by Raymond Lim
Petaling Jaya
I refer to the recent statement by the Minister for Human Resources, Dato’ Dr. Chan Fong Onn that the back-dated wages will be limited to 24 months in cases of wrongful dismissal by employers under the proposed
amendments to the Employment Act.
The Minister justified the proposed amendment by referring to Practice Note No. 1/1987 which was introduced by the Industrial Court on the said 24 months limitation. Practice Note No.1/1987 on 24 months cap on backdated wages created some confusion. Several Industrial Court decisions applied the 24 months limitation. However, many did not do so on the basis that it is merely a practice note but not legally binding and by doing so, they sought to give more protection to employees from unscrupulous employers.
It is instructive for Members of Parliament to note that the Federal Court, in one of its landmark decisions, had ruled that the “right to live” under the Federal Constitution included the “right to livelihood”. For this reason, many decisions in the Industrial Court took judicial notice of this ruling in their decisions and declined to follow Practice Note No. 1/1987 when dealing with wrongful dismissal cases involving breach of natural justice, mala fide, victimization or unfair labour practice. Put in a nutshell, Practice Note No.1/1987 will not achieve the said ruling of the said Federal Court, the highest Court in the land. As a matter of fact, Practice Note No.1/1987 should be withdrawn by the Industrial Court.
In this letter, I will submit that it is extremely unwise for our Government to approve the said amendment to the Employment Act.
By way of introduction, in the case of wrongful dismissal by an employer, the Industrial Court will order a reinstatement of the employee and payment of back-dated wages from the date of wrongful dismissal to the date of judgment. Since the hearing at the Industrial Court may take place 3-5 years later or even longer, the amount of back-dated wages can be a substantial amount. If the employer-employee relationship is such that it is no longer possible to be continued, the Industrial Court will order the employer to pay one month’s salary for every year of service in lieu of reinstatement.
As a lawyer for close to 20 years, I have encountered countless cases wherein employers were extremely high handed when handling the dismissal of employees. Such high-handedness borders on total disregard to the livelihood of employees, especially employees who have been loyal to their organizations and had given the best years of their lives to their employers. Most wronglful dismissals arose because many unconscionable employers simply have no respect for employees as human beings or have scant regard for the due process of natural justice. In many cases, employees were transferred to branches far away merely to make them resign or subjected to other forms of victimization or unfair labour practice. Against this background, it is therefore not surprising that the industrial relations law and the industrial courts are protecting the welfare of employees, much to the chagrin of employers. Continue reading “Amendment to Employment Act”