Banning retrenchment will hurt bosses and workers alike, says lawyer

Lawyer T Thavalingam says it would be inappropriate to ban retrenchment at a time when many companies are struggling to stay afloat.

PETALING JAYA: A seasoned industrial law practitioner has cautioned against the introduction of any regulation barring employers from retrenching personnel for a specific period, saying it would be unwise to do so at a time when businesses are trying to survive.

T Thavalingam, an industrial relations expert, said such a law would be unfair to both employers and employees.

Speaking to FMT, he said retrenchment was recognised by law while the Industrial Relations Act ensured that employers did not sack workers based on “whims and fancy”.

He said bosses must have just cause before giving someone the boot, for example misconduct, poor performance and redundancy. They must also prove these criteria when sacking or retrenching employees.

Under the law, he said, the right to reorganise is a management prerogative, with courts steering clear unless it can be shown that retrenchments were done in bad faith.

“To make it illegal would be unfair to any employer because he runs his business according to needs and finances.

“To make it illegal, even for a short period of time, is inappropriate especially in times like these where companies are trying to stay afloat,” Thavalingam, who has penned a book titled “Retrenchment Law and Procedure in Malaysia”, told FMT.

He was responding to the push by the Malaysian Trades Union Congress (MTUC) for the government to introduce emergency employment regulations prohibiting employers from laying off workers for a specific period.

MTUC secretary-general J Solomon pushed for the law after the Malaysian Employers Federation (MEF) warned that the 5% unemployment rate in the country, the worst in 30 years, would soar as high as 12% before the middle of next year.

Thavalingam said there were sufficient laws in Malaysia to protect employees from unfair dismissal claims arising from any retrenchment exercise.

He cited the Employment Act 1955 which he said stipulated a notice period as well as termination and lay-off benefits. The Employment (Termination and Lay-off Benefits) Regulations 1980, meanwhile, makes provision for monetary compensation in the event that an employee is terminated or laid off.

Prohibiting retrenchment, Thavalingam said, would also be unfair to the employee who would be idling away without any work.

He suggested that employees consider re-skilling, referring to various initiatives introduced by the government through agencies such as the Human Resources Development Fund.

Meanwhile, MEF executive director Shamsuddin Bardan said MTUC had “missed the point” about retrenchment exercises.

He said while unions and some employees might think that employers are trigger-happy when it comes to letting people go, retrenchments are usually made as a last resort.

“A union thinks that at the slightest chance, employers will just retrench, which is not true. It is a serious misconception,” he said when contacted.

Shamsuddin said employers wouldn’t simply let staff go as they had invested in them via training. Letting them go would be akin to blowing off such investment, he said.

He urged unions, the government and employers to instead think outside of the box on how to help businesses stretch their capacity to pay wages, even reduced ones.

“At the end of the day, we want to retain employees,” he said.

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