After nearly three months in an economic environment that could not have been foreseen, many businesses have reached the inescapable conclusion, that short of closure, some cost-saving measures are necessary. Even though the Covid-19 pandemic is a unique context organizational restructures due to downturns in the economy at large or a specific industry, are common. The Court of Appeal in Harris Solid State (M) Sdn Bhd v Bruno Gentil Pereira & Ors [1996] 4 CLJ 747 has held that an employer may re-organize his commercial undertaking for any legitimate reason, such as promoting better economic viability; provided it is not done to victimize workers.

In Chew Kean Chet v. Tesco Stores (M) Sdn Bhd Award 142 of 2015[1], the Company embarked on a restructuring scheme as part of a global initiative by the headquarters in the United Kingdom in order to remain sustainable. This ‘Citrus Project’ aimed to streamline operations worldwide according to the size and scale of each operation. The restructure resulted in the removal of the Claimant- a Business Analyst’s -fixed car allowance amounting to RM2,200 a month and the end of his supervisory functions. Regarding the removal of this allowance a breach to his terms of employment, the Claimant brought an action of unfair dismissal against the Company.

To present evidence rebutting this claim, the Company’s witness gave evidence that ultimately, only 13 employees were made redundant although a total of 296 employees were impacted by the project. The Company took numerous measures to support affected employees. These included sharing the reasons for the restructure and providing redeployment support to employees such as assistance with resumes, a recruitment room for internal transfers and monetary compensation.

The Claimant had also been offered a job at a different branch. Employees dissatisfied with available options were permitted to attend interviews elsewhere. Furthermore, the Claimant’s basic salary remained the same, as did his duties.

Accepting these factors which demonstrated no collateral purpose beyond efforts to improve economic viability, the Industrial Court dismissed the claim,


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[1] The firm’s Dharmen Sivalingam acted for the Company in this matter