02(f)-11-02/2019(W)

(DALAM MAHKAMAH PERSEKUTUAN MALAYSIA DI PUTRAJAYA

(BIDANGKUASA RAYUAN)
RAYUAN SIVIL NO.: 02(f)-11-02/2019(W)

ANTARA

AHMAD ZAHRI BIN MIRZA ABDUL HAMID

(Singapore ID.: S73102254A) ... PERAYU

DAN

AIMS CYBERJAYA SDN BHD

(No. Syarikat: 794695-X) … RESPONDEN)

(Dalam Perkara Rayuan Sivil No.: W-02(A)-287-02/2017

Di Mahkamah Rayuan Malaysia Bidang Kuasa Rayuan

Antara

AIMS CYBERJAYA SDN BHD

(No. Syarikat: 794695-X) … PERAYU

Dan

AHMAD ZAHRI BIN MIRZA ABDUL HAMID

(Singapore ID.: S73102254A) ... RESPONDEN)
 02(f)-11-02/2019(W)

(Dalam Perkara Mahkamah Tinggi Malaya Kuala Lumpur

Bahagian Rayuan dan Kuasa-Kuasa Khas
Permohonan Untuk Semakan Kehakiman No: WA-25-117-07/2016

Antara

AIMS CYBERJAYA SDN BHD

(No. Syarikat: 794695-X) … PEMOHON

Dan

AHMAD ZAHRI BIN MIRZA ABDUL HAMID

(Singapore ID.: S73102254A) ... RESPONDEN)

CORAM:

TENGKU MAIMUN TUAN MAT, CJ

MOHD ZAWAWI SALLEH, FCJ
IDRUS HARUN, FCJ
NALLINI PATHMANATHAN, FCJ
ABDUL RAHMAN SEBLI, FCJ

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JUDGMENT OF THE COURT

Introduction

[1] The key issue in this appeal is whether the appellant/claimant was

employed on a fixed term contract or was a permanent employee of the

respondent at the material time. The Industrial Court and the High Court

found that the appellant/claimant was a permanent employee of the

respondent and his dismissal from his employment was without just cause

or excuse. On appeal, the Court of Appeal set aside the decision of the

High Court and allowed the respondent’s appeal.

[2] On 7.1.2019, this Court granted the appellant/claimant leave to

appeal on the following questions of law:

(i) Whether a need for work permit is a material consideration in

determining whether an employment contract is a genuine

fixed term contract; and

(ii) Does a contract of employment which is renewed

successively without application by the employee and without

any intermittent breaks in between, is in reality a permanent

employment.

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The Factual Background and Antecedent Proceedings

[3] We do not propose to narrate the detailed factual background and

antecedent proceedings of the case. They may be recounted in

chronological order as follows:

End of 2008 The appellant/claimant was invited to join, invest and

then became a shareholder of the AIMS Data Centre 2
Sdn Bhd (“ADC”).

27.5.2009 The appellant/claimant received a letter of appointment

from ADC for the position of the Consultant. The letter
was signed by Gan Te- Shen, the Chief Executive Officer
(“CEO”) of ADC.

26.8.2009 The appellant/claimant received a contract for

consultancy services from ADC for a fixed term i.e., from
1.10.2009 to 30.9.2010 (“original contract”). On the
same day, the appellant/claimant received a letter of
appointment as Vice President Product Development of
ADC, from 1.10.2009. According to this original contract,
the appellant/claimant would be entitled for performance
bonus scheme. The contract and the letter were signed
by Gan Te- Shen, the CEO of ADC.

24.9.2010 The appellant/claimant received a renewal contract for a

further period of twelve (12) months from 1.10.2010 to
30.9.2011. All the terms and conditions of the contract
remained unchanged. The letter was signed by Chiew
Kok Hin, the CEO of ADC.

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8.10.2011 The appellant/claimant received a renewal contract for a

further period of twelve (12) months, from 1.10.2011 to
30.9.2012. All the terms and conditions of the contract
remained unchanged. The letter was signed by Chiew
Kok Hin, the CEO of ADC.

11.10.2012 The appellant/claimant received a renewal contract for a

further period of twelve (12) months, from 1.10.2012 to
30.9.2013. All the terms and conditions of the contract
remained unchanged. The letter was signed by Chiew
Kok Hin, the CEO of ADC.

18.10.2012 The appellant/claimant received a renewal contract for a

further period of twelve (12) months from 1.10.2012 to
30.9.2013, as Consultant of AIMS Cyberjaya Sdn Bhd
(“respondent”) instead of ADC. This was due to the
phasing out of ADC. All the terms and conditions of the
contract remained the same as the original contract
dated 26.8.2009. The letter was signed by Chiew Kok
Hin, the CEO of the respondent.

7.1.2013 ADC was subsequently consolidated into the respondent.

In view of the company structure, the appellant/claimant
was re-designated to assume the position of Vice
President, Product, & Solutions with effect from 1.1.2013
in the respondent. All the terms and conditions of the
contract remained the same as the original contract
dated 26.8.2009. The letter was signed by Chiew Kok
Hin, the CEO of the respondent.

10.9.2013 The appellant/claimant was given a letter by the

respondent offering him further employment from
1.10.2013 until 30.9.2014. However, the respondent
sought to change the terms of the appellant’s/claimant’s
employment by excluding the performance bonus
scheme. The letter was signed by Chiew Kok Hin, the
CEO of the respondent.

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13.9.2013 The appellant/claimant had informed Chiew Kok Hin, the

CEO of the respondent, that he was not agreeable to the
new terms and conditions of the contract.

18.9.2013 The respondent renewed the appellant’s/claimant’s

contract for a period of three (3) months from 1.10.2013
to 31.12.2013. The terms and conditions of the contract
still remained unchanged i.e. excluding the performance
bonus scheme. The letter was signed by Chiew Kok Hin,
the CEO of the respondent.

1.10.2013 The appellant/claimant informed the respondent that he

was unable to accept their offers, via an email.

18.10.2013 The appellant/claimant received a letter notifying him that

the respondent gave him two (2) months’ notice of expiry
of his contract from 1.11.2013 until 31.12.2013. The
respondent also informed the appellant/claimant that
they had decided to grant him an early release from his
employment with effect from 19.10.2013. The appellant/
claimant made a representation under section 20 of the
Industrial Relations Act (1967). The reconciliation
attempts before the Industrial Relations Department
failed and the matter was subsequently referred to the
Industrial Court for adjudication.

1.4.2016 The Industrial Court held that the appellant/claimant was

a permanent employee of the respondent and the
purported “fixed term contracts” were not genuine fixed
term contracts and the appellant’s/claimant’s dismissal
was without just cause or excuse. The Industrial Court
awarded back wages of twenty-four (24) months and
compensation of one and a half (1½) month salary for
each year of the appellant’s/claimant’s service in lieu of
reinstatement.

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1.7.2016 Dissatisfied with the award of the Industrial Court, the

respondent filed a judicial review application to quash the
Industrial Court’s award.

6.1.2017 The High Court dismissed the respondent’s application

for judicial review.

27.1.2017 The respondent then appealed to the Court of Appeal.

30.11.2017 The Court of Appeal allowed the respondent’s appeal

and set aside the decision of the High Court and the
award of the Industrial Court.

26.12.2017 The appellant/claimant then filed the notice of motion for

leave to appeal to the Federal Court.

7.1.2019 Leave to appeal to the Federal Court was granted on two

(2) questions of law. The two (2) questions of law are as
stated in paragraph [2] of this judgment.

28.11.2019 After perusing the appeal record, reading the written

submissions and hearing oral submissions from both
parties, this Court allowed the appeal. The award of the
Industrial Court was reinstated.

The 2nd Leave Question

[4] We will first deal with the 2nd Leave Question which is the

determinative and central question in this appeal. The issue whether the

appellant/claimant was employed on fixed term contract or was a

permanent employee of the respondent is at the heart of the dispute

between the parties.

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[5] The appellant’s/claimant’s case before the Industrial Court was that

his contract of employment with the respondent was permanent in nature

and not a genuine fixed term contract. The Industrial Court found in favour

of the appellant/claimant and vide its award dated 1.4.2016 concluded as

follows –

“[45] Based on the totality of the evidence before this Court,

the conclusion that is reached is that the claimant was a
permanent employee of the Company and the purported
“fixed term contracts” were not genuine fixed term contracts.
Since the Company had terminated the claimant on the
ground that his contract had expired, the dismissal is therefore
found to be without just cause and excuse.”

[6] In arriving at its decision, the Industrial Court made the following

findings of fact –

(i) all contracts of employment of the appellant/claimant were

automatically renewed upon the initiative of the Company and

not based on any application by the appellant/claimant;

(ii) the appellant/claimant was not a Consultant but an employee

of the company;

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(iii) the appellant’s/claimant’s function and position were not for a

fixed duration but had an indefinite amount of time as was

within the reasonable contemplation of parties; and

(iv) there was no break in the appellant’s/claimant’s employment

with the respondent as confirmed by the respondent’s own

witness in her testimony.

[7] The Industrial Court lifted/pierced the corporate veil of the

respondent and held that the appellant/claimant was in fact a permanent

employee and there was continuity of employment from ADC.

[8] The High Court affirmed the decision of the Industrial Court’s award.

On appeal, however, the Court of Appeal allowed the respondent’s

appeal. The Court of Appeal held, inter alia, that this was not a case

where the corporate veil of the respondent ought to be lifted/pierced to

reveal that the appellant/claimant was at all material times a permanent

employee of the Company since joining AIMS group of companies in 2009

as opposed to an employee on a fixed term contract.

[9] The nub of the Court of Appeal’s reasoning is captured as follows

at paragraphs [16] and [17] –

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“[16] Established authorities have held that there must be

special circumstances, where there is either actual fraud at
common law or some inequitable or unconscionable conduct
amounting to fraud in equity that warrants the lifting of the
corporate veil by either the Industrial Court or the High Court.
(Refer to Law Kam Loy & Anor v Boltex Sdn Bhd & Ors
[2005] 3 CLJ 355).

[17] There is no evidence that the facts of the instant case

demonstrate fraud or unconscionable conduct of the Applicant
and neither did the Learned High Court address this matter in
her ‘Grounds of Judgment’. Thus, there are no grounds for
the Industrial Court or the Learned High Court Judge to lift the
corporate veils of AIMS Data Centre 2 Sdn Bhd and the
Applicant, AIMS Cyberjaya Sdn Bhd to treat the two separate
entities as one i.e. the Applicant, AIMS Cyberjaya Sdn Bhd.”

Lifting/Piercing the Corporate Veil

[10] Learned counsel for the appellant/claimant vehemently argued that

the Court of Appeal had erred and/or failed to appreciate that the Industrial

Courts would, in appropriate cases, more readily lift/pierce the corporate

veil to reveal the true employer and prevent the employer from disclaiming

responsibility for an employee. In support of his submission, reliance was

placed on the Federal Court’s decision in Hotel Jaya Puri Bhd v National

Union of Hotel Bar and Restaurant Workers [1980] 1 MLJ 109 (“Hotel

Jaya Puri case”).

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[11] Learned counsel further submitted that in the industrial

jurisprudence, the mere description of a contract as a fixed term contract

is not conclusive of whether an employee was indeed employed as such.

The Court is duty bound to enquire from the evidence adduced what was

the real nature of the appellant’s/claimant’s employment and if there is a

need to lift/pierce the corporate veil of the company, then this ought to be

done to reveal the true nature of the appellant’s/claimant’s employment.

[12] Based on the evidence adduced before the Industrial Court, it was

submitted that the Court of Appeal erred when it held that the veil of

incorporation of ADC and the respondent could not be lifted/pierced to

reveal that the appellant’s/claimant’s employment was in fact a continuous

employment from the time he was employed in 2009 until his termination

in October 2013.

Our Decision on the 2nd Leave Question

[13] Put simply, “lifting/piercing the corporate veil” means disregarding

the dichotomy between a company and a natural person behind it and

attributing liability to that person where he has misused or abused the

principle of corporate personality. Since the decision of the House of

Lords in Salomon v Salomon & Co [1897] AC 22, which affirmed the

legal principle that, upon incorporation, a company is generally considered

to be a new legal entity separate from its shareholders, the courts in

Malaysia, England and other Commonwealth jurisdictions have found

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exceptions to the general principle stated in Salomon (supra) and have

lifted/pierced the corporate veil to reveal those who controlled the

company.

[14] The application of the doctrine of veil lifting/piercing the corporate

veil is far from clear from case law. Professor Farrar has described the

Commonwealth authority on piercing the corporate veil as “incoherent and

unprincipled” (See: J. Farrar, ‘Fraud, Fairness and Piercing the

Corporate Veil’ (1990) 16 Canadian Business Law Journal 474, 478).

It would appear that the circumstances in which the corporate veil may be

lifted/pierced are greatly circumscribed and the courts tend to take a fact-

based approached on the matter.

[15] Courts have recognised a number of factors that may lead to

lifting/piercing of the corporate veil. Generally speaking, grounds under

general law for lifting/piercing the corporate veil may be grouped into the

following categories:

(a) agency;
(b) fraud;
(c) sham or façade;
(d) group enterprise; and
(e) unfairness/injustice.

These categories are probably not exhaustive. For the purpose of this

instant appeal, categories (d) and (e) are relevant.

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[16] A court may lift/pierce the corporate veil where the relationship

between companies in the same group is so intertwined that they should

be treated as a single entity to reflect the economic and commercial

realities of the situation. An argument of “group enterprise” is that in

certain circumstances a corporate group is operating in such a manner as

to make each individual entity indistinguishable, and therefore it is proper

to lift/pierce the corporate veil to treat the parent company as liable for the

acts of the subsidiary. Lifting/piercing the corporate veil is one way to

ensure that a corporate group, which seeks the advantages of limited

liability, must also accept the corresponding responsibilities.

[17] In the employment law perspective, the application of the “single

economic unit” test or “functional integrality” test is particularly significant

in ascertaining the continuity of employment for the scope of dismissal

protection [see Manley Inc. v Fallis (1977), 2 B.L.R. 277 (Ont. C.A.)]. It

recognises the complexity of modern corporate structures and that the

corporate veil must only be pierced in exceptional circumstances. On the

other hand, such complexity should not be an obstacle to defeat the

legitimate entitlements of wrongfully dismissed employees. This approach

has its root on the general notions of fairness, equality and proportionality

in the treatment of vulnerable employees. It serves to balance fairness

with evolving commercial realities.

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[18] One of the seminal cases in Malaysia on lifting/piercing the

corporate veil is the Hotel Jaya Puri case. It was a decision in respect of

judicial review application for certiorari against the decision by the

Industrial Court ordering Hotel Jaya Puri Berhad (“the Hotel”) to pay

compensation of 2 months salaries plus fixed allowances in favour of

workmen employed in the business of Jaya Puri Chinese Garden

Restaurant Sdn Bhd (“the Restaurant”). The Restaurant, which was a fully

owned subsidiary of the Hotel had 56 workers employed and operated its

business at the hotel premises by paying a rental. Subsequently, the

Restaurant closed its business due to financial losses and the employees

were retrenched. It resulted in an industrial dispute and the matter was

referred to the Industrial Court. The employees claimed that they had

been dismissed rather than retrenched as they were employees of the

Hotel. The Industrial Court issued an award directing the Hotel to pay

compensation.

[19] The Industrial Court found that the Hotel was in fact the employer of

the workers and reasoned that –

(i) The Hotel and the Restaurant were inter-dependent;

(ii) There was functional integrality and unity of establishment

between the Hotel and the Restaurant. In other words,

functionally the Hotel and the Restaurant were in fact one

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integral whole and in terms of management, they also

constituted a single unit; and

(iii) A number of senior officers including the secretary, personnel

manager and assistant manager were common to both the

Hotel and the Restaurant.

[20] On appeal, Salleh Abas FJ (as he then was) upheld the decision of

the Industrial Court. His Lordship observed –

“It is true that while the principle that a company is an entity

separate from its shareholders and that a subsidiary and its
parent or holding company are separate entities having
separate existence is well established in company law, in
recent years the court has, in a number of cases, by-passed
this principle if not made an inroad into it. The court seems
quite willing to lift the "veil of incorporation" (so the
expression goes) when the justice of the case so
demands. The facts of the case may well justify the court to
hold that despite separate existence a subsidiary company is
an agent of the parent company or vice versa as was decided
in Smith, Stone and Knight v Birmingham Corporation
[1938] 4 All ER 115; Re FG (Films) Limited [1955] 1 WLR
483; and Firestone Tyre & Rubber Co v Llewelyn [1957] 1
WLR 464.
...

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In my judgment, by giving recognition to this fact, the

President did not cause any violence to the sanctity of
the principle of separate entity established in Salomon v
Salomon... but rather gave effect to the reality of the
Hotel and the Restaurant as being in one enterprise.... In
my view, the finding by the President is in no way against the
principle of separate entity and I am therefore not prepared to
interfere with the award on this account...”
[Emphasis added]

[21] The willingness of the Malaysian courts to lift/pierce the corporate

veil by adopting the principle enunciated in the Hotel Jaya Puri case,

particularly in the industrial disputes, is not new. In Rusli Luwi v RM Top

Holdings Sdn Bhd & Ors [2003] 4 MLRH 352, the High Court found no

difficulty in lifting the veil of incorporation, when the respondents, one of

which was a subsidiary of the other, were operating as one business

enterprise. Another example of this can be found in Jimsburg Services

Sdn Bhd v Rostam Wahidin [1999] 2 ILR 324.

[22] In this instant appeal, the Court of Appeal, relying on the case of

Law Kam Loy (supra), held that the corporate veil of the respondent

ought not to be lifted/pierced. Learned counsel for the appellant/claimant

submitted that the Court of Appeal failed to properly consider the context

in which the decision was made.

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[23] We agree with the submission. If the case is properly considered,

one would discover that the Court of Appeal in Law Kam Loy (supra) had

endorsed that the Industrial Court may, in special and appreciate

circumstances, lift of the corporate veil to reveal who is the proper

employer, such as in a situation where there is actual fraud at common

law or some inequitable or unconscionable conduct amounting to fraud in

equity. Gopal Sri Ram JCA (as he then was) stated as follows –

“…But that is not to say that the court in the Hotel Jayapuri
case was wrong in lifting the veil of incorporation of the facts
of that case. The Hotel Jayapuri case was concerned with
the Industrial Relations Act 1967 which requires the
Industrial Court to disregard the technicalities and to
have regard to equity, good conscience and the
substantial merits of a case. Accordingly, in industrial
law, where the interests of justice so demand, it may, in
particular cases be appropriate for the Industrial Court to
pierce or to disregard the doctrine of corporate
personality. That is what happened in the Hotel Jayapuri
case and no criticism of that case on its facts may be
justified”.
[Emphasis added]

[24] In our considered opinion, the case of Law Kam Loy (supra) simply

stands for the proposition that whilst the approach of the Supreme Court

in the Hotel Jaya Puri case may not be suitable in present times (vis-a-

vis current company law principles), the practice of the courts in

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lifting/piercing the corporate veil may still be accepted in the realm of

industrial relations as the correct approach to reveal who is the employer

in the given case in order to achieve social justice so that the workmen

are not adversely affected. In addition section 30(5) of the Industrial

Relations Act 1967 provides that the court shall act according to “equity,

good conscience and the substantial merits of the case without regard to

technicalities and legal form”.

[25] In this connection, perhaps it would be useful to embark on a

voyage cross other Commonwealth jurisdictions to look at persuasive

authorities relevant to the issue under discussion.

South Africa

[26] In the South Africa, particularly in industrial and labour court matters,

there has been willingness to pierce the veil. In the circumstance where

the company is the agent or alter ego of its shareholders and directors,

the courts are concerned with reality of the situation and not its form. In

essence, what is important is the manner in which the company operated

and with the individual’s relationship to that operation. In the case of

Footwear Trading CC v Mdlalose [2005] 5 BLLR452 (LAC), Nicholson

JA noted that –

“The abuse of juristic personality occurs too frequently for

comfort and many epithets have been used to describe the
abuse against which the courts have tried to protect third
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parties, namely puppets, shams, masks and alter ego.

However, the general principle underlying this aspect of the
law of lifting the veil is that, when the corporation is the mere
alter ego or business conduit of a person, it may be
disregarded. The lifting of the veil is normally reserved for
instances where the shareholders or individuals hiding behind
the corporate veil are sought to be responsible. I do not see
why it should not also apply where companies and close
corporations are juggled around like puppets to do the bidding
of the puppet master.”

[27] The Labour Appeal Court concluded that although Fila (PTY) Ltd and

Footwear Trading CC were separate legal personalities, an expose of both

entities would show that they were controlled by the same individuals and

were inextricably interlinked, confirmed that they were in effect joint or co-

employers.

[28] In Esterhuizen v. Million Air Services (in liquidation) & Others

(2007) 28 ILJ 1251 (LC), the applicant had referred a constructive

dismissal dispute to the Commission of Conciliation, Mediation and

Arbitration (“CCMA”) in 2001. The employer (first respondent) failed to

appear at both conciliation and arbitration hearings. The CCMA found in

favour of the applicant and awarded compensation. A warrant of execution

was issued.

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[29] When the deputy sheriff tried to execute the writ, he was informed

by third respondent, the manager of Million-Air Services Carletonville (Pty)

Ltd (second respondent) which had been incorporated in 2003, that the

first respondent had been liquidated.

[30] The applicant applied to the Labour Court to declare that the second

respondent was the same business operations as the first respondent and

was liable, jointly and severally with the third respondent, to pay the

amount awarded to the applicant in a CCMA award. Further, that it be

declared that the third respondent was the real employer of the applicant

and that he is liable, jointly and severally with the second respondent, to

pay the amount awarded to the applicant in the CCMA award.

[31] The Labour Court of South Africa found that there were policy

considerations allowing the corporate veil be pierced to reveal who the

true employer was. Francis J, in delivering the judgment of the court, held

that the conduct of the third respondent was 'gravely improper’. The court

found that the liquidation of the first respondent was a stratagem of the

third respondent, in a deliberate attempt to thwart the employee’s right to

compensation. The third respondent had absolute control over both of the

companies involved. He was the common denominator in the applicant’s

dismissal, the liquidation of the company, and the incorporation of the

second company. The third respondent was the real employer and was

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liable, jointly and severally with the second respondent, to pay the amount

awarded to the applicant in the CCMA award.

Canada

[32] The Canadian law recognises a doctrine known as the common

employer doctrine. Under the doctrine, two or more legal entities can be

employers of a person in relation to the same work where there is a

sufficient degree of relationship between the different entities that act as

common employers. What counts as a sufficient degree of relationship is

determined on a case by case basis but includes “factors such as

individual shareholdings, corporate shareholdings, and interlocking

directorships the essence of that relationship will be the element of

common control” (See: Sinclair v Dover Engineering Services Ltd

(1988) 49 D.L.R. (4th) 297).

[33] The idea of common employers was first recognised in Bagby v

Gustavson Int'l Drilling Co Ltd (1980), 24 A.R. 18, but the test was not

clearly stated until Sinclair (supra). In Sinclair (supra), the plaintiff was

a professional engineer who wanted to bring a wrongful dismissal claim

against two companies. One company, Dover Engineering Services Ltd

(“Dover”), held itself out as his employer. Another company, Cyril

Management Limited (“Cyril”), was responsible for paying the plaintiff.

Cyril also deducted all payments from the plaintiff’s salary for income tax,

unemployment insurance and his pension plan. Dover was owned by Mr

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Vernon Gould and Mr Donald Keenan. Cyril was effectively a

management company that paid everyone who worked for Dover and the

other companies owned by the Gould partnership.

[34] The Court held both companies were the common employers of the

plaintiff and it did not matter that the companies were in this complex

business relationship with one another. Wood J stated –

“16. I see no reason why such an inflexible notion of contract

must necessarily be imposed upon the modern employment
relationship. Recognizing the situation for what it was, I see no
reason, in fact or in law, why both Dover and Cyril should not be
regarded jointly as the plaintiff’s employer. The old-fashioned
notion that no man can serve two masters fails to recognize the
realities of modern-day business, accounting and tax
considerations.
…
18. As long as there exists a sufficient degree of relationship
between the different legal entities who apparently compete for
the role of employer, there is no reason in law or in equity why
they ought not all to be regarded as one for the purpose of
determining liability for obligations owed to those employees
who, in effect, have served all without regard for any precise
notion of to whom they were bound in contract.”

[35] The case of Downtown Eatery (1993) Ltd v Ontario (2001) 8

C.C.E.L.(3d) 186 (Ont. C.A.), had affirmed that the focus of the common

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employer doctrine was the relationship between the employers and not on

the relationship between the employers and the employee. In this case,

the plaintiff was a manger of a night club. He had been awarded damages

for wrongful dismissal against his employer. However, his employer was

insolvent. He sought judgment against all the companies involved in the

nightclub enterprise, which he claimed belonged to the same corporate

group. The Court held that all the companies belong to one integrated

unit and they were the plaintiff’s joint employer.

[36] MacPherson JA stated that although an employer is entitled to

establish complex corporate structures and relationships, the law should

be vigilant to ensure that permissible complexity in corporate

arrangements does not work an injustice in the realm of employment law.

New Zealand

[37] In New Zealand, the first acknowledgement of the concept of having

two employers was in the case of Inspector of Awards v Pacific

Helmets (NZ) Ltd [1988] NZILR 411. Chief Judge Horn stated –

“I see nothing in principle to prevent two people or firms joining

together to employ one man for their respective purposes. And
the more so when those purposes are closely associated.”

[38] The acceptance of the concept of joint employers was confirmed by

Shaw J, in the case of Orakei Group (2007) Limited v Doherty [2008]

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NZEmpC 65. The Employment Court confirmed that a person can be

employed in the same employment by two or more companies; but there

must be a sufficient degree of relationship between the legal entities for

them to be joint employers. Common control by both employers would be

usual in joint employment relationship.

The United Kingdom

[39] In the context of employment law, there are two cases which

highlighted the principle that a parent company could owe tortious liability

for the health and safety of its subsidiary’s employees, namely: Chandler

v Cape Plc [2012] EWCA Civ 525 and Thompson v Renwick Group Plc

[2014] EWCA Civ 635.

[40] In Chandler (supra), the subsidiary’s employee, who suffered from

disorders caused by asbestos in the workplace, claimed damages against

the parent company. The case appeared to be the first which actually

imposed a duty of care to an employee of a company on that company’s

parent company. Arden LJ applied the three-stage test i.e. (i) whether the

damage was ‘foreseeable’; (ii) whether there was ‘proximity’ between the

parties, and (iii) whether it was ‘fair, just and reasonable’ to impose the

duty on the party. As a result, her Ladyship recognised the duty of care of

the parent company either to advise its subsidiary about the steps to take

or to ensure the implementation of these steps due to the parent’s

knowledge of the working condition and its superior knowledge about the

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risks. Her Ladyship summarised her judgment in paragraph [69] as

follows –

“[I]n appropriate circumstances the law may impose on a

parent company responsibility for the health and safety of its
subsidiary's employees. Those circumstances include a
situation where, as in the present case, (1) the businesses of
the parent and subsidiary are in a relevant respect the same;
(2) the parent has, or ought to have, superior knowledge on
some relevant aspect of health and safety in the particular
industry; (3) the subsidiary's system of work is unsafe as the
parent company knew, or ought to have known; and (4) the
parent knew or ought to have foreseen that the subsidiary or
its employees would rely on its using that superior knowledge
for the employees' protection.”

Although her approach could have the same effect as piercing the veil,

Arden LJ rejected the view of this approach as ‘veil-piercing’.

[41] In Thompson (supra), the possibility of a direct duty of care owed

by the parent company was again recognised with the criteria proposed

by Chandler (supra). However, the claim by the employee was rejected

due to lack of sufficient evidence. Tomlinson LJ stated that the four factors

mentioned by Arden LJ in Chandler (supra) were descriptive rather than

exhaustive. Although the degree of fairness was as high as in Chandler,

Thomlinson LJ rejected the claim of the plaintiff as there was no evidence

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of the parent’s knowledge and control related to foreseeability and

proximity. Hence, the parent company’s direct duty of care could not be

recognised.

[42] From a short review of cases above, it would appear that although

the principle of separate legal entity is at the core of the company law,

there are a number of situations in which a corporate group and its

members can be treated the same. In other words, while the dicta in Hotel

Jaya Puri case is correct in substance particularly in the context of

industrial jurisprudence, the approach of ‘common employer’ taken by the

Canadian, South African and English courts better explains the rationale

in industrial law terms in order to achieve equity and social justice. This is

in keeping with the tenor and purpose of the Industrial Relations Act 1967.

[43] In sum, insofar as employment law is concerned, the circumstances

which are believed to be most peculiar basis under which the court would

lift/pierce the corporate veil and find a group of companies to be common

employers include –

(i) Where there is “functional integrality” between entities;

(ii) Unity of establishment between the entities.

(iii) The existence of a fiduciary relationship between the

members of the entities and/or the extent of control;

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(iv) There was essential unity of group enterprise; and

(v) Whenever it is just and equitable to do so and/or when the

justice of the case so demands.

But these circumstances are just guidelines and are by no means being

exhaustive. The circumstances for which the Court may lift/pierce the

corporate veil are never closed.

[44] Reverting back to the mainstream of the present appeal, we are of

the considered opinion that ADC and the respondent were part and parcel

of the same group. There was “an essential unity of group enterprise”.

The uncontroverted evidence established that –

(i) The appellant’s/claimant’s original contract of employment

with ADC was dated 26.8.2009;

(ii) Vide letter dated 11.10.2012, ADC informed the

appellant/claimant that his contract as Consultant will be
renewed for another twelve (12) months from 1.10.2012 to
30.9.2013;

(iii) However, vide letter dated 18.10.2012 from the respondent,

the appellant/claimant was informed that his contract as a
Consultant will be renewed under the respondent, instead of
ADC. Further, it was expressly stated that there will be no

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change in his designation, grade and other terms and

conditions of his contract dated 26.8.2009;

(iv) In the letter dated 18.10.2012, the respondent expressly

stated that the appellant’s/claimant’s contract is being
renewed under the respondent instead of under ADC in view
of the phasing out of ADC;

(v) The Chief Executive Officer of ADC who signed the letter
dated 11.10.2012 and the Chief Executive officer of the
respondent who signed the letter dated 18.10.2012 (i.e. seven
(7) days later) were one and the same - Mr. Chiew Kok Hin;

(vi) It was a finding of fact by the Industrial Court that ADC was
consolidated into the respondent and vide a letter dated
7.1.2013, in view of the new company structure, the
appellant/claimant had been re-designated to assume the
post of VP, Product and Solutions with effect from 1.1.2013;

(vii) It was a finding of fact by the Industrial Court that the

appellant/claimant continued to report to Mr. Chiew Kok Hin
before and after the letter dated 18.10.2012; and

(viii) It was a finding of fact by the Industrial Court that according to

the testimony of the respondent’s witness (COW-1) the
appellant’s/claimant’s contract with ADC allowed for the
appellant/claimant to be moved to any of its subsidiaries
and/or associate companies. Thus, the appellant/claimant

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was asked to assume the position of VP, Product & Solutions

with the respondent on 7.1.2013.

[45] For all the aforesaid reasons, we are of the considered view the

Court of Appeal was wrong when it held that ADC and the respondent

were two separate legal entities and failed to treat the

appellant’s/claimant’s contract of employment as a continuous one from

ADC to the respondent. In our view, the doctrine, whether is categorized

as “essential unity group enterprise” or “common employer”, its purpose

is to permit the corporate veil to be pierced in order to establish or identify

the true labour relationship between parties in terms of the existing labour

relation realities. The Court of Appeal’s failure to identify the employer-

employee relationship runs contrary with the fundamental purposes of the

Industrial Relation Act 1967.

[46] Further, the Court of Appeal was wrong in reversing the findings of

fact by the Industrial Court and ruled that the appellant/claimant had

accepted a three (3) months contract that was offered to him in September

2013. The facts clearly showed that the appellant/claimant did not accept

the offers because the Company had removed his entitlement to the

performance bonus scheme in which he was a participant at all material

times since he was in employment with AIMS group of companies in 2009.

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[47] It is an established rule, enunciated in a long line of decisions, that

the appellate court will not disturb the findings of fact made by the trial

court as to the credibility of witnesses in view of its opportunity to observe

the demeanor and conduct of witnesses while testifying and the said

findings will generally be accepted or acted upon unless it can be

demonstrated that the trial court’s decision is plainly wrong or the decision

is one that no reasonable judge or tribunal could have reached (See: Tay

Kheng Hong v Heap Moh Steamship Co Ltd [1964] 1 MLJ 87; Chow

Yee Wah & Anor v Choo Ah Pat [1978] 2 MLJ 41b; Gan Yook Chin (P)

& Anor v Lee Ing Chin @ Lee Teck Seng [2005] 2 MLJ 1; Tengku Dato’

Ibrahim Petra Tengku Indra Petra v Petra Perdana Bhd & Another

[2018] 2 CLJ 641, Henderson v Foxworth Investments Ltd and

another [2014] 1 WLR 2600; Mc Graddie v Mc Graddie [2013] WLR

2477). We observe that the Court of Appeal did not proffer any reasons

whatsoever in revising the Industrial Court’s finding that the

appellant/claimant did not accept the three (3) months contract that was

offered to him. In our considered opinion, there is no material error in the

findings of fact by the Industrial Court which justifies the Court of Appeal

to reverse its decision. The findings of fact by the Industrial Court are

amply supported by the relevant evidence on record.

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Fixed Term Contract Or Permanent Employee

[48] We now turn to the issue on whether on the facts and circumstances

of the present appeal, the appellant/claimant was employed on a fixed

term contract or was a permanent employee of the respondent.

[49] The Court of Appeal had considered the issue of fixed term contract

in the light of its decision on the issue of separate legal entity. The Court

of Appeal concluded that it was wrong for the Industrial Court and the

High Court to have lifted the corporate veil based on the facts of the

present appeal. The Court of Appeal disregarded the earlier contracts of

employment between the appellant/claimant and ADC.

[50] The Court of Appeal held that the appellant/claimant was appointed

under a fixed term contract of three (3) months and that early termination

of the appellant’s/claimant’s contract employment was affected in

accordance with clause 8 of the appellant’s/claimant’s contract of

employment dated 18.9.2013 which provides as follows –

“8. Termination
Your appointment may be terminated by giving two (2) months
notice. Such notice shall be given by the party that intends to
effect the determination. Where no notice is given, two (2)
months salary in lieu of notice shall be payable by the party
effecting such termination.”

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[51] Clause 1(e) of the same contract of employment provides as

follows–

“This contract shall supersede all other contracts previously

issue under AIMS Data Centre 2 Sdn Bhd and AIMS Data

Centre Pte Ltd.”

[52] It was submitted on behalf of the respondent that the Court of

Appeal was right in holding that there was no continuity of employment

because the two companies were two separate legal entities. It was

further submitted that even if a contract of employment was renewed

successively without any application by the employee and without any

intermittent breaks in between, this did not change the character and

nature of a fixed term contract into a permanent contract. And clause 1(e)

of the appellant’s/claimant’s contract of employment shows that there is

no continuity between the appellant’s/claimant’s contract of employment

and his past fixed term contracts.

Our Decision

[53] Security of tenure in employment or job security is recognised by our

Malaysian courts (see Hong Leong Equipment Sdn Bhd v Liew Fook

Chuan & Anor [1996] 1 MLJ 481, Ang Beng Teik v Pan Global Textile

Bhd, Penang [1996] 4 CLJ 313, The New Straits Times Press

(Malaysia) Bhd v Chong Lee Fah [2003] 2 ILR 239). This right however,

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has to be balanced with the employer’s prerogative to make commercial

decisions for reasons of better economy or better management (see

Harris Solid State (M) Sdn Bhd & Ors v Bruno Gentil s/o Pereira & 2

Ors [1996] 4 MLJ 747, Malaysia Shipyard and Engineering Sdn Bhd v

Mukhtiar Singh & 16 Ors [1991] 1 ILR 626).

[54] The use of fixed term contract employee had become a trend in

Malaysia, particularly in the employment of expatriates and also in the

construction industry where employees are commonly engaged on a

project basis. A fixed term contract is a contract of employment for a

specific period of time i.e. with a defined end (See: Wiltshire Country

Council v National Association of Teachers in Further and Higher

Education and Guy [1980] 1 C.R 455). As a general rule, such contract

cannot be terminated before its expiry date except for gross misconduct

or by mutual agreement. However, a contract can still be for a fixed-term

if it contains within it a provision enabling either side to terminate it on

giving notice before the term expires (See: Dixon and another v British

Broadcasting Corporation [1979] 1 Q.B. 546). In this connection, the

main issue that presents itself is whether there is a genuine fixed term

contract or there is an employment on a permanent basis dressed up as

several fixed term contracts.

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[55] The judicial treatment regarding the question of whether an

employer had a genuine need for the service of an employee for a fixed

duration may be divided into three (3) consideration points –

(i) The intention of parties (see Han Chiang High

School/Penang Han Chiang Associated Chinese School
Association v National Union of Teachers in Independent
Schools, West Malaysia & Industrial Court of Malaysia
(1990) 1 ILR 473, Hasni Hassan & Ors v Menteri Sumber
Manusia & Anor [2013] 6 CLJ 74);

(ii) Employers’ subsequent conduct during the course of

employment (see Innoprise Corporation Sdn. Bhd., Sabah
v Sukumaran Vanugopal [1993] 1 ILR 373B, Sime UEP
Development Sdn Bhd v Chuah Poi [1996] 1 ILR 256,
Malaysia Airlines Bhd v Michael Ng Liang Kok [2000] 3 ILR
179, Holiday Villages of Malaysia Sdn Bhd v Mohd Zaizam
Mustafa [2006] 2 LNS 0812); and

(iii) Nature of the employer’s business and the nature of work

which an employee is engaged to perform (see Audrey Yeoh
Peng Hoon v Financial Mediation Bureau [2015] 3 ILR 371,
Charles Aseervatham Abdullah v The Zenith Hotel Sdn
Bhd [2018] 2 LNS 2349).

The Intention Of Parties

[56] In the locus classicus case on fixed term contract, Han Chiang High

School (supra), the Court distinguished between a genuine fixed term

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contract and one which is a sham. In this case, the material facts are that

the school had employed teachers on fixed term contracts of two (2) years.

A number of teachers who had joined the Union of Teachers in

Independent Schools were informed that their employment would cease

upon expiry of the fixed term contract. The Union applied to the High Court

for an interlocutory injunction restraining the school from terminating the

services of the teachers. The High Court granted the injunction but the

then Supreme Court subsequently set aside the injunction because the

forum to deal with complaints of wrongful dismissal was the Industrial

Court. After the injunction was set aside, the school proceeded to inform

the teachers that their service was no longer required. The teachers

claimed that they were dismissed without just cause and excuse.

[57] The Industrial Court held that although there might have been a

genuine need for fixed term contracts when the school was first

inaugurated in 1951, there did not appear to be such a need when it had

been successfully established as some of the teachers had taught for

more than twenty (20) years and had their contracts renewed unfailingly

during those years. In holding that the fixed term contracts were not

genuine, the Industrial Court stated that the system of fixed term contracts

in the school was employed not out of genuine necessity, but as a means

of control and subjugation of its teaching employees.

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[58] In Hasni Hassan (supra), five (5) employees were migrated to fixed

term contracts in 2003 as part of a transformation plan to improve the

performance of government-linked companies, which in this case Telekom

Malaysia Berhad (“Telekom”). Telekom, had offered all senior

management officers the option of either remaining under current terms

as permanent employment or to accept fixed term contracts. In order to

accept the fixed term contracts, the employees would have to resign from

their permanent employment.

[59] The dispute arose when five (5) of those officers did not have their

fixed term contracts renewed. They lodged a complaint under section 20

of the Industrial Relations Act 1967, but the Minister declined to refer the

matter to the Industrial Court. The employees applied for judicial review of

the Minister’s decision. At the High Court, the decision of the Minister was

upheld. Three of the five employees appealed to the Court of Appeal,

which allowed the appeal and referred the matter to the Industrial Court

for adjudication.

[60] Even though the Court of Appeal held that it is for the Industrial Court

to decide the matter on merit (genuineness of the fixed term contract), the

Court of Appeal went further and stated that the Telekom had genuine

intentions when they offered the fixed term contracts to their senior

management as their intention was to increase performance and

productivity and, as reward, the senior management would be able to earn

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higher incomes. The Court of Appeal also stated that this was part of a

business plan and there was no ulterior or sinister motive on the part of

the Telekom when they offered the fixed term contracts and the fixed term

“was not a guise to shorten the employment of the employees previously

on permanent contracts”.

Employers’ Subsequent Conduct During

The Course Of Employment

[61] We have the opportunity to review several cases decided by the

Industrial Court on this issue and we agree with the approach adopted that

in determining whether a contract of employment is a fixed term contract

or permanent employment, the employer’s subsequent conduct during the

course of employment is a relevant consideration. The total duration or

length of service with an employer is also a factor that would be

considered.

[62] In the case Sime UEP (supra), a clerk was employed for four (4)

years on a contract that was renewed annually. During his four (4) years

there, the employee was involved in various projects. The Industrial Court

held that an employee cannot be considered to be employed for a

temporary or one-off job if he was not employed for a particular project and

he had been involved in various projects during his tenure.

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[63] In the case of Malaysia Airlines (supra), the employee was

engaged on a fixed term contract of two (2) years as second officer in the

Rural Air Service. He was confirmed in his position as second officer two

(2) months later. Eight (8) months into his employment, he was promoted

as a commander and was confirmed in that position after serving a

probationary period of six (6) months. His fixed term contract was

subsequently renewed twice, each time for three (3) years. When the

employee wrote to the company on the forthcoming expiry of his third fixed

term contract, he was given a three-month contract by the company. The

Industrial Court, in finding that the employee’s employment had been

permanent, considered that the Rural Air Service was not a temporary

operation and that it did not have a definite duration beyond which the

cessation of the business is inevitable.

[64] The next case is Holiday Villages (supra). In this case, a resort

employed both seasonal and permanent employees. Seasonal employees

had a fixed term in their contracts which would range from three (3) to six

(6) months or for a season. The resort was not open for the whole year

and would be closed during the monsoon season which falls between

November and January of each year. The employee had begun

employment on a fixed term contract for one (1) season. He was

subsequently employed for six (6) consecutive seasons. The Industrial

Court acknowledged that the resort was only open for nine (9) to ten (10)

months in a year and that there was a genuine need for fixed term

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contracts as it was inconceivable to expect the resort to pay salaries when

it was closed.

[65] Notwithstanding the genuine need for fixed term contracts, the

Industrial Court found that the employee was, by the last fixed term

contract in the series of fixed term contracts, a permanent employee of the

resort as –

(i) he was employed even during the off-season as a laundry

supervisor;

(ii) he was given a new contract without the need to reapply; and

(iii) he was able to continue in employment even after the alleged

expiry of his penultimate fixed term contract without an
extension.

Nature Of The Employer’s Business And The Nature Of

Work Which An Employee Is Engaged To Perform

[66] Factors that determine the true character of a fixed term contract

may also include the nature of the employer’s business and the nature of

the work which an employee is engaged to perform. In Charles

Aseervatham Abdullah v The Zenith Hotel Sdn Bhd [2018] 2 LNS

2349, a similar issue with the present appeal arose for the court

determination: whether or not an employee who had worked for 3

separate entities over several years was on a fixed term contract. In

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arriving at its award, the Industrial Court examined the entirety of the

claimant’s employment history, and came to conclusion that the contract

was not a genuine fixed term contract.

[67] With the principles outlined above in mind and based on the factual

matrix of the instant appeal, we are satisfied that the appellant’s/claimant’s

contract of employment beginning with ADC before being terminated

under the respondent, was not one-off, seasonal or temporary

employment. It was on going, continuous employment without a break

from 2009 to 2013. In our considered opinion, the Court of Appeal erred

in not recognising the industrial law principle of lifting/piercing the

corporate veil in the circumstances and the ongoing nature of the

appellant’s/claimant’s contract of employment with both the companies.

Our Decision On The 1st Leave Question

[68] We now turn our attention to the 1st leave Question. The Court of

Appeal held that an expatriate who requires a work permit to work in

Malaysia can never be a permanent employee in Malaysia, relying on

Nash’at Muhy Mahmoud v Malaysia Airline System Bhd [2013] 2 LNS

1745 and Toko Inomoto & Ors v Malaysian Phiharmonic Orchestra

[2015] 2 LNS 1034.

[69] Learned counsel for the appellant/claimant mounted a spirited

attack on the decision of the Court of Appeal in respect of this issue.

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Learned Counsel argued that the Court of Appeal ought to have referred

to the Federal Court case of Assunta Hospital v Dr. A. Dutt [1981] 1

MLJ 115 which held that the citizenship of an employee has no bearing in

deciding whether the applicant was in permanent employment or under a

fixed term contract.

[70] We agree with the submission. In Assunta Hospital (supra), Dr.

Dutt was an Indian citizen and was engaged as a radiologist in the

Assunta Hospital, on a 3-year contract, which was renewed without any

break a number of times. Later, the Dr.’s contract was terminated. The

Industrial Court awarded a sum of RM522,000 as compensation in lieu of

reinstatement. In the Federal Court, the employment contract of Dr. Dutt

was not an issue but the court did make an observation that the last letter

of appointment described the period of engagement as "permanent'' and

that there was no doubt that the contract offered a certain security of

tenure. On the citizenship matter, the Court had these to say –

“As for the non-citizenship status of Dr. Dutt, we shared the

astonishment of the judge at the relevance of this point. Our
views can be stated shortly; whether Dr. Dutt can get an
extension of his visit-pass so as to be able to stay in this
country or the issue of a work-permit in order to be able
to take up the appointment are not matters that can
influence the court in the proper exercise of the
jurisdiction conferred on it by the Minister's reference of
the representations for reinstatement. If an order is made
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ordering reinstatement and the workman is unable to

obtain either the visit pass or the work-permit, the
employer would not be in contempt of the order. It is for
the workman to make the order effective. All that the
hospital had to do is to make the post available to the
workman. As for any suggestion that the order for
reinstatement would influence the Ministry of Home Affairs to
issue the visit pass or the work-permit, there cannot be any
truth in it, and it cannot possibly be said that the Ministry of
Home Affairs is bound to comply with the order for
reinstatement. In any event, it is of no concern to the hospital.”
[Emphasis added]

[71] In Toko Inomoto & Ors v Malaysian Philarmonic Orchestra

[2017] 1 LNS 201, one of the issues that was dealt with by the learned

High Court Judge was whether or not an employee’s citizenship is a

material consideration in deciding whether an employment is on a

permanent basis. The Learned High Court Judge took the view that the

issue of the citizenship is not a material consideration. At paragraph 223

of the judgment, the learned judge said –

“I agree with the counsel for the applicant that the issue of
citizenship was not a material consideration for the
Industrial Court to take into account.”
[Emphasis added]

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[72] In our view, the proposition of law propounded above is correct in

law. The citizenship of the appellant/claimant has no bearing in deciding

whether the appellant/claimant was in permanent employment or in

employment under a fixed term contract. We also note that the Industrial

Relations Act 1967 does not make any distinction between the citizens

of Malaysia and non-citizens.

[73] At this juncture, it is pertinent to consider the definition of “workman”

in section 2 of the Industrial Relations Act 1967:

"'workman' means any person, including an apprentice

employed by an employer under a contract of employment to
work for hire or reward, and for the purpose of any
proceedings in relation to a trade dispute includes any such
person who has been dismissed, discharged or retrenched in
connection with or as a consequence of that dispute or whose
dismissal, discharge or retrenchment has led to that dispute."

[74] According to this definition, a workman is “any person” employed

under " a contract of employment", and in the case of a “trade dispute”, he

is a person whose dismissal, discharge or retrenchment from employment

leads to or is the cause of the dispute. But what is the meaning of any

“person”, “contract of employment” and “trade dispute”?

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[75] The word “person” is interpreted in section 3 of the Interpretation

Acts 1948 and 1967 (Act 388), as including body of person, corporate, or

unincorporated.

[76] “Contract of employment” is defined by the section 2 of the

Industrial Relations Act 1967 as "any agreement whether oral or in

writing and whether express or implied, whereby the person agrees to

employ another as a workman and that other agrees to serve his employer

as a workman”.

[77] Meanwhile, “trade dispute” is defined in section 2 of the Industrial

Relations Act 1967 to mean “any dispute between an employer and his

workmen which is connected with the employment or non-employment or

the terms of employment, or conditions of work of any such workmen”

[78] It is a pertinent to understand the combined effects of these

definitions. Salleh Abas LP in the case of Inchcape Malaysia Holdings

Bhd v RB Gray & Anor [1985] 2 MLJ 297 said –

“The combined effect of these definitions is that a person

is a workman if the contract of employment under which
he is employed requires him to serve his employer as a
workman and in the case of a trade dispute a person is a
workman if the dispute between him and his employer is
connected with his employment as a workman. The

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definition, therefore, does not go very far and in fact it goes in

circle. I am still left with the same question: who is a workman?
But one thing is clear in that whilst a contract of employment
is part of the definition, it does not follow that every person
who is employed under a contract of employment or
being an employee of another is a workman. To be a
workman a person must be employed as a workman. If he
is employed in other capacity he cannot be a workman.
…
“Now let me turn to the definition of workman in our IRA.
Although it may appear to be wide, in fact it is limited by its
own definition of contract of employment, which means any
agreement whereby (an employer) agrees to employ his
employee as "a workman", and the (other employee) agrees
to serve his employer, (also) as "a workman". We were urged
to disregard the expression "as a workman" as being a mere
labelling. I cannot agree. I have no right to treat it as mere
surplusage. It was included there for good measure just as
the words "or otherwise" in the National Arbitration Tribunal
case (supra) were held to extend the definition beyond the
natural and common sense meaning of the word "workman".
In my view the expression "as a workman" indicates the
intention of the legislature in that in construing the term
"workman", the purpose for which a person is employed
must be taken into consideration. In other words, the
function and responsibility of an employee are the
criterion and must be looked into.”
[Emphasis added]

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[79] Further, in Assunta Hospital (supra), the Federal Court also upheld

the finding of the Industrial Court that, Dr. A. Dutt, a professional

radiologist, who was employed under a contract of service was a

workman. The Court rejected the narrow definition of workman adopted by

Indian courts because the expression “in any industry" which is part of the

statutory definition of workmen in Indian Industrial Disputes Act 1947 is

conspicuously absent from the definition under our Industrial Relations

Act 1967.

[80] One other important point to note is that Malaysia is a member

country of International Labour Organisation (ILO). Article 10 of the ILO

Migrant Workers (Supplementary Provisions) Convention 143 of 1975,

states –

“Each Member for which the Convention is in force undertakes

to declare and pursue a national policy designed to promote
and to guarantee, by methods appropriate to national
conditions and practice, equality of opportunity and
treatment in respect of employment and occupation, of
social security, of trade union and cultural rights and of
individual and collective freedoms for persons who as
migrant workers or as members of their families are
lawfully within its territory.”
[Emphasis added]

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[81] This ILO Convention, to which Malaysia is a party, expressly

provides that states should undertake to promote and guarantee equality

of opportunity and treatment between migrant workers and nationals.

[82] This ILO standards apply to migrant workers and nationals equally.

In Nacap Asia Pacific Sdn Bhd v Jeffrey Ronald Pearce & Anor [2011]

5 CLJ 791, the learned judge referred to Article 9 of the ILO Migrant

Workers (Supplementary Provisions) Convention 143 of 1975 and stated–

“This ILO Convention, to which Malaysia is a party, expressly

provides that where laws and regulations which control the
movement of migrants for employment - such as the
Immigration Act - have not been respected, the migrant
worker shall nevertheless enjoy equality of treatment in
respect of rights arising out of past employment. This is
the international labour standard prescribed by the ILO.”
[Emphasis added]

[83] Based on the above reasons, we take the view that all workers

should be treated with fairness, dignity, and equality without distinction

whether they are local or foreigners. This is also consonant with Article

8(1) of the Federal Constitution which essentially provides that all persons

are equal before the law and entitled to the equal protection of the law.

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[84] In our judgment, the decision of the Court of Appeal that a foreign

national cannot have a permanent contract of employment cannot

withstand judicial scrutiny and is liable to be set aside.

Conclusion

[85] We say that the Hotel Jaya Puri case is still good law. The Industrial

Court made a finding of fact that the appellant/claimant work for one group

of companies as one enterprise. Applying the principles enunciated in

Han Chiang (supra), we find that the appellant’s/claimant’s contract of

employment is a permanent contract and not a fixed term contract.

[86] The work permit is a non-issue in the present appeal. The work

permit was not pleaded in the respondent’s Statement-in-Reply filed at the

Industrial Court. The respondent also did not raise the matter in its

submission before the Industrial Court. The appellant’s/claimant’s

evidence in the Industrial Court that he had a valid Malaysian Working

Pass and did not require a work permit from the respondent was not

challenged. Further, the respondent’s witness, COW1, admitted that the

respondent had never applied any work permit for the appellant/claimant.

Since the work permit issue was not canvassed and ventilated, it was right

for the Industrial Court and the High Court not to consider this issue. It is

trite that parties are expected to put before the trial court all questions both

of fact and law upon which they wish to have an adjudication. Parties to

litigation are entitled to know where they stand and tailor their expenditure

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and efforts in dealing only with what is known to be in dispute. In our

considered view, the Court of Appeal ought not to have dealt with the issue

at all and should have allowed it to enjoy its eternal sleep. In any event, it

has no application in determining whether the appellant’s/claimant’s

contract was a fixed term contract or whether he was a permanent

employee.

[87] In the circumstances of the present appeal, the fact that the

appellant/claimant is a foreigner is irrelevant in determining whether the

dismissal is with just cause or otherwise.

[88] For all the foregoing reasons, the questions posed for our

determination are answered as follows –

(i) Whether a need for work permit is a material consideration in

determining whether an employment contract is a genuine
fixed term contract; and

In the negative.

(ii) Does a contract of employment which is renewed

successively without application by the employee and without
any intermittent breaks in between, is in reality permanent
employment?

In the affirmative.

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[89] Consequently, the appeal is allowed with costs. So ordered.

Dated: 28th May 2020

Signed
(MOHD ZAWAWI SALLEH)
Federal Court Judge
Malaysia

Counsel for the Appellant: Alex De Silva (V. K. Raj & Tan Yang
Qian together with him)
Messrs. Bodipalar Ponnudurai De Silva
D3-1-8, Solaris Dutamas
No 1, Jalan Dutamas 1
50480 Kuala Lumpur

Counsel for the Respondent: Vijayan Venugopal (Jamie Goh Moon

Hoong together with him)
Messrs. Shearn Delamore & Co.
7th Floor, Wisma Hamzah-Kwong Hing
No.1, Leboh Ampang
50100 Kuala Lumpur

[This judgment is subject to final editorial approved by the Court].

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