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Industrial Court upholds retrenchment of employee as part of ongoing cost optimisation exercise

Loh Wai Mun v. Hewlett-Packard (M) Sdn Bhd

(Industrial Court Award No. 1191 of 2021)

An employer can lawfully retrench staff as part of an ongoing workforce reduction exercise, even if other departments continue to hire.

In the above case, the Claimant was retrenched in May 2019 as part of a workforce reduction exercise (“WFR”) after she was unsuccessful in securing any alternative positions within the Company during a set redeployment period. Upon her retrenchment, she was paid ex gratia retrenchment benefits amounting to RM165,744.55 as per the workforce reduction terms and conditions.

The Claimant, being dissatisfied with her retrenchment, claimed unfair dismissal and alleged, among other things, that she had been victimised for escalating complaints against other employees.

In dismissing the claim, the Industrial Court applied a number of prevailing cases recognising the employer’s prerogative to lawfully reorganise, and that only diminution (and not cessation) of the employee’s role or function needs to be proven.

In the instant case, the Court found that the Claimant’s role had been absorbed and taken over by an existing, more senior, employee.

The Industrial Court observed that the Claimant was well-aware that the Company conducted periodic workforce reduction programmes aimed at optimising costs and competitiveness in the market, as she had testified to asking about the same before re-joining the Company.

The Court further held that the Claimant failed to prove any element of victimisation, as she had conceded in her testimony that all her complaints were duly investigated, and there was no evidence that her immediate superior bore her any ill will.

Taken altogether, the learned Chairman concluded that the Company had acted within the confines of its managerial prerogative to reorganise, and had treated the Claimant in good faith.

The Court further observed that the mere fact that other departments continued to hire did not invalidate the bona fides of the Claimant’s retrenchment, as it was clear that her role was subsumed by a more senior employee and was not externally filled.

The Industrial Court Award can be accessed below.

Hewlett-Packard (M) Sdn Bhd was represented by our Partner, David Tan Seng Keat.

Industrial Court Award 1191 of 2021 -- Loh Wai Mun v. Hewlett-Packard (M) Sdn Bhd
Download PDF • 450KB


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