Maximum 24 months in backwages for sacked employees, court rules

The Industrial Court was wrong in awarding 24 months’ wages to a sacked employee last month, the High Court rules today.

KUALA LUMPUR: The High Court today ruled that sacked employees are only entitled to a maximum 24 months of backwages.

“Back wages cannot exceed 24 months irrespective whether the employee is given back his job,” judge Mariana Yahya said in allowing a judicial review application by Novartis Corporation (M) Sdn Bhd.

The company took its complaint to the High Court to quash an Industrial Court award, after it was ordered to pay full backwages to its chief financial officer Leong Chee Kong.

Mariana said the Industrial Court should base its ruling only on the Second Schedule of the Industrial Court Act which restricts wages to 24 months.

She also ruled that Leong is now entitled to 12 months in backwages.

However, the judge maintained the findings of Industrial Court chairman Bernard John Kanny that the dismissal was without cause and the reinstatement order was correct.

In March, Kanny in his decision said the Second Schedule which restricted wages to 24 months is not applicable when a reinstatement is ordered.

On the other hand, he said if an employee is dismissed without just cause but not reinstated, he is to be awarded compensation of a maximum of 24 months.

Last year, Kanny ruled that Leong’s dismissal was unfair and ordered reinstatement effective Oct 1, with the employer told to pay full backwages of RM870,408.

The Industrial Court has the power to also award back wages plus compensation in lieu of reinstatement which is one month salary of the number years of service. - FMT