HRLaw Training & Consultancy PLT’s post

The Industrial Court has ruled that Canon Opto (M) Sdn Bhd used a mutual separation scheme (MSS) to avoid paying full retrenchment benefits to its workers. The court questioned the company’s downsizing during the Covid-19 pandemic, stating it was essentially a retrenchment requiring higher compensation. The company also failed to consult the union and offered lower compensation rates than stipulated in the collective agreement. The union is now seeking compensation for the former employees, arguing the workers may have been misled without union advice.

𝐊𝐞𝐲 𝐭𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬:

𝐀𝐯𝐨𝐢𝐝 𝐌𝐢𝐬𝐥𝐚𝐛𝐞𝐥𝐢𝐧𝐠 𝐑𝐞𝐭𝐫𝐞𝐧𝐜𝐡𝐦𝐞𝐧𝐭: Don’t try to disguise retrenchment as a “mutual separation scheme” to cut costs. Courts will scrutinize the true nature of the job losses.

𝐔𝐩𝐡𝐨𝐥𝐝 𝐅𝐚𝐢𝐫 𝐂𝐨𝐦𝐩𝐞𝐧𝐬𝐚𝐭𝐢𝐨𝐧: When jobs are eliminated due to redundancy, employees are entitled to the legally mandated or contractually agreed-upon retrenchment benefits. Offering less is risky.

𝐄𝐧𝐠𝐚𝐠𝐞 𝐰𝐢𝐭𝐡 𝐔𝐧𝐢𝐨𝐧𝐬: Proper consultation with trade unions is essential during workforce reductions. Failing to do so can lead to legal challenges and demonstrate bad faith.

𝐊𝐧𝐨𝐰 𝐘𝐨𝐮𝐫 𝐑𝐢𝐠𝐡𝐭𝐬 𝐚𝐬 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐞𝐬: Employees should be aware of their rights regarding retrenchment and not feel pressured to accept less favorable separation terms without seeking advice, especially from their union if applicable.

𝐓𝐫𝐚𝐧𝐬𝐩𝐚𝐫𝐞𝐧𝐜𝐲 𝐚𝐧𝐝 𝐆𝐨𝐨𝐝 𝐅𝐚𝐢𝐭𝐡 𝐌𝐚𝐭𝐭𝐞𝐫: Companies must act transparently and ethically in all workforce restructuring processes. Attempts to circumvent legal obligations can result in legal repercussions and damage their reputation.

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