implications of entering into a contract. Accordingly, the Appointment Letters ought to be accorded due evidentiary weight. Hence, this court finds the Assisstant Director had not erred in coming to her decision.

Even though the Respondents/Complainants were not bound by fixed working hours, the Assistant Director found that their attendance was required by the Managing Director and that the work location was provided by the employer. This demonstrated control by Koperasi BR2.0, satisfying one of the key tests of employment. Moreover, the Assistant Director found the fact that Respondents/Complainants used their own belongings for work did not undermine their status as employees, especially considering Koperasi BR2.0’s financial constraints at the time.

The facts demonstrate that there were no fixed working hours binding the Respondents. Nonetheless, the fact that their attendance at work was required by the Managing Director, and that the locations for meetings and discussions were provided by Koperasi BR2.0. Based on these facts, it could be concluded that the Respondents/Complainants were under the effective control of the management. This relates to the control test.

As to the contention that the Respondents/Complainants used their personal resources in the performance of their duties, the learned Assistant Director held that such circumstances did not displace their employment status, given the financial constraints faced by Koperasi BR2.0 at the material time. This court agrees with the finding of the Assistant Director of Labour. There are many instances where employees use their personal resources in the performance of their duties, such as using their own car for transportation in performance of their work. This does not negate the fact that the Respondent are employees.

The learned Assistant Director of Labour further acknowledged that the Appointment Letters contained the elements prescribed under Regulation 5(b) of the Employment Regulations 1957. The learned Assistant Director of Labour opined that if Koperasi BR2.0’s assertion that the Respondents/Complainants served on a voluntary basis were to be accepted, then its issuance of formal Appointment Letters, rather than contracts for service applicable to volunteers or freelancers, would be difficult to justify and inconsistent with such a claim.

The letters met the criteria under Regulation 5(b) of the Employment Regulations 1957. The fact is that there were formal appointment letters. This cannot be denied by the Appellant. Thus, to argue that the Respondents had worked voluntarily when there were Appointment Letters, in the view of this court is contradictory.

The Assistant Director of Labour dismissed Koperasi BR2.0’s reliance on the issue of an insufficient quorum of its Board at the time the Appointment Letters were issued, deeming the issue irrelevant. She reasoned that the matters of Board appointment and the employment of the Respondents/Complainants were separate and distinct, and that any alleged irregularity in the constitution of the Board had no bearing on the validity of the contracts of service.

In the view of this court, the Appellant cannot issue Letters of Appointment to the Respondents and later argue that there was insufficient quorum of the Board. The Appellant was fully aware of its conduct in issuing the Letters of Appointment. This court opines the Appellant cannot now come to court and argue that there was no quorum of the Board when the Letters of Appointment were issued.

It is observed that Enclosures 3 and 4 of the 2023 and 2024 Budget documents (tendered as Exhibit 13) were prepared by Koperasi BR2.0 itself and entitled “arrears staff salaries (Sep’22 - Dec’22)”, listing the names of the Respondents/Complainants. These documents also employed terms such as “employer”, “employee”, “EPF”, “SOCSO”, and “EIS”. With such documents pertaining to EPF and SOCSO, it cannot be that the Respondents are not employees of the Appellant. This court therefore agrees with the finding of the Assistant Director.

While Koperasi BR2.0 presented records of payments as Board member allowances, the payments were made after a six-month unpaid period. Conversely, the payment records submitted by Koperasi BR2.0 were found to reflect payments made to the Respondents/Complainants in their capacity as Board members. Thus, this raises questions as to the credibility of Koperasi BR2.0’s claim, particularly in light of two earlier payments made on 27 February 2023 and 5 April 2023. This court therefore finds it implausible that the Respondents/Complainants would have voluntarily rendered services for six months without remuneration.

In the case of Zolkifli, there was no proof of any agreement waiving Koperasi BR2.0’s obligation to pay compensation in lieu of notice. Hence, the payment was found to be due.

With respect to the issue of payment in lieu of two weeks’ notice to Zolkifli, this court is satisfied there is no evidence of any mutual agreement between the parties that would relieve Koperasi BR2.0 of its obligation to make such payment. This court therefore finds that the Assistant Director of Labour had not erred in this finding.

For the aforementioned reasons, this court is satisfied that the Assistant Director of Labour had not erred in law when arriving at the conclusion that the Respondents were employees of the Appellant. This appeal is therefore dismissed. The decision of the Assistant Director Labour is hereby upheld and affirmed. Costs of RM3000 to be paid by the Appellant to each Respondent, subject to allocator. Dated: 18th August 2025 SHAHNAZ BINTI SULAIMAN JUDGE HIGH COURT OF MALAYA, SHAH ALAM Counsel: For the Appellant: Auzan Hasanuddin bin Sazali Messrs Mu’az Aiman Halem Auzan & Associates Advocates & Solicitors T3-22-19, Tower 3, 3 Towers, 296, Jalan Ampang, Kampung Berembang, 50450 Kuala Lumpur For the Respondents: Zainal bin Narudin Messrs Zainal Narudin & Co. No. 25-3B, Jalan PJU 1/3B, Sunwaymas Commercial Centre, 47301 Petaling Jaya,