MALAYSIAN COURT OF APPEAL
LEE SWEE SENG, MARIANA YAHYA AND LIM CHONG FONG JJCA
8TH FEBRUARY 2023
The law recognises that there exists unequal bargaining of power in some contractual relationships between parties. There are certain statutory legislations enacted by Parliament with the intent to provide protection for the weaker class of persons against the stronger class of persons. One of those legislations is the Employment Act 1955. In this case, the Court of Appeal demonstrates how the courts of Malaysia conduct a balancing exercise when interpreting statutory legislation.
In this case, a total of 48 Indian nationals (“Appellants”) employed by the Respondent Company lodged a complaint to the Department of Labour at Bentong, claiming for unpaid wages for the months of September and October, 2018 (“Complaints”). During the hearing at the Labour Court, some of the Appellants stated that they intended to return to their home country and forego their respective Complaints.
After the inquiry by the Presiding Officer under Section 69 of the Employment Act 1955 (“EA”), the Respondent was ordered to pay a total sum of RM95,617.00 to all 48 Appellants.
The Respondent being dissatisfied, appealed to the High Court of Temerloh. On 6.11.2019, the High Court allowed the Respondent’s appeal.
The Appellants, being dissatisfied, sought leave to appeal to the Court of Appeal against the decisions of the High Court. Leave was granted on 25.2.2021 in respect of the following questions:
- (i) Whether Section 69 of the EA confers full discretion to the Presiding Officer of the Labour Department and/or Labour Court to further investigate and decide on a complaint despite the Complainant’s intention to withdraw the Complaint in the course of proceedings; and
- (ii) Whether the Presiding Officer of the Labour Department and/or Labour Court is right in deciding that the Respondent has a duty to pay wages to the Appellants under the Employment Contract and EA, regardless of the intention of the Appellants to withdraw the complaint.
The Decision by the Court of Appeal
Section 69 of the EA provides as follows:
Section 69. Director General’s power to inquire into complaints.
(1) The Director General may inquire into and decide any dispute between an employee and his employer in respect of wages or any other payments in cash due to such employee under—
- (a) any term of the contract of service between such employee and his employer;
- (b) any of the provisions of this Act or any subsidiary legislation made thereunder; or
- (c) the provisions of the Wages Councils Act 1947 [Act 195] or any order made thereunder, and, in pursuance of such decision, may make an order in the prescribed form for the payment by the employer of such sum of money as he deems just without limitation of the amount thereof.
(2)The powers of the Director General under subsection (1) shall include the power to hear and decide, in accordance with the procedure laid down in this Part, any claim by—
- (i) an employee against any person liable under section 33;
- (ii) a contractor for labour against a principal contractor or sub- contractor for any sum which the contractor for labour claims to be due to him in respect of any labour provided by him under his contract with the contractor or sub-contractor; or
- (iii) an employer against his employee in respect of indemnity due to such employer under subsection 13(1), and to make such consequential orders as may be necessary to give effect to his decision.
(3)In addition to the powers conferred by subsections (1) and (2), the Director General may inquire into and confirm or set aside any decision made by an employer under subsection 14(1) and the Director General may make such consequential orders as may be necessary to give effect to his decision:
Provided that if the decision of the employer under paragraph 14(1)(a) is set aside, the consequential order of the Director General against such employer shall be confined to payment of indemnity in lieu of notice and other payments that the employee is entitled to as if no misconduct was committed by the employee:
Provided further that the Director General shall not set aside any decision made by an employer under paragraph 14(1)(c) if such decision has not resulted in any loss in wages or other payments payable to the employee under his contract of service:
And provided further that the Director General shall not exercise the power conferred by this subsection unless the employee has made a complaint to him under the provisions of this Part within sixty days from the date on which the decision under section 14 is communicated to him either orally or in writing by his employer…
In dealing with these questions, the Court of Appeal referred to the decision in PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and Other Appeals  2 CLJ 441, which held that a social legislation has been passed by the Parliament for the purpose of protecting the weaker party against the stronger party in the relationship:
 All legislation is social in nature as they are made by a publicly elected body. That said, not all legislation is “social legislation”. A social legislation is a legal term for a specific set of laws passed by the Legislature for the purpose of regulating the relationship between a weaker class of persons and a stronger class of persons. Given that one side always has the upper hand against the other due to the inequality of bargaining power, the State is compelled to intervene to balance the scales of justice by providing certain statutory safeguards for that weaker class. A clear and analogous example is how this court interpreted the Industrial Relations Act 1967 in Hoh Kiang Ngan v. Mahkamah Perusahaan Malaysia & Anor  4 CLJ 687;  3 MLJ 369 (“Hoh Kiang Ngan “).
Similar to the Industrial Relations Act 1967, the EA is also a social legislation as held by the Court of Appeal in Barat Estates Sdn Bhd & Anor v Parawakan Subramanian & Ors  3 CLJ 625 CA where Gopal Sri Ram JCA (later FCJ) held as follows:
“The scheme of the Act thus when viewed as a whole, is to afford protection to persons employed under a contract of service. Hence the Act is designed to afford a degree of security of tenure that is not available to a servant at common law. It is therefore plain that the Act is a piece of beneficent social legislation. As such, its provisions must, in accordance with well-settled principles, receive a broad and liberal interpretation that enhances its avowed object. It is what Lord Simon in Stock v. Frank Jones (Tipton) Ltd  1 WLR 231, 236 referred to as the “functional construction of a statute.”
In conducting the balancing exercise, the Court of Appeal refers to Sections 69 and 70 of the EA and held that the Presiding Officer has wide discretion to inquire and examine persons summoned on the material matters in issue.
In this case, the Presiding Officer was found to have correctly exercised his jurisdiction and powers conferred by the EA to carry out the inquiry and ultimately made his decision notwithstanding that some of the Appellants had testified that they intended to withdraw their clams against the Respondent as long as they were able to return to their home country. That is so despite the Respondent contending that the Appellants should be deemed to have already withdrawn their Complaints during the hearing and that the Presiding Officer no longer having the jurisdiction to continue to inquire and decide the Complaints.
The Court’s Findings:
The Court of Appeal found that:
First, not each and every one of the 48 Appellants stated that they wish to withdraw their Complaints during the hearing;
Second, having carefully reviewed the statements, the Appellants’ priority was to return to their home country rather than being bogged down in the Labour Court Inquiry. This is however not an unequivocal expression of waiver of their rights to be paid their unpaid wages by the Respondent; and
Third, EA is a social legislation which be interpreted liberally and equivocally in favour of the weaker party who are the poor and likely illiterate Appellants.
Fourth, the Presiding Officer’s jurisdiction and power to continue to conduct the inquiry into the Complaints are only forfeited if there is a negotiated settlement or prior payment of the unpaid wages.
Based on the matters set forth above, the question of law on whether the Presiding Officer of the Labour Department and/or Labour Court had the jurisdiction and power to continue to conduct the inquiry into the Complaints until the issuance of the decision was answered in the affirmative by the Court of Appeal. It follows therefore that the Respondent was rightly found to have a duty to pay the wages to the Appellants under the EA regardless of statements made by some of the Appellants that they wanted to withdraw the Complaints.
This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
About the Author
Teoh Yen Yee
Construction, Employment & Labour Disputes, Contractual and Commercial Dispute Resolution, General Debt Recovery
Harold & Lam Partnership