Client Update
Update 01/2012 (April 2012)
Employment, Industrial Relations
& Administrative Law
IN THIS ISSUE
Legislation Updates
· Employment (Amendment
of First Schedule) Order
2012
· Employment
(Amendment) Act 2011
· Personal Data Protection
Act 2010
· Whistleblower Protection
Act 2010
· National Wages
Consultative Council 2011
Case Law Updates
· Industrial Court Cases
· Court of Appeal cases
· Federal Court Cases
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We are pleased to launch our inaugural edition of our client update.
The purpose of this update is to highlight the key areas and
developments in employment, industrial relations and administrative
laws in Malaysia, from legislation to case law precedents. As for
case law, some of these cases may not yet be reported but are
important and noteworthy developments that you may wish to be
aware of. We have endeavored to keep this update as short and
simple as possible. We hope that you will find it useful to your area
of practice.
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April 2012| 01
Legislation Updates
Employment (Amendment of First Schedule)
Order 2012
The first schedule of the Employment Act 1955
(“EA”) relating to the employees who are
protected under the EA has been amended.
Currently, an employee who earns a monthly
salary of RM1,500 or below is covered by the Act.
With the amendments, the salary threshold has
been increased from RM1,500 to RM2,000. This
means that an employee who earns a monthly
salary of RM2,000 or below is now covered by
the Act. The amendments came into effect on 1st
April 2012.
Employment (Amendment) Act 2011
The Employment (Amendment) Act 2011 [EA
Amendment Act], which was passed by the
Parliament on 6th October 2011 but not yet
enforced to date, is the 14th major amendment to
the EA. There are approximately amendments to
33 sections to the EA.
The major amendments brought by the EA
Amendment Act include:1. Regulation of Contractors for Labour and the
introduction of a registration system for
Contractors for Labour. A Contractor for
Labour refers to a party that supplies labour
required by a principal or contractor or
subcontractor. Contractors for Labour are
required to be registered at the Labour and
Manpower Department;
2. Introduction of provisions to regulate on
complaints of sexual harassment at the
workplace. The EA Amendment Act
introduces, for the first time, a definition of
sexual harassment and creates a statutory
obligation on employers to enquire into
sexual
harassment
complaints.
The
amendments empower the Director General
of Labour to direct an employer to conduct
an inquiry on a complaint of sexual
harassment. This amendment has wide
implications as the provisions relating to
sexual harassment brought by the new
amendments will apply to all employees
employed under an employment contract in
Malaysia, irrespective of whether the
employees fall within the scope of the EA or
not. Hence, non-EA employees will be
covered by this new section of the
amendments;
3. Maternity Leave protection – Currently, only
employees covered by the EA are
guaranteed of maternity leave protection
under the EA. Under the amendments, all
female employees employed under an
employment contract, irrespective of salary,
will be entitled to maternity leave protection
under the EA. In addition, the confinement
period definition under the EA has been
amended to reduce the parturition period
from 28 weeks to 22 weeks to cover
situations of premature childbirth.
4. Increase of gazetted public holidays from 10
to 11 days, wherein Malaysia Day has been
recognized as the new addition to the
gazetted public holiday list;
5. Revision to the jurisdiction of Director
General to hear contractual claims filed by
non EA employees. Currently, the DG has
the powers to hear a complaint of non
payment of salaries and contractual benefits
from EA employees and employees whose
monthly wages range between RM1,500 to
RM5,000 per month. With the amendments,
the DG may hear employees whose monthly
wages range between RM2000 to RM5000.
April 2012| 02
6. Extension of liability for offences under the
EA. Under the amendments, where an EA
offence is committed by a body corporate,
any person who is a director, manager or
other similar officer of that body corporate at
the time of the commission of the offence
shall be deemed to have committed the
offence and may be charged jointly or
severally in court.
Commercial transactions is widely defined to
cover any matter relating to the supply of
services, which may arguably cover employment
contracts. The PDPA makes it compulsory for a
data user to comply with 7 Personal Data
Protection Principles, as follows:-
7. Wages – The amendments require that the
payment of wages shall be paid into an
employee’s bank account or financial
institution under the BAFIA Act within 7 days
after the last day of any wage period. In
respect of work done on a rest day, gazetted
public holiday or overtime, such wages must
be paid not later than the last day of the next
wage period.
c. the Disclosure Principle;
d. the Security Principle;
8. Advances to employees – The list of
permitted reasons recognized under the EA
has been expanded further to include
advances for the purchase of computer,
medical expenses for employee and
immediate family members, daily expenses
pending SOCSO temporary disablement
payments and education expenses for
employee or immediate family members.
Personal Data Protection Act 2010
The Personal Data Protection Act 2010 was
passed by the Parliament in April 2010. Although
the date of enforcement has not been published
in gazette yet, the relevant ministry has
announced that the Act will come into force by
June 2012.
The PDPA was enacted to regulate the
processing of personal data in commercial
transactions and applies to any person who
processes and any person who has control over
or authorizes the processing of any personal
data in respect of commercial transactions.
a. the General Principle;
b. the Notice and Choice Principle;
e. the Retention Principle;
f. the Data Integrity Principle;
g. the Access Principle.
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A failure to comply with any of the above
principles constitutes an offence and upon
conviction, is punishable with a fine not
exceeding RM300,000 or to imprisonment for a
term not exceeding 2 years of to both. The PDPA
also regulates on the transfer of personal data to
a location outside Malaysia. The PDPA is
enforced by the Personal Data Commissioner.
An important feature to note is that the PDPA
introduces a compulsory system of registration of
data users. Any data user that fall within the list
of category of gazetted data users are required
to register with the Personal Data Commissioner
and obtain the necessary certificate of
registration. Once the Act comes into force, any
data users who have been processing personal
data prior to the date of enforcement has a grace
period of 3 months to comply with the Act.
However, any personal data collected after the
date of enforcement of the Act must immediately
be in compliance with the PDPA.
April 2012| 03
Whistleblower Protection Act 2010
The Whistleblower Protection Act 2010, which
came into force in December 2010, is enacted to
combat corruption and other wrongdoings by
encouraging and facilitating disclosures of
improper conduct in the public and private
sectors, to protect persons making such
disclosures from detrimental action, to provide for
the matters disclosed to be investigated and
dealt with and to provide for other matters
connected therewith.
The Act provides an avenue for persons to
whistleblow on any improper conduct to a
government agency. The Act would provides 2
broad types of protection- Firstly, Immunity from
civil, criminal and disciplinary action and
Secondly, protection from detrimental action by
the employer.
This Act impacts the employment sector as it
seeks to restrain an employer from taking
detrimental
action
against
whistleblowing
employees in respect of their employment. There
is also a provision in the Act which invalidates
any “anti-whistleblowing” clause in employment
contracts. The powers of the court in granting
remedies to a whistleblower are enormous. The
court is empowered to grant reinstatement to an
employee to his former position, award
compensation in lieu of reinstatement, rescind
any illegal disciplinary action, and award
compensation for pain and suffering. Such wide
ranging remedies were not available to the civil
courts prior to this Act.
However, a closer reading of the Act reveals its
limitations as protection is only limited to
informants who provide information to a
government agency. Further, improper conduct is
limited to any conduct that constitutes a
disciplinary or criminal offence if proved.
Additionally, from the wording of the Act, it is
imperative to note that the protection afforded by
the Act is not available to employees who make
a report of any wrongdoing or suspected
wrongdoing to their employers.
National Wages Consultative Council 2011
On 23 September 2011, the National Wages
Consultative Council Act 2011 came into force,
establishing
a
Council
responsible
for
conducting studies and consultations on all
matters concerning minimum wage and
thereafter to make recommendations on the
same to the Government according to sectors,
types of employment and regional areas. The
Council is made up of public officers,
representatives of both employees and
employers and also persons who, in the opinion
of the Minister, have knowledge, experience and
expertise in matters relating to labour and
industrial relations. The Act empowers the
Council to establish committees to assist it in the
performance of its functions. The minimum
wages order made pursuant to the Act applies to
‘contracts of service’ which includes collective
agreements made under section 14 of the
Industrial Relations Act 1967. The minimum
wages order is reviewed once every two years.
It is an offence to fail to comply by the minimum
wages order and an employer may, upon
conviction, be liable to a fine of not more than
ten thousand ringgit for each employee. This
Act supercedes and repeals the Wages Council
Act 1947.
April 2012| 04
Case Law Updates
Industrial Court Cases
a. Negara Properties Malaysia Sdn Bhd v
Mahadi (Award No 1568 of 2011)
In this case, the Industrial Court upheld the
dismissal of a former Senior Finance Manager of
Negara Properties for having improperly allowed
a profit recognition arising from a sale of land
transaction, which resulted in the incorrect profit
declaration by the Company in its audited
accounts. The Industrial Court ruled that noncompliance of the appropriate accounting
standard which resulted in errors in the accounts
of the Company was a justified ground for
dismissal. In this case, the Court ruled that it
was wrong for the Senior Finance Manager to
recognize the land sale transaction as revenue of
the Company because the Company had yet to
receive any payment from the buyer at the time
of the profit entry.
c. Tractors Malaysia Sdn Bhd v Annie Lai
(Award No 34 of 2012 / [2012] 2 LNS 0034)
This case concerns the issue as to whether an
order of reinstatement, which states that a
“claimant is to be reinstated within 30 days from
the date of receipt of award” required the
employer to issue a letter to the employee to
invite the employee back to work. In this case,
the employee had failed to report for work within
30 days from the date of award and explained
that she did not do so because she was still
waiting for the employer to issue her a letter to
invite her back to work. The employer argued
that the words of the award were clear and did
not impose any conditions for it to issue a letter
to require the employee to report for work. The
employee ought to have reported for work on her
accord within 30 days. The Industrial Court,
however, in its award, clarified that employer was
obliged to issue a letter calling the Claimant back
to work, otherwise it would be difficult for the
Claimant to know when to return to work.
b. Malayan Racing Association v Sivakumar
(Award No 1786 of 2011 / [2011] 2 LNS
1786)
On 7 December 2011, the Industrial Court upheld
the dismissal of a former Stipendiary Steward of
the Malayan Racing Association, who was
dismissed primarily for soliciting for bribes and
abusing his position as Stipendiary Steward to
exert inappropriate influence over a jockey. In
coming to its decision, the Industrial Court found
that the inconsistencies between the Claimant’s
testimony and his Statement of Case were very
material and went to the root of the Claimant’s
credibility. The Industrial Court also accepted the
tape recording evidence which implicated
steward, even though the recording was made
without the knowledge or consent of the steward.
Based on that, the Court found that the Company
had succeeded in establishing a case of
misconduct against the Claimant and the latter’s
dismissal was upheld.
April 2012| 05
Court of Appeal Cases
a. HSBC Bank (M) Berhad v Minister of
Human Resources & Resident Managers
Association (Court of Appeal Civil Appeal
No W-01-436-2010)
This case relates to the claim of recognition filed
by an in-house union of a bank. The bank
disputed the claim of recognition and the Director
General of Industrial Relations (DGIR) enquired
into the competency of the union under section 9
of the Industrial Relations Act 1967. In the course
of the claim for recognition, the Minister had
made a decision in respect of a section 9(1A)
dispute as to whether certain categories of
employees were employed under the managerial,
security or confidential capacity. The bank
challenged the said decision in the High Court
which ruled that the application was premature
and that the bank ought to have waited for the
Minister to hand down its final decision on
recognition under section 9(5) of the IRA. The
Bank appealed to the Court of Appeal and
argued that the decision which it is seeking to
quash did not relate to any decision on
recognition or membership check but rather, a
decision of the Minister on the scope of
membership of the trade union (whether certain
employees fell within the excluded categories of
security, managerial or confidential) under
sections 9(1A) and 9(5) of the IRA. The Court of
Appeal agreed with the bank and allowed the
appeal. The Court of Appeal also directed the
High Court to re-hear the matter on its merits.
b. Hotel Istana v Jasman Singh (Court of
Appeal Civil Appeal No W-02-486-2010 )
On 18th January 2012 the Court of Appeal had
overturned the decisions of the Industrial Court
and High Court which earlier ruled that the
Industrial Court has the power to hear a case exparte even without notifying the other party of the
dates of hearing.
In this case the Industrial Court had proceeded to
hear the matter ex-parte due to the failure of the
Company’s representative to be present on
several occasions. However, the Industrial Court
had failed to comply with the requirements under
the Industrial Court Rules 1967 to issue the
Notice of Hearing in Form G to all parties and
further failed to adhere to its own directions when
it heard the matter ex-parte prior to the expiry of
the dateline for filing the Company’s Statement in
Reply.
The High Court ruled that the Industrial Court
had the power to depart from the requirement
and technicalities of the Industrial Court Act
1967 and Industrial Court Rules 1967 pursuant
to Section 30 (5) of the Industrial Court Act 1967,
to act in equity and good conscience. However
recent case precedents have ruled that there is
a mandatory requirement imposed on the
Industrial Court to comply with the rules and the
requirements of the Act. As such, the Court of
Appeal ruled that the Industrial Court and High
Court had committed serious errors of law in
ruling the Industrial Court could depart from the
requirement of the Rules and Act - as these
requirements are mandatory - before the exparte hearing could proceed.
c. PadiBeras Nasional Bhd v Zainon Ahmad
& Ors [2011] 8 CLJ 38
This case concerns a dispute between Padiberas
Nasional Bhd and its former employees who had
opted for a Voluntary Separation Scheme (‘VSS’)
offered by the Padiberas. The former employees
opted for VSS and were paid VSS benefits.
However, they later contended that they were
entitled
to
retirement/termination
benefits
provided under their contracts of employment.
The High Court ruled that even though the
employees had successfully applied for and
accepted the VSS, they were still entitled to
receive retirement/terminations benefits provided
April 2012| 06
under their contract of employment. However,
the Court of Appeal found in favour of the
employer on appeal and ruled that the mutual
termination of the Respondents’ former contracts
of employment by the VSS brought about a
complete rescission of the employees’ former
contracts of employment and the retirement and
termination benefits. The Court also ruled that
there was no necessity for the employer to insert
an express waiver clause regarding the benefits
as the employees had known that the VSS was a
comprehensive package.
Federal Court Cases
a. Federal Court Civil Appeal No. 08(f)-3692011(W) between BATEU and DGTU, BAT
& 2 Ors / [2011] 7 CLJ 478
This case concerns the decision of the DGTU in
revoking the registration of an in-house trade
union of BAT Bhd. Historically, the in-house BAT
Union represented employees of the parent
company as well as some of its subsidiary
companies in collective bargaining. The DGTU
then cancelled the in-house Union’s registration
under section 4A and section 26(1A) of the Trade
Unions Act on the basis that the in-house trade
union can only represent employees of the
parent company and not the employees of the
subsidiary companies.
The High Court upheld the DGTU’s decision on
the basis that the BAT parent company and its
subsidiaries are separate legal entities and the
in-house union of the BAT parent company
cannot represent employees beyond the parent
company. The court also ruled that the fact that
the BAT subsidiaries had granted recognition or
even entered into collective agreement with the
in-house union cannot stop the company from
reconsidering the union’s competency from
representing the employees of the subsidiary
companies.
The decision of the High Court was upheld by the
Court of Appeal on 27.7.2011. On 20.2.2012, the
Federal Court dismissed the application of inhouse union for leave to appeal the decision of
the Court of Appeal handed down on 27.7.2011.
Both superior courts had affirmed the decision of
the High Court which confirmed that the
amendment to the Trade Unions Act 1959 to
include the term establishment, was to legitimise
in-house unions and referred to a single legal
entity.
b. Mohd Shakri Mohamad and Hong Leong
Bank Berhad [Federal Court Civil Appeal
No. 08(F)-168-2011(W)]
The Federal Court refused the employee
permission to appeal to the Federal Court on the
questions before it, namely, whether the
Industrial Court has the jurisdiction to
apply/invoke the “doctrine of proportionality of
punishment” in determining the cases before it
and whether the test of “Reasonable Employer’s
Test” as decided in the case of Ng Hock Cheng v
Pengarah Am Penjara & Ors [1998] 1 CLJ 405, is
applicable in representation cases under Section
20(1) of the Industrial Relations Act 1967
involving private sector employees.
In this case, the Industrial Court had ruled that
the dismissal of a loan officer who committed
breaches of duty as a cheque signatory to be too
harsh. The High Court held that it was perverse
for the Industrial Court to have concluded that
the punishment meted out was unnecessarily
harsh and confirmed that it is for the employer
and not the court, to decide whether a
misconduct justifies dismissal. The Court of
Appeal upheld the decision of the High Court.
April 2012| 07
c. Harianto Effendy Zakaria &
Ors v
Mahkamah Perusahaan Malaysia & Bank
Bumiputra Commece Bhd [Federal Court
Civil Appeal No 08-609-12-2011]
This case concerns the dismissal of 9 former
employees of Bank Bumiputra Commerce Bhd
who were dismissed for being involved in an
illegal picket at the bank’s premises. The
Industrial Court found the dismissal of the
employees who were found to have participated
in an illegal picket to be justified.
The High Court upheld the dismissals and in its
written judgment, ruled that where the
misconduct has been proven, the courts should
not interfere with the decision of the employer on
the punishment imposed. In so doing, the court
applied the ratio in Ng Hock Cheng v Pengarah
Am Penjara. The Court of Appeal had upheld the
High Court’s decision.
However, in March 2012, the Federal Court
granted leave to the 9 sacked Bank Bumiputra
Commerce Bhd employees to file an appeal on a
question of law as to whether the cases of Tan
Tek Seng v. Suruhanjaya Perkhidmatan
Pendidikan & Anor [1996] 2 CLJ 771/Ng Hock
Cheng v Pengarah Am Penjara & Ors [1998] 1
CLJ 405 which pertained to public sector
employees are applicable in representation
cases under Section 20(1) of the Industrial
Relations Act 1967. The Federal Court will
therefore examine the legal question of law as to
whether the Industrial Court, in an unfair
dismissal case under section 20 of the IRA, may
examine whether the punishment of dismissal
imposed by an employer is too harsh or
otherwise.
April 2012| 08
Sivabalah Nadarajah
Telephone: +603 2027 2866
Email: sivabalah@shearndelamore.com
Vijayan Venugopal
Telephone: +603 2027 2874
Email: vijayan@shearndelamore.com
Partners in the
Employment &
Administrative Law
Practice Group
Raymond T C Low
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Email: raymond@shearndelamore.com
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Telephone: +603 2027 2829
Email: suganthi@shearndelamore.com
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Telephone: +603 2027 2836
Email: reena@shearndelamore.com
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April 2012| 09