Govindasamy Munusamy

[2007] 1 MLRH v. Industrial Court Malaysia & Anor i

GOVINDASAMY MUNUSAMY
v.
INDUSTRIAL COURT MALAYSIA & ANOR
[2007] 1 MLRH 133

High Court, Sandakan

Hamid Sultan Abu Backer JC
[Application For Judicial Review No: S25-02-2006]
29 November 2007

Labour Law: Industrial Court — Award — Certiorari — Application to quash award

of Industrial Court which dismissing applicant’s claim for constructive dismissal —
Transfer of employee to a different entity — Whether a prerogative right of management
— Whether transfer was mala fide

The applicant was notified by the respondent company that he was transferred
to Ganda Plantations Sdn. Bhd. (‘GPSB’) which was outside the respondent
company’s group or organisation. The applicant wrote to the respondent
company protesting against the transfer. The respondent company failed to
withdraw the applicant’s notice of transfer and the applicant walked out of his
employment. The applicant claimed that the transfer of the applicant by the
2nd respondent to GPSB with a reduction in the applicant’s total remuneration,
constituted a dismissal of the applicant without just cause or excuse and/or was
an unfair labour practice and/or unlawful or was victimisation. The applicant
applied for an order of certiorari to quash an award of the Industrial Court
which had dismissed the applicant’s claim for constructive dismissal.

Held (allowing the applicant’s application):

(1) In this time and era, any proposition to say that the right of transfer of an
employee to a different entity being a prerogative right of the management will
not be upheld in toto. On the facts of this case, the terms of contract do not
expressly or impliedly say that. On this issue, the Chairman of the Industrial
Court had erred. (para 8)

(2) The respondent’s evidence to show that the additional remuneration of

RM550 stated in the letter of offer was in respect of hardship allowance when
the contract prima facie was for a job in Sabah, was abhorrent to the notion
of justice and fair play. Hardship allowance is usually given to workers who
are transferred from West Malaysia to Sabah and not otherwise. Thus, the
Chairman was in error when he concluded that the claimant’s allegation that
he would receive less income upon transfer is not a valid reason to establish
mala fide. (para 8)

(3) The transfer per se was not bona fide, but with a view to eliminate the
applicant from the service of the 2nd respondent by transferring him to a
different entity which was not part of the contractual term. (para 10)
 Govindasamy Munusamy
ii v. Industrial Court Malaysia & Anor [2007] 1 MLRH

(4) The applicant had merits, and order of certiorari to quash the award must
be allowed. Further, this is a fit and proper case to order compensation in lieu
of reinstatement. (para 11)

Case(s) referred to:

Ahmad Tajuddin Haji Ishak v. Suruhanjaya Pelabuhan Pulau Pinang CA [1995] 3
MLRH 206; [1997] 2 CLJ 225; [1997] 1 MLJ 241 (refd)
Chiong Wee Chiok v. Barau Laja & Anor [2007] 3 MLRH 282; [2008] 10 CLJ 95 (refd)
Ladang Holyrood v. Ayasamy Manikam & 16 Ors [2004] 1 MELR 19; [2004] 1 MLRA
341; [2004] 3 MLJ 339; [2004] 2 CLJ 697; [2004] 4 AMR 621 (refd)
Lee Freddie & Ors v. Majlis Perbandaran Petaling Jaya & Anor [1994] 4 MLRH 554;
[1994] 3 MLJ 640 (refd)
Malayan Banking Berhad v. Lim Tee Yong & Ors [1994] 2 MLRH 698; [1994] 3 MLJ
715; [1994] 4 CLJ 558 (refd)
Perbadanan National Insurans Sdn Bhd v. Pua Lai Ong [1996] 1 MLRA 308; [1996] 3
MLJ 85; [1996] 3 CLJ 321; [1996] 3 AMR 2869; [1996] 3 AMR 2869 (refd)
Regal Transport Co Sdn Bhd Ipoh v. Transport Worker’s Union [1987] 2 MELR 42;
[1987] 2 ILR 247a (refd)
Tan Cheng Hing v. Federal Metal Printing Sdn Bhd & Anor [1999] 5 MLRH 98;
[1999] 3 MLJ 564 (refd)
Union of India v. Hindustan Development Corp AIR [1994]988 (refd)

Legislation referred to:

Rules Of The High Court 1980, O 2, O 32
Subordinate Courts Rules 1980, O 2

Counsel:
For the applicant: Sukumaran Vanugopal; M/s S Vanugopal & Partners
For the respondents: Edwin Tsen Thau Bing; M/s Tang Pang Tsen & Co
 Govindasamy Munusamy
[2007] 1 MLRH v. Industrial Court Malaysia & Anor 133

JUDGMENT

Hamid Sultan Abu Backer JC:

[1] This is my judgment in respect of the judicial review application in respect

of the award of the Industrial Court seeking inter alia the following.

(i) The transfer of the applicant by the 2nd respondent to another

entity, Ganda Plantations Sdn Bhd with effect from 1 January 1994
and with a reduction in the applicant’s total remuneration constituted
a dismissal of the applicant without just cause or excuse and/or was
an unfair labour practice and/or unlawful or was victimization be
upheld and affirmed;

(ii) That the 1st and/or the 2nd respondent be accordingly directed
to reinstate the applicant to his former position or equivalent position
in the 2nd respondent without any loss of wages, allowance, service,
seniority privileges or benefits of any kind and/or any other alternate
relief as shall be deemed fit and proper; and

(iii) That all necessary and consequential directions and/or other

orders, as the case may be, be given.

[2] The respondent at the commencement of the hearing as a preliminary issue

says that the applicant did not in his notice of hearing apply for an order for
certiorari to quash the award of the Industrial Court and in consequence an
order for certiorari ought not to be considered. I do not see any merit in such a
line of argument as the leave application and notice of hearing must be read
together. Further, any preliminary objection purely on technicalities ought
not to be entertained more so when there is no formal application to do so,
pursuant to O 2 of RHC 1980. I have dealt with this area of procedural law
in detail in the case of Sibu High Court Civ-App-12-8-2007 Chiong Wee Chiok
v. Barau Laja & Anor [2007] 3 MLRH 282; [2008] 10 CLJ 95; and the relevant
part reads as follows:

The only issue for me to decide is whether various provisions of the

rules of procedure relied on by the respondents is mandatory. The law
in this area is well settled. A rule of procedure is only mandatory when
the law in positive terms say that or can be implied as a condition
precedent in the cause of proceedings, otherwise any omission to
comply with the rules may be condoned by the courts pursuant to
various provisions of rules of courts as well as inherent jurisdiction of
court. (See O 2 SCR 1980; Megat Najmuddin Dato Seri (Dr) Megat Khas
v. Bank Bumiputra (M) Bhd). Support for the proposition stated above
can be garnered from a number of cases, and rules of procedure. Legal
Practitioners often say that the distinction between ‘mandatory’ and
‘directory’ rules is largely a matter of judicial taste. There are many
judicial decisions which will support this proposition. For example,
 Govindasamy Munusamy
134 v. Industrial Court Malaysia & Anor [2007] 1 MLRH

the courts in interpreting O 32 r 13(2) of the RHC 1980 have held

that it is a strict requirement that any affidavit filed in support of an
application must be filed and served on the other party within 14 days.
(See Malayan Banking Berhad v. Lim Tee Yong & 3 Ors [1994] 2 MLRH
698; [1994] 3 MLJ 715; [1994] 4 CLJ 558). However, the Court of
Appeal in Perbadanan National Insurans Sdn Bhd v. Pua Lai Ong [1996] 1
MLRA 308; [1996] 3 MLJ 85; [1996] 3 CLJ 321; [1996] 3 AMR 2869;
[1996] 3 AMR 2869 did not give a mandatory interpretation to the
said rule. The importance of observing procedural law is essential to
attain substantive justice and early disposal of the case. However, any
form of predatory instinct to use procedural law as a sword to dispose
of a case without merits being heard will in truth lead to miscarriage
of justice. Such a result must be avoided at all costs to ensure that
the legitimate expectations of the litigant who has been embedded
with the notion that the fulcrum of justice will be met by judges by
ensuring that merit of the case will be heard further. The doctrine of
legitimate expectation requires an adjudicator to act fairly and has
become integral part of natural justice. (See Union of India v. Hindustan
Development Corp AIR [1994]988). Many Malaysians cases has adopted
this doctrine. (See Ahmad Tajuddin Haji Ishak v. Suruhanjaya Pelabuhan
Pulau Pinang C.A. [1995] 3 MLRH 206; [1997] 2 CLJ 225; [1997] 1
MLJ 241; Lee Freddie & Ors v. Majlis Perbandaran Petaling Jaya & Anor
[1994] 4 MLRH 554; [1994] 3 MLJ 640).
For reasons stated above I dismiss the preliminary objection.
Brief Facts
[3] The applicant was employed by the 2nd respondent on the following terms
which reads as follows:
Dear Sir,
We refer to your application dated 18 August 1989 for a planting
position and are pleased to offer you the post of acting manager of
Litang Estate, Lahad Datu, Sabah.
Your emoluments will be:
Basic Salary $2,200
Additional Remuneration 550
EPF 330
$3,080
You will serve a probationary period of six months and on completion
of this period, if you are found to be suitable, you will be confirmed
as acting manager.
 Govindasamy Munusamy
[2007] 1 MLRH v. Industrial Court Malaysia & Anor 135

During the probationary period, the company shall have the right to
terminate your employment by serving you one month’s notice or pay
you one month’s pay in lieu and vice-versa.

You will be entitled to three weeks leave per annum following the
completion of each year of service. You will also be entitled to one
single passage to Kuala Lumpur per annum.

The above offer is subject your passing a medical examination to be

conducted by a private practitioner and request the doctor to submit
the report to us before the 18 September 1989.

You are required to commence work on Litang Estate on 18 September

1989.

If you accept this offer of employment, kindly sign and return the
duplicate copy of this letter to us as soon as possible.

On 18 December 1993 the applicant was notified by the respondent company

that he was transferred to Ganda Plantations Sdn Bhd (“GPSB”). Being
dissatisfied with the said transfer because GPSB was outside the respondent
company’s group or organization, the applicant wrote to the respondent
company on 22 December 1993 protesting against the transfer. In the same
letter, the applicant gave due notice of ten days that he be relieved with effect
from 31 December 1993. As the respondent company failed to withdraw the
applicant’s notice of transfer by 31 December 1993, the applicant walked out
of his employment based on the said letter.

[4] The letter of protest by the applicant stated above sets out the full grievance
and reads as follows:

Dear Sir,

Re: Transfer

Your letter dated 18/12/93 refers. I regret and disappointed with your
transfer order for the following reasons:

1) I consider the transfer was a punishment for my active involvement

in the association of Agricultural Executive which has applied for
Registration under the Trade Unions Act 1959 and it is done with
mala fide intention.

2) There are no reasons given for the transfer.

3) My income will affected / reduced. I am paid additional

remuneration and not hardship allowance.

4) I am appointed for LBSB, Litang Estate. PBSB and GPSB different

entities.
 Govindasamy Munusamy
136 v. Industrial Court Malaysia & Anor [2007] 1 MLRH

5) Your letter to PASB has relevance to this transfer.

6) The appointment letter has no clause on transfer.

Therefore I am unable to accept you transfer but hereby I resign and

consider I am constructively dismissed with the right for legal redress.
I will be leaving the estate on 31/12/93.

The Law

[5] To succeed in a case of constructive dismissal, it is sufficient for the claimant

to establish that:

(i) the company has by its conduct breached the contract of employment
in respect of one or more of the essential terms of the contract;

(ii) the breach is a fundamental one going to the root or foundation of

the contract;

(iii) the claimant had placed the company on sufficient notice period
giving time for the company to remedy the defect;

(iv) if the company, despite being given sufficient notice period, does
not remedy the defect then the claimant is entitled to terminate the
contract by reason of the company’s conduct and the conduct is
sufficiently serious to entitle the claimant to leave at once; and

(v) the claimant, in order to assert his right to treat himself as

discharged, left soon after the breach.

[6] The test for constructive dismissal as it stands is a test on contractual

breach rather than unreasonableness. Further, where the workman’s claim
for reinstatement is based on constructive and not actual dismissal, the onus
of proving that he has been constructively dismissed lies on the workmen
himself.

[7] To decide the fate of the application, it is incumbent to decide whether on

the facts of this case, the employee can be transferred as of right from Sabah
to Teluk Intan, Perak. The other point of consideration is if the transfer is
valid, whether there can be a diminution in the emoluments to be paid to the
applicant.

Transfer To Teluk Intan

[8] The learned Chairman says that “it is well established in industrial law
that the right to transfer an employee from one department to another or
from one branch to another or from one company to another within the
organization is the prerogative of the management and the Industrial Court
will not interfere unless the transfer is actuated with improper motive.
 Govindasamy Munusamy
[2007] 1 MLRH v. Industrial Court Malaysia & Anor 137

Whether a transfer entails a change to the detriment of a workman in regard

to his terms of employment or whether the transfer is bona fide is a question
of fact for the court to determine.

The learned Chairman relies on two treatises and that part of the award read
as follows:

The principle is that although the claimant’s contract of employment

is silent on transfer the company still has an implied and/or inherent
right to transfer especially where as in this case the claimant is
being transferred to its parent company. Alfred Arins in his treatise
‘Employees Misconduct’ addressed the issue of an implied and/or
inherent right to transfer in the following terms:

The large majority of reported cases concerning transfer are Indian,

and they have uniformly held that where an employer has several
branches in different cities and nothing is stated in the contract of
service regarding transfer, the employer’s right to do is implied....

On p 243 last para Alfred Arins wrote:

In one case where an employee’s contract said, ‘Your headquarters

will be Madras’ the Madras Labour Court held that this did not mean
that the employee could not be transferred. The Court constructed
this language as merely meaning that ‘you will for the present work
in Madras’.

The Court concluded:

The liability to be transferred from one place to another by the employer

is an implied condition of service of every employee. It can only be
taken away, curtailed, or regulated in express terms. Therefore, unless
the terms of employment provide otherwise the company has the right
to transfer and it is really for the employee to show that there was a
contracting out of this position.

Similarly, CP Mills in his book Industrial Disputes Law in Malaysia

acknowledged the right to transfer an employee from one job to
another. He wrote at p 75 of his book as follows:

It is well settled that, normally, the right to transfer an employee from

one place to another is the prerogative of the management and an
employer is entitled to require his employee to work anywhere.

Both the views of Alred Arins and CP Mills were positively endorsed
by the High Court in Tan Cheng Hing v. Federal Metal Printing Sdn Bhd
& Anor [1999] 5 MLRH 98; [1999] 3 MLJ 564 and by the Industrial
Court in Regal Transport Co Sdn Bhd Ipoh v. Transport Worker’s Union
[1987] 2 MELR 42; [1987] 2 ILR 247a.
 Govindasamy Munusamy
138 v. Industrial Court Malaysia & Anor [2007] 1 MLRH

I am aware that the Court of Appeal in the case of Ladang Holyrood [2004] 1
MELR 19; [2004] 1 MLRA 341; [2004] 3 MLJ 339; [2004] 2 CLJ 697; [2004]
4 AMR 621 has decided that transfer is the prerogative or implied right of
the employer, so long as it is not actuated by mala fides or improper motive.
The Court of Appeal was dealing with departmental transfers and not transfers
relating to one employer to another.

I do not think that in this time and era, any proposition to say that the right
of transfer of an employee to a different entity being a prerogative right of
the management will be upheld in toto. It all depends on the facts and the
contract of employment. On the facts of this case, the terms of contract does
not expressly and/or impliedly say that. It is clear from the letter dated 14
September 1989 that the employee accepted the offer to the post of acting
manager of Litang Estate, Lahad Datu, Sabah and not some other legal entity
in West Malaysia. On this issue, I take the view that the learned Chairman has
erred. Support for my views can be garnered from the following cases:

(i) Nokes v. Doncaster Amalgamated Collieries, Ltd H.C.J. [1940] 3 All ER

549;

(ii) Ladang Holyrood v. Ayasamy Manikam & 16 Ors [2004] 1 MELR

19;[2004] 1 MLRA 341; [2004] 3 MLJ 339; [2004] 2 CLJ 697; [2004]
4 AMR 621 CA;

(iii) Barat Estates Sdn Bhd & Anor v. Parawakan a/l Subramaniam & Ors
[2000] 1 MLRA 404; [2000] 4 MLJ 107; [2000] 3 CLJ 625; [2000] 3
AMR 3030 CA;

(iv) Rosneli Kundor v. Kelantan State Economic Development Corporation

[1997] 2 MELR 360; [1997] 1 MLRH 626; [1997] 3 CLJ SUPP 470;
[1997] 3 BLJ 470;

(v) Manager, Ms Pyarchand Kesarimal Porwal Bidi Factory v. Onkar

Laxman Theng & Ors [1970] 20 ELR 140; and

(vi) Jowharlal Nehru University v. Dr KS Jawatkar and Others [1989] 2

LLJ 586.

In the Editorial note in Nokes case (supra) the learned editor says as follow:

It is a general rule that contracts of personal service contemplate

that the person employed has been selected with reference to his
individual skill, competency or other qualification, and it is therefore,
of the essence of the contract that the contracting party is entitled to
personal performance, and, in default thereof, is entitled to treat the
contract as at an end. By reason of this rule, it has been said that
contracts of personal service are not assignable, and it is here held
that the assignment of contracts of personal service is not included
in a general assignment of all the property of a company about to be
 Govindasamy Munusamy
[2007] 1 MLRH v. Industrial Court Malaysia & Anor 139

dissolve to a new company formed for the purpose of taking over the
business of that company.

Even if I am wrong on this issue, I take the view that it is totally abhorrent
to notion of justice and fair play for the respondent to lead evidence to show
that the additional remuneration of RM550 stated in the letter of offer was in
respect of hardship allowance when the contract prima facie was for a job in
Sabah. Hardship allowance is usually given to workers who are transferred
from West Malaysia to Sabah and not otherwise. The applicant was never
employed in West Malaysia. The contract of employment did not say that the
RM550 was for hardship allowance. In consequence, the learned Chairman
was in error when he concluded that the claimant’s allegation that he would
receive less income upon transfer is not a valid reason to establish mala fide.

Mala Fide

[9] On the issue of mala fide, it was the conclusion of the learned Chairman that
there was no mala fide in the transfer as well as the reduction of remuneration,
without taking due weight of the following facts.

(i) The 2nd respondent did not want the service of the applicant. This is
evidenced by a letter dated 1 November 1993 by the 2nd respondent to the
recruiting agent to take back the applicant on the ground that his services were
no longer needed by the company. The letter reads as follows:

Litang Plantation Sdn Bhd

TOP FLOOR, WISMA GANDA, 32000 SITIAWAN, PERAK

1 November 1993

Plantation Agencies Sdn Bhd

Standard Chartered Bank Chambers
Beach Street,
10300 Penang.

Dear Sirs,

Re: Mr M Govindasamy

We wrote to inform you that the service of the abovementioned in our

estate is no longer required. We hereby request that you take him back
on or before 31 January 1994.

We thank you once again for allowing Mr M. Govindasamy to serve

in our estate in the past few years.

Yours faithfully,

Litang Plantation Sdn Bhd.

 Govindasamy Munusamy
140 v. Industrial Court Malaysia & Anor [2007] 1 MLRH

The agent by a letter dated 4 November 1993 informed the 2nd respondent that
the applicant is in the employment of the 2nd respondent and they have to deal
directly. The said letter states as follows:

Litang Plantation Sdn Bhd,

Box 500,
9th Floor, Wisma Central,
Jalan Ampang,
50450 Kuala Lumpur.

Attn: Mr Ngan Ching Wen

Dear Sir,

Mr M Govindasamy

We refer to your letter of 1 November 1993 and advise that the above
named was recruited as a manager on behalf of Litang Plantation
Sdn Bhd (LPSB when PASB was appointed as managing agents for
LPSB in April 1990. In other words, Mr Govindasamy is a employee
of LPSB and consequently LPSB will have to deal directly with the
employee concerning the termination of his services.

We trust the above explanation clarify our position.

Yours faithfully,

PLANTATION AGENCIES SDN BERHAD

Only after the above episode did the 2nd respondent write the letter of transfer
dated 18 December 1993 which reads as follows:

Lahad Datu

Sabah.

Dear Sir,

We write to inform you that Mr Yeap Cheok Khoon will take over
from you as the Manager of Litang Plantations Sdn Bhd effective from
22nd instant. You are required to hand over all the documents and
correspondence fles etc. of the company to Mr Yeap. Immediately
after the handover, you can take your annual leave until 31 December
1993.

Your new posting will be in Teluk Intan. You are required to report
for duty on 2 January 1994. Your immediate superior is Mrgoh Keng
Seng, the Chief Executive Officer of Ganda Plantations Sdn Bhd
All other terms and conditions of service will remain unchanged
 Govindasamy Munusamy
[2007] 1 MLRH v. Industrial Court Malaysia & Anor 141

except the hardship allowance will be withdrawn as the same is only

applicable for those who are working in Sabah estate.

Yours sincerely,

Litang Plantations Sdn Bhd.

[10] From the reading of the above three letters, it is not difficult to fathom that
the transfer per se was not bona fide, but with a view to eliminate the applicant
from the service of the 2nd respondent by transferring him to a different entity
which was not part of the contractual term.

[11] I take the view that the application of the applicant has merits, and order
of certiorari to quash the award must be allowed. Further, I take the view that
it is not appropriate to order for reinstatement. This is a fit and proper case to
order compensation in lieu of reinstatement.

[12] For reasons stated above, the applicants’ application is allowed with costs.
The getting up fees shall not exceed RM20,000. If costs cannot be agreed, the
applicant is at liberty to tax the costs. Further, it is hereby ordered that the
matter be referred back to the Industrial Court for assessment of back wages
and compensation in lieu of reinstatement.