Ali owned a restaurant, which was simply called Alis Restaurant. He was a sole trader. In 2005, he decided to bring his two sons, Bakri and Daud, into the business. He incorporated a company, Rahmat Food Sdn Bhd, and the restaurant was managed by the company ever since. Ali was the managing director. Bakri was in charge of human resource matters while Daud dealt with service delivery.

Business was good. The company decided to expand operations by opening another business. Ali granted a RM500,000 loan to the company. Rahmat Food Sdn Bhd therefore opened a second restaurant called Muhibbah Restaurant.

Now that the company has two restaurants to run, they faced shortage of employees. Bakri did not manage the employees well many new employees were incompetent and staff turnover rate was very high. Bakri received the following complaints:

- Chef Zadi had been working overtime but found that he was paid the ordinary rate of pay for the overtime hours.

- Sarimah was denied annual leave.

- Misha worked on two public holidays but was paid the ordinary rate of pay for the two

days.

- Despite protests, Chef Mahmood had to work 14 days in a row, with no rest day in

between.

- Tina, who went on maternity leave, was asked to return to work after 30 days rest only.

Daud ordered expensive decorative items for both restaurants. Ali thought that the items were unnecessary and refused to pay the seller, Serenity Decor. When Serenity Decor insisted on being paid, Ali claimed that Daud had no authority to purchase the decorative items on behalf of the company.

Answer the following questions based on this case study.

Ali wished he was a sole trader again, seeing that his two sons gave him trouble. He did not think there were advantages to running the restaurants under a company. Do you agree? Please justify your answer. (5 marks)

What is the principle of separate legal entity? In the event that Rahmat Food Sdn Bhd goes into liquidation, is Ali entitled to be repaid the RM500,000 loan granted to the company? (5 marks)

Based on your knowledge of the Employment Act 1955, do the following employees have good grounds of complaints against the company? (15 marks)

(a) Chef Zadi (b) Sarimah (c)Misha (d)Chef Mahmood (e)Tina

Is Rahmat Food Sdn Bhd under an obligation to pay Serenity Decor for the decorative items ordered by Daud? (5 marks)