Judgment

Abdul Kadir Sulaiman, JCA

(delivering the judgment of the court)

1. This is an appeal against the decision of the learned judge of 15th October 1999 affirming the decision of the Assistant Director of Labour, Segamat (“the Director”), allowing the claim of the respondents for termination benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980 (“the 1980 Regulations”). The Director made an order for the appellant to pay the respondents RM114,001.42 as such benefits because the appellant could not withdraw unilaterally its notice to terminate the services of the respondents. We heard the arguments on 6th April 2004 and reserved our decision on the appeal. We now provide our decision.

2. The first respondent was a mandore and the rest were rubber tappers employed by the Claire Estate owned by the appellant. The appellant by a letter dated 31st October 1995 gave them 8 weeks termination notice to take effect from 1st January 1996. The reason given was that their positions on the estate would be redundant as a result of the felling of old rubber trees in the Estate. They were told that their employment with the Estate would cease on 1st January 1996 when appropriate termination benefits and any other monies due to them would be paid. However, some 40 days before 1st January 1996, the appellant by another letter of 20th November 1995, informed them that due to a review of the Company’s policy on the matter it has been decided that they would not be declared redundant upon the felling of the old rubber trees. They were requested to treat the appellant’s earlier letter of 31st October 1995 as withdrawn and cancelled and they were told to report for work as usual on 1st January 1996 whereupon they would be allotted their normal duties. This information concerning the change of policy on the part of the appellant did not come as a relief to the respondents, for by a letter dated 5th December 1995, they informed the appellant that they have made all necessary arrangements in accordance with the appellant’s letter of 31st October 1995 terminating their services on 1st January 1996. They requested the appellant to abide by its letter of 31st October 1995 and to make appropriate steps to pay out the termination benefits, as promised, on expiry of the termination notice. The appellant responded by its letter of 8th December 1995 maintaining the validity of its stand to withdraw the letter of 31st October 1995 on grounds that the withdrawal of the notice of termination was effected well in advance of the expiry of the notice period. As such, the respondents were accordingly advised to abide by the estate’s decision on the matter and to report for work as usual on 1st January 1996 whereupon they would be allotted their normal duties. This time they were warned that failure to report for work on that date would tantamount to abandoning their contract of service with the estate.

3. The respondents did not return to work on 1st January 1996 as expected. So by a letter dated 3rd January 1996, the appellant wrote to them as follows:

   Dear Sir, Re: Absence from Work We refer you to our letters Ref. 29/401-95 dated 20th November 1995 and 31/401-95 dated 8th December 1995 instructing you to report for work as usual on 1st January 1996. We note that till this date you have failed to report for work as directed without just cause or excuse and without prior permission from the Management. As you may no doubt be aware, vide Section 15(2) of the Employment Act 1955, you shall be deemed to have broken your contract of service if you have been continuously absent from work for more than two consecutive working days without prior leave or no reasonable excuse for such absence. In view of your absence from work without prior leave, you are now required to show cause in writing on receipt of this letter as to why the Management should not treat your absence as abandonment of your contract of service. You are further advised that should you failed or refuse to respond to this letter immediately, and/or your reply is unsatisfactory, the Management reserves the right to take any form of disciplinary action against you or alternatively it will be construed that you have broken your contract of service by your continued absence and the Management will further construe that you have unreasonably refused to accept the continuous employment offered vide our letters dated 20th November 1995 and 8th December 1995. In conclusion, should there be no response from you within two days of receipt of this letter, the Management would proceed to assign other workers to the task originally allocated to you. Please acknowledge receipt of this letter. Thank you.

4. Nothing came out of its letter dated 3rd January 1996, the appellant on 16th January 1996 issued letters to the respondents informing them to the effect that since they have decided not to return to work, they have therefore, abandoned their contract of service with the company and accordingly were no longer in the employment of the company.

5. In the meantime, conciliation steps were taken by the Labour Department to resolve the dispute between them, but without success. On 19th January 1996, the respondents lodged their complaint with the Segamat, Labour Office under section 69 of the Employment Act 1955 which allows the Director to inquire into and decide any dispute between an employee and his employer in respect of wages or any other payments in cash due to such employee under any of the provisions of the Act or any subsidiary legislation made thereunder. In this case the complaint by the respondents was over non-payment of their termination benefits by the appellant pursuant to the 1980 Regulations.

6. Their complaint was inquired into by the Director. As we see it, the issue here really is whether on the facts alleged, the respondents are entitled in law to be paid the termination benefits provided for by the 1980 Regulations. But from the records, we found that both the Director and the learned judge concentrated on the issue of whether on the given facts the appellant is entitled to withdraw the termination notice given to the respondents unilaterally i.e. without the consent of the respondents. Having decided that the appellant was not entitled to do so, the Director went ahead to order the appellant to pay the termination benefits without having regards to the express provisions of the 1980 Regulations relating to termination benefits payment. It could be seen that the Director, and subsequently the learned judge, had overlooked or misconstrued some statutory provision or had committed some error of legal principle. See Jamil Harun v Yang Kamsiah Meor Rasdi [1984] 1 CLJ (Rep) 11, a Privy Council decision.

7. According to the record, this is what the Director said in his judgment [translation]:

   5.

   This Court is of the opinion that the issues in this case are: first, can the termination letter be withdrawn without the consent of the Complainants before the expiry of the notice and secondly, are the Complainants entitle to payment of termination benefits under the Employment (Termination and Lay-Off Benefits) Regulations 1980 if the Complainants reject the withdrawal of the termination by the Defendant (P1-5 and P1-6).

8. Citing section 12 of the Employment Act 1955, the Director was of the view as follows [translation]:

   7.	Therefore section 12(1) of the Employment Act 1955 emphasises more on intention of the Defendant towards the Complainants. Hence, the withdrawal letter (P1-5 & 6) in respect of the notice (P1-3) is confusing to the Complainants as it did not give any regard to its effects and no rational consideration was allowed. The Complainants will lose their statutory rights under the Employment Act 1955. In particular, those who had served for more than 30 years. This seems cruel to the rights of employees as a result of the Defendant's non-professional conduct in discharging its duties as required by the Labour Laws of this country (Exhibit D1)
   8.	Finally, in my opinion, base on the facts before me, the Defendant's notification letter dated 31.10.95 (P1-3) that was issued to the Complainants cannot be withdrawn as the meaning of section 12(1) of the Employment Act 1955 clearly shows that the real "intention" of the Defendant was to terminate the Complainants and this is a "statutory" intention. Therefore, I am satisfied that the Defendant ought to pay the claim for termination benefits, to the Complainants following the provisions of Regulation 6(2) of the Employment (Termination and Lay-Off Benefits) Regulations 1980 - Employment Act 1955 as agreed in Exhibit D1 between the Complainants and the Defendant.
   9.	The Defendant must pay the sum of RM114,001.42 as "Ordered" to the Assistant Director of Labour in Segamat for the Complainants or through their solicitors and notified to this Court.

9. We are of the view that the Director had seriously misdirected himself which amounts to a non-direction on the issue before him in view of the statutory provisions of reg. 4(3) of the 1980 Regulations, the very Regulations under which the claim by the respondents was made i.e. for termination benefits payment. The regulation states as follows:

   4.

   (3) An employee shall not be entitled to any termination benefits payment if, not less than seven days before the date with effect from which his services are to be terminated, the employer has offered to renew his contract of service or to re-engage him under a new contract, so that- (a) the provisions of the contract as renewed, or of the new contract, as the case may be, as to the capacity and place in which he would be employed, and as to the other terms and conditions of his employment, would not be less favourable than the corresponding provisions of the contract as in force immediately before the termination of his services; (b) the renewal or re-engagement would take effect on or before the date with effect from which his services are to be terminated, and the employee has unreasonably refused that offer. [emphasis added]

10. On the facts, the withdrawal of the letter of notice dated 31st October 1995 was made by the appellant “not less than seven days” as so provided by the express provisions of reg. 4(3) of the 1980 Regulations, before the date with effect from which the services of the respondents were to be terminated, which was to be on 1st January 1996. By the letter of 20th November 1995 withdrawing the letter of 31st October 1995 the respondents were told to continue to report for work as usual on 1st January 1996 whereupon they would be allotted their normal duties. They were not happy because the appellant acted unilaterally to do so without first consulting them. As we see it, there is nothing in the provisions of the 1980 Regulations which require the appellant to do so. The notice given in the letter of 31st October 1995 is not of immediate effect. It is to be effective only on 1st January 1996. It is contingent in nature. For so long as the provisions of reg. 4(3) of the 1980 Regulations is complied with, the appellant may unilaterally withdraw the notice letter of 31st October 1995 which it did in this case. If that happens, the respondents would not be entitled to any termination benefits. So, on the facts and the law, the Director ought not to have penalized the appellant in the way he did by awarding against it the termination benefits payment to the respondents having regards to the provisions of the 1980 Regulations upon which the respondents’ claim was based.

11. Be that as it may, the matter went on appeal to the learned judge. Before the learned judge it was submitted on behalf of the appellant on the inapplicability of the common law principle in the light of the statutory provisions of reg. 4(3) of the 1980 Regulations. But the learned judge was unable to subscribe to the submissions put forward on behalf of the appellant. This is because, according to the learned judge, the letter dated 20th November 1995 issued to the respondents cannot be said to be issued under reg. 4(3) of the 1980 Regulations because the letter made no mention or reference to the said reg. 4(3) of the 1980 Regulations. Thus without the agreement of the respondents to cancel the notice, the learned judge said the termination must run its course. The learned judge cited the case of Harris & Russel Ltd v Slingsby [1973] 3 All ER 31 in support. Upon perusal of the case cited, we are of the view that the case can easily be distinguished from the present sets of facts. The case was decided on the basis of the law of contract relating to offer and acceptance by parties to a contract. Once the offer is accepted, it cannot be withdrawn except by the agreement of the offeree. In that case, the respondent who was working for the appellant, gave a month’s notice of termination from 1st January 1973. This is considered as an offer made by the respondent. The said offer was accepted by the appellant on 10th January 1973. Until the end of the period the respondent did not withdraw his notice. The industrial tribunal made a finding that the appellant had unfairly dismissed the respondent and made an award of compensation consequent upon the finding of unfair dismissal. On appeal against the decision of the industrial tribunal, the National Industrial Relations Court held that where one of the parties to a contract of service gave notice determining the contract, that party could not thereafter unilaterally withdraw the notice. Although it was always open to the other party to agree to the withdrawal of the notice, in the absence of the agreement the notice would stand and the contract would terminate on the effluxion of the period of notice. On the basis of the law of contract, we wholly agree with the decision of the case. But in our present case, the basis is not the contract law because the claim by the respondents is on the 1980 Regulations. Hence, that Regulations must determine the issue at hand. The Regulations by the provisions of reg. 4(3) thereof expressly allow the appellant to withdraw such a notice and to offer to renew the respondents’ contract of service or to re-engage the respondents under a new contract provided he did so, not less than seven days before 1st January 1996, thereby disentitling the respondents from receiving any termination benefits payment. In this case, the appellant did so by its letter of 20th November 1995 complying with the necessary requirements of reg. 4(3) of the Regulations. Hence, the decision in Slingsby, supra, which the learned Judge based his decision upon is clearly irrelevant in deciding as to whether the respondents are entitled to the termination benefits payment or otherwise.

12. For our part, we are of the view that the issue here is one of law which is whether on the facts as presented the respondents are entitled or otherwise to the termination benefits payment. Irrespective of whether the appellant in its letter mentioned expressly or otherwise of the necessary provisions of law, the facts would determine the law as applicable. The facts may disclose the issue of common law principle of contract but the same facts may raise the very issue that the court has to make a decision upon, which in this case is the issue of termination benefits payment claimed by the respondents which is governed by the 1980 Regulations. Hence, the court cannot overlook the very matter which it has to decide upon. By confining itself to the issue of the common law principle of contract and ignoring the very issue for which a decision is called upon, the learned judge has erred in coming to his decision on the matter.

13. Before us in this appeal, the learned counsel for the respondents submitted that the letter of the appellant of 20th November 1995 was not an offer to renew the contract of the respondents echoing the words of the learned judge that the letter cannot be said to be issued under reg. 4(3) of the 1980 Regulation. We cannot agree with that line of submission. The letter of 20th November 1995, in our view, is clear from its wordings that it is a letter from the appellant/employer offering to the respondents/ employees to renew their contract of service with the appellant which but for this letter would have terminated on 1st January 1996. This offer was made not less than seven days from that date as so required by reg. 4(3) of the 1980 Regulations. Such offer made would not be less favourable than the corresponding contract then in existence. Such renewal of the contract of service would take effect on the date with effect from which the services of the employee are to be terminated, which is on 1st January 1996. Had the respondents reported for work on 1st January 1996, there would clearly be a continuity of service without any break. Unfortunately, by not turning up for work as offered on 1st January 1996, the respondents had in our view, unreasonably refused that offer sticking to their stand that the termination notice letter of 31st October 1995 could not be withdrawn by the appellant without their consent. So, by the operation of reg. 4(3) of the 1980 Regulations, the respondents are not entitled to any termination benefits payment.

14. Next, the learned counsel for the respondent submitted to us the case of Kerisna Govindasamy v Highlands & Lowlands – Ladang Bukit Selarong [2003] 4 CLJ 595, a High Court decision from Alor Star, as being on all fours with the present case under appeal. In that case, the appellant was a mandore working in the respondent’s rubber estate. On 1st November 1998 the respondent issued a notice of termination of service to take effect from 1st January 1999 with similar promise for compensation or benefit under the 1980 Regulations. However, by another letter of 15th December 1998, the respondent withdrew the said notice letter on ground of mistake. It was not intended for the appellant. He was therefore told that his services would not be terminated and he was to carry on work as usual. Considering that the notice letter was effective, the appellant no longer went to work with the respondent from 1st January 1999. The appellant lodged the same complaint with the Labour Department claiming that he had not been paid any compensation from the respondent for terminating his services. The Labour Department turned down his claim on the ground that the respondent had no intention to dismiss the appellant. Furthermore, the correspondence took place during the notice period when the appellant was still in the employment of the respondent. The appellant took advantage of the mistake of the respondent to stop work with a hope to get the termination benefit. Aggrieved over that decision dismissing his claim, the appellant appealed to the High Court. In the High Court, the learned judge allowed the appeal by holding as follows [translation]:

    This Court finds that the Labour Officer had erred in law in deciding that the respondent can withdraw the termination notice on the ground that the notice was wrongly given to the appellant. As decided above, the respondent can withdraw the termination notice only with the consent of the appellant, regardless of any reason. Besides, the Labour Officer also erred in not taking into consideration the provisions of s.12(3)(a) and (d) of the Employment Act 1955 which are applicable to this case. This Court finds that the appellant is not governed by any of the situations under reg.4 of the Employment (Termination and Lay-off Benefits) Regulations 1980 which prevent him from obtaining termination benefits. Because the appellant was terminated by the respondent before the appellant reaches retirement age, thus this Court decides that the appellant is entitle to termination benefits of RM17,480 as claimed by the appellant. [emphasis added]

15. It is to be noted that in that case, the termination of service was to take effect on 1st January 1999 and the letter withdrawing the notice to terminate was dated 15th December 1998, well over the minimum period allowed by reg. 4(3) of the 1980 Regulations of seven days. In the circumstances, the non-entitlement of the termination benefits payment condition would have applied. In the circumstances, we cannot see in what manner that the appellant there was said to be not subjected to any situation under reg. 4 of the 1980 Regulations. We notice that in these two cases, the mind of the learned judges had been clouded by the issue under the Employment Act 1955 so much so that the very issue before the courts which in each case is a claim for termination benefits provided by the 1980 Regulations had been overlooked. We feel that the case of Kerisna Govindasamy, supra, was wrongly decided. In any event, we were told by the learned counsel for the appellant in the present appeal before us, that Kerisna Govindasamy, supra, is under appeal to the Court of Appeal and that leave to do so had been granted. In the circumstances, the submission of the learned counsel for the respondent on the case lacks any merit for our consideration.

16. So, for all those reasons, we are of the view that this appeal by the appellant must be allowed with costs here and below. Accordingly, the decision of the learned judge is hereby set aside.

Cases

Jamil Harun v Yang Kamsiah Meor Rasdi [1984] 1 CLJ (Rep) 11

Harris & Russel Ltd v Slingsby [1973] 3 All ER 31

Kerisna Govindasamy v Highlands & Lowlands - Ladang Bukit Selarong [2003] 4 CLJ 595

Legislations

Employment Act 1955: s.12

Employment (Termination and Lay-Off Benefits) Regulations 1980: Reg.4

Representations

Ramadas with R. Visha Devi (Messrs Ramadass & Associates, Advocates & Solicitors) for the appellant

P. Kupusamy with En. V.K. Raj (Messrs P. Kuppusamy & Co.) for the respondent