Malaysia - A Redundancy Situation Can Still Exist Even When The Duties And Functions Are Not Eliminated.

Legal News & Analysis - Asia Pacific - Malaysia - Labour & Employment

19 September, 2019


In the recent decisions of the Industrial Court in Suhana Binti Mat Din and Ors v Sarawak Hidro Sdn Bhd and 8 other cases (handed down vide Awards 2433 till 2441 of 2019, dated 5 September 2019) we successfully defended the Company in unfair dismissal claims brought by its former employees.


The Company is the owner and operator of the Bakun Hidro Electricity Dam in Sarawak (“Bakun Dam”). The Company was providing support services for the Bakun Dam from its Petaling Jaya Office. Subsequently, ownership of the Company was transferred from the Federal Government to the Sarawak State Government, and the Company was named Sarawak Energy Berhad (“SEB”). The support services for the Bakun Dam were thereafter undertaken by the existing employees of SEB based in Sarawak and the Petaling Jaya Office was consequently closed. The SEB offices in Sarawak were already performing similar roles as the employees of the Petaling Jaya office for other power generation assets belonging to SEB. Pursuant to the closure of the Petaling Jaya Office, all its employees were released by the Company on the grounds of redundancy. A total more than 40 employees were affected by the closure of the Petaling Jaya Office. Of that number, 27 employees filed claims of unfair dismissal against the Company. However, only 9 claimants proceeded with their cases as the others withdrew their claims.


In arriving at its decision, the Industrial Court made amongst others the following important findings:


  1. The change of ownership by way of sale of shares was bona fide;

  2. The Court held that the reorganization exercise conducted by the Company which resulted in the closure of the Petaling Jaya Office was bona fide and that the Claimants failed to bring forth any evidence to show otherwise.

  3. Despite the support services being conducted by existing employees of SEB based in Kuching, Sarawak, the Court held that the employees of the Petaling Jaya Office were redundant in view that the entire Petaling Jaya office was closed .

  4. The employees of SEB did not take over the jobs of the former employees of the Petaling Jaya office but were alread y doing similar jobs as those as those employees who were basedin the Petaling Jaya Office. 

  5. It would not make sense for SEB to dismiss its employees in Sarawak to accommodate the employees of the Petaling Jaya Office.

  6. The Claimants failed to prove that their jobs still existed in Petaling Jaya.

  7. The Company had conformed to the accepted standards of procedure in a retrenchment exercise by giving ample notice of their release, providing a generous compensation package and setting up a mobility centre to provide re-training.



These cases go to show the willingness of the Industrial Court to hold that a genuine redundancy situation can exist even when the duties and functions were not eliminated nor diminished in importance. The instant decisions of Industrial Court had departed from the narrow approach adopted in certain cases wherein the courts ruled that the duties and functions must cease to exist or be eliminated for a redundancy situation to occur.


The Company was represented by Vijayan Venugopal, who is a partner in our Employment and Administrative Law Practice Group. 



For further information, please contact:


Sivabalah Nadarajah, Partner, Shearn Delamore & Co​

[email protected]