COURT OF APPEAL, MALAYSIA
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www.ipsofactoJ.com/appeal/index.htm [2004] Part 3 Case 2 [CAM] |
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COURT OF APPEAL, MALAYSIA |
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Judgment
Arifin Zakaria, JCA
(delivering the judgment of the court)
THE BACKGROUND FACTS
The facts in this case are not in dispute. They are briefly as follows. Except for the first respondent all the respondents in this case were in the employment of the appellant as rubber tappers. The first respondent was a mandore (tapping) also in the employment of the appellant. Ladang Holyrood, the appellant herein, comprised of two divisions namely, the main division estate and the Bukit Rhona division estate. The respondents were attached to the Bukit Rhona division estate. By a letter dated June 18, 1994 the respondents were told by the appellant that the rubber trees in the said division will be felled for replanting purposes. As a consequence the respondents would be transferred to the main division with effect from July 1, 1994. The respondents did not agree to the proposed transfer. Instead they asked the appellant to pay them termination and lay off benefits pursuant to the Employment (Termination and Lay Off Benefits) Regulations 1980.
By letter dared June 30, 1994 the appellant told the respondents to comply with the transfer order failing which the appellant would resort to the various options open to the appellant. This was followed by the letter of July 6, 1994 wherein the respondents were directed to report for work at the main division on or before July 20, 1994 failing which they will be deemed to have abandoned their employment. The respondents did not comply with the said order, but instead they brought a claim under s 70 of the Employment Act 1955 ("the Act") claiming the following reliefs, namely, the annual leave pay, indemnity in lieu of notice and the termination benefits. The claim went before the Assistant Director of Labour ("Assistant Director"). He allowed their claim for annual leave pay but dismissed all other claims.
The respondents then appealed to the High Court which allowed the appeal and ordered that the respondents be paid the indemnity in lieu of notice and the termination benefits in addition to the annual leave pay. The appellant now appeals to this court against the decision of the learned judge. After having heard arguments of the parties we adjourned the matter for our consideration and decision. We now give our decision.
THE CONTENTIONS OF THE PARTIES
We were told that the issue in this case is of considerable importance to the plantation industry as this concerns the "relocation of workers", which learned counsel for the appellant contended, is a normal practice in the industry. He emphasized that such a practice is a normal occurrence in the industry arising from the need to have the old rubber trees replanted with new one in order to increase the yield. He said the practice has been to relocate workers to the new area while the old trees are being felled. This he said is precisely what happened in the present case. In the alternative he argued even if the court holds that the relocation is in fact tantamount to a transfer as alleged by the respondents the learned trial judge had erred in law in holding that the appellant has no right to transfer the respondents in the present case. He contended that it is within the prerogative of the appellant, as the employer, to transfer the respondents any where within the same organization for as long as the transfer is reasonable and not tainted by any ulterior motive.
He said, in this case it is not disputed that the two divisions form part of the same estate with a common management. It is being run by a single manager and assisted by two assistant managers. For all intents and purposes it is a single entity. The respondents were paid by the appellant and would continue to be paid by the appellant even after the transfer to the main division. That is to say the respondents would continue to be in the same employment even after the said transfer. In the circumstances, he submitted there is no cause for complaint.
Learned counsel for the respondents submitted that the learned judge was right in his decision, on the premise that the contract of service as well as the collective agreement do not contain the transferability clause. In the absence of such a clause he contended the appellant has no right to transfer the respondents.
THE ISSUES
From the facts it is clear that there is no written contract of service between parties. However, there is a collective agreement, which had been taken cognizance of by the Industrial Court. The agreement was between the Malayan Agricultural Producers Association (MAPA), a trade union of employers in the plantation industry and the National Union of Plantation Workers, a trade union of employees in the plantation industry. There is no transferability clause in the agreement.
The first issue as rightly stated by the learned judge is whether the order given by the appellant in this case was a transfer or merely a relocation of task as contended by the appellant. The Assistant Director in his decision held the view that this was merely a relocation of task rather than a transfer.
The learned judge took the opposite view. Relying on the Indian case of Shalimar Paints Ltd v Third Industrial Tribunal Calcutta [1971] 11 LLJ 58, he held that in the circumstances of this case the movement of tappers from one division to another is a transfer within the meaning of the word "transfer" appearing in s 12(3)(e) of the Act. In that case Mr. Justice TK Basu came to consider the word "transfer" and he expressed the following view -
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The expression "transfer" in my opinion connotes that an employer has more than one place of business, and the employee is called upon to work in a different place of business from the one in which he worked previously. |
In the present case the learned judge held that the "relocation order" is in effect a transfer of the respondents from one division to another. He came to this finding on the premise that the distance between the two divisions is more than five km apart. He further relied on the testimony of the first respondent that in the 22 years he had been working in the estate there had never been any transfer of workers from one division to the other. For those reasons the learned judge concluded that "the two divisions, albeit belonging to the same owner, were different places of employment".
Having said that, the learned judge then went on to hold that it is for the appellant to satisfy the court that the contract of service did contain such a clause. From the evidence before him he concluded that such a clause could not be so implied.
Having considered the matter we are of the view that the learned judge was right in holding that in the circumstances the so-called relocation order was in fact a transfer order. We came to this finding for the following reasons:
the distance between the two divisions is not less than 5km;
the respondents had always been working in the division and were provided living quarters in the same division; and
it has not been the practice to transfer workers from one division to another.
We now turn to the next issue, that is, whether the appellant has any right under the contract of service to transfer the respondents to the main division. In Soon Seng Cement Products Sdn Bhd v Non-Metallic Mineral Products Manufacturing Employees' Union [1996] 1 ILR 414, award No 107 of 1997, the same issue came to be considered by the Industrial Court. There the court made the following observation which we think is highly pertinent to the issue before us -
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It is well established in industrial law that the right to transfer an employee from one department to another or from one post of an establishment to another or from one branch to another or from one company to another within the organisation is the prerogative of the management and the Industrial Court will ordinarily not interfere. But if the transfer is actuated with improper motive, it will attract the jurisdiction of the court. The power to transfer is, therefore, subject to, according to Ghaiye's Misconduct in Employment (at pp 254 and 255), the following well recognised restrictions:
And this right of transfer is also embodied in the Industrial Relations Act 1967, where it states that the company has the right to transfer its employees within the organisation so long as such transfer "does not entail a change to the detriment of an employee in regard to the terms of employment." - Section 13 of the Industrial Relations Act 1967. |
Similarly BR Ghaiye in his book Misconduct in Employment at p 238 stated as follows:
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It is generally held that the right to transfer an employee is an implied right of the employer and, therefore, no express term in the contract is necessary. The right exists even in the absence of contract unless there is a contract to the contrary. The implied right of an employer to transfer is available even when an employee is a probationer. In the absence of anything in the contract of service, general right of the management to transfer will remain. |
This proposition of law may be found in a number of Industrial Court awards. (See, Kesatuan Kebangsaan Pekerja-Pekerja Ladang v Kesatuan Pekerja-Pekerja di dalam Kesatuan Sekerja [1992] 2 ILR 326; Georgetown Pharmacy (M) Sdn Bhd, Ipoh v National Union of Commercial Workers [1992] 2 ILR 377 and BP Malaysia Sdn Bhd v Chua Among [1995] 1 ILR 357.)
This right to transfer is not without restriction. In Assembly Services Sdn Bhd/UMW Engineering Sdn Bhd/UMW Holding Sdn Bhd & Motor Assemblers Supervisory Staff Union (Award 136 of 1985) the court observed:
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A company has the right to transfer its employees within its organisation, provided that such transfer does not entail a change to the detriment of an employee in regard to his terms of employment. It is well-established in industrial law that the right to transfer an employee from one department to another, or from one part of an establishment to another, or from one branch to another, or from one company to another within the organisation, is the prerogative of the management and the Industrial Court will ordinarily not interfere. But if the transfer is actuated with improper motive, it will attract the jurisdiction of the court. The power to transfer is thus subject (according to Ghaiye's Misconduct in Employment) to the following well-recognised restrictions:
Whether a transfer entails a change to the detriment of an employee in regard to his terms of employment, or whether the transfer is bona fide is a question of fact for the court to determine. |
At this stage we think it is appropriate to consider the facts and circumstances of the present case. The principle ground relied upon by the respondents in resisting the transfer is that the transfer was to the detriment of the respondents. This is because the main division is located some 5 km from the Bukit Rhona division hence it would entail additional travelling time roughly around 15 minutes daily. The respondents further contended if they were to move to the quarters in the main division as proposed by the appellant they would incur additional cost in terms of bus fare for their school going children. The difference in the fare per child according the first respondent was around RM3.00 per month. The other grievance by the respondents is that their income would suffer; they claimed that in the main division the yield was lower than that in the Bukit Rhona division due to the age of the trees.
The appellant, however, contended that the basic salary for the task was the same as set out in the collective agreement. Further the appellant said the respondents had not adduced any evidence to support their contention.
From of the collective agreement it is clear that an employee may be required to tap rubber in either the low yielding area as well as in the high yielding area. Article 12 of the agreement provides that a rubber tapper working in low yielding field shall be paid a suitable rare and the average earnings of a rubber tapper in such field or area shall not fall below the basic wage. Based on the above we do not think that the fact that the transfer would result in the respondents having to work in low yielding area is any proper basis for the respondents to reject the transfer. The respondents were bound by the collective agreement. In this regard we agree with the Assistant Director. We are also of the view that the case of Kumpulan Guthrie Sdn Bhd v Valaithan Raman Nair [1990] 1 MLJ 294, relied upon by the learned Judge is, on the facts, clearly distinguishable from the present case.
On the extra cost in terms of the bus fare for their children if they were to move to the main division our view is that the respondents were not forced to move to the main division. In fact they were given the choice either to stay on in the existing quarters or to move to the quarters in the main division. In any event in our view the claim here is far too trivial to be of any consequence.
In allowing the appeal the learned judge also took into consideration the extra 20 minutes each day that the respondents would take to travel to work. In his view this would amount to altering the terms and conditions of service to a less favorable one. With respect to the learned judge we are of the opinion that he had interpreted the terms and conditions of service far too stringently. We do not think this constitutes a material change in the terms and conditions of service. Far from it. This is unlike in the case of Metaldek Industries Sdn Bhd v Kamaruddin Tokimon [1999] 1 AMR 1160; [1999] 2 CLJ 761 where the relocation involves a distance of some 250 km. The effect of the transfer in the present case is not as drastic as suggested by learned counsel for the respondents.
Finally with the regard to the payment of indemnity in lieu of notice as ordered by the learned judge under s 13 of the Act, it is to be noted that he made the order on the premise that there is no transferability clause in the contract of service. In the circumstances he held that s 12(3)(e) of the Act, applies to the respondents. However, with respect to the learned judge, for the reasons given earlier, we are of the view that, on condition that the employer has acted bona fide and in the interest of its business and is not actuated by any indirect motive or any kind of mala fide, the right to transfer is an implied right of the employer. In the circumstances of this case we find that the appellant had acted in accordance with these principles. For those reasons we hold that s 12(3)(e) of the Act, does not apply to the present case. Hence, the order of the learned judge for payment of indemnity in lieu of notice under s 13 of the Act is hereby set aside.
CONCLUSIONS
For the above reasons we allowed the appeal with costs here and below. The order of the learned judge is set aside and that the order of the Assistant Director is reinstated. Deposit to be refunded to the appellant.
Cases
Assembly Services Sdn Bhd/UMW Engineering Sdn Bhd & UMW Holding Sdn Bhd and Motor Assemblers Supervisory Staff Union (Award 136 of 1985); BP Malaysia Sdn Bhd v Chua Among [1995] 1 ILR 357; Georgetown Pharmacy (M) Sdn Bhd, Ipoh v National Union of Commercial Workers [1992] 2 ILR 377; Kesatuan Kebangsaan Pekerja-Pekerja Ladang v Kesatuan Pekerja-Pekerja di dalam Kesatuan Sekerja [1992] 2 ILR 326; Metaldek Industries Sdn Bhd v Kamaruddin Tokimon [1999] 1 AMR 1160; [1999] 2 CLJ 761, HC; Shalimar Paints Ltd v Third Industrial Tribunal Calcutta [1971] 11 LLJ 58; Soon Seng Cement Products Sdn Bhd v Non-Metallic Mineral Products Manufacturing Employees' Union [1996] 1 ILR414
Legislations
Employment Act 1955: s.12, s.13, s.70
Employment (Termination and Lay Off Benefits) Regulations 1980
Authors and other references
BR Ghaiye, Misconduct in Employment
Representations
A Ramadas and M Jothi (Ramadas & Associates) for appellant
P Kuppusamy and VK Raj (P Kuppusamy & Co) for respondent
Notes:-
This decision is also reported at [2004] 4 AMR 621
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