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INDUSTRIAL COURT OF MALAYSIA CASE NO : 3/4-1850/06 BETWEEN THAVARATNAM A/L THAMBIPILLAY AND OM EDUCATION SDN. BHD. AWARD NO : 345 OF 2010 Before : TUAN FRANKLIN GOONTING Venue Date of Reference Dates of Mention : : : Chairman (Sitting Alone)

Industrial Court Malaysia, Kuala Lumpur 31.5.2006 19.10.2006, 11.1.2007, 23.2.2007, 22.3.2007, 12.9.2007, 1.10.2007, 29.5.2008, 4.7.2008, 24.7.2008, 3.3.2009, 6.5.2009, 11.11.2009, 1.12.2009, 4.1.2010, 9.2.2010, 2.3.2010 11.11.2008, 29.7.2009, 16.9.2009 2.6.2009 Ms. Srividhya Ganapathy, From Messrs Muhendaran Sri, Counsel for the Claimant. Ms. Koh San Tee & Mr. Aaron Lee Cheen Yee, From Messrs Benjamin Dawson, Counsel for the Respondent.

Dates of Hearing Hearing of Application Representation

: : :

Reference : This is a reference made under Section 20 (3) of the Industrial Relations Act, 1967 arising out of the dismissal of Thavaratnam a/l Thambipillay (hereinafter referred to as the Claimant) by OM Education Sdn Bhd (hereinafter referred to as the Respondent) on 31.12.2005.

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AWARD
This case came to the court by way of a ministerial reference pursuant to Section 20(3) of the Industrial Relations Act 1967 and it concerns the alleged dismissal of the claimant by the respondent on 31 st December 2005.

At age 56 the claimant, on 3rd January 1996, commenced employment with the respondent as a secondary school teacher pursuant to a letter of appointment of the same date. Clause 7 thereof stated as follows:

Age limit On attaining your 60th birthday you will be employed on a

year to year basis. You will be required to apply for reemployment with the school at the latest by the last day of the current academic year. Non-compliance will result in your services being terminated automatically at the end of the academic year without notice..

The letter also provided for a 12-month probationary period and the claimant's employment was duly confirmed on 14th March 1997. Upon reaching the age of 60 he was invited by the respondent to apply for re-employment for academic year 2001 on a fixed term basis renewable yearly. He was also required to submit a medical report
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certifying that he was medically fit together with his said application. Pursuant to his application he was re-employed for a period of one year. This requirement to apply for re-employment and the claimant's responding application for a new contract of employment was repeated each and every subsequent academic year up to and including 2005. The first such letter of invitation and the claimant's application in response are reproduced as follows:

Respondent's letter dated 18th October 2000

OM Education SDN BHD

company number 409010 W

_________________________________________________________________________________
No 1 Jln. SS 15/7A, Subang Jaya, 47500 Petaling Jaya, Selangor Darul Ehsan, W. Malaysia tel : 03 7343491 03 7343493, fax : 03 7343489

Our.ref : OM/RES/60/2000 MR.THAVARATNAM A/L THAMBIPILLAY PRESENT Dear Mr. Thavaratnam

18 October, 2000

RE : EMPLOYMENT OF STAFF OVER SIXTY YEARS OF AGE AT OM EDUCATION SDN. BHD. All members of the staff have previously been informed of the Company's policy regarding the employment of staff who had attained sixty years of age and above. The circular No SKL/7/93 stated that on attaining the age of sixty, all staff members were deemed to have reached the statutory retirement age for OM EDUCATION SDN BHD and will automatically, be retired from their duties. 2. If you wish to continue working with the Company, you are required to sign a new contract of employment which will be renewable yearly at the mutual consent of both parties. 3. You are now required to apply for RE-EMPLOYMENT with the Company and your application accompanied by a medical report certifying that you are fit and healthy to continue teaching, should reach us on or before 6.11.2000.

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4. Please take note that non-compliance will result in your services being terminated automatically at the end of the academic year without further notice. Yours faithfully, OM EDUCATION SDN. BHD. Signed ..................................... ABD.RAIS MANAS Director.

Claimant's application dated 31st October 2000 31 OCTOBER 2000 Your ref: OM/RES/60/2000
THAVARATNAM S/O THAMBIPILLAY To : TUAN ABDUL RAIS MANAF Director OM EDUCATION SDN. BHD. RE : EMPLOYMENT OF STAFF OVER SIXTY YEARS OF AGE AT OM EDUCATION. SDN. BHD. Dear Sir, Thank you for your letter dated 18"' October 2000 with regard to the above. It would be my pleasure to continue working for the Company. As such I am prepared to sign a new contract of employment as required by the Company. 2. Herewith is enclosed a medical report on my health and fitness to continue teaching. 3. I assure you that I would give of my best in discharging my duties to the Company. Thank you, Yours faithfully, Signed ....................... (Thavaratnam s/o Thambipillay)

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Towards the end of academic year 2005 the claimant received a letter dated 30th November 2005 from the respondent informing him that his service with the respondent would not be extended to the next academic year and therefore his contract would end on 31st December 2005.

The claimant's pleaded case The claimant considers the non-renewal of his 2005 contract to be a dismissal without just cause and excuse and further states, vide

paragraph 23 and 24 of his statement of case as follows:

23.

The claimant further contends that there were other

employees in the company who had their contracts renewed and continued to work until the age of 70.

24.

The claimant also contends that no reasons whatsoever

were afforded to him in respect of the respondent's decision not to renew his contract of employment with the company..

The respondent's pleadings The respondent's position is that upon expiry of the claimant's contract on 31st December 2005, it had the right not to renew it for the next academic year. It further states vide paragraph 11A of its

amended statement in reply:

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11A.

Further and in the alternative, the company contends that its decision in not renewing the claimant's contract is bona fide based on the following reasons:

(i)

The company had found a replacement for the position who is able to assume more

claimant

responsibilities and task; and

(ii)

The claimant is getting on with age in that he had

taken 28 days of medical leave for Academic Year 2005.

Identifying the issues The court must confess to having some difficulty in identifying the issues to be determined in this case. In his pleaded case, as also in his presented case, that is, vide his witness statement (CLWS-1A&B) the claimant avers that he was dismissed by virtue of the fact that his contract was not renewed. With respect, non-renewal of a fixed term contract per se is not a dismissal. Then he goes on to add that there were other employees who had their contracts renewed and continued to work until the age of 70. The court surmises from this averment (although something as important as issues to be determined should in the first place be properly identified by parties and not left to conjecture) that the claimant is saying that he had a reasonable expectation of his contract also being renewed. Alas, this guess-work is
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incorrect because the claimant's counsel, in his written submissions at paragraph 3.2 states the issue to be whether the claimant's contract was a genuine fixed term contract or a permanent contract of employment merely dressed up as a fixed term contract. Earlier on in the said submissions counsel postulates the law on fixed term contracts and then deduces (at paragraph 2.2) clearly then Yang Arif, what needs to be determined is whether the claimant's employment was a temporary, one-off job and work to fill the temporary absence of permanent staff or an on-going permanent contract of employment. This, in effect introduces a position which is extraneous to the

claimant's pleaded case and even his presented case. Nevertheless the court now proceeds to review and evaluate the evidence.

The claimant 's evidence The claimant's testimony, in brief, is as follows: The respondent required him to turn up for school at the beginning of each academic year although he had not then yet received confirmation whether or not his application for re-employment had been accepted. He was paid his full salary for the month of January of that year, and not just from the date of the confirmation letter. anniversary of his appointment. He received an increment on each He was also paid bonuses. His The

students performed well in the subject he taught i.e history.

respondent did not cease the teaching of history; what it did instead was to replace the claimant with one Mr. Tanasekaran on the excuse

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that he was younger than the claimant i.e his job, and function remained. He was not redundant; he was replaced. At the time when

he was first employed he was already 56 years old. The respondent could have placed him on a fixed contract at that point, but chose to give him a permanent contract. Having done so it subsequently, some four years later, proceeded to take away his security of tenure by informing him that if he failed to sign a new contract of employment for a one-year fixed term his employment would be terminated.

Under cross-examination the claimant conceded that there was an element of mutuality in the renewal or otherwise of the contract:

Would you then agree with me that if you had not applied for re-employment with the company you would not have continued to serve the company for 5 academic years from 2001 to 2005?

Yes, I would not have continued with the company if I had not applied.

: If one party does not agree the contract cannot be renewed? Yes?

If one party does not agree of course the contract cannot be renewed..

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The respondent's evidence

The respondent's witnesses testified, inter alia, as follows: The claimant was not the only one whose contract was not renewed; there were two others, namely Mr. David Jeevaratnam and Ms. Marie Low. It was almost a yearly affair that some teachers who were on fixed term contracts did not have their contracts renewed. The claimant had

taken excessive medical leave in academic year 2005 i.e 18 days due to hospitalisation for pneumonia in April 2005, and prior to that he fell sick at least once a month from January to April 2005. Further, after the long medical leave in May 2005, the medical leave taken by him increased in frequency and the number of days. disruption in lessons. The result was a

The respondent ran a private school and the

parents of students having paid high fees had high expectations. Thus the respondent was obliged to ensure that the student received the best education.

Concerning the claimant's point that the respondent had extended the contracts of two teachers, Mr. Krishnan Nathan and Ms. Boey, beyond the age of 70, COW-2, the principal of Sri Kuala Lumpur (Secondary School) explained that this had been because of their teaching skills and expertise in their respective fields. Ms. Boey was an excellent English teacher and there was an acute shortage of English teachers. As for Mr. Krishnan, he taught physical education (PE) for all forms in secondary school. He had in fact wanted to retire but COW-2

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had asked him to stay on because the respondent was in need of his service and expertise. The respondent was always on the lookout for experienced PE teachers because PE teachers were no longer being trained in the teaching college. Mr. Krishnan was one of a kind, a rare breed; despite his age he was still very fit, physically, mentally and emotionally. He was one of COW2's assistants; he was overall in

charge of sports and games, and partly in charge of discipline, he was still very active in the coaching of cricket. In fact in 2008 he was given a special award by the National Sports Council, Malaysia for his contribution to the development of cricket in the country.

The parties' contention Pursuing a security of tenure line of argument the claimant's counsel cites the case of Han Chiang High School/Penang Han Chiang Associated Chinese Schools Association and National Union of Teachers in Independent School W. Malaysia [1988] 2 ILR 612. In that case some 35 teachers who had been employed on fixed term contracts did not have their contracts renewed upon their expiry. The Industrial Court held that such non-renewal constituted dismissal of these teachers and ordered their reinstatement to employment. The chairman expounded as follows:

These clauses denote what is commonly known as fixed term contract of employment. In common law, when a contract for a fixed term expires, it terminates of itself: it has not been

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terminated by either party. In the conventional sense, there is neither dismissal nor resignation. (This is implicitly affirmed in our Employment Act 1955, Section 11). The workman may have a grievance that he has not been hired by his employer under a fresh contract, but ordinarily an employer is not under any obligation in law to enter into a contract. At common law, therefore, there is simply no remedy.

In a framework of statute-guaranteed security of employment however, where the termination of a workman's employment without just cause or excuse may be subject to an award of reinstatement by the Industrial Court (see Section 20 of the Act, and the case of Dr. Dutt Assunta Hospital in Federal Court Civil Appeal No. 276 of 1980 for the section's origins, interpretation and raison d'etre) it would be an obvious loophole if any employer could evade the statutory protection by making a series of contracts of finite duration with his workmen. In other words, employers could engage their workmen on a succession of fixed-term contracts of, say, three months duration each and simply fail to re-engage particular workmen whom they wanted to get rid of, without having to face a claim for reinstatement. This would, to quote from Dr. Dutt's case, make nonsense of the whole purpose and intent of, and stultify, the Act as well as offend well-known principles of interpretation of statutes.

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The Court, however, is aware that on the other hand there are genuine fixed term contracts, where both parties recognise there is no understanding that the contract will be renewed on expiry. The Court realises that such genuine fixed-term contracts for temporary, one-off jobs are an important part of the range of employment relationships. Some such jobs are found in

seasonal work, work to fill gaps caused by temporary absence of permanent staff, training, and the performance of specific tasks such as research projects funded from outside the employer's undertaking. These are the types of work envisaged in Section

11 of the Employment Act, 1955, which may be embodied in contracts of service for a specified period of time. This type of fixed-term contracts are therefore to be differentiated from the so-called fixed-term contracts which are in fact ongoing, permanent contracts of employment.

In deciding whether a contract is genuinely fixed-term or not, English tribunals were told : The great thing is to make sure

that the case is a genuine one ......... On the one hand, employers who have a genuine need for a fixed-term employment which can be seen from the outset not to be ongoing, need to be protected. against On the other hand, employees have to be protected deprived of their rights through ordinary

being

employments being dressed up in the form of temporary fixedterm contracts. What we are saying in this judgment is that

there is no magic about fixed-term contracts; that they are

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not .......... excluded from the Act.

(Terry v. East Sussex

County Council, 1976, I. C. R 536, per Phillips J..

Counsel also refers to the case of Innoprise Corporation Sdn Bhd , Sabah v. Sukumaran Vanugopal Sabah [1993] ILR 373. In that case the employee had served the employer for nine years pursuant to successive 3-year contracts. The last such contract was not renewed and he claimed unfair dismissal. The Industrial Court

found that he had been dismissal without just cause and excuse and awarded him backwages. The chairman stated:

The cardinal issue therefore that falls to be decided is whether the Claimant's employment with the Company which continued for nine years on the basis of successive renewals, was permanent taking into consideration also the verbal assurance given to the Claimant and the policy and practice of the Company to renew and to routinely renew contracts of Senior Managers and Senior Officers in the absence of misconduct or poor performance which created and induced a reasonable legal expectancy in the Claimant's mind that he was in fact a permanent employee of the Company.

Industrial Jurisprudence Leans ln Favour of Permanency To Ensure Security of Tenure of Employment

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At the time the Claimant was notified that his services were no longer required he had completed a period of nine years service through successive three years contracts. There is no dispute that the work, conduct and character of the Claimant was exemplary and unimpeachable.

Assuming for a moment his last contract of employment which expired on 16 December 1989 - which is disputed - was renewed for another term of three years ending in December 1992, and renewed further for yet another three year term ending in 1995, the Claimant would have worked for 15 years on successive contracts, without any form of security of tenure being guaranteed, the renewal of each contract being subject to the absolute discretion of the Groups' or the company's Managing Director. And assuming at the end of 15 years his contract of employment was not renewed, the Claimant would be thrown out into the streets wholly insecure and disorientated, after 15 years of service. This is a highly undesirable state of affairs, unconscionable and repugnant to notions of social justice and the principle of security of tenure of employment. The Claimant through successive contracts was being kept in a state of suspended animation with the sword of Damocles hanging over his head.

It is on the solid basis of security of tenure of employment, which brings a guaranteed regular income that a workman

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sustains himself, gets married, brings forth children, is able to give them education, purchase a house, a vehicle for transport, look after his dependants and his aged parents and looks forward to secure retirement. Society will crumble, individuals

driven to despair, a family's well being jeopardised, children's schooling interrupted and indebtedness encouraged, when a workman does not enjoy security in the form of continuity and permanency of employment. Unless a workman is able to

obtain immediate employment elsewhere, even though on less favourable terms or had recourse to savings, he would not be able to meet the exigencies of his monthly budgeting in respect of himself and his family, and school children, if any.

These are the evils and injustices that industrial law and social justice seeks to avoid in s. 20 of the Industrial Relations Act 1967 ("the Act")..

Arguing for the other side of the line the company's counsel cites

the case of Sharp-Roxy Sales & Service Co (M) Sdn Bhd v. See Hing Lin [2003] 3 ILR 1425. In that case the employee was retired at the prescribed age of 55 but two other retired employees were re-employed on contract. The employer explained that it had decided to employ

these two person based on its needs but did not offer re-employment to the claimant since his services were not needed and his work could be done by another person, one Ms. Katherine Wan. The Industrial Court accepted the employer's explanation.
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In another case cited by the respondent's counsel i.e Kesatuan Pekerja-Pekerja Resort world, Pahang v. M. Vasagam Muthusamy

[1999] 1 ILR 368 a salaried executive secretary of a union had been employed by the union on a fixed term contract i.e one year renewable at the union's discretion. It was not renewed and he claimed wrongful dismissal, arguing that his contract had been renewed automatically on two previous occasions and therefore the contract was not a fixed term contract. The union's explanation was that it did not need the

claimant's services any longer since its members themselves were taking over to continue the claimant's job. After considering all the

facts before it the court found that the contract was a genuine fixed term contract of employment. The claimant's application to quash the Industrial Court's award was dismissed by the High Court which held that the facts in the Han Chiang High School case (supra) were distinguishable. See M. Vasagam Muthusamy v. Kesatuan PekrjaPekerja Resorts World, Pahang & Anor [2003] 5 CLJ 448 where at page 455 Faiza Tamby Chik J stated:

The applicant relied on the case of Han Chiang School, Penang Han Chiang Associated Chinese Schools

Association v. National Union of Teachers in Independent Schools, W. Malaysia [1988] 1 ILR 611 ("the Han Chiang case"). It is noted that this case was also relied on at the

Industrial Court and in fact mentioned in its award. It is observed that in the Han Chiang case the Industrial Court

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made a finding that the system of fixed term contracts in the school was employed not out of a genuine necessity but as a means of control of the teachers concerned. The intention of

the school was to rid itself of the union, which, was why the school relied on the fixed term contracts to flush out the teachers who were members of the union. The Han Chiang

case therefore can be distinguished from the instant case as in the instant case, the Industrial Court upon examining the facts of the case found that there was genuine fixed term contract..

Not satisfied, the employee appealed to the Court of Appeal, and lost again. (See M. Vasagam Muthusamu v. Kesatuan PekerjaThis is

Pekerja Resorts World, Pahang & Anor 2005 4 CLJ 93).

what the Court of Appeal (per Abdul Kadir Sulaiman JCA at page 100) had to say:

Having gone into the Han Chiang High School case ourselves,
we are in total agreement with the learned judge that the facts of the appellant's case do not fit into the principle laid down therein. They are clearly distinguishable. There was an ulterior motive behind the fixed term contract in Han Chiang High School case which is absent in the contract entered into between the appellant and the first respondent. We agree with the

second respondent and the learned judge that the contract in our present case is a genuine fixed term contract terminable upon the expiry of the fixed term agreed upon.

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Terry v. East Sussex County Council [1997] All ER 567 cited to us in further support of the contention of the appellant is not at all relevant in deciding the issue before us. It is a decision based on a certain provision in a particular statute of England which is not at all of any similarity with the Act 1967 upon which the second respondent was called upon to adjudicate over the dispute between the appellant and the first respondent.

No two sets of facts are alike. Each case is to be decided purely on its own facts before the tribunal called upon to adjudicate on the matter. On the facts of the appellant's case we are satisfied

that neither the second respondent nor the learned judge, in particular, has committed any error in arriving at the decision.. (Italics added).

Evaluation and finding As reiterated by the Court of Appeal in Vasagam Muthusamy's case, each case is to be dealt with and decided on its own facts. This includes the one at hand.

The respondent runs a private school. Both COW-1 and COW-2 testified that there was a need to re-employ teachers past their retirement age due to a shortage of supply of teachers. As these

teachers were of advanced age it was necessary to re-employ them under fixed term contracts on a year to year basis until the respondent
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found suitable replacements. The respondent would offer to re-employ or extend the fixed term contract if the position was available and provided that the teacher concerned was still fit to discharge his duties. The availability of the positions or vacancies depended on the subjects and whether the teachers concerned possessed special skills and expertise. The subjects which were short of teachers varied from time to time, the more usual ones being English, Mathematics and Physical Education. Such, then, was the respondent's scheme of things which the claimant, a teacher of history, came into in January 1996 and he knew, from day one, that the respondent's mandatory age of retirement was 60 because this was clearly spelt out in clause 7 (reproduced earlier) of his letter of appointment dated 3rd January 1996.

Being age 56 at the time the claimant had some four years to go before reaching that retirement age and when these four years ran out and he had thereby reached this contracted retirement age the respondent, in keeping with clause 7 aforesaid, invited him to apply for re-employment on a one-year fixed term contract renewable yearly at the mutual consent of both parties. He did so then but he now

complains that the respondent had taken away his security of tenure by giving him a one-year contract. The court finds this complaint to be untenable because if he had really believed that to be the case he should have rejected the one-year contract and claimed dismissal at that time, but, no, not only did he accept that first one-year term

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contract in 2000 but also he went on to accept five more such contracts for the years following, i.e 2001, 2002, 2003, 2004 and 2005 with apparent alacrity. Having received the benefit of gainful employment past the age of retirement (this must be emphasised) under these contracts he cannot now be heard to say that the one-year stipulation therein has no effect and that he is actually entitled to permanency of employment. This court, as a court of equity and good conscience,

cannot allow the claimant to approbate and reprobate in this manner.

The court concludes that the one-year contracts offered to the claimant after his retirement age of 60 were genuine fixed term contracts. This being so there is no duty on the respondent to give

reasons for the non-renewal of the contract for the academic year 2005. Nevertheless the respondent has explained to the court at the hearing why it did not renew the said contract i.e the claimant had taken excessive medical leave that year and was not physically present in class to teach the students for a period of one month in total, resulting in the disruption of the teaching and learning process, and which was no good for the students whose parents had paid high fees and therefore had high expectations as they were entitled to. It was

reasonable in these circumstances for the respondent to have come to the conclusion that the claimant was getting on in age and was

medically unfit and therefore no longer suitable for the job.

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One last matter needs to be addressed. The claimant is unable to come to terms with the non-renewal of his contract because two other teachers had had their contracts renewed beyond age 70, namely Ms. Boey and Mr. Krishnan Nathan. With respect, he cannot equate

himself with these two persons. Firstly, they hardly took medical leave. Secondly, Ms. Boey taught English for which subject teachers were in short supply while Mr. Krishnan Nathan was a PE teacher and PE teachers were also in short supply since fewer PE teachers were being trained at teachers' college. Furthermore Mr. Krishnan was one of a kind (see COW-2's testimony concerning him, reviewed above).

In conclusion it is the finding of the court that there was no dismissal in as much as the claimant's contract expired on 31st December 2005. This was simply a case of non-renewal of a fixed term contract.

The claim is dismissed.

HANDED DOWN AND DATED THIS 17th DAY OF MARCH 2010

Signed ( FRANKLIN GOONTING ) CHAIRMAN INDUSTRIAL COURT, MALAYSIA KUALA LUMPUR

K/ud-16.3-4.20

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