We have come across cases where employees approaching retirement age were dismissed from employment and subsequently filed unfair dismissal claims against their employers, seeking either:
- Reinstatement to his/her former employment and a sum equivalent to the wages that the employee would have earned had he/she not been dismissed; OR
- A compensation in lieu of, as may be determined by the Court,
- Backpay in full from date of dismissal to date of conclusion of hearing, subject to a maximum of 24 months; and
- Compensation in lieu of reinstatement.
(See Section 20 of Industrial Relations Act 1967 and Practice Note No. 1 of 1987 Guidelines on Dismissal Cases)
In the Federal Court’s decision in Unilever (M) Holdings Sdn Bhd v. So Lai @ Soo Boon Lai & Anor [2015] 2 ILR 265; [2015] 3 CLJ 900 (“Unilever”), the case decided by Mohamed Apandi Ali (then Federal Court Judge) has left an impact on employees in such circumstance. In cases where an employee is approaching retirement age and had already retired by the time the Industrial Court issued its award, the employee may not be entitled to compensation in lieu of reinstatement—even if the dismissal was found to be unfair or without just cause.
In Unilever, the employee was 14 months away from retirement when he was dismissed. He subsequently filed an unfair dismissal claim against the company at the Industrial Court. Upon hearing the matter, the Industrial Court found that the employee had been unfairly dismissed and awarded him back wages and compensation in lieu of reinstatement. Notably, although the claim was filed in 2001, the Industrial Court only delivered its decision in 2011. This chronology highlights the substantial delay faced by the employee during the arbitral process before the Industrial Court.
Dissatisfied with the decision, this case was filed at the High Court for an order of certiorari to quash the award.
The case later reached to the Federal Court on a single question of law to be decided:
Whether compensation in lieu of reinstatement can be awarded to a person who cannot be reinstated and/or whether the issue of reinstatement even arises as he had already attained the age of retirement at the time of the filing of his claim (under s. 20 of the Industrial Relations Act 1967).
The Federal Court answered the leave question in the negative, thereby setting aside the orders made by the courts below. It held that the phrase “compensation in lieu of reinstatement” only arises when the employee is in a position to be reinstated. In this case, the employee could not be reinstated as he had passed the compulsory retirement age by the time the award was given. Therefore, the issue of compensation does not arise, as it cannot be said to be in lieu of reinstatement.
In conclusion, compensation in lieu of reinstatement is not available where, at the time the Industrial Court delivers its award, the employee has already passed the compulsory retirement age. This is because reinstatement is no longer a viable remedy, and compensation cannot be granted in lieu of something that is no longer possible.
In the circumstance of where the facts of a case is similar to the above, it is crucial that the matter is filed at the Industrial Court, without delay and to take all necessary steps to ensure the matter is heard and disposed, as soon as possible, preferably before the employee reaches the retirement age.
Sources:
- Industrial Relations Act 1967;
- Practice Note No. 1 of 1987 Guidelines on Dismissal Cases;
- Reported case of Unilever (M) Holdings Sdn Bhd v. So Lai @ Soo Boon Lai & Anor [2015] 2 ILR 265; [2015] 3 CLJ 900;
- Article titled ‘Should Compensation In Lieu of Reinstatement be Denied on the Basis of Age? Revisiting the Federal Court’s Decision in Unilever (M) Holdings Sdn Bhd v. So Lai @ Soo Boon Lai & Anor [2015] 2 ILR 265; [2015] 3 CLJ 900’ by Dr Jashpal Kaur Bhatt
- Article titled ‘Compensatory Award for Unfair Dismissal In Malaysia: Criterions In Assessment of Award’by Ashgar Ali Ali Mohamed, Mohd Akram Shair Mohamed, and Farheen Baig Sardar Baig.