M Jets International Sdn Bhd v Philip Phang Kin Ming (BA-16-34-08/2023)

PHILIP PHANG KIN MING (No. K/P: 650623-10-6747)

GUNASEKAR A/L MARIAPPAN (No. K/P: 681030-10-5425) …RESPONDEN-RESPONDEN [DALAM PERKARA PEJABAT TENAGA KERJA BANGI, KES SAMAN KETUA PENGARAH TENAGA KERJA NO.: KBR 11004/2023/0264

PHILIP PHANG KIN MING (No. K/P: 650623-10-6747)

GUNASEKAR A/L MARIAPPAN (No. K/P: 681030-10-5425) …PENGADU-PENGADU DAN M JETS INTERNATIONAL SDN BHD (No. Syarikat: 1263258-M) …DEFENDAN] 08/11/2024 17:06:20 Kand. 47 JUDGMENT Introduction [1] This is an appeal against the decision of the Director General of Labour dated 18 August 2023 given at the Bangi Labour Office. Factual Background [2] The material facts of this appeal are as follows. Philip Phang Kin Ming the Chief Finance Officer and Gunasekar a/l Mariappan the Managing Director, were appointed at M Jets International Sdn Bhd (“M Jets”) on 16 November 2020 with monthly salaries of RM30,000.00 each under their contracts dated 13 November 2020. [3] A Shareholders’ Agreement between MMAG Holding Berhad and JT Aerotech Solutions Sdn Bhd was executied on 22 July 2021. This Shareholders’ Agreement related to M Jets. [4] On 28 April 2022, a request was made by the respondents on M Jets’s letterhead to the Board of Directors for a salary review, citing key achievements. Subsequently, on 1 July 2022, Philip’s salary was increased to RM50,000.00 and Gunasekar’s to RM60,000.00 effective from 1 August 2022. [5] A complaint was lodged by the appellant with the Malaysian Anti-Corruption Commission (MACC) regarding alleged misconduct in M Jets’ management. Following the complaint, the MACC raided M Jets’ office on 13 February 2023 and investigated Philip and Gunasekar. On 25 February 2023, M Jets suspended both Philip and Gunasekar for 14 days pending further investigation. Their suspension letters specified that they would continue to receive their salaries during this period, and their employment would remain continuous. On 11 March 2023, M Jets extended their suspension for an additional 14 days with the same salary and employment terms remaining in effect. [6] On 15 March 2023, Philip and Gunasekar responded to M Jets’ first suspension extension, highlighting that their February 2023 salaries had not been paid, contrary to the terms of their suspension. After receiving no response from M Jets, they lodged a complaint with the Labour Office on 16 March 2023. M Jets further extended their suspension for another 14 days on 24 March 2023, again affirming that salary payments would continue. On 25 March 2023, Philip and Gunasekar followed up on the salary issue, but M Jets did not respond. On 30 March 2023, M Jets issued show cause letters alleging that Philip and Gunasekar had unauthorizedly increased each other’s salaries. Both responded to these allegations on 3 April 2023. [7] On 7 April 2023, M Jets extended Philip and Gunasekar’s suspension for another 7 days, again affirming that salary payments would continue. On 10 April 2023, Philip and Gunasekar responded, raising the issue of unpaid salaries for February and March 2023. On 12 April 2023, M Jets terminated their employment. Philip and Gunasekar then filed complaints with the Industrial Court on 14 April 2023, claiming unfair dismissal. On 18 August 2023, the Bangi Labour Office ordered M Jets to pay their unpaid salaries for February, March, and April 2023, totaling RM264,000.00 with 8% annual interest. [8] Dissatisfied with the decision of the Labour Court, M Jets appealed to this court. Analysis and Findings [9] According to M Jets, the Director General of Labour has erred in law by failing to consider the preliminary objections raised by the appellant regarding the jurisdiction of Labour Office under sections 69 and 69A of the Employment Act 1955. [10] Section 69A of the Employment Act 1955 provides: “Limitation on power conferred by section 69 69A. Notwithstanding section 69, the Director General shall not inquire into, hear, decide or make any order in respect of any claim, dispute or purported dispute which, in accordance with the

is pending in any inquiry or proceedings under that Act;

has been decided upon by the Minister under subsection 20(3) of that Act; or

has been referred to, or is pending in any proceedings before, the Industrial Court.” [11] See: Chong Wah Plastics Sdn Bhd, Foam Packaging Industries Sdn Bhd & Fiman Plastic Industries Sdn Bhd [2001] ILJU 90; Uvarajah & Anor v. Penolong Pengarah Buruh, Butterworth & Ors [1992] 2 MLJ 152; Bumi Ekspress Sdn Bhd v. Transport Workers Union Peninsular Malaysia [2001] ILJU 12. [12] In reply, the respondent argued that the appellant’s argument is misconceived as a complaint for unpaid wages may be brought to the Director General of Labour pursuant to subsection 69(1) of the Employment Act 1955. [13] It was submitted by the respondent that the respondents’ complaints before the Bangi Labour Office was in respect of unpaid wages during the suspension period from 25 February 2023 till 12 April

The Industrial Relations Matter, which was filed pursuant to section 20 of the Industrial Relations Act 1967, is a claim that the dismissal/termination of the respondents on 12 April 2023 was without just cause and excuse. [14] See: Sheik Muhamed Amin Sheik Hassan v. Teknik Datasaab Sdn Bhd [2021] ILRU 1403 at page 33; Ghim Chuan Foong v. The Sarawak Press Sdn Bhd [2008] ILRU 0761; [15] The facts in this case is that there was a suspension which took place. Pertaining to this issue, this court is of the considered view that that section 69A of the Employment Act 1955 is irrelevant to the Labour case. The case of Sheik Muhamed Amin (supra) can be distinguished as it dealt with unpaid wages during a probation period, while the current case concerns unpaid wages during suspension. Furthermore, the Industrial Court’s jurisdiction in matters of suspension can be seen in the case of Kuala Lumpur Hilton v. National Union of Hotel Bar & Restaurant Workers [1989] 1 MLJ 42 and Harpers Trading (M) Sdn Bhd v. National Union of Commercial Workers [1991] 1 MLJ 417, which support the Industrial Court’s ability to hear suspension-related cases and award compensation. [16] For this reasons, this court is of the considered view this argument has merit. [17] The appellant M Jets submitted that the Director General of Labour has erred in facts and law by failing to consider that the respondents as the top management of the appellant have breached their fiduciary duty against the appellant and committed various misconduct/wrongdoings against the appellant. [18] It was argued that the respondents held posts both as director and as the senior management of the company and accordingly, were subject to statutory, contractual and common law duties, which they had by their actions in unliterally raising each other’s salary, fallen foul of Companies Act 2016: Directors’ duties and responsibilities. [19] A Shareholders’ Agreement (“Agreement”) was made on 22 July 2021 between MMAG Holdings Berhad and JT Aerotech Solutions Sdn Bhd, clause 6.3 of the Shareholders’ Agreement reads: “Every request for the appointment or removal of a Director by MMAG or the Management Shareholder shall be in writing and

in the case of MMAG, signed by or on behalf of MMAG, and

in the case of the Management Shareholder, signed by or on behalf of the Management Shareholder, appointing or removing, as the case may be, such Director. Such request shall be delivered to the registered office for the time being of the Company. Whenever for any reason a person appointed by MMAG or the Management Shareholder ceases to be a Director, the Party who appointed such person shall be entitled to appoint forthwith another Director. The Shareholders shall appoint from within the Management Shareholder's directors, the managing director of the Company and Chief Executive Office, both with salary and such terms of employment as the Board of Directors of the Company shall determine.” [20] It is apparent from the Shareholders’ Agreement that the shareholders shall appoint from within the management shareholder’s directors, the managing director of the Company and Chief Executive Office, both with salary and such terms of employment as the Board of Directors shall determine. [21] The facts of this case demonstrate that on 13 November 2020, Phillip was appointed as Chief Financial Officer in a letter signed by Gunasekar. On the same day, 13 November 2020, Gunasekar was appointed Managing Director by Phillip. [22] Vide a letter dated 1 July 2022, the salary of Gunasekar was increased by Phillip to RM60,000.00 a month effective from 1 August 2022. On the same day, the salary of Phillip was increased to RM50,000.00 a month by Gunasekar. These increments were clearly done unilaterally without the approval of the Board of Directors as per the provisions of clause 6.3 the Shareholders’ Agreement. [23] For this reason, this court therefore finds the Labour Court had erred in coming to its decision. Conclusion [24] For the aforementioned reasons, this court is satisfied the Labour Court had erred in its decision. The decision of the Labour Court is hereby set aside. This appeal is allowed, costs of RM5,000.00 subject to allocator to be paid by the respondents to the appellant. Date: 8 November 2024 (SHAHNAZ BINTI SULAIMAN) Judge High Court of Malaya, Shah Alam Counsel: For The appellant Wong Kah Hui, Ng Jing Yi Tetuan KH Wong & Co Advocates & Solicitors B-1-8 Gateway Kiaramas Corporate Suites, Jalan Kiara 5, Mont Kiara, 50480 Kuala Lumpur. general@khwlaw.com.my +6 03 6242 8513 For the Respondents: Alex Nandaseri De Silva, Joshua Lawson Cowie Tetuan Alvin Tang Law Office Advocates & Solicitors B-23-05, Pavilion 200, Jalan Ampang 50450 Kuala Lumpur general@atlo.com.my +6 03 3051 3150