Click here to download the PDF version: Zulkarnain Bin Samani v Antara Steel Mills Sdn Bhd.
In the recent Industrial Court case of Zulkarnain Bin Samani v Antara Steel Mills Sdn Bhd (“Antara Steel Mills”), we successfully defended Antara Steel Mills Sdn Bhd’s retrenchment exercise. A total of 24 claimants including the claimant in this present matter filed unfair dismissal claims at the Industrial Court in relation to the retrenchment exercise. The Industrial Court held that the retrenchment exercise was conducted in bona fide manner and therefore should not be interfered by the Industrial Court.
In this case the Industrial Court considered the various steps taken by the company prior to the unilateral retrenchment exercise. Prior to the retrenchment exercise, the company had taken amongst others the following measures:-
- No bonuses declared;
- No increments;
- Lay off of employees ;
- Reduction in overtime;
- Abolishing retirement benefits for managers and executives;
- Reduction in shifts; and
- Reduction in social activities for employees.
Based on the above, the Industrial Court held that the company had only resorted to the retrenchment exercise as a last resort.
The Industrial Court also took into account the strong competition caused by cheaper steel imports from China in coming to its decision. The company also tendered evidence to show that it was suffering from poor financial results since the year 2015. Pursuant to poor financial results and strong competition from steel imports, the company had decided to restructure its Johor Steel Plant operations which resulted in the release of 143 employees.
This case illustrates the importance of undertaking measures to avoid and/or delay the need to carry out a retrenchment exercise. These measures will eventually be taken by the Industrial Court in deciding on whether the retrenchment exercise was conducted in a bona fide manner by the employer.
This case was conducted by Mr N Sivabalah and assisted by Mr Wong Kian Jun from the Employment and Administrative Practice Group.
This Alert is issued for the information of the clients of the Firm and covers legal issues in a general way. The contents are not intended to constitute any advice on any specific matter and should not be relied upon as a substitute for detailed legal advice on specific matters or transactions.