LABOUR LAWS AND INDUSTRIAL RELATIONS

TERMINATION AND DISCIPLINE

Creamery Sdn Bhd is a company that manufactures chocolates and sugar confectionery products. The company currently employs 250 employees. It has been in operation for the last 12 years but lately the company is not doing so well financially. As part of the companys effort to restructure and cut cost, the company intends to retrench some of its employees.

Last week the company sent out notice of retrenchment to 75 of its current employees on ground of financial difficulties and redundancy. Among those involved are Santhini, Anbarasan, Jamal, Hock Tai and Nora. Santhini, Anbarasan and Jamal are production operators in the company while Hock Tai is a marketing executive. Nora meanwhile is an assistant manager in the Quality and Assurance Department. All of them are quite upset with the decision as they have been serving the company loyally for the many years.

They questioned the companys decision to retrench them because just last week they hear that the company has hired two new technicians for the Production Department and a manager for the Quality Department. To add insult to injury, they found out that the company has decided to maintain the service of 5 Indonesian workers because the cost of paying their salaries is cheaper compared to paying the locals.

Question:

Did the company follow legally sound procedure and law in terminating their employment?

In your answer, explain first the rules and procedures that a company must follow if they wish to retrench employees. Then identify the non-compliances (if any) and discuss whether the termination of employees above was done with just cause and excuse.