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INDUSTRIAL COURT OF MALAYSIA CASE NO. 19/4-816/10 BETWEEN DR RADAKRISHNA A/L SUBRAMANIAM AND LOURDES MEDICAL CENTRE SDN.

BHD AWARD NO. 1708 OF 2012 Before Venue : : Y.A. PUAN HAPIPAH BINTI MONEL - CHAIRMAN (Sitting Alone) Industrial Court Malaysia, Kuala Lumpur. 5 July 2010 28.09.2010, 01.12.2010, 19.12.2010, 25.01.2011, 28.02.2011. 21.06.2011 Mr. S. Shanker and Mrs. Juanita Chua of Messrs. Shanker & Arjunan, Counsel for the Claimant Mr. Edward Saw and Mr. R. Bala of Messrs. Y.H. Teh & Quek, Counsel for the Company REFERENCE This is a reference under section 20(3) of the Industrial Relations Act 1967 arising out of the dismissal of DR RADAKRISHNA A/L SUBRAMANIAM (hereinafter referred to as The Claimant) by LOURDES MEDICAL CENTRE SDN. BHD (hereinafter referred to as The Company) on the 31 July 2008.
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.. ..

CLAIMANT COMPANY

Date Of Reference : Dates of Mention Date of Hearing Representation : : :

AWARD Fact The Claimant first commenced his employment with the Company with effect from 30th June 2003 for a fixed term of 3 years. A copy of the Claimant's initial fixed term contract can be found at pages 1 to 4 of COB1.

At the expiry of the term of 3 years the Claimant was employed thereafter on another fixed term contract for a period of 1 year from 1 st July 2006 until 30th June 2007. A copy of the Claimant's 2nd fixed term contract can be found at pages 5 to 8 of COB1.

In September 2006 (before the expiry of the 2 nd fixed term contract) both parties entered into a Contract dated 1st October 2006 which expressly provided that the Claimant was the independent contractor (hereinafter referred to as the 3 rd Contract). A copy of the Contract dated 1 st October 2006 can be found at pages 9 to 14 of COB1. The said Contract was for a period of one year from 1 st October 2006.

On 20th December .2006 the Claimant wrote to the Company to request that his professional fees payable under the Contract be paid to a company formed by him called Hexa Awan Sdn. Bhd. The Company states that it had agreed to his request and had
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thereafter made all professional fee payments to the said Hexa Awan Sdn. Bhd. A copy of the Claimant's request is page 15 of COB1.

During the life of the 3 rd Contract, between 17th March 2007 and 15th April 2007 the Claimant had absented himself from service for personal reasons without any notice to the Company. Copies of the Company's memorandums on this matter dated 19 th March 2007 and 4th April 2007 can be found at pages 16 and 17 of COB1 respectively.

Due to his unexplained absence the Company wrote to the Claimant on 5 th April 2007 to put him on notice that it accepted his self termination of the 3 rd Contract. The Company however agreed to waive the requirement of notice in good faith. A copy of the Company's letter dated 5th April 2007 is at page 18 of COB1.

On 17th April 2007 the Claimant wrote to the Company to request that he be allowed to continue with his service under the 3 rd Contract. A copy of the Claimant's letter dated 17th April 2007 is found at page 20 of COB1. The Company agreed to his request and the Claimant continued his service under the 3 rd Contract.

Thereafter the parties entered into a fresh contract dated 10 th August 2007 for a term of three (3) years commencing 1st July 2007 (hereinafter referred to as the 4 th

Contact). Once again the 4th Contract expressly provides that the Claimant was to be an independent contractor (pages 23 of COB1). A copy of the 4 th Contract is found at pages 21 to 27 of COB1.

On 25th June 2008 the Company had decided to terminate the 4 th Contract with one (1) months notice as required under Clause 4.1 of the 4 th Contract. It is to be noted that at no time after notice of termination was served on him did the Claimant protest or object o the termination of the 4th Contract. In fact the Claimant continued to serve his notice period without any protest or objections from him.

The Claimant now claims that he had been dismissed without just cause or excuse under S.20 of the Industrial Relations Act.

Issues 1. The issue in this case is whether the Claimant is a workman within its definition and meaning under the Industrial Relations Act. 2. If the answer is in affirmative, then the next issue is whether the dismissal of the Claimant was with just cause or excuse.

The Law The approach to be taken by a court when it is called upon to determine the question as to whether a person is an independent contractor has been expressed in the case of Hoh Kiang Ngan v Mahkamah Perusahaan Malaysia & Anor [1996] where the Federal Court stated thus:
In our judgment, the correct test to be applied in determining whether a claimant is a workman under the Act is that enunciated by Chang Min Tat FJ in Dr. A Dutt v Assunta Hospital [1981] 1 MLJ 304 at p 311. We accordingly hold that a workman under the Act is one who is engaged under a contract of service. An independent contractor who is engaged under a contract for services is not a workman under the Act. We take this view because it provides, as earlier observed, for a flexible approach to the determination of the question. It is fairly plain to see why flexibility is achieved by having resort to this test. In all cases where it becomes necessary to determine whether a contract of service is one of service or for services, the degree of control which an employer exercises over a claimant is an important factor, although it may not be the sole criterion. The terms of the contract between the parties must, therefore, first be ascertained. Where this is in writing, the task is to interpret its terms in order to determine the nature of the latter's duties and functions. Where it is not then its terms must be established and construed. But in the vast majority of cases there are facts which go to show the nature, degree and extend of control. These include, but are not confined, to the conduct of the parties at all relevant times. Their determination is a question of fact. When all the features of the engagement have been identified, it becomes necessary to determine whether the contract falls into one category or the other, that is to say, whether it is a contract of service or a contract 5

for services.

In Lee Ting Sang v Chung Chi Keung [1990] 2 AC 374 the Privy Council had the occasion of considering whether the person concerned was working as an employee or as an independent contractor:
... the fundamental test to be applied is this: Is the person who has engaged himself to perform these services performing them as a person in business on his own account?. If the answer to that question is 'yes' , then the contract is a contract for service. If the answer is 'no', then the contract is a contract of service. No exhaustive list has been compiled with and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relatives weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provided his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.

The point to be discerned from the authorities on this point is that while the degree of control may be a factor, it is not the sole criterion nor the sole deciding factor when it

comes to deciding the issue as to whether a person is a workman or not. There is no exhaustive list of factors which the Court may take into consideration. Most importantly it must be emphasized that the Court is not concerned with labels but the substance of the relationship between the parties with reference to the express terms and conditions governing it.

Evidence The Claimant's first submission is that the Company had failed to produce any evidence to show that the Claimant had made a request for his employment to be converted into that of a independent contractor. The Claimant then takes issue with the fact that COW1 could not remember the date on which this request was made in the hope that this Court will draw an inference that he did not make such a request. The Claimant further argues that the heading of the 4 th contract points to the fact that he was an employee and not an independent contractor.

The Claimant's arguments are untenable. Firstly COW1's testimony that she could not remember the date on which the request was made cannot, on its own, be construed to mean that no request was made by the Claimant. It merely means that COW3 was unable to recall the date on which the request was made. Furthermore the facts and circumstances of this case shows that the Claimant had signed the 3 rd Contract without

any form of protest or objection from him, Indeed if the Claimant did not make such a request then surely the Claimant would have objected to this and refused to agree to the terms contained therein. But he did not.

On the issue of the 4th Contract's heading which made Contract of Employment' it is trite law that the law is not concerned with mere labels but rather the substance of the relationship between the parties. In Metro Health Sdn. Bhd v. Norshila Abu Hashim (1999) 1 ILR 123 the Industrial Court observed on the facts of that case:
the Court has noted the company in its submission seemed to change its stance and resorted to words like re-employment or redeployment. In Industrial adjudication regard is had to substance and not labels and the correct approach to the factual matrix of this case is to hold that this was not a case of reemployment or redeployment but

reinstatement under the Industrial Relations Act.

Therefore it matters not whether the 4 th Contract bears the heading 'Contract of Employment'. The real issue is whether the Claimant was a workman or an independent contractor. To decide this issue the intention of the parties must be discerned from the terms and condition of the contract (Hoh Kiang Ngan's case above).

As with the 3rd Contract the terms and conditions of both the 3 rd and 4th Contract clearly show that the parties had at all material times intended that the Claimant would be an independent contractor. This is clearly evident from Clause 2.2 and 2.4 of of both contracts (pages 10 & 22 of COB1) which commonly reads:
2.2 For the avoidance of any doubt the Consultant shall be treated as an independent contractor and the payment referred to above. Payment as set out above is not payment due to from the Company or salary remuneration due from the Company and there shall not be imputed any relationship of Consultant and employer between the Company and the Consultant. 2.4 Statutory Deductions All treatment and services rendered by the Consultant at LMC shall be as an independent contractor. The Company will not make any contribution to the Consultant's provident fund or SOSCO or make any deductions from the Consultant's payment.

It is clear from the above terms that the Company had painstakingly made it very clear that the relationship between the Company and the Claimant would not be construed as one of employer and employee. It was made very clear that, for the avoidance of any doubt, the Claimant would be an independent contractor.

Further it is clear from the 3rd and 4th Contracts that the Claimant was to be paid a 'Professional Fee' as remuneration as opposed to salary. Under Clause 2.3 the Claimant
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was made responsible to declare his own tax and no deductions (PCP) from his professional fee for this purpose. It is also made clear under Clause 2.4 that there will be no deductions for both EPF and SOSCO. Surely these could not have been the hallmarks of a normal employer employer relationship where EPF, SOSCO and Tax deductions would have been the order of the day.

The important thing to remember is that the Claimant had agreed to all these terms and operated under those terms and conditions for a good 1 years. To come to this Court now to deny that he knew anything about it makes the Claimant's contentions wholly unbelievable. It is the undisputed fact that 20.12.2006 the Claimant had in his own hand,written to the Company to request that his professional fee (note: Claimant also refers to his remuneration as a 'Professional Fee') be paid to a Company which he had formed ie. Hexa Awan Sdn. Bhd. He testified in evidence that he wanted this

arrangement because his accountants had advised that he could get better tax reliefs if he received payment into a Company. Surely a contract between the Company and Hexa Awan would have defeated this purpose as Haxe Awan would then have to be taxed as a business. It is therefore clear that the Claimant wanted this arrangement so as to reap the benefits of tax reliefs. Once again this surely could not have been the hallmark of a normal employer and employer relationship.

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To further his case that he was an employee and not an independent contractor the Claimant puts much emphasis on the control test as propounded in Hoh Kiang Ngan's case to demonstrate the degree of control that the Company had over him. With all due respect it must be pointed out that Hoh Kiang Ngan's case has stated very clearly that the degree of control is only one of the criterion and never the sole consideration to be taken into account. The facts in cases like Hoh Kiang Ngan and Nadeson Kuppusamy v Retunee Sdn. Bhd., referred to by the Claimant in his submissions, can easily be distinguished from the present case. Hoh Kiang Ngan's case concerned a determination of whether a Director of the Company who is employed at the same time as the Group General Manager could be a workman within the meaning of the Act. Nadeson Kuppusamy's case also concerned a determination of whether a General Worker employed on a temporary basis only could be a workman under the Act. In none of the two abovementioned cases was there a contract which expressly states that the Claimant was to be an independent contractor as in this present case. It was only in those circumstances i.e. where the intention of parties have been expressly stated in the contract, can there be any doubt that the Claimant was an independent contractor and hence not a workman within the meaning of the Act.

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The Claimant was required to observe the Hospital's working hours There is nothing unreasonable in having the Claimant observe working hours. How can one expect the Hospital to function properly if the Doctors are allowed to turn up at any time that they wished. The Claimant's contention that the mere fact that he was required to follow working hours means that he was an employee is wholly untenable.

The Claimant needed to obtain the Hospital's approval before he could go on leave There is absolutely nothing wrong in requiring the Claimant to obtain the Hospital's approval before he could go on leave. COW1 has explained that this is because the Hospital needed to know who the available doctors were and if any doctor was to be on leave it would be the responsibility of the Hospital to ensure that there is a replacement doctor on duty to attend to the patients. Even the Claimant agreed to this fact in crossexamination. COW1 has also testified that the Claimant's leave has never been refused. Hence it made for good administration to have te doctors apply for leave so that the Hospital knew who was around and who was not. There is absolutely nothing wrong with this.

It is also an undisputed fact that the Claimant had between 17 th March 2007 and 15th April 2007 absented himself on his own volition due to personal reasons. No notice

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was given to the Company. Nevertheless it is to be observed that the Company did not proceed to take any disciplinary action against the Claimant for his sudden disappearance. Instead the Company wrote to the Claimant to inform him that in essence he had repudiated his contract and that they were accepting his self termination of the 3rd Contract as in any normal contractual relationship. In doing so it is clear from the conduct of the Company that it treated the Claimant as an independent contractor and not as an employee. The Claimant never contended that the 3 rd Contract was unlawfully terminated. Instead, when he was ready, he come back to Company and requested that he be allowed to resume his services under 3 rd Contract. The Company agreed to his request. Surely this also indicates that theirs was not the usual employer employee relationship.

The Claimant continued to receive a fixed salary every month and did not have to pay rent for the office space he occupied in the Hospital The Claimant did not receive a salary. He received a professional fee. The Claimant has agreed to this fact (see also in request at page 15 of COB-1).

The Company never charged him rent because they did not want to and it was not their policy to do so. COW-1 had explained that the question of rental did not arise because they wanted to attract doctors to render their services at their Hospital.

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The Hospital retained the ability to terminate the Claimant if he was found to have committed a misconduct under 3 rd and 4th Contract. The above suggestion is not accurate. Clause 4.1 and 4.2 refers to the termination of the service and/or the contract respectively on the grounds that the Claimant is guilty of any grave misconduct or dishonesty or commit any act which in the opinion of the Company is likely to bring the Company into disrepute whether or not such misconduct, dishonesty or act directly or related to the affairs of the Company.

This is tied in with the Claimant's obligation not to misconduct himself as a Consultant. It is curious to note that the right to dismiss the Claimant on the same grounds is obviously absent form the clause. There is absolutely nothing is this clause which could suggest that the Claimant was an employee rather than an independent contractor.

The Claimant was restrained from working elsewhere and was required to work exclusively for the Hospital This suggestion is also not accurate. Clause 6.1 expressly reads that the prohibition is on a business or activity which would be in conflict with the Consultant's responsibilities inclusive of practice as a locum. Clause 6.2 even states that he is actually not prohibited from engaging in a business similar to that of the Hospital during the term
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of the Agreement or 2 years after that so long as he does not do this within a 5 km radius from the Hospital. The restriction is only in respect of the vicinity of his activity.

The heading of the 4th Contract and the Claimant's employee number The court should be concerned with substance and not labels. Therefore the fact that the 4th contract bears the heading Contract of Employment is of no consequence.

Although COW-1 had agreed that Claimant had an employee number she explained that this was purely for administrative purpose only. In any event this on its own is wholly insufficient to prove that the Claimant was an employee and not an independent contractor.

Conclusion As stated in Hoh Kiang Ngan's case, although the degree of control is an important factor,it is not the sole criterion. Looking at the totality of the facts and circumstances of this case including the express provisions in the 3 rd and 4th Contracts which intentionally excludes any interpretation that the Claimant is an employee, this Court holds that the Claimant was not a workman within the meaning of the Industrial Relations Act.

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Accordingly he is not entitled to avail himself of the statutory scheme under S.20 of the Industrial Relations Act and accordingly his claim is hereby dismissed.

HANDED DOWN AND DATED THIS 12 DECEMBER 2012

(HAPIPAH BINTI MONEL) CHAIRMAN INDUSTRIAL COURT OF MALAYSIA AT KUALA LUMPUR

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