Retrenchment Ban Will Only Hurt Bosses and Workers, Says Lawyer

A retrenchment ban for a specific period would not be a good idea especially at a time when businesses are trying to survive, according to an experienced industrial law practitioner. 

T Thavalingam, an industrial relations expert, stated that the retrenchment ban would be unfair to both employers and workers. He said retrenchment was recognised by law while the Industrial Relations Act guaranteed that employers did not dismiss employees based on “whims and fancy”.

He stated bosses must have just cause before dismissing someone, for example, misconduct, poor performance and redundancy. They need to prove these criteria when firing or retrenching employees.

Under the law, he said, the right to reorganise is a management prerogative. Unless the retrenchments were done in bad faith, the courts would steer clear of this issue. Therefore, the retrenchment ban is not a good move.

“To make it illegal would be unfair to any employer because he runs his business according to needs and finances.

“To make it illegal, even for a short period of time, is inappropriate especially in times like these where companies are trying to stay afloat,” he said.

Thavalingam, who has written a book titled “Retrenchment Law and Procedure in Malaysia”, said he was responding to the pressure by the Malaysian Trades Union Congress (MTUC) for the government to introduce emergency employment regulations prohibiting employers from laying off workers for a specific timeline.

MTUC secretary-general J Solomon pushed for the law after the Malaysian Employers Federation (MEF) warned that the 5% unemployment rate in Malaysia, the highest since 1990, would rise as high as 12% before the middle of next year.

Thavalingam said there were adequate laws in Malaysia to shield employees from unfair dismissal claims stemming from any retrenchment exercise.

Thavalingam said a retrenchment ban would be unfair to both employers and employees alike.

He mentioned the Employment Act 1955 which he said stipulated a notice period as well as termination and lay-off benefits. The Employment (Termination and Lay-off Benefits) Regulations 1980, meanwhile, makes provision for monetary compensation in the event that an employee is terminated or laid off.

He also said that the retrenchment ban would also be unfair to the worker who would be idling away without any work. He recommended that employees consider re-skilling, referring to several initiatives introduced by the government through agencies such as the Human Resources Development Fund.

Meanwhile, MEF executive director Shamsuddin Bardan said MTUC had “missed the point” about retrenchment exercises. He stated while unions and some employees might believe that employers are trigger-happy when it comes to dismissals, retrenchments are normally made as a last resort.

“A union thinks that at the slightest chance, employers will just retrench, which is not true. It is a serious misconception,” he said.

Shamsuddin said employers wouldn’t simply let staff go as they had invested in them via training. Letting them go would be similar to blowing off such investment, he said.

He urged unions, the government and employers to instead think outside of the box on how to help businesses stretch their capacity to pay wages, even reduced ones. “At the end of the day, we want to retain employees,” he said.

Source: Free Malaysia Today

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