The Malaysian Court docket of Attraction in Gopala Krishnan Chettiar a/l Muthu v Sealand Marine Inspection and Testing (M) Sdn Bhd 2023] 4 MLJ 445 lately dominated {that a} director can be thought-about a workman in the event that they in truth perform features and duties as a workman, enabling them to file a declare for dismissal with out simply trigger or excuse beneath the Industrial Relations Act 1967 (Act).

Background

The appellant (Appellant) joined the employer firm (Firm) on 3 November 2016, was appointed to the board of administrators and granted 20% of the Firm’s shares. In March 2018, a collection of occasions led the Appellant to contemplate himself as constructively dismissed:

• some workers resigned, attributing their departure to undue strain from the Appellant;
• a gathering was held the place critical allegations had been made towards the Appellant, together with providing cash for an worker to assault one other, bodily assaulting an worker to power them to resign, and inflicting an worker’s miscarriage resulting from work strain. The Appellant denied these allegations;
• two Firm administrators introduced the Appellant with a pre-written resignation letter to signal;
• the Appellant’s workplace entry card and electronic mail had been deactivated, and he was faraway from work-related WhatsApp teams; and
• the Firm knowledgeable third events that the Appellant had been “eliminated/terminated” from the Firm with impact from 12 March 2018.

Part 20(1) of the Act permits workmen to file a illustration for reinstatement to the Director Common in the event that they consider they had been dismissed with out simply trigger or excuse. The Appellant exercised this proper. The Industrial Court docket dominated in his favour, figuring out that regardless of his roles as a director and shareholder, he was performing duties as a workman in his capability as ‘operations director’.

The Firm sought a judicial evaluate from the Excessive Court docket, which concluded that the Industrial Court docket had made a authorized error in classifying the Appellant as a workman, and quashed the award. The Appellant appealed to the Court docket of Attraction.

The Court docket of Attraction’s Resolution

The Court docket of Attraction upheld the attraction and reinstated the Industrial Court docket’s award.

The central subject was whether or not the Appellant, regardless of being a director and shareholder of the Firm, additionally certified as a “workman”. Part 2 of the Act outlined a “workman” as “any individual … employed by an employer beneath a contract of employment to work for rent or reward…“.

Figuring out whether or not a claimant was a ‘workman’ employed beneath a contract of service (or an impartial contractor engaged beneath a contract for providers) was a blended query of regulation and truth. This relied on the character, diploma, and extent of management over their duties and features. The evaluation was not restricted to contractual phrases but additionally thought-about the conduct of the events in any respect related occasions.

The Court docket of Attraction thought-about the next:

• the Appellant didn’t carry out important duties of a director as outlined within the Firm Act 2016, and the Firm failed to point out that the Appellant was the mind and controlling thoughts of the Firm. As an illustration, he reported to the Finance Director for monetary issues and was not liable for recruitment, as he by no means employed any worker;
• the Appellant’s slip dated 25 January 2017 confirmed that he was paid RM20,000 as ‘director charges’ however the slips dated 27 February 2017 and 28 March 2017 indicated that the RM20,000 was paid as ‘Primary Pay’. The Firm couldn’t clarify the ‘Primary Pay’ description;
• the Firm deducted Workers’ Provident Fund and Social Safety Organisation contributions from the RM20,000 paid; and
• the Firm’s reference to the Appellant being ‘eliminated/terminated’ will need to have implied elimination or termination as an worker, as there was no proof of his elimination as a director.

The Court docket of Attraction concluded that the proof introduced to the Industrial Court docket clearly confirmed that the Appellant, though a shareholder and director, was in truth an worker performing government features because the director of operations.

Having established that the Appellant was a workman, the following subject was whether or not the dismissal was certainly with out simply trigger or excuse.

The Court docket of Attraction agreed with the Industrial Court docket’s discovering that the Appellant was not given an enough alternative to answer the allegations. As a substitute, he was “ambushed” and “cornered” in a gathering the place he confronted a barrage of allegations and was requested to resign.

The Court docket of Attraction in the end decided that the Excessive Court docket had misdirected itself in overturning the Industrial Court docket’s factual findings, warranting appellate interference.

Key takeaway

This case underscores the significance of understanding the twin roles a person might maintain inside an organization. A director, regardless of their title and shareholding, can be thought-about a ‘workman’ in the event that they carry out duties akin to these of an worker. This classification permits them to file a declare for dismissal with out simply trigger or excuse beneath part 20(1) of the Act.

The case additionally highlights the need for corporations to make sure honest and correct procedures when coping with allegations towards workers, together with these in directorial positions. Failure to take action might result in authorized repercussions.