Can a director file an unfair dismissal claim under the Industrial Relations Act 1967 (“IRA”)
The company directors play a crucial role in controlling, managing, and operating a company.
Under the Companies Act 2016, directors can be removed by a simple majority vote by the shareholders. This is unlike the procedures for dismissing an employee/workman, where there must be a right to be heard for charges of misconduct levelled against him. The employee/ workman is also entitled to file an unfair dismissal claim under the IRA if he considers his dismissal is without just cause and excuse.
This blog discusses whether can a director be considered a workman, enabling them to file an unfair dismissal claim under the IRA.
Gone are the days when the Supreme Court in the case of Inchcape (M) Holdings Bhd v. RB Gray & Anor [1985] CLJ (Rep) 132 held in absolute terms that a director cannot be a “workman” under the IRA.
In the new age corporate and commercial world where there is an abundance of job titles, thus in identifying the party's relationship, one should take greater care in scrutinizing whether the director was a workman, or the brain and controlling mind of the company.
In the Court of Appeal decision of Gopala Krishnan Chettiar A/L Muthu v Sealand Marine Inspection and Testing (M) Sdn Bhd & Ors [2023] 4 MLJ 445, the Court considered the director did not perform the essential duties of a director as outlined in the Companies Act 2016 but was nevertheless carrying out function or duties as a workman. Thus, the director is considered as a workman.
Further, in the recent Court of Appeal decision of Woon Kim Choy v Acexide Technology Sdn Bhd & Anor and another appeal [2024] MLJU 3109, it was held that directors may wear “two hats” –– as a director under the Companies Act and as the most senior and highest-ranking staffs of the Company, reporting to the Board of Directors. Thus, the directors as a workman is entitled to seek the remedy of reinstatement or compensation in lieu of reinstatement as the Industrial Court has jurisdiction to hear the dispute.
In conclusion, it is crucial to have a clear distinct job scope and different treatment towards the directors, if the director is not intended to be an employee/workman of the company.
At Shang & Co., we are dedicated to offering our clients comprehensive legal services in employment law. Our team is available to assist throughout employee management, providing information and guidance as needed to protect employers against unwanted consequences. Consult us to learn more about our employment law services.
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