A decision on an employment dispute which has been referred to the Industrial Court will be delivered through an award.
The majority of disputes referred to the Industrial Court involve claims for unfair dismissal. If the Industrial Court decides the dispute in favour of the employee, then the Industrial Court may order the employer to pay back wages and reinstate the employee or pay compensation in lieu of reinstatement. If the dispute is decided in favour of the employer, then the claim for unfair dismissal would be dismissed.
The question that arises is what happens if an Industrial Court award is not complied with? This is an issue which would primarily affect an employee who has succeeded in the Industrial Court and obtained an award in his or her favour. What steps can the employee take to enforce the Industrial Court award? An employer is unlikely to face this issue if it succeeds in the Industrial Court as the unfair dismissal claim would be dismissed and nothing further would be required to be done.
This article shall set out the steps that can be taken by a successful party to enforce an Industrial Court award.
In a situation where there is non-compliance with an award handed down by the Industrial Court, the successful party can lodge a complaint of non-compliance under Section 56(1) of the Industrial Relations Act 1967. A complaint of non-compliance is done by lodging with the Industrial Court Form S in accordance with Rule 24A(1) of the Industrial Court Rules 1967.
A complaint of non-compliance will be treated as a new case in the Industrial Court and therefore a new case number will be allocated with the case code “I”. If the parties wish to be legally represented in the non-compliance proceedings, then fresh representation forms (Forms A and B) must be filed.
In the non-compliance proceedings, the Industrial Court may direct the parties to file pleadings in the form of a Statement of Case, Statement in Reply and a Rejoinder.
The Industrial Court, upon hearing the complaint, will issue a Non-Compliance Order where the Industrial Court may amongst others order as follows:
- i) Direct a party to comply with the award
- ii) Direct a party to make restitution for contravening the award
- iii) Vary or set aside the award if there are special circumstances.
A Non-Compliance Order issued by the Industrial Court will be in Form T in accordance with Rule 24A(3) of the Industrial Court Rules 1967.
Failure to Comply with a Non-Compliance Order
Pursuant to Section 56(3) of the Industrial Relations Act 1967, a party who fails to comply with a Non-Compliance Order is guilty of an offence and on conviction, will be liable to a fine not exceeding RM50,000.00 or to imprisonment not exceeding one year, or both. In addition, the party will also be liable to a fine of up to RM500.00 for every day during which such offence continues.
Enforcement of a Non-Compliance Order as a Judgment
A Non-Compliance Order can be recorded as a Judgment of the High Court or the Sessions Court depending on the quantum to be paid under the Non-Compliance Order. If the quantum exceeds RM1 million, then it can be recorded as a Judgment of the High Court. If the quantum is RM1 million or below, then it can be recorded as a Judgment of the Sessions Court.
A Non-Compliance Order which is recorded in the civil court shall be enforceable as a court judgment.
Once the Non-Compliance Order is recorded as a court judgment and there continues to be non-compliance, then the standard modes of enforcement or execution of a court judgment can be applied. This would include the following modes:
- i) Judgment Debtor Summons – An application to summon the defaulting party to court [typically the directors if it involves a company] to disclose their assets and their means of satisfying the judgment.
- ii) Writ of Seizure and Sale – An application to court for the assets of the defaulting party to be seized by the bailiff and sold through an auction to satisfy the judgment.
- iii) Writ of possession – An application to court to seize possession of the defaulting party’s immovable property. The immovable property will then have to be auctioned off and the proceeds used to satisfy the judgment.
- iv) Garnishee proceedings – An application to court for the bank accounts of the defaulting party to be frozen and the amounts in the accounts to be utilised to satisfy the judgment.
- v) Charging order – An application to court for a charge to be imposed on any securities such as shares owned by the defaulting party. The securities may then be sold to satisfy the judgment.
- vi) Insolvency proceedings – Proceedings may be commenced to wind-up the defaulting party if it is a company on the ground that it is unable to satisfy the judgment. If the defaulting party is an individual, then bankruptcy proceedings may be commenced on similar grounds.
In essence, the enforcement of an Industrial Court award involves a two-stage process. Firstly, the successful party must lodge a non-compliance complaint in the Industrial Court against the defaulting party.
Secondly, once the Non-Compliance Order is issued by the Industrial Court and there is non-compliance with this Order, this order can then be recorded in the civil court as a court judgment. Thereafter, it becomes enforceable as a court judgment.
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
Rohan Arasoo Jeyabalah
Partner, Employment & Industrial Relations
Harold & Lam Partnership