Malaysian Court of Appeal
Lee Swee Seng, Mariana Yahya, and Lim Chong Fong JJCA
8th February 2023
The law acknowledges the existence of imbalanced power dynamics in certain contractual relationships. To protect the weaker parties from the stronger ones, Parliament has enacted specific statutory legislation, such as the Employment Act 1955. In this case, the Court of Appeal illustrates how Malaysian courts strive for a fair interpretation of statutory legislation.
In this instance, 48 Indian nationals (“Appellants”) employed by AJN Energy (M) Sdn Bhd (“Respondent Company”) filed a complaint with the Department of Labour at Bentong. They claimed unpaid wages for September and October 2018 (“Complaints”). During the hearing at the Labour Court, some of the Appellants expressed their intention to withdraw their Complaints and return to their home country.
Following the inquiry conducted 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.
Unsatisfied, the Respondent appealed to the High Court of Temerloh, which allowed their appeal on 6th November 2019.
The dissatisfied Appellants sought leave to appeal the High Court’s decision to the Court of Appeal. The Court granted leave on 25th February 2021 with regards to the following questions:
Does Section 69 of the EA grant complete discretion to the Presiding Officer of the Labour Department and/or Labour Court to investigate and decide on a complaint, even if the Complainant intends to withdraw it during the proceedings?
Did the Presiding Officer of the Labour Department and/or Labour Court make the correct decision in determining that the Respondent has an obligation to pay wages to the Appellants under the Employment Contract and EA, regardless of the Appellants’ intention to withdraw the complaint?
The Decision by the Court of Appeal
Section 69 of the EA states:
“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…”
When addressing 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. In that case, the court recognized that social legislation aims to protect the weaker party in a relationship from the stronger one, given the inherent power imbalance. The court drew a similar parallel to how it interpreted the Industrial Relations Act 1967.
Similarly, the EA is considered social legislation, as confirmed by the Court of Appeal in Barat Estates Sdn Bhd & Anor v Parawakan Subramanian & Ors  3 CLJ 625 CA. Gopal Sri Ram JCA (later FCJ) commented that the Act, when viewed as a whole, provides protection to employees beyond what common law offers. It is thus a piece of beneficial social legislation.
In carrying out the balancing exercise, the Court of Appeal referred to Sections 69 and 70 of the EA and determined that the Presiding Officer possesses wide discretion to inquire into and examine the relevant parties on the matters at hand.
In this particular case, the Court found that the Presiding Officer appropriately exercised their jurisdiction and powers conferred by the EA to conduct the inquiry and make a decision, despite some of the Appellants testifying their intention to withdraw their claims against the Respondent. The Respondent argued that the Appellants’ statements during the hearing meant they had already withdrawn their Complaints, rendering the Presiding Officer without jurisdiction to continue the inquiry and make a decision.
The Court of Appeal’s Findings:
Not all 48 Appellants stated their desire to withdraw their Complaints during the hearing.
After careful examination of the statements, it became evident that the Appellants’ priority was to return to their home country rather than being embroiled in the Labour Court Inquiry. However, this did not constitute an unequivocal waiver of their right to receive payment for their unpaid wages from the Respondent.
The EA is a social legislation designed to protect the weaker party: the poor and potentially illiterate Appellants. Therefore, it should be interpreted liberally and favorably towards them.
The Presiding Officer’s jurisdiction and power to conduct the inquiry into the Complaints only cease if a negotiated settlement or prior payment of the unpaid wages occurs.
Based on the aforementioned points, the Court of Appeal answered the question of whether the Presiding Officer of the Labour Department and/or Labour Court possessed the jurisdiction and power to continue the inquiry into the Complaints until the decision was issued in the affirmative. Consequently, the Respondent was deemed obligated to pay wages to the Appellants under the EA, regardless of the Appellants’ statements expressing their desire to withdraw the Complaints.
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