INDUSTRIAL COURT OF MALAYSIA

CASE NO: 15/4-911/15

BETWEEN

YAP HOCK SENG

AND

PUNCAK BANYAN MANAGEMENT CORPORATION

AWARD NO: 1284 OF 2018

Before : Y.A. PUAN REIHANA BT. ABD. RAZAK

Chairman

Venue : Industrial Court, Kuala Lumpur.

Date of reference : 08.10.2015

Dates of mention : 01.12.2015, 17.02.2016, 11.04.2016, 11.05.2016,

24.05.2016, 26.01.2017, 17.01.2018

Dates of hearing : 13.02.2017, 14.02.2017, 08.05.2017, 09.05.2017,

11.05.2017, 31.05.2017, 02.06.2017, 02.08.2017,
28.08.2017

Representations : Mr. Chandra Segaran

Messrs. Prem & Chandra
Counsel for the Claimant

Mr. Goh Chin Han

Messrs. Goh Chin Han
Counsel for the Company

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REFERENCE

This is a reference made under section 20 (3) of the Industrial Relations Act
1967 (the Act) arising out of the dismissal of YAP HOCK SENG (“the
Claimant”) by PUNCAK BANYAN MANAGEMENT CORPORATION (“the
Respondent”) on 19.4.2014.

AWARD

The Ministerial reference in this case required the Court to hear and
determine the Claimant's complaint of dismissal by the Respondent on
19.04.2014.

BRIEF FACTS

[1] The Respondent Puncak Banyan Management Corporation (“PBMC”) is

a management corporation set up pursuant to Strata Title Act 1985 to
manage and maintain the common property as well as, to collect
maintenance charges and sinking funds from the proprietors of the Puncak
Banyan Apartment.

[2] The Claimant commenced employment as Residential Manager with

Puncak Banyan Joint Management Board (PBJMB) on 14.01.2009 and was
confirmed in his employment with effect from 30.05.2009 with a salary of
RM3,000.00 plus a monthly allowance of RM100.00.

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[3] At the inception of PBMC in 2010, there were three (3) administrative
posts namely, the Claimant as the residential manager, an accounts clerk
and administrative clerk employed with the Respondent. When the account
clerk and the administrative clerk resigned in and left in February 2014, the
Claimant was left to be the sole personnel carrying out the administrative
functions for the Respondent.

[4] In order to ensure that the management cooperation’s functions are

carried out properly as the Respondent’s Council members having difficulties
supervising the operations of the management office due to their respective
full time jobs, the Respondent’s Council Members agreed to outsource the
management and office operation to a managing agent. The Respondent’s
Council Member outsourced the entire management operation work to an
independent agent namely Jadiharta Urusan Sdn Bhd (“JUSB”) vide letter of
appointment dated 12.03.2014.

[5] On 18.03.2014 Respondent’s Chairman and Secretary met the

Claimant in the office and informed him that effective 01.04.2014 all the
management and administration of the management corporation office is
outsourced to be handled by a managing agent. The Claimant was also
informed that the managing agent will appoint the Claimant as a building
manager under their employment.

[6] The Respondent’s Secretary on 18.03.2014 itself introduced the

Claimant to the Managing Director of the managing agent who then offered
the Claimant to be under the employment of the managing agent (JUSB) as

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the building manager starting 01.04.2014 with no changes to the salary and
duties.

[6] On 01.04.2014, the managing agent (JUSB) took over the

Respondent’s management office and the Claimant appeared in the office,
worked as usual, collected some payment from the residents and issued
receipts.

[7] Vide letter dated 07.04.2014, the managing agent (JUSB) informed the
Respondent that the Claimant had declined the managing agent’s (JUSB)
offer to work as a building manager under JUSB and that JUSB had to
appoint another person to be the building manager to fill in the position of the
Claimant.

[8] The Respondent then issued a letter dated 31.03.2014 informing the
Claimant that his employment as the Resident Manager with the Respondent
is terminated effective 31.03.2014 due to the Respondent no longer operating
the management office as it was already outsourced to JUSB as of
01.04.2014.

[9] The Respondent also vide a letter dated 14.04.2014 informed the
Claimant that he was no longer allowed to collect payments on behalf of the
Respondent and was requested to hand over all the Respondent’s
belongings to the management agent.

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[10] The Claimant was still coming to office despite being issued with the
termination letter and letter asking him to hand over the Respondent’s
belonging to the appointed managing agent.

[11] The Respondent then issued letter dated 19.04.2014, informing the
Claimant that they will pay the Claimant’s April 2014 salary and a
compensation if he properly handover the Respondent’s belongings to the
managing agent and also tenders a resignation letter. The Claimant did the
handover of the Respondent’s belongings to the managing agent but did not
tender his resignation. The Respondent then paid the Claimant’s April 2014
salary.

ISSUE FOR DETERMINATION

[12] The issues to be determined by this Court are whether the Claimant
was dismissed and whether the said dismissal was with just cause or excuse.

THE LAW

[13] When dealing with a reference under section 20 of the Act, the first
thing that the Industrial Court has to consider is the question of whether
there was, in fact, a dismissal. If this question is answered in the affirmative,
it must only then go on to consider if the said dismissal was with or without
just cause or excuse. In the case of GOON KWEE PHOY . J&P COATS (M
BHD (1981) 1 MLRA 415 it was held:

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 “Where representations are made and are referred to the Industrial Court
for enquiry, it is the duty of that court to deter mine whether the termination
or dismissal is with or without just cause or excuse. If the employer
chooses to give a reason for the action taken by him, the duty of the
Industrial Court will be to enquire. whether that excuse or reason has or
has not been made out. If it finds as a fact that it has not been proved, then
the inevitable conclusion must be that the termination or dismissal was
without just cause or excuse. The proper enquiry of the court is the reason
advanced by it and that court or the High Court cannot go into another
reason not relied on by the employer or find one for it.”

[14] It is trite law that if the dismissal is not in dispute, the burden is on the
employer on a balance of probabilities to prove the grounds relied on for
terminating the services of the employee is made out as decided in the Court
of Appeal case of TELEKOM MALAYSIA KAWASAN UTARA V KRISHNAN
KUTTY SANGUNI NAIR & ANOR (2002) 3 CLJ 314.

EVALUATION AND FINDINGS

[15] It was the Respondent’s pleaded case that the Claimant was redundant
due to an outsourcing exercise of its operation while the Claimant pleaded
that he was terminated without just cause and excuse by the Respondent.

[16] The principle of law is that an employer is entitled to organise his

business in the manner he considers best so long as that managerial power
is exercised bona fide. In HARRIS SOLID STATE (M) SDN BHD & ORS. V.
BRUNO GENTIL PEREIRA & ORS.[1996] 4 CLJ 747 the Court held:
“......An employer may re-organize his commercial undertaking for any
legitimate reasons, such as promoting better economic viability. But he
must not do so for a collateral purpose, for example, to victimize his
workmen for their legitimate participation in union activities. Whether the
particular exercise of managerial power was exercised bona fide or for
collateral reasons is a question of fact that necessarily falls to be decided
upon the peculiar circumstances of each case”.
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[17] As such, an employer has the prerogative to reorganize its business
operations in any manner for the purpose of its viability provided he acts bona
fide and that being the case the Court should not interfere with the bona fide
exercise of that right. Where the management decides that the workmen are
surplus and that there is a need for retrenchment, an arbitration tribunal will
not intervene unless it can be shown that the decision was capricious, without
reason, mala fide, to victimize or unfair labour practice.

[18] In the present case, the Claimant contended that vide letter dated
19.04.2014 [CLB-1 pg. 9] the Respondent (PBMC) terminated his service,
while the Respondent contends that vide letter dated 31.03.2014 [CLB-1 pg.
7] the Claimant’s services was terminated due to redundancy.

[19] Having to perused all the documents before this Court, the Court found
that it was in the letter dated 31.03.2014 [CLB-1 pg. 7] the Respondent
terminated the service of the Claimant on the ground that the Respondent no
longer operates the management office as it is been outsourced to be run by
a managing agent (JUSB). Hence, the Claimant’s position as a Resident
Manager with the Respondent was no longer exist due to the outsourcing and
the appointment of the managing agent (JUSB) by the Respondent to run the
operation of the management office.

[20] Since the reason chosen by the Respondent to terminate the

Claimant’s service is redundancy, the Court is restricted in its inquiry into the
veracity of the reason chosen by the Respondent in terminating the Claimant.
The Court is to determine whether the case of redundancy has been made
out and whether the Respondent had acted bona fide.
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[21] In determining whether the Respondent had acted bona fide which led
the Claimant to be made redundant due to the outsourcing exercise, the
Court is to first determine whether the Respondent is entitled to outsource or
have the power to appoint an agent to perform its duties and obligations.

[22] It was not disputed that the Respondent is a body set up under the
Strata Title Act 1985. Paragraph 6 of the Second Schedule of the Strata Title
Act 1985 provides that:

“The Council may employ, for and on behalf of the corporation, such
agents and servants as it thinks fit, in connection with or to facilitate the
exercise of the powers and the performance of the duties of the
corporation.”

[23] As such the Respondent have the power to appoint agents to perform
the duties of the corporation. Hence the Respondent did not violated any
statutory provision appointing and outsourcing the duties of the corporation to
a managing agent.

[24] To see whether the Respondent was justified in outsourcing its duties
which led the Claimant to become redundant, the Court need to examine the
reason for the outsourcing. The reasons for the Respondent to outsource the
duties of the corporation were because its council members found it difficult
to supervise the management and administrative work of the corporation as
they all have their own respective fulltime job and professions. Furthermore,
when both the account executive and administrative clerks resigned and left
in February 2014, the Council Members was also facing problem in
maintaining proper accounting of the corporation as the Claimant being the
sole personnel left in the corporation was only carrying out the administrative
functions for the corporation.
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[25] The Claimant too did not challenged this fact that he was the only one
left in the corporation, During cross examination, he admitted that his job was
solely administrative and that he had alerted the Respondent vide email in
CLB-4 pg. 136 to the Chairman (COW-1) the urgent need to replace the
account executive and admin clerk who had resigned and left in February
2014.

[26] The Court is of the view, that being put in this situation where the
Respondent’s council members finding it difficult to supervise the operation of
the corporation as they have their own respective full-time job and
professions coupled with the non-proper keeping of the accounting records
after the account executive resigned in February 2014 and with the Claimant
solely doing administrative job, the Respondent’s decision to outsource the
whole operations of the cooperation to a managing agent for a better
management that will ensure that the operations of the corporation are
carried out properly at all material time is a genuine reason for outsourcing.

[27] The Respondent have every right to outsource in order to reorganise

itself to have a proper and better management of its services.
The outsourcing to a managing agent is a bona fide exercise at that material
time as COW-1 in his evidence which was not challenged by the Claimant
stated that the Respondent did acted on the Claimant’s [CLB-4 pg. 136] email
but couldn’t find the replacements as there was no takers for those posts.

[28] It is the finding of the Court that the Respondent as a result of these
situations it was in at that time decided to rationalize its problems by
exercising its managerial rights and prerogatives to run its business efficiently
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by outsourcing. It was a bona fide decision to outsource its operation to a
management agent. The Respondent’s right to reorganise for greater
efficiency and if this leads to the redundancy of the Claimant, it does not
makes it mala fide. In MUHAMAD YUSUF AWANG & ORS V. GUINNES
ANCHOR BERHAD [2012] 4 IR 134 it was held that:

“A company is entitled to outsource its work or part of its work even if the
same would lead to a retrenchment exercise. It was for the company to
prove on the balance probabilities that the purpose of outsourcing part of
its operations was for the purpose of improving efficiency and to be costs
effective.”

[29] There was also no evidence adduced by the Claimant to show that the
Respondent’s Council Members’ decision to outsource the whole operations
of the management corporation to a management agent was mala fide
motivated or that the Council Members’ acting in bad faith with the intention
to victimise the Claimant at anytime.

[30] The Claimant has failed to challenge the Respondent’s approach and
its decision of outsourcing its management operations is tainted with mala
fide intention with a view of getting rid of the Claimant or that the managing
agent would not perform the administrative function better that the Claimant.
The Court is convinced that based on the manner and the reasons adduced
by the Respondent through COW-1, COW-2 and COW-3, the outsourcing
exercise, effective from 01.04.2014, was indeed conducted in good faith.

[31] It was also not disputed by the Claimant that when COW-1 and COW-2
on 18.03.2014 informed him about the outsourcing of the corporation’s duties
which will take place effective 01.04.2014, he had never at any time
protested, objected or raised any issue about the outsourcing of the
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corporation’s duties with the Respondent. The Claimant too in his evidence
confirmed that on 18.03.2014 he was informed by COW-1 and COW-2 that
with effect from 01.04.2014 the management operation of the Respondent
will be outsourced to a management agent namely Jadiharta Urusan Sdn.
Bhd (JUSB).

[32] The Claimant also did not challenged the evidence of COW-1 and
COW-2 that they informed him that he will be offered a post as building
manager by JUSB under its employment with no changes to his salary and
duties on the 01.04.2014. The Claimant also never disputed the evidence
of COW-1, COW-2 and COW-4 that on the very same day of 18.03.2014,
COW-1 and COW-2 introduced him to COW-4 the managing director of the
managing agent (JUSB) to discuss about the terms and condition of his
employment with JUSB. There was not a single evidence adduced by the
Claimant that had protested or raised any issue with the Respondent about
the outsourcing exercise of the whole management operations to a
management agent nor anything pertaining his job especially to the
Respondent or to COW-4 from the management agent.

[33] The Court is of the view that the Claimant did not protested neither
raised any concern with the Respondent either about the outsourcing of the
corporation’s operations to the managing agent (JUSB) or raised of any issue
relating to his employment on the 18.03.2014 because the Claimant knew all
along that though with the outsourcing where the Respondent will no longer
be handling the management and administration of the corporation, he will
not be effected with the outsourcing exercise as come 01.04.2014 he will still
have a job arranged by the Respondent with the managing agent (JUSB) as

11
a building manager under the employment of the managing agent (JUSB)
with no changes to his salary and duties.

[34] Though there is no duty on the Respondent to offer alternative

employment to the Claimant, the fact that the Respondent did secured the
Claimant a job which was also offered by the managing agent as a building
manager with the managing agent (JUSB) with no changes to his salary and
duties on the 18.03.2014 itself, shows the Respondent never intended to
victimised or get rid of the Claimant at any time.

[35] The Claimant in his evidence states that when he met COW-4 the
managing director of the managing agent (JUSB) on the 18.03.2014, COW-4
only discussed with him about benefits that JUSB offering to which the
Claimant claimed that he had straight away declined the offer made to him by
JUSB on 18.03.2014 itself because the offer was inferior to what he was
enjoying from the Respondent. COW-4 too confirmed that he discussed with
the Claimant about the benefits under JUSB but did not mention that the
Claimant had declined the offer or raised any issue about JUSB’s offer on the
18.03.2014.

[36] It’s the Court’s view that if the Claimant had really declined the offer by
JUSB to him to be employed as a building manager on 18.03.2014 itself, why
didn’t the Claimant reverted back to either COW-1 or COW-2 or any council’s
members of the Respondent on 18.03.2014 or any other day before the
01.04.2014 to inform them about alleged inferior offer made by JUSB to him.

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[37] No evidence adduced at all by the Claimant to indicate this reaction of
the Claimant about the alleged inferior offer of JUSB. As such the evidence
of COW-1 and COW-2 that the Claimant on the 18.03.2014 told them that he
can work with anyone and the evidence of COW-4 that the Claimant did not
declined the offer made by JUSB to him to be employed as a building
manager under JUSB employment on 18.03.2014 remained unchallenged.

[38] If the Claimant had really declined JUSB’s to be employed as their

building manager on 18.03.2014 itself, surely COW-4 too would had reverted
back to the Respondent who had secured for the Claimant the post as a
building manager with JUSB to inform them that the Claimant had declined
the offer as the building manager under JUSB’s employment.

[39] There was also no evidence adduced by the Claimant as to how

and to whom he communicated his declination of the JUSB’s offer.
COW-4 confirmed in his evidence that after he briefed the Claimant about the
benefits offered by JUSB, he gave the Claimant a form to be filled up and
neither did the Claimant challenged this evidence about the form that COW-4
gave to him on the 18.03.2014.

[40] The Court is of the view that the Claimant’s evidence that he had
declined JUSB’s inferior offer on the 18.03.2014 itself is merely an
afterthought because on the 01.04.2014 the Claimant showed up to work at
the corporation’s office despite been informed by the Respondent on the
18.03.2014 that as of 01.04.2014 the Respondent will no longer handle the
corporation’s office operations and the appointed managing agent (JUSB) will
take over. Therefore, when the Claimant showed up at management’s office
13
on 01.04.2014, he knew that he was there because he wanted to be JUSB’s
building manager under JUSB’s employment and no longer under the
Respondent anymore as his services as a resident manager of the
Respondent ceased to exist due to the outsourcing exercise with effect of
01.04.2014.

[41] The fact that the Claimant turn up to work on 01.04.2014, collected
dues from the residents and issued receipts as in COB-1 pg. 23-26,
the Claimant by his conduct is deemed to have accepted JUSB’s offer as
the building manager under JUSB as of 01.04.2014. The Claimant by
his conducts shows that he is fully aware that his position as the
resident manager with the Respondent no longer exist after 31.03.2014.
COW-4’s evidence that JUSB did not employ other person to be it’s building
manager on 01.04.2014 as the Claimant had taken up the post and came to
work on 01.04.2014 was not challenged too by the Claimant.

[42] The Claimant also did not challenged COW-4’s evidence that he did not
appear to work a few days without informing JUSB and that after numerous
phone calls made to him by COW-4, he eventually informed COW-4 that he
did not intend to work anymore. This evidence of COW-4 tallied with the
letter dated 07.04.2014 [COB-1 pg. 7] issued by JUSB informing the
Respondent that the Claimant had declined to work with JUSB as the building
manager and also to inform the Respondent that JUSB will need to find other
person to be employed as building manager for the apartments.

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[43] Given this fact, the Court finds that the Claimant by his conduct had
accepted JUSB’s offer as the building manager under JUSB’s employment as
of 01.04.2014, worked as building manager for JUSB on 01.04.2014 and a
few days thereof and then abandoned the job as building manager with
JUSB. This conduct of the Claimant then led JUSB to issue the letter dated
07.04.2014 [COB-1 pg. 7] to the Respondent informing them that the
Claimant had declined JUSB’s offer and also to inform the Respondent that
JUSB need to look for another building manager since the Claimant had
abandoned his job with JUSB.

[44] It was the Claimant’s contention that he was terminated by the

Respondent vide letter dated 19.4.2014 [CLB-1 pg. 9] where the Respondent
informed him that he was no longer required to come to the office effective
19.04.2014.

[45] This Court is of the view that from the tone and content of the letter
dated 19.04.2014 [CLB-1 pg. 9], it cannot be construed as a letter terminating
the Claimant but more of a letter pleading the Claimant who was already
been terminated as of 31.03.2104 and ceased to be the employee of the
Respondent, to give full corporation in handing over all the Respondent’s
belongings to the managing agent. In the same said letter, the Respondent
offers to pay the Claimant his April 2014 salary which was supposedly to be
paid by the managing agent (JUSB) with whom the Claimant worked for as
their building manager when he came to work on 01.04.2014 and thereafter
until he decided to declined to work with the management agent (JUSB).

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[46] It was also not disputed that that prior to the letter dated 19.04.2014
[CLB-1 pg. 9], the Respondent had on 14.4.2014 gave the Claimant letter
dated 31.03.2014 [CLB-1 pg. 7] which terminate his service and also another
letter dated 14.04.2014 [CLB-1 pg.8] requiring him to handover all the
belongings of the Respondent to the managing agent (JUSB).

[47] Perusing the letter dated 14.04.2014 [CLB-1 pg. 8], the said letter refers
to a meeting between COW-2 and the Claimant on 12.04.2014 to which the
Claimant denied in his evidence about the meeting with COW-2 on
12.04.2014 but never disputed the content of the said letter that state the
Claimant informed COW-2 his decision to decline the managing agent’s offer
and to leave the organization.

[48] The Court finds that it doesn’t make sense why would the Respondent
make reference or fabricate about the meeting on 12.04.2014 if it did not
took place. It will only make sense that the said letter dated 14.04.2014
[CLB-1 pg. 8] was issued by the Respondent to the Claimant after COW-2
met the Claimant on 12.04.2014 with regards to the status of the Claimant as
raised by the managing agent (JUSB) to the Respondent vide letter
07.04.2014 [COB-1 pg. 7].

[49] The Court is of the opinion that since the Claimant by conduct accepted
the managing agent’s offer to work as their building manager when he came
to work on 1.04.2014 and after a few days declined it, the letter dated
31.03.2014 [CLB-1 pg. 7] which was given to the Claimant on the 14.04.2014
was issued as a formality to inform the Claimant that his service with the
Respondent is terminated with effect of 31.03.2014 due to the outsourcing
16
exercise, while the letter dated 14.04.2014 [CLB-1 pg. 8] is to inform the
Claimant that since he had decided not to work with the managing agent
(JUSB) after having accepted it, he is no longer allowed to collect payments
on behalf of the management corporation, or to do anything without the
approval of the appointed managing agent.

[50] As the Claimant in his evidence admitted that he continued to come in

to the office even after 14.04.2014 until the letter dated 19.04.2014 [CLB-1
pg. 9] ) was issued to him informing him that he was no longer required to
come to the office effective 19 April 2014, the Court is of the opinion that the
letter dated 19.04.2014 [CLB-1 pg. 9]) was issued by the Respondent in order
to stop the Claimant from keep coming to the office after he had declined the
managing agent’s job as their building manager and also to get the Claimant
to fully hand over the Respondent’s belongings to the managing agent
(JUSB) which he had not done despite being served with the letter dated
14.04.2014 (CLB-1 pg. 8] requiring him to hand over the Respondent’s
belongings to the managing agent (JUSB).

[51] Vide letter dated 19.04.2014 [CLB-1 pg. 9]), the Respondent was
trying to amicably settling with the Claimant, who was still coming to the
office despite knowing that he was terminated by the Respondent as
of 31.03.2014, who had declined the job secured by the Respondent for
him under the managing agent and who did not hand over the Respondent’s
belongings despite being informed to do so vide letter dated 14.04.2014.
As the Respondent offered to pay the Claimant his April 2014 salary and
compensation, the Claimant to admitted that he did the hand over of the

17
Respondent’s belongings to the managing agent (JUSB) and did not come to
office after 19.04.2014.

[52] The letter dated 19.04.2014 [CLB-1 pg. 7] is therefore not the letter
terminating the Claimant as of 19.04.2014 because the Claimant’s
employment with the Respondent was deemed ceased as of 31.03.2014 due
to the outsourcing effective 1.04.2014 and as of 01.04.2014 when he showed
up to work, he came in as JUSB’s building manager as his position as the
resident manager with the Respondent ceased to exists as of 01.04.2014.
The letter dated 19.04.2014 [CLB-1 pg. 9] was issued to inform the Claimant
again him to properly handover all the belongings of the Respondent to the
managing agent (JUSB) and thereafter to stop come to the office which was
run by the managing agent (JUSB) as of 01.04.2014.

CONCLUSION

[53] Based on the totality of the evidence adduced both through oral
testimony as well as documentary evidence and also having regard to equity
and good conscience as well as substantial merits of the case, the Court
finds that the Respondent has proven on a balance of probabilities that a of
genuine redundancy has been made out and that the Respondent had acted
in a bona fide manner.

[54] The Court is satisfied that the Respondent’s action for terminating the
Claimant was justified by the circumstances of the case and that the grounds
given by the Respondent for the said termination are true. The Respondent’s

18
conduct and the overall circumstances of this case does not show any hint
victimization by the Respondent against the Claimant.

[55] In my considered view, the said termination was not motivated by bad
faith or by desire to victimize or harass the Claimant with any ulterior reasons
such as to discharge or dismiss the Claimant without any justified reasons.
There was never an ulterior motive and certainly no hidden intention to get rid
of the Claimant at any point of time.

[56] For the above mentioned reasons, this Court comes to the conclusion
that the dismissal of the Claimant by the Respondent is with just cause or
excuse. The Claimant's case is hereby dismissed.

HANDED DOWN AND DATED 6 JUNE 2018

-signed-
(REIHANA BTE ABD. RAZAK)
CHAIRMAN
INDUSTRIAL COURT OF MALAYSIA
KUALA MPUMPUR

19