Importance Of Retrenchment
2.1.4 RETRENCHMENT
There is several ways to end an employee’s employment contract. One of the way can be used to end the contract of employment is through retrenchment.Termination of employment contract through retrenchment will be relevant when there is restructures or reorganization by an employer in order to have a better economy.
A retrenchment occurs when there is redundancy. (Ayadurai, 2004) defined redundancy as a surplus of labour. ( Hamidah & Kamaruzaman, 2008) stated that redundancy happen when an employee no longer required to work and this happen due to several reasons such as downturn in production, financial crisis, merging of business, restructuring and reorganisation.As per law, employers have a fundamental right to decide
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In the law clearly stated that the retrenchment must be exercise fairly, therefore recognized trade union should be consulted before the employer purpose to make an employee redundant ( Hamidah&Kamaruzaman, 2008). Although the Section 13 (3) under Industrial Relation Act 1967 clearly mentioned that termination of employment due to retrenchment is management’s prerogatives but the employer must terminate employee with a proper cause. Thus, if there is excessive employees then employer are entitled to reduce the excessive employees. This could be seen in case of Stephen Bong vs FBC (M) SdnBhd (1993) where the industrial court had concluded that the retrenchment process that made by employer is due to surplus of labour and does not have any victimization or acted with mala …show more content…
But the retrenched employee have a little bit chance to win if the retrenchment exercise done accordingly the procedure. If any case of retrenchment refers to Industrial Court then the court will look whether the retrenchment was justified, whether the employer is in a position to give grounds of retrenchment and whether the retrenchment is made bona fide (Hamidah & Kamaruzaman, 2008). This is to ensure there is a valid reason for the grounds of retrenchment and the employer had been done the termination due to restructure or reorganization of their business. The Industrial Court had concluded that if the termination due to retrenchment by employer is for better economic then they have the managerial prerogatives to decide for discharging the surplus of
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