IN THE COURT OF APPEAL OF MALAYSIA (APPELLATE JURISDICTION)
CIVIL APPEAL NO. S-01(IM^-359-10/2013
SABAH FOREST INDUSTRIES SDN BHD
INDUSTRIAL COURT MALAYSIA …1st RESPONDENT
ENCIK RICHARD FELIN JINIVON …2nd RESPONDENT
[In the matter of an application for Judicial Review No. K24-01 OF 2010-1 in the High Court in Sabah and Sarawak at Kota Kinabalu
IN THE MATTER of an application for Judicial Review for leave to apply for an Order of Certiorari;
IN THE MATTER of paragraph 1 of the Schedule to the Courts of Judicature Act 1964 and/or Order 53 of the Rules of the High Court 1980;
IN THE MATTER of Award No. 1441/2009 of Industrial Court Case No. 17/4-1090/07 Between Encik Richard Felin Jinivon and Sabah Forest Industries Sdn Bhd handed down on the 11th day of December 2009.
…1st RESPONDENT …2nd RESPONDENT
SABAH FOREST INDUSTRIES SDN BHD
INDUSTRIAL COURT MALAYSIA ENCIK RICHARD FELIN JINIVON
Coram: Raus Sharif, PCA
Zaharah Ibrahim, JCA David Wong Dak Wah, JCA
JUDGMENT OF THE COURT
1. This is an appeal by Sabah Forest Industries Sdn Bhd (Appellant) against part of the decision of the High Court that upheld the Industrial Court’s Award of compensation in lieu of reinstatement in the sum of RM159,940.00 to Richard Felin Jinivon (2nd Respondent).
2. We heard the appeal on 24 April 2014. After hearing the parties, we adjourned the matter of our consideration and decision. We now give our decision and the reasons for the same.
3. On 2 March 2006, the 2nd Respondent was dismissed from the services of the Appellant. As a result, the 2nd Respondent filed a representation to the Minister under s 20(1) of the Industrial Relations Act 1967 (IRA) for reinstatement of his position.
4. The Minister referred the Appellant’s representation to the Industrial Court for an Award. On 11 December 2009, the
Chairman of the Industrial Court, after a trial, found that the 2nd Respondent was dismissed without just cause or excuse and handed an Award under the following heads:-
(i) Backwages from date of dismissal (02.03.2006) to last date of hearing (09.10.2008) but limited to 24 months:
RM7,270 x 24 = RM174,480.00
Less 10% for contributory
factor on part of Appellant RM 17,448.00
(ii) Compensation of one month’s salary for each completed year of service (01.08.1984 till
5. There is no dispute that the trial started on 9 October 2008 and the Award was handed down on 11 December 2009. When the trial started, the 2nd Respondent was 54 years and 10 months old. Thus, when the Award was handed down, he had passed the retirement age. And it is not in dispute either that under the Appellant’s General Terms and Conditions of Service the
retirement age for male employees is upon reaching 55 years of age.
6. The only issue that called for determination in this appeal is whether in law the Award of compensation in lieu of reinstatement to the 2nd Respondent, whose dismissal was held to be without just cause or excuse, can be made when as at the date of the Award the 2nd Respondent had already reached or passed his compulsory retirement age.
7. This case concerns the representation made by the Appellant under subsections 20(1) and (3) of the IRA. The subsections read:-
“Representation on dismissal
20(1) Where a workman, irrespective of whether he is a member of a trade union or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director General to be reinstated in his former employment; the representations may be filed at the office of the Director
General nearest to the place of employment from which the workman was dismissed.
(3) Upon receiving the notification of the Director General under subsection (2), the Minister may, if he thinks fit, refer the representations to the Court for an award. ”
8. It is clear from the above that the primary remedy under s 20 for the IRA complaint is reinstatement. However, when reinstatement is not a suitable remedy a successful claimant can be awarded monetary compensation. (See Federal Court case of Dr. Dutt v Assunta Hospital  1 MLJ 304). It is a well established principle that when a claimant is awarded monetary compensation, the award is made under two heads:-
(i) Back-wages not exceeding 24 months based on the last-drawn salary from the date of dismissal, less deduction for post-dismissal earnings and contributory misconduct; and
(ii) Compensation in lieu of reinstatement based on the multiplicand of one month’s salary for every completed year of service.
9. As stated earlier, the only complaint by the Appellant in this present appeal is that there is no legal basis for the Industrial
Court award, which was upheld by the High Court, compensation in lieu of reinstatement to the 2nd Respondent as the issue of reinstatement does not arise. This is because at the time of the Award the 2nd Respondent had already attained the age of retirement. In support learned counsel for the Appellant referred to us the decision of the High Court in Hj. Md Ison Baba v Swedish Motor Assemblies Sdn Bhd  8 CLJ 180 where K.C. Vohrah J(as he then was) held as follows:-
“It will be noted that the Industrial Court not only awarded a sum equivalent to ten months’ salary as back-wages but also 18 month’s salary (one month for every for every year of completed service) as compensation in lieu of reinstatement. Swedish Motor has pointed out that the compensation in lieu of re-instatement does not arise at the time the Industrial Court computed the compensation payable to Md Ison as he had already reached his retirement age and could not been re-instated beyond his retirement age. From the evidence it seems clear that if Md Ison had not been dismissed but had been allowed to retire he would have only received ten month’s salary plus a gratuity of RM82,091.37 from the Group Pension Scheme.
While I cannot see any merit in the 1st ground that the Industrial Court erred in law when it held that Md Ison was only required to be paid a sum equivalent to 10 month’s salary as back-wages using 55 years as the age of retirement it appears to me that the Industrial Court was
wrong in awarding the equivalent of 18 month’s salary as compensation in lieu of re-instatement when the Court was not entitled to do so. ”
10. Learned counsel for the 2nd Respondent however approached this appeal on the basis that this Court should be slow in disturbing the Award of the Industrial Court, especially so in this case when the Award was upheld by the High Court. It was submitted that the amount of the Award is very much at the discretion of the Industrial Court to fix under s 30(5) of the IRA which provides that Court should act according “to equity, good conscience and the substantial merits of the case without regard to technicalities and legal form”. And it was submitted that the Industrial Court had acted on the right principle when awarding the 2nd Respondent compensation in lieu of reinstatement, in addition to the back-wages, as result of the dismissal.
11. We accept the principle that in awarding compensation to an employee who is found to be dismissed without just cause, the Industrial Court must act according to equity, good conscience and substantial merit of the case as required under s 30(5) of the IRA. But there must be a legal basis for the Industrial Court to award such compensation. The Federal Court in Hotel JayaPuri Bhd v National Union of Hotel, Bar & Restaurant
Workers & Anor  1 MLJ 109 speaking through Salleh Abas FJ (as he then was) at page 112-113 said:-
“If there is a legal basis for paying compensation, the question of amount of course is very much a matter of the discretion which the Industrial Court is fully empowered under section 30 of the Industrial Relation Act to fix, but where there is no legal basis for the payment of compensation, I do not think that the President can create legal right and obligation for it and, in my view, the award will be clearly an error in law for which I am prepared to allow this application. ”
12. Applying the above principle to the facts of the instant case, we are of the view that there is no legal basis for the 2nd Respondent to be awarded compensation in lieu of reinstatement. The award of compensation in lieu of reinstatement assumes that the 2nd Respondent who had been dismissed has to be reinstated in his employment as at the date of the Award. Obviously, the 2nd Respondent could not be reinstated or in a position to be reinstated when he was already as at the date of the Award reached or passed the retirement age. Thus, the issue of paying the 2nd Respondent that compensation in lieu of reinstatement does not arise. Such compensation can only be ordered if at the date of the Award he had not reached his age of retirement. But as stated earlier,
the 2nd Respondent had well passed his retirement age. Thus, we adopt the view expressed by K.C Vohrah J (as he then was) in the case of Haji Md. Ison Bin Baba v Swedish Motor Assemblies Sdn Bhd (supra) wherein His Lordship held that compensation in lieu of re-instatement does not arise in cases where the employee has reached his retirement age.
13. Thus, it is our finding that the Industrial Court in the instant case fell into error when it awarded compensation in lieu of reinstatement when clearly the 2nd Respondent cannot be reinstated beyond his retirement age. The Industrial Court had no legal basis to award the 2nd Respondent compensation in lieu of reinstatement. Thus, there was an error on the face of the record and the Award should be quashed.
14. We therefore allow the Appellant’s appeal with costs. The Award of the Industrial Court which was affirmed by the High Court, in respect of compensation in lieu of reinstatement is therefore set aside.
Dated this 17th day of June 2014.
Raus Sharif President
Court of Appeal, Malaysia
Counsel for the Appellant: S. Vanugopal
Solicitors for the Appellant: Messers S. Vanugopal & Partners
Counsel for the 2nd Respondent: Yunof Maringking
Solicitors for the 2nd Respondent: Messers Maringking & Co