Pm Securities Sdn. Bhd v 1. ) Yee Seng Joo (WA-25-22-01/2018)

1.

MAHKAMAH PERUSAHAAN, MALAYSIA … RESPONDEN-RESPONDEN 2 2 Grounds of Judgment Azizah Nawawi, J Application [1] This is an application to quash the Award of the Industrial Court No. 1511 of 2017 dated 24.10.2017, which has allowed the 1st Respondent‟s claim for constructive dismissal. [2] The grounds of the application are as follows:

the Applicant, as the employer, had the right and managerial prerogative to transfer and re-designate the 1st Respondent;

(ii) there was no requirement to obtain the consent of the 1st Respondent before the Applicant could exercise its right to re-designate the 1st Respondent;

(iii) there was no bad faith or victimization in re-designating the 1st Respondent to the position of Head of Branch;

(iv) the transfer and re-designation was in line with the business needs and exigencies; 3 3

the transfer and re-designation was part of the succession plan for the 1st Respondent to take on the position of Head of

(vi) the terms and conditions of the 1st Respondent‟s employment contract remained unchanged at all material time; and

(vii) the Applicant had not breached the implied terms of trust and confidence relationship. [3] Having considered the application and the submission of the parties, this Court has allowed the applications with costs. The Salient Facts [4] The 1st Respondent (“Claimant”) joined the Applicant (“Company”) as Head of Information Technology (“IT”) with effect from 3.3.2008 and his job grade was Grade B2 (Deputy General Manager). His employment was subsequently confirmed on 3.9.2008 and the terms and conditions of his employment remained unchanged. [5] The Claimant was subsequently transferred / re-designated to different positions in various departments from 2009 to 2012, as detailed below: Department Position Date 4 4

Business Development Department Deputy General Manager - eBusiness 1.11.2009 2. Special Project Department Deputy General Manager 8.10.2010 3. Special Projects/IT Application Services Department Deputy General Manager – IT Application Services and Special Projects 15.10.2012 [6] On or about January 2013, the Company has identified the Claimant as a potential Head of Branch and decided to give the Claimant the additional role of acting as a back-up (Relief) Head of Branch. As such, the Claimant then underwent a one (1) month training (Head of Branch Training Program) at the Klang Branch of the Company from 25.3.2013 to 26.4.2013, to equip himself with the necessary knowledge and job skills required of a Head of Branch. [7] On or about 28.3.2013, the Head of Branch of the Puchong Branch resigned and the Puchong Branch was left without a Head of Branch. [8] By a letter dated 9.5.2013, the Company informed the Claimant that he would be re-designated to the position of Head of the Puchong Branch with effect from 13.5.2013. However, the terms and conditions of his employment remained unchanged at all material times. 5 5 [9] By a letter dated 10.5.2013, the Claimant requested that the transfer order be revoked, failing which he shall deem himself constructively dismissed. [10] By a letter dated 16.5.2013, the Company denied the Claimant‟s allegation that the transfer was in breach of the employment contract and further advised the 1st Respondent to perform his duties and responsibilities as Head of Puchong Branch diligently. [11] The Claimant, however, deemed himself constructively dismissed by way of a letter dated 17.5.2014. [12] The Claimant then filed his representation under Section 20 of the Industrial Relations Act 1967 to the Industrial Relations Department and the representation was referred to the 2nd Respondent for an adjudication. [13] The 2nd Respondent (the “Industrial Court”) had allowed the Claimant‟s claim through the Award dated 24.10.2017. Dissatisfied with the decision made by the Industrial Court, the Company filed an application this application for judicial review. The Findings of the Court [14] The Federal Court in Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 has set out the function of the Court in an application for Judicial Review and the correct test to be applied 6 6 in reviewing findings of fact made by the Industrial Court, to be as follows: “[15] …… Historically, judicial review was only concerned with the decision making process where the impugned decision is flawed on the ground of procedural impropriety. However, over the years, our courts have made inroad into this field of administrative law. Rama Chandran is the mother of all those cases. The Federal Court in a landmark decision has held that the decision of inferior tribunal may be reviewed on the grounds of "illegality", "irrationality" and possibly "proportionality" which permits the courts to scrutinize the decision not only for process but also for substance. It allowed the courts to go into the merit of the matter. Thus, the distinction between review and appeal no longer holds. [16] The Rama Chandran decision has been regarded or interpreted as giving the reviewing court a license to review without restrain decisions for substance even when the said decision is based on finding of facts. However, post Rama Chandran cases have applied some brakes to the courts' liberal approach in Rama Chandran. The Federal Court in the case of Kumpulan Peransang Selangor Bhd v. Zaid Mohd Noh [1997] 2 CLJ 11 after affirming the Rama Chandran decision held that there may be cases in which for reason of public policy, national interest, public safety or national security the principle in Rama Chandran may be wholly inappropriate. 7 7 [17] The Federal Court, in Petroliam Nasional Bhd v. Nik Ramli Nik Hassan [2003] 4 CLJ 625, again held that the reviewing court may scrutinise a decision on its merits but only in the most appropriate of cases and not every case is amenable to the Rama Chandran approach. Further, it was held that a reviewing judge ought not to disturb findings of the Industrial Court unless they were grounded on illegality or plain irrationality, even where the reviewing judge might not have come to the same conclusion. [18] The Court of Appeal has in a number of cases held that where finding of facts by the Industrial Court are based on the credibility of witnesses, those findings should not be reviewed (see William Jacks & Co (M) Sdn BHd v. S Balasingam [1997] 3 CLJ 235, National Union of Plantation Workers v. Kumpulan Jerai Sdn Bhd (Rengam) [2001] 1 CLJ 681, Quah Swee Khoon v. Sime Darby Bhd [2001] 1 CLJ 9, Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong & Another [2001] 3 CLJ 9. However, there are exceptions to this restrictive principle where:

reliance upon an erroneous factual conclusion may itself offend against the principle of legality and rationality, or

there is no evidence to support the conclusion reached. (See Swedish Motor Assemblies Sdn Bhd v. Hj. Md Ison Baba [1998] 3 CLJ 288 ]. 8 8 [19] It is clear from the above authorities that the scope and ambit of Rama Chandran had been clearly explained and clarified. Decided cases cited above have also clearly established that where the facts do not support the conclusion arrived at by the Industrial Court, or where the findings of the Industrial Court had been arrived at by taking into consideration irrelevant matters, and had failed to consider relevant matters into consideration, such findings are always amendable to judicial review”. (emphasis added) [15] In the present case, since the Claimant‟s claim is on constructive dismissal, the onus is therefore on the Claimant to establish constructive dismissal in the Industrial Court. [16] In Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1988] 1 CLJ (Rep) 298 where at p. 301, Salleh Abas LP explained the meaning of “constructive dismissal” as follows: “We think that the word "dismissal" in this section should be interpreted with reference to the common law principle. Thus it would be a dismissal if an employer is guilty of a breach which goes to the root of the contract or if he has evinced an intention no longer to be bound by it. In such situation the employee is entitled to regard the contract as terminated and himself as being dismissed. (See Bouzourou v. The Ottoman 9 9 Bank [1930] AC 271 and Donovan v. Invicta Airways Ltd. [1970] Lloyd's LR 486). In Bouzourou 's case an employee would have been entitled, according to the Privy Council, to regard himself as being dismissed if his transfer from one province to another province rendered him exposed to an immediately threatening danger of violence or disease to his person. And in Donovan 's case the Court of Appeal held that when the conduct of the employer was such that it rendered the continuance of the employee's service impossible, the latter was entitled to treat the contract as at end and to obtain damages for wrongful dismissal.” (emphasis added) [17] In Quah Swee Khoon v. Sime Darby Bhd [2001] 1 CLJ 19, the Court of Appeal described “constructive dismissal” as follows: “A reading of the pleaded case for the parties resolved the issue that fell for adjudication before the Industrial Court into what the profession has come to call as a “constructive dismissal”. There is no magic in the phrase. It simply means this: An employer does not like a workman. He does not want to dismiss him and face the consequences. He wants to ease the workman out of his organisation. He wants to make the process as painless as possible for himself. He usually employs the subtlest of means. He may, under the guise of exercising the management power of transfer, demote the workman. That is what happened in Wong Chee Hong (ibid). Alternatively, he may take steps to reduce the workman in rank by giving him fewer or less prestigious responsibilities than 10 10 previously held. Generally speaking, he will make life so unbearable for the workman so as to drive the latter out of employment. In the normal case, the workman being unable to tolerate the acts of oppression and victimization will tender his resignation and leave the employer's services. The question will then arise whether such departure is a voluntary resignation or a dismissal in truth and fact.” [18] The High Court in Bayer (M) Sdn Bhd v. Anwar Abd Rahim [1996] 2 CLJ 49 has set out the four conditions as follows which have to be met by an employee to be able to successfully claim for constructive dismissal:

there must be a breach of contract by the employer;

(ii) the breach must be sufficiently important to justify the employee resigning;

(iii) the employee must leave in response to the breach and not for any other unconnected reason; and

(iv) he must not occasion any undue delay in terminating the contract, otherwise he will be deemed to have waived the breach and agreed to vary the contract. Where the employee leaves in circumstances where these conditions are not met, he will be held to have resigned and there will be no dismissal within the meaning of the Act. [19] The Court of Appeal in Southern Investment Bank Bhd/Southern Bank & Anor v. Yap Fat & Anor [2017] 8 CLJ 159, with regards to constructive dismissal held as follows: 11 11 “[18] We agreed with the submission of learned counsel for the appellants that in the overall conspectus of evidence adduced in this instant appeal, the constructive dismissal contended for by the first respondent was devoid of substance, and he failed to discharge the onus on him to prove that there was any breach of the employment contract by the appellant, let alone one which goes to the root of the contract justifying the resignation of the first respondent. [19] It is trite that the employee must prove that the employer's action amounted to a fundamental breach of contract or the law. In Moo Ng v. Kiwi Products Sdn Bhd, Johor & Anor [1998]1 3 CLJ 475, the court stated: In a broad sense constructive dismissal occurs when an employer repudiates a contract of employment. The repudiation may take the form of a breach, anticipatory breach or notice of intention. It may be express or implied and it must go to the substance of the contract. If an employee asserts that he has been constructively dismissed, he must establish that there has been conduct on the part of the employer which breaches an expressor implied term of the contract of employment going to the very root of the contract. 12 12 [20] It is important, therefore, to be cautious in adopting a wide interpretation of what conduct by an employer that would constitute constructive dismissal because of the danger of inviting a flood of employees who resign and then resile and claim to be constructively dismissed. The paramount consideration is the requirement that the breach must be so serious which goes to the root of the contract and the employee cannot be expected to continue with the contractual arrangement.” [20] Bearing in mind the above mentioned principles, I will now deal with the grounds of judicial review relied by the Company. Ground (i) The Employer’s right and managerial prerogative to transfer and re-designate the employee [21] It is the submission of the Company that the Industrial Court erred in law when it held that the transfer and re-designation of the Claimant amounted to a fundamental breach of the implied term of trust and confidence by depriving the Claimant the choice of his employment. [22] In the Award, the Industrial Court made the following findings: ““Therefore, applying “the Contract test” propounded by Lord Denning in the aforesaid case of Western Excavating (ECC) Ltd v. Sharp, I do not think that the mere transfer of the 13 13 Claimant to the Puchong Branch is a breach of the Claimant ’s contract of employment. The more pertinent issue for the Court to consider here is whether the redesignation of the Claimant amounted to fundamental breach of the Claimant’s contract of employment. The Claimant was initially offered and employed as Head of Information Technology (IT) with the Company. There is no express provision in the Claimant’s contract of employment on re-designation of the Claimant to other position in the Company. The contract of employment is silence on re-designation of the Claimant as Head of Branch.” (emphasis added) [23] The Industrial Court made a correct finding when it held that the transfer of the Claimant to the Puchong Branch is not a breach of the Claimant ‟s contract of employment. This can be seen from Clause 15 of the Claimant‟s contract of employment which expressly states the Company‟s right to transfer: “Transfer The Company reserves the right to transfer you to any of the branches of PM Securities Sdn. Bhd. or any of the subsidiaries or associate companies within the Malayan United Industries Berhad Group of Companies in Malaysia or overseas.” 14 14 [24] In any event, it is trite that an employer has the right and managerial prerogative to re-designate his employee or to transfer his employee so long as it is not actuated with improper motive. In Ladang Holyrood v Ayasamy A/L Manikam & 16 Ors [2004] 3 MLJ 339, the Court of Appeal held as follows: “13 We now turn to the next issue, that is, whether the appellant has any right under the contract of service to transfer the respondents to the Main Division. In Soon Seng Cement Products Sdn. Bhd & Anor v Non-Metallic Mineral Products Manufacturing Employees's Union [1996] 1 ILR 414 award no. 107 of 1997 the same issue came to be considered by the Industrial Court. There the court made the following observation which we think is highly pertinent to the issue before us: It is well established in Industrial Law that the right to transfer an employee from one department to another or from one post of an establishment to another or from one branch to another or from one company to another within the organisation is the prerogative of the management and the Industrial Court will ordinarily not interfere. But if the transfer is actuated with improper motive, it will attract the jurisdiction of the Court. The power to transfer is, therefore, subject to, according to Ghaiye's Misconduct in Employment (at pages 254 and 255), the following well recognised restrictions: 15 15

there is nothing to the contrary in the terms of employment;

the management has acted bona fide and in the interests of its business;

the management is not actuated by any indirect motive or any kind of mala fide;

the transfer is not made for the purpose of harassing and victimising the workmen; and

the transfer does not involve a change in the conditions of service.” [25] However, the Company takes that position that the second part of above finding, that is „whether the redesignation of the Claimant amounted to fundamental breach of the Claimant’s contract of employment’ is an error as the Industrial Court has created an unprecedented distinction when it purported to draw a distinction between right to transfer and right to re-designate. [26] It is trite that an employer‟s right to transfer includes transfer in the following manners:

from one department to another; or

(ii) from one post of an establishment to another; or

(iii) from one branch to another; or

(iv) from one company to another within the organisation. 16 16 [27] Therefore, the employer‟s right to transfer would necessarily entail the right to re-designate the employee, particularly in the scenarios (i) and (ii) above. In the present case, the Claimant was transferred to his new position as the Head of Puchong Branch of the Company. With this transfer, he has to deal with the responsibilities of the new post. [28] With regards to the Industrial Court‟s findings that the management prerogative to transfer an employee is subjected to the basic principle of trust and confidence and that the Company has acted in breach of the implied term of trust and confidence by re-designating the Claimant to a position materially different from the contract of employment, I am of the considered opinion and I agree with the Company that the Industrial Court has failed to "direct its mind to all the matters it should have taken into account", which includes the following :

that the Company retains the prerogative to determine which employee is best for the job provided that it is carried out in good faith;

(ii) that so long as the transfer is not tainted with ulterior motive, unfair labour practice or mala fide, the Industrial Court ought not have interfered with the Company‟s exercise of management prerogative to re-designate the Claimant; 17 17

(iii) that the burden is on the Claimant to show such vitiating circumstances that undermine the proper exercise of management prerogative;

that the Claimant has failed to furnish any evidence of bad faith / mala fide on the part of the Company in its decision to re-designate the Claimant to the position of Head of Branch; and

(vi) that the re-designation of the Claimant‟s position was done in view of the Company‟s business exigencies and was part of the Company‟s succession plan in place for the Claimant. [29] Therefore, I agree with the Company that had the Industrial Court directed its mind to all the matters it should have taken into account, it would have concluded that the Company had not acted in breach of the implied term of trust and confidence by re-designating the Claimant to the position of Head of Branch. [30] Similarly BR Ghaiye in his book Misconduct in Employment p 238 stated as follows: “It is generally held that the right to transfer an employee is an implied right of the employer and, therefore, no express term in the contract is necessary. The right exists even in the absence of contract unless there is a contract to the contrary. The implied right of an employer to transfer is available even when an employee is a probationer. In the absence of anything in the contract of service, 18 18 general right of the management to transfer will remain.” (emphasis added) [31] Further, in Antioni Sdn. Bhd. v. Maria Lawrence [2001] 2 ILR 364 the Court further explained the employer‟s exercise of management prerogative in the following terms: “It is a well-established principle in industrial jurisprudence that the transfer of employees in the interest or exigencies of the employer's business is a managerial prerogative. Such prerogative, however, is not absolute or untrammeled. Where a transfer is tainted by ulterior motive, arbitrariness or capriciousness, unfair labour practice or mala fide, the same is subject to intervention by the Industrial Court in the process of industrial adjudication. The onus of showing such vitiating circumstances that undermine the proper exercise of the employer's prerogative lies with the employee." (emphasis added) [32] Therefore, the correct test in determining the legality of re-designation/transfer of an employee is that the right to transfer / re-designate is the prerogative of the management unless the transfer is tainted with ulterior motive, unfair labour practice or mala fide. Ground (ii) No requirement of consent of the employee is required before re-designation 19 19 [33] The Company had submitted that the Industrial Court acted in excess of jurisdiction when it imposed an additional element of consent of an employee before the employer could exercise its right to transfer its employer. In this connection, the Industrial Court stated as follows: “It is trite law that any variation of the terms of contract has to be mutually agreed upon by the parties. The Company has unilaterally and without the consent of the Claimant, re-designated the Claimant to be the Head of Puchong Branch from his previous position as Head of IT Application Services and Special Projects.” … “In this context, the Claimant knows himself best. The Claimant should not be compelled to take up the position of Head of Branch against his free will and volition as he has never signed up or agreed to be Head of Branch or do the things required of him as Head of Branch. It is immaterial whether sufficient trainings have been provided to the Claimant or the Claimant was slacking off on the one-month Head of Branch training program.” (emphasis added) [34] I am of the considered opinion and I agree with the Company that in making such findings, the Industrial Court has failed to appreciate the established principle that the consent of the employee is not required in the exercise of management prerogative to transfer an employee. In George Town Holdings Berhad v. Chan Wang Tak [1997] 3 ILR 935 it was held that: 20 20 “The law on the transfer of employees is well settled. The right to transfer an employee from one department to the other or from one part of an establishment to another or from one branch to another or from one company to another within the organisation is the prerogative of the management and the consent of the employee is not required in the exercise of such prerogative. However, it is reasonable to expect that there should be some genuine consultation between the two parties wherein the adverse effects of a transfer upon an employee may be minimised. In other words, the prerogative power vested with the company is not absolute and in exercising its prerogative powers to transfer the company must ensure that the transfer is not mala fide, an unfair labour practice or an act of victimisation. Whether a transfer is bona fide or mala fide is a question of fact for the court to decide.” (emphasis added) [35] The same principle was adopted by the High Court in Nestle Products Sdn. Bhd. v Mahkamah Perusahaan Malaysia & Anor [2013] 4 ILR 263: “There was no obligation on the part of an employer to consult an employee prior to his transfer. Although an employee who is dissatisfied with the transfer order may lodge an appeal, such an action by itself does not negate the transfer order and excuse the employee from complying with the order. Hence, the decision to transfer the second respondent was well within the scope of the applicant's managerial prerogative. 21 21 … [11] The law on the transfer of a workman is well settled:- …

(ix) No obligation or requirement on the part of the employer to consult with employee prior to a transfer.” (emphasis added) Ground (iii) there is no bad faith / victimisation in the re-designation [36] It is also the submission of the Company that the Industrial Court erred in law and acted in excess of its jurisdiction when it held that there was no requirement for the Claimant to prove that the Company had acted in bad faith in re-designating the Claimant. In the Award, the Industrial Court held as follows: “The Company also submitted that the Claimant failed to furnish any evidence of bad faith on the part of the Company and as such the decisions of the Company can only be viewed as acting in good faith and in the best interest of the Claimant. In our present case, the Company has committed a fundamental breach of the contract. There is no need for the Claimant to prove that the Company has acted in bad faith. There is also no evidence that the Company was acting in the best interest of the Claimant.” (emphasis added) [37] However, the law is very clear that the test to challenge the transfer of an employee, the burden on the employee to prove that the transfer is actuated with ulterior motive, male fide, victimisation. In 22 22 Nestle Products Sdn. Bhd. v. Mahkamah Perusahaan Malaysia & Anor [2013] 4 ILR 263, the High Court held as follows: “[11] The law on the transfer of a workman is well settled: …

(ii) Managerial prerogative to transfer, prima facie valid unless vitiated by proof of mala fide. The burden of proof lies on the workman alleging victimisation.” (emphasis added) Ground (iv) the transfer and re-designation was in line with business needs / exigencies [38] The Company takes the position that the Industrial Court acted in error of law and in excess of jurisdiction in concluding that the business needs and exigencies at that material time were not sufficient to justify the Company‟s decision to re-designate the Claimant to the position of Head of Branch. In the Award, the Industrial Court held as follows: “Be that as it may, I do not think that in the circumstances, it was justifiable for the Company to transfer and re-designate the Claimant as Head of Branch. It is the duty and responsibility of the Company to source for suitable candidate to fill in the vacancy. The Claimant was dealing with IT and IT related matters throughout his employment with the Company. The Claimant was entitled to decline the position of Head of Branch as it was materially different from his original job. The Claimant did not have any prior experience in business 23 23 management, let alone managing a branch and was only given one-month training on how to run a branch. It ought to the noted that the Company was dealing with trading of shares and securities. As a Head of Branch, one is expected to be familiar not only with shares trading but the technical aspects of the rules and regulations governing trading of shares and securities. In the circumstances, the Claimant’s concerns and fears that he would be held accountable and responsible for the mistakes committed are real and warranted. Therefore, the Company cannot insist on the Claimant taking up the role of Head of Branch against his free will and volition despite the urgency to fill the void.” [39] It is trite that an employer can transfer or re-designate its employees based on its business needs and exigencies. In Southern Investment Bank Bhd/Southern Bank & Anor v Yap Fat & Anor [2017] 3 MLJ 327, the Court of Appeal held that: “[24] The law recognises that in pursuit of its legitimate interest, the management has the prerogative to assign or transfer employees from one area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This is a privilege inherent in the employer’s right to control and manage his enterprise effectively. For this reason, courts often decline to interfere in legitimate business decisions of employers. In fact, industrial relations laws 24 24 discourage interference in employer’s decisions concerning the conduct of their business.” (emphasis addded) [40] Similarly, in Elya Designs Sdn. Bhd. v Mahkamah Perusahaan Malaysia & Anor [2011] 3 CLJ 929, the High Court held as follows: “[28] The court should be mindful of the fact that every business strives to keep afloat during these times when prevailing economic situations turns such endeavor into a near struggle. With as much latitude as our laws would allow, the court has always respected a company’s exercise of its prerogative to devise means to improve its operations. Thus, courts have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of prerogative, whenever exigencies of the service so require, to change the working hours of its employees.” (emphasis added) [41] In the present case, the Company has established the following facts:

that the IT Application and Special Project Department was only involved in a single project called BTS2 Project (Bursa Trade System 2) and there were no other projects pending under the Claimant‟s portfolio; 25 25

(ii) that the Claimant‟s workload in the IT Department is minimal and it could be assumed by his other colleagues in the IT Department;

(iii) that pursuant to the Company‟s Memorandum dated 31.1.2013, the Company had exercised its discretion to give the Claimant an additional role as back up (relief) Head of Branch to ensure that the Claimant has sufficient workload;

(iv) the Claimant had received training for one month which was more than sufficient to allow the Claimant to learn the operations of a branch. This was supported by the report by Mr. Sharizal Bin Zainal Abidin, the Applicant‟s Head of Branch of the Klang Branch (“COW-2”); and

(vii) that there was an urgent need to fill up the position of Head of Branch for Puchong Branch as Mr. Chong Keat Soon had resigned on 28.3.2013. [42] Therefore premised on the above facts, I am of the considered opinion that the Industrial Court has applied the wrong test and has erred in law when it concluded that it was not justifiable for the Company to re-designate the Claimant as Head of Branch based on the business needs and exigencies. Ground (v) the transfer and re-designation was part of the Succession Plan of the Claimant as the Head of Operations 26 26 [43] The Company takes the position that the Claimant‟s re-designation was part of the succession plan to allow the Claimant to gain the necessary experience in the operations of the Company. In this regard, the Company had its succession plan for the Claimant to take on the position of Head of Operations. [44] However, the Industrial Court had concluded that there was no such succession plan by relying solely on the Claimant‟s evidence as follows: “The Claimant gave evidence that he was not aware of any succession plan the Company has in mind for him and the Company has never informed him of such plan. If indeed there was such succession plan installed for the Claimant, why the Company did not inform the Claimant of it? Had the Company done so, the Claimant in all likelihood might be singing a different song today and the Company would not have been embroiled in this litigation with the Claimant. Of course, the reverse is equally probable. Since the Claimant was not interested to be Head of Branch, he might not in the least interested with the succession plan that the Company claimed to have installed for him.” 27 27 [45] I am of the considered opinion and I agree with the Company that by making the above conclusion, the Industrial Court failed to take into account the following material evidence:

that it is undisputed that the Claimant was holding the highest position available in the IT Department and there was no room for progress thereon;

(ii) that the Claimant was reporting to the position of Head of Operations at that material time. Therefore, the logical conclusion is that the career path envisaged for the Claimant would be to take on the position as Head of Operations once the Claimant had gain the necessary experience in the operations of the Company;

(iii) that the Company had identified the Claimant as a candidate for the Head of Operations position in view of his academic/professional qualifications, especially him holding a Masters degree in Business Administration (major in General Management);

(iv) that the Claimant was aware of the succession plan as Mr. Francis Ang, the Company‟s then Executive Director Dealing (“COW-1”) had duly informed him. This can be seen from the evidence of COW-1: “Q: What was discussed? 28 28 We were discussing because we were experiencing shortages of Head of Branch. There was always people leaving so we need to mark somebody and find somebody. Sorry we were experience shortages of Head of Branch? Head of Branch, yes, because if will not then if a people resigning so we have nobody to replace them so we are looking at some senior one. …. Okay carry on. And so we identified Mr. Yee. Sorry we. The management identified Mr. Yee as a suitable candidate considering that he has MBA plus IT. He had an MBA? Yes. Is that all you informed Mr. Yee? I did mention, if I recall, but not exact words, what I said to him, that this is for what we call a succession, what we call succession planning being like I mentioned earlier, that his seniority in the company his ranking, you know, that’s why we need to expose him to more of this operation matters. Did you inform him about what would be his role after the training? Yes. My question is did you inform him about what would be his role after the training you said yes? Yes. If you want to carry on. Yes, I mentioned that this part what we call I mentioned again about the succession planning, you know, this is a training to equip him with the necessary, what we call, skill and 29 29 knowledge, so that later on it would be easier for him to, what we call, to move up his career in the company beside doing IT because as far as IT is concerned, he is at the top, we cannot go any further than that so he has to be out of IT then he can become more senior management team.”

that the Company‟s succession plan did not, in any way, derail the Claimant‟s chosen career path in IT Department as it would enhance his career in the Company to take on the position of Head of Operations; and

(vi) that the IT Department comes within the purview of the Head of Operations and the Claimant would still be involved in IT operations. [46] Therefore, I find that the Industrial Court erred in law when it failed to take into account the reasons advanced by the Company as to the re-designation vis-à-vis the succession plan. Ground (vi) that the Terms and Conditions of Employment remain unchanged at all material times [47] Another issue raised by the Company is that the Industrial Court has erred in law when it concluded that there were material changes to the terms of the Claimant‟s employment contract which entitled the Claimant to claim constructive dismissal. In this regard, it is apparent that the Industrial Court relied solely on the difference of the job 30 30 scope of Head of Branch and the Claimant‟s previous IT related positions. [48] In this connection, the Industrial Court made the following findings: “It is obvious from the above that the job scope of Head of Branch is significantly different from that of the IT related positions previously held by the Claimant. In fact, COW1 admitted during cross examination by the Claimant’s Counsel that the job scope and responsibilities between IT and Head of Branch are very different. The Claimant’s duties and responsibilities were shifted from dealing with matters pertaining to IT to business development and management of the branch. It is undeniable that with the re-designation, there were material changes to the terms of the Claimant’s employment.” (emphasis added) [49] However, I am of the considered opinion and I agree with the Company that the Industrial Court failed to consider the following material evidence:

that the re-designation did not entail a change to the detriment of the 1st Respondent in respect of the terms of employment i.e. the 1st Respondent‟s terms and conditions of employment remained unchanged;

(ii) that the Claimant‟s Job Grade remained as Grade B2 – Deputy General Manager;

(iii) that the Claimant had been sufficiently trained for the position of Head of Branch; and 31 31

(iv) that the re-designation was part of the succession plan to allow the Claimant to gain the necessary experience in the operations of the Applicant;

(iv) that COW-1 had explained in detail the basis in the Company‟s decision in identifying the Claimant as a potential Head of Branch “Q: Please explain the basis of the Company’s decision in identifying the Claimant as a potential Head of Branch. In the Company, there are three (3) senior management positions that are licensed by the Securities Commission, namely, Head of Operations, Head of Compliance and Head of Dealing. At that material time, it was the intention of the Company to groom the Claimant to take on the position of Head of Operations. The Claimant was holding a senior management position within the Company, and coupled with his academic/professional qualifications, especially him holding a Masters in Business Administration (major in General Management), he was identified as a candidate for the Head of Operations position. As the Claimant was holding an IT based role, it was the intention of the Company that the Claimant, as part of his succession plan, be familiar with and gain the necessary experience in the operations of the Company. It was for this reason that the Claimant was identified to undergo the Head of Branch training. Once the Claimant was equipped with the necessary knowledge and experience with the operations of the Company, he would be on right track in the career path envisaged by the Company. It is also crucial to note that the Claimant’s progression within the IT Department is limited and in fact, he was already holding the highest position available in the IT 32 32 Department. However, with knowledge and experience of the operations of the Company, there was a better chance of the Claimant advancing further within the Company, which was part of the Company’s succession plan for the Claimant.” [50] Therefore, I agree with the Company that the Company‟s right to transfer an employee to another position and/or department would necessarily entail changes to the job scope / responsibilities. This, in itself, did not amount to a material change to the terms of employment which entitling the Claimant to claim constructive dismissal. [51] Added to that, the Claimant was previously transferred / re-designated to different positions and various departments within the Company, namely, Business Development Department, Special Projects / Operations Department and Special Projects / IT Application Services which similarly involved change of the job scope. Ground (vii) that the Company had not breached the trust and Confidence relationship [52] In the Award, the Industrial Court had also made a finding that the Company had acted in a manner which is calculated or likely to destroy or seriously damage the trust and confidence relationship between the Company and the Claimant: 33 33 “To my mind, the Company clearly have acted or conducted in a manner which calculated or likely to destroy or seriously damages their relationship of trust and confidence by depriving the Claimant the choice of his employment. The Claimant wanted to be employed as IT personnel and in fact contracted with the Company to do so. The Company cannot in turn arbitrarily and unilaterally transferred and re-designated the Claimant to other position materially different from the contract of employment. In fact, Article 23 of the Universal Declaration of Human Rights provides as follows: - Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. For reasons stated above and applying the reasonable test, I find that the Company has breached the implied term of trust and confidence.” (emphasis added) [53] I am of the considered opinion that the Industrial Court has applied the wrong test, by applying the reasonable test in holding that the Company has acted in breached of the implied term. In Anwar bin Abdul Rahim v. Bayer (M) Sdn Bhd (supra), the Court of Appeal held that the proper approach is to adopt the contract test in the following terms: “It has been repeatedly held by our courts that the proper approach in deciding whether constructive dismissal has taken place is not to ask oneself whether the employer's conduct was unfair or unreasonable (the unreasonableness test) but whether 'the 34 34 conduct of the employer was such that the employer was guilty of a breach going to the root of the contract or whether he has evinced an intention no longer to be bound by the contract'. (See Holiday Inn, Kuching v Elizabeth Lee Chai Siok [1992] 1 CLJ 141 (refd) and Wong Chee Hong v Cathay Organisation (M) Sdn Bhd [1988] 1 MLJ 92 at p 94 (refd).) In the court below, Low Hop Bing J found that the chairman had applied the wrong test. We agree. The factual issue was whether Bayer (M)'s proposal that Anwar's move to Chee's room was made with a view to finding a solution to problems of space or whether it was done to evince an intention no longer to be bound by the contract. If it was a breach to suggest that Anwar could move to Chee's room (and we cannot see in the circumstances how it was), we fail to see how it can be urged that this breach was so fundamental as to go to the root of the contract.” (emphasis ours) [54] Therefore, I find that had the Industrial Court applied the correct test, it would have concluded that the transfer and re-designation did not amount to a fundamental breach which goes to the root of the contract. Conclusion [55] Premised on the reasons enumerated above, I find that the Industrial Court had erred in law and acted in excess of its jurisdiction in 35 35 holding that the Claimant was constructively dismissed by the Company. The Award is hereby quashed. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 28 May 2019 Counsels/Solicitors for the Applicant Encik David Ng Yiew Kiat [Tetuan Shook Lin & Bok, Kuala Lumpur] Counsels/Solicitors for the Respondant Encik Ravindra Murugavell [Tetuan Murugavell Arumugam & Co, Kuala Lumpur] REFERENCES: 1) Ranjit Kaur S Gopal Singh v. Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 36 36 2) Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1988] 1 CLJ (Rep) 298 3) Quah Swee Khoon v. Sime Darby Bhd [2001] 1 CLJ 19 4) Bayer (M) Sdn Bhd v. Anwar Abd Rahim [1996] 2 CLJ 49 5) Southern Investment Bank Bhd/Southern Bank & Anor v. Yap Fat & Anor [2017] 8 CLJ 159 6) Ladang Holyrood v Ayasamy A/L Manikam & 16 Ors [2004] 3 MLJ 339 7) Antioni Sdn. Bhd. v. Maria Lawrence [2001] 2 ILR 364 8) George Town Holdings Berhad v. Chan Wang Tak [1997] 3 ILR 935 9) Nestle Products Sdn. Bhd. v Mahkamah Perusahaan Malaysia & Anor [2013] 4 ILR 263 10) Southern Investment Bank Bhd/Southern Bank & Anor v Yap Fat & Anor [2017] 3 MLJ 327 11) Elya Designs Sdn. Bhd. v Mahkamah Perusahaan Malaysia & Anor [2011] 3 CLJ 929