Federal Court reserves judgment on when firms can join dismissal cases

 Retrenched workers say only a reasonable link is needed to join companies in Industrial Court claims.

The lawyer representing the workers told the Federal Court the appellate court had applied the wrong test in deciding whether the companies could be joined, but counsel for the two companies said it had applied the correct test in deciding the joinder application.

PUTRAJAYA:

The Federal Court has reserved judgment on when companies can be brought into Industrial Court proceedings involving workers’ dismissal claims.

The appeals were brought by 21 workers retrenched in 2015 by Hub Shipping Sdn Bhd and EM Shipping Sdn Bhd, subsidiaries of Hubline Bhd.

The Industrial Court had allowed the workers’ application to substitute Hubline for Hub Shipping and to join sister company Highline Shipping Sdn Bhd in the proceedings.

The High Court subsequently dismissed judicial review applications against the Industrial Court awards.

However, the Court of Appeal allowed appeals by Hubline and Highline, quashing the awards.

Lawyer Muhendaran Suppiah, representing the workers, told the Federal Court the Court of Appeal had applied the wrong test in deciding whether the companies could be joined.

He said Section 29(a) of the Industrial Relations Act 1967 required only a prima facie reasonable factual or legal nexus between a proposed party and the dispute.

“It is a preliminary procedural question, not a determination of liability,” he submitted.

Muhendaran said requiring the workers to first prove that Hubline or Highline was ultimately responsible for their dismissals before either company could be joined had reversed the proper sequence.

He pointed to evidence of common ownership, directors and company secretary, shared addresses, and appointment and termination letters issued on common letterhead, with each company describing itself as a Hubline subsidiary.

The workers’ employment contracts also contained a clause allowing them to be transferred to another branch, subsidiary or associate company.

Muhendaran said Hubline was substituted after Hub Shipping was wound up in 2016, while Highline’s potential responsibility could be determined when the dismissal claims were heard on their merits.

He also argued that the Court of Appeal had wrongly treated the joinder issue as one involving the lifting of the corporate veil.

Arguments by Hubline and Highline

Lawyer Alex De Silva, representing Highline, said the Court of Appeal had applied the correct test in deciding the joinder application.

“The correct test is that it must be shown that the proposed joinee has a legal and factual nexus to the dispute and the joinee can be held responsible for the termination of the employee,” he said.

De Silva said being part of the same corporate group as a wound-up employer, sharing addresses and having common directors did not, by itself, establish such a nexus.

Lawyer Robert Low, for Hubline, said the Court of Appeal had correctly identified and applied the test advanced by the workers.

He said the workers also had to show how Hubline was connected to the dispute in terms of responsibility and could not rely solely on corporate links to bring the parent company before the Industrial Court.

Low said the workers’ own documents identified Hub Shipping and EM Shipping as their employers, while their termination letters were issued by those companies.

He said evidence that Hubline had played no role in the dismissals was unrebutted.

He also argued that Hub Shipping’s winding-up did not, by itself, create a legal or factual nexus between Hubline and the dispute sufficient to establish potential liability.

The three-member bench, chaired by Justice Rhodzariah Bujang and comprising Justices Collin Lawrence Sequerah and Azimah Omar, reserved judgment. - FMT