Federal Court rules 2 directors were ‘workmen’, upholds RM2mil award

 The apex court concurs that duo were dismissed without just cause and are entitled to compensation and back wages.

The Federal Court affirmed the findings of the Court of Appeal that two former executives of Acexide Technology Sdn Bhd were employees entitled to full statutory protection despite their director status.

PUTRAJAYA:

The Federal Court has unanimously upheld a Court of Appeal decision to award about RM2 million in compensation to two former directors-cum-employees of a company who were found to have been unfairly dismissed.

Delivering the judgment today, Justice Nazlan Ghazali said there was no basis for appellate intervention in the Court of Appeal’s decision.

“These appeals are accordingly dismissed with costs of RM150,000 to the two respondents,” said Nazlan, who sat with Justice Vazeer Alam Mydin Meera, who chaired the bench, and Justice Ahmad Terrirudin Salleh.

In 2024, the Court of Appeal allowed appeals by former technical director Woon Kim Choy and former project director Chan Heng Keong of Acexide Technology Sdn Bhd, setting aside the decisions of the Industrial Court and the High Court.

The appellate court held that reinstatement was not feasible and awarded Woon RM893,000 and Chan RM1.15 million in compensation instead.

At the time, Woon and Chan earned monthly salaries of RM19,000 and RM24,500, respectively, inclusive of allowances.

The Court of Appeal also ordered Acexide Technology to pay interest at 8% per annum on the awards from Aug 9, 2022 until full settlement.

In affirming the decision, Nazlan said the court found that although the respondents were company directors, they were nevertheless “workmen” within the meaning of the Industrial Relations Act 1967.

He said an employer-employee relationship existed under their contracts of employment, bringing them within the statutory definition of workmen.

He noted that both respondents contributed to EPF and the Social Security Organisation, and were subject to income tax deductions, factors consistent with their status as employees.

“As employees and executive directors, they also reported to the entire board of directors,” he said.

The court further held that the two men had been dismissed without just cause or excuse during an extraordinary general meeting of the company.

Nazlan said it was proper for the Court of Appeal to grant back wages as a consequential order, consistent with principles established in the Rama Chandran case.

The company had argued that the respondents failed to comply with Order 53 of the Rules of Court 2012 and that the Court of Appeal lacked jurisdiction to hear the judicial review applications.

The Federal Court rejected both arguments, holding there was no failure to sufficiently particularise the complaints and that the jurisdictional challenge was unsustainable.

Nazlan said that even if the company’s arguments were accepted, the courts would still retain the power to examine issues involving illegality and contravention of law.

Citing the Perbadanan Pengurusan Sunrise decision, the panel reaffirmed that procedural non-compliance did not automatically deprive a court of jurisdiction.

“While procedural non-compliance may have consequences in an appropriate case, it is not equivalent to a jurisdictional defect,” Nazlan said.

Wong and Chan were represented by Gavin Jayapal, Merissa Ann Augustin, Sivanandini Sreegantham, Goh Yee Huey and Fang Huey Yiing.

Steven Thiru, Khoo Wai Tuck, Janice Ann Leo, Adrienne Sena and Anthanasia Yolanda Bartholome acted for the company. - FMT