ARTICLE
15 February 2024

[EMPLOYMENT] Special Alert: Redundancy Can Arise Even When The Job Still Exists!

The Claimant was heading a division of the Sales Department and was dismissed on the grounds of redundancy. This arose following a restructuring exercise to: (a) optimise and flatten...
Malaysia Employment and HR
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Gregory Lim Eong Boon v Lee's Frozen Food Sdn Bhd (Industrial Court Award No. 1790 Of 2023)

The Claimant was heading a division of the Sales Department and was dismissed on the grounds of redundancy. This arose following a restructuring exercise to: (a) optimise and flatten the structure of the Sales Department for optimisation and better business continuity; (b) encourage holistic sales of the Company's products by area rather than by customer type; and (c) separate the Company's Product Department from the Sales Department for clearer demarcation of roles and focus.

As a result of the restructuring exercise, several positions were identified as being surplus including the position held by the Claimant. The Claimant's role was subsequently redistributed to four newly created junior Regional Manager positions.

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The Claimant contended that his dismissal was without just cause or excuse. The Industrial Court dismissed his claim and found in favour of the Company. The Court took into account:

(a) The Claimant's admission that the Company had genuine reasons for the restructuring exercise, which led to a more efficient structure.

(b) The impact of the restructuring exercise, which: (i) reduced operating costs; (ii) saw an increase in profits in the Sales Department; and (iii) addressed the high turnover rates of employees in the Sales Department during the material time.

(c) The restructuring exercise resulted in the elimination of the Claimant's position.

The Court found that the Company was justified in not considering the Claimant for the alternative position of Regional Manager as: (a) his salary was higher than what was being offered for the said position; and (b) in comparison to the other employees who were eventually offered the position, the Claimant was a probationer and the most junior in terms of seniority.

This case reaffirms the principle that redundancy does not necessarily mean that the job or work no longer exists; it may arise when the business requires fewer employees of whatever kind.

The Company was represented by Partner, Amardeep Singh Toor, and Associate, Wong Lien Taa, of Lee Hishammuddin Allen & Gledhill. The Industrial Court Award can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
15 February 2024

[EMPLOYMENT] Special Alert: Redundancy Can Arise Even When The Job Still Exists!

Malaysia Employment and HR

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