Ng Cheng Guat v Eiscon Construction Sdn Bhd (Industrial Court Award No.: 222 Of 2024)
This dispute emanates from the dismissal of a Finance Executive on the grounds of redundancy following the aftermath of the COVID-19 pandemic.
The Company is principally involved in civil engineering and infrastructure construction projects, with a particular emphasis on sewerage networks and pipe-laying works. Since 2017, the Company had been facing financial adversity, which were further exacerbated by the impact of the COVID-19 pandemic.
In finding that the dismissal was with just cause or excuse, the Industrial Court considered the various cost-saving measures undertaken by the Company to avoid a retrenchment exercise, including:
(a) Reduction of overtime hours;
(b) Reduction of administrative expenses by conducting internal meetings online, and the reclassification and/or removal of certain allowances and benefits;
(c) Implementation of a hiring freeze;
(d) Revision of the employer’s contribution rate to the Employees Provident Fund (EPF);
(e) Removal of overtime meal and shift allowances;
(f) Reduction of petrol card entitlements and vehicle mileage claims;
(g) Replacement of the Company’s private group hospitalisation and surgical insurance with a self-insurance scheme;
(h) Revision of working hours to further reduce overtime;
(i) Voluntary salary reductions by several heads of department;
(j) Implementation of mandatory annual and unpaid leave;
(k) Reduction of rental commitments;
(l) Disposal of assets; and
(m) Freezing of salary adjustments and staff loans for confirmed employees.
Although many of these austerity measures did not directly impact the Employee, they were indicative of the Company’s good faith and genuine effort to manage its operational costs and avoid immediate retrenchment.
While the Employee’s core responsibilities remained, the Company required fewer employees to manage the reduced workload due to the downturn in business. The Court accepted this explanation and was satisfied that the redundancy was not a pretextual dismissal.
The Industrial Court also emphasised that the COVID-19 pandemic must not be misused as a justification for termination of employment. Any retrenchment exercise arising from the pandemic must be grounded in a genuine and critical need to reduce manpower costs for the continued survival of the business.
The Company was represented by Partner, Amardeep Singh Toor, and Associate, Wong Lien Taa, of Lee Hishammuddin Allen & Gledhill.
If you have any queries, please contact Partner Amardeep Singh Toor (ast@lh-ag.com) or Associate Wong Lien Taa (wlt@lh-ag.com).
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