Court Of Appeal Affirms That Industrial Court Has No Jurisdiction To Order Notice Pay

• Law Firm: Zul Rafique & Partners
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Trials & Appeals & Compensation
• Author: P. Jayasingam, Thavaselvi Pararajasingam, Teoh Alvare and Wong Keat Ching
• Published date: 06 January 2023

"Trite law that parties are bound by a Court order until the same is set aside"

P. Jayasingam, and P. Thavaselvi, together with Reyna Lim Khang Yen from Zul Rafique & Partners' Employment and Industrial Relations Practice Group successfully represented Megasteel Sdn Bhd ("the Company") at the Court of Appeal in respect of an appeal filed by ex-employees of the Company ("the Appellants") against the decision of the High Court of Malaya to quash part of Industrial Court Awards No. 761, 762 and 763 of 2020 via the Company's Judicial Review application.

THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:

In 2016, the Company, facing serious financial difficulties, was forced to retrench the Appellants from service with the Company ("the retrenchment exercise"). At the time of the retrenchment exercise, the Company paid to the Appellants all the sums due to them, save and except for their respective Three (3) Months' Salaries in Lieu of Notice of Termination ("the Notice Pay").

Facing difficulties in meeting its debts, the Company began restructuring its debts through Schemes of Arrangement with a secured scheme encompassing its Secured Debts, and an unsecured scheme for its Unsecured Debts. 65 of the 70 Appellants submitted their Proofs of Debt to the Company between 8.6.2018 and 8.8.2018, and under which only the debt for the Notice Pay was approved and included under the Unsecured Scheme.

On 21.9.2018, the High Court of Malaya vide Originating Summons WA-24NCC-481-09/2018 had granted a 2nd Restraining Order for a period of three (3) months from 21.9.2018 until 21.12.2018 and gave the 1st Respondent liberty to convene meetings of the Scheme Creditors pursuant to Section 366(1) of the Companies Act 2016. Accordingly, a meeting of the unsecured creditors was convened on 10.7.2019 and majority of the unsecured creditors (i.e. equivalent to 99.42% of the value of the debt) voted in favour of the Unsecured Scheme, achieving the statutory majority required.

By an Order of the High Court of Malaya dated 7.8.2019, the Secured Scheme was sanctioned by the High Court of Malaya. By an Order of the High Court of Malaya dated 10.9.2019, the Unsecured Scheme was sanctioned subject to the Secured Scheme. At all material times, the Appellants' Notice Pay, which is classified as unsecured debts, was the subject matter of the Unsecured Scheme sanctioned by the Order of the High Court of Malaya dated 10.9.2019 and which in turn is subject to the Secured Scheme.

The Industrial Court

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