An employer has the right to transfer an employee from one post to another within the company. This is part of the powers of the employer who has a right to organize his business. But is that power absolute? Is the power subject to restrictions? This issue came up before the Industrial Court in Chan Phaik Leng v. Meda Healthcare Sdn Bhd [2018] MELRU 2231 . We represented the employee.
The employee was employed for 16 years in the company. She started as a Medical Representative in 2000 with a monthly salary of RM2,000. She gained promotions and by April 2016 had become the Senior Sales Manager with a monthly salary of RM8,000. The company then transferred her to a newly created position Key Account Manager with no change in the salary. She objected as to her the new position was effectively a demotion. The company defended the change on grounds that the new position was in line with their new business strategy to place more focus on their key customers; it was an equally important position that required experience and expertise and in the company’s assessment she was the best person. The company said that it was within their rights to make the changes to suit the business needs. They refused to retract the transfer but was prepared to allow her to keep the title Senior Sales Manager so as to appease her. She rejected this and claimed constructive dismissal.
The Industrial Court held that under the terms of the contract of employment the company has the right to carry out the transfer; that the company has given the required explanations, it was not a demotion and that she failed to prove that the company’s decision was not bona fide. The claim was dismissed.
The employee applied for judicial review. The High Court held that the Industrial Court had erred. Although the employer has the powers to transfer/redesignate an employee in the interest of the business, that power is not absolute and subject to restrictions under the law. Amongst others, the transfer should not involve a change in the condition of service to the detriment of the employee – referring to the Court of Appeal decision in Ladang Holyrood v. Ayasamy a/l Manikam & 16 Ors [2004] 3 MLJ 339. Here, there were such changes : her subordinates were removed, she will be doing what she was doing five years before, her job responsibilities were reduced and she will be doing what her subordinates were doing under her. That there was no change in her salary or that she was allowed to keep her old title was immaterial. The erosion in responsibilities and changes in the condition of service amounted to a constructive dismissal. The Industrial Court award was quashed and she was awarded backwages and compensation. For the full judgment see Chan Phaik Leng v. Mahkamah Perusahaan & Anor [2019] 6 AMR 19.
The company appealed against the decision to the Court of Appeal but the appeal was dismissed. It was held that there was no error in the High Court decision.
This case illustrates that although an employer has the right to run his business and organize his workforce that right is however not absolute or unfettered and is still subject to restrictions under the law; the objective being the protection of the rights and dignity of the employee. The law will come to the aid of the employee.
