The right of the employer to manage their own company and retrenchment

The employer has the right to manage his or her own company as long it is done in bona fide or in good faith.  They are to run the company as per to the law and to maintain industrial harmony between the employer and the employees.

In the case of William Jacks & Co (M) Bhd v S. Balasingam [1997] 3 CLJ at the Court of Appeal, his Lordship Gopal Sri Ram JCA were of the view:-

"Whether the retrenchment exercise is bona fide or otherwise, is a question of fact and of degree depending for its resolution upon the peculiar facts and circumstances of the case.  It is well settled that an employer is entitled to organise his business in the manner he considers best.  So long as that managerial power is exercised bona fide,  the decision is immune from examination even by the Industrial Court,  However, the Industrial Court is empowered, and indeed duty-bound, to investigate the facts and circumstances of a particular case to determine whether that exercise of power was in fact bona fide".

The company can introduce any scheme in the best interest of all parties in matters of finance, productions, items that need to be produced, to make the company profitable.

There are times when the company might face a downturn of not making money and going down hill, running  a loss. Because of the loss,  the company might turn to retrenchment exercise. 

Many companies might be looking into the retrenchment exercise to cut their losses, not to create further debts or to avoid winding-up action now because of the Covid-19 and the Movement Control Order or "MCO'.

The key word is whether the company can do it and if they can do it, it must be done in a bona fide manner or in good faith.  Industrial harmony must be maintained.

Wait for my next post.

Ramu