Court of Appeal overturns Industrial Court award favouring retrenched ex-manager

The Court of Appeal set aside an award of RM143,000 in compensation granted by the Industrial Court to B Braun Medical Industries Sdn Bhd’s ex-maintenance manager V Mugunthan.

PUTRAJAYA: The Court of Appeal has set aside an award of RM143,000 in compensation handed down in favour of former maintenance manager V Mugunthan, ruling that the employee had voluntarily agreed to a mutual separation.

Justice Wong Kian Kheong said both the Industrial Court and the High Court which dismissed a judicial review application by health products manufacturer B Braun Medical Industries Sdn Bhd had committed several errors of law when arriving at their respective decisions.

“An irrational award has been made. The High Court decision is set aside and a certiorari order is issued to quash the award,” he said in a 55-page written judgment posted on the judiciary’s website two days ago.

Wong, together with Justices Supang Lian, who chaired the three-member bench, and Noorin Badaruddin heard and allowed the appeal last November.

The court also ordered Mugunthan to pay RM20,000 in costs.

Wong said an Industrial Court chairperson should be wary when confronted with a claim for unlawful dismissal by an employee who had willingly entered into a negotiated mutual separation scheme (MSS) contract with an employer, and received all its benefits.

Mugunthan, whose last drawn monthly salary was RM17,938, received RM125,566, or the equivalent of seven months’ wages, from the employer under the MSS agreement, prior to filing his representations for unfair dismissal.

Evidence showed that Mugunthan, who joined the company on June 1, 2015, was told that the MSS agreement had the effect of an ordinary resignation from employment with the company.

Wong said when an employee alleges that he had been forced to enter into an MSS contract tantamount to a dismissal, the burden of proof is on him to prove the assertion.

“The Industrial Court chairman and the judicial commissioner (in the High Court) had failed to impose the legal burden under Section 101(1) and (2) of the Evidence Act on the claimant (to prove) that he was forced to resign at a meeting on Jan 14, 2019,” said Wong.

The judge said the company’s representatives gave Mugunthan time to consider the terms of the draft MSS agreement.

He also said Mugunthan’s resignation letter did not state that he had been forced into accepting the MSS offer.

“(In the letter) the claimant thanked ‘all for the support’ and wished the respondent (the company) all the best in the future,” he said.

Wong said Mugunthan’s text message on Jan 15, 2019 was an admission that he had signed the MSS agreement voluntarily.

He said the employer had also “walked the extra mile” by accommodating the claimant’s early release request and paid the agreed compensation in full even though Muganthan did not serve his three-month resignation notice period.

Wong said it is trite law that an employer has the prerogative to restructure its business in a bona fide manner. He noted that in this case the company was having financial problems.

“The company’s offer of MSS to the claimant was not a cloak to dismiss him unlawfully under a threat of retrenching him,” he said.

Wong said that Muganthan was retrenched on the “Last-In, First-Out” (Lifo) principle, and another employee much senior to him was appointed to fill his position.

Lawyers Raymond Low and Adam Thye acted for the company, while V K Raj represented Mugunthan.

Mugunthan is appealing the decision to the Federal Court, and has already secured leave to appeal the decision.