A. Law in the time of Corona
Extraordinary times are upon us, foretelling a period of massive social, political and economic dislocation and change. Countries around the world have been put on a war footing to combat a virus that is causing the biggest peacetime lockdown and immobilisation of population in living memory.
The economy will surely be a casualty in these unprecedented upheavals. Globally many businesses will be forced to close down making millions of people jobless and destitute in the coming months.
Malaysia’s newly-installed government eager to prop up its popularity with its worried, wearied and physically-restricted masses, has issued statements through the Ministry of Human Resources (MOHR) that companies must not cut staff salaries or retrench workers during the period of Movement Control Order (MCO), which tentatively is now extended by another two weeks to 14 April.
B. Hire and Fire
The law used to give Employers, as a corollary to their entrepreneurial risk-taking, the right to hire or fire workers as they pleased. Such capriciousness and not to mention callous disregard for the welfare of workers were reasons for Karl Marx labelling law as a capitalist tool of oppression and exploitation.
These days in times of greater social enlightenment and media, companies can of course still be free to allocate manpower and resources to maximise profit but they are required by law to have just grounds and genuine reasons before terminating a worker.
The only accepted lawful grounds for termination are misconduct and poor performance.
Under section 20 of the Industrial Relations Act 1967, an employee who finds himself unfairly dismissed by his employer without just cause or excuse, may complain to the Director General of Industrial Relations within 60 days from the date of his termination to get his job back or alternatively be paid compensation for losing his job.
The Government has even gone as far as judicially pre-empting in the MOHR’s website FAQs of 20 March 2020 (‘ the Guidelines’) that staff cannot be terminated on the grounds of ‘frustration’ of employment since the MCO does not involve a long period of disruption to their contractual relationship!
Seriously? Are you kidding me?
So what can Employers and Companies legally do when they are squeezed between continuing costs and zero or disappearing incomes during the MCO and even after?
C. Reducing Hours and Salaries
In clause 23 of the Guidelines, MOHR says that before any company is allowed to lay off staff, it should try to delay or avoid it altogether by first reducing their duties, shortening their work hours, suspending operation or cutting their salaries.
Salary is understandably a vital term. It is an important term binding on every employer who has promised in the contract of employment the remuneration the employee can expect to receive for the job and services he renders to the company.
Workers’ pay is protected by the Employment Act which prohibit companies from making any deduction from monthly salaries except under limited circumstances or for statutory payments such as EPF. Although, interestingly, salary can also be deducted of an employee for time he has stayed away from work due to imprisonment and custodial detention.
A cut in salary would be a crucial change to a key term in the contract of employment that requires the employee’s consent.
Any company contemplating cutting salaries should first discuss the plan with the employees giving them details and reasons for such a move and getting their signed consent. The proposed cut in salaries should be non-discriminatory. It should ideally cut across all ranks and positions by taking into consideration factors such as job scope, amount, length of service and contribution.
No business can be expected to run for long and meet its overheads and costs including the salaries it pays its staff unless it has recurring and sustainable income.
It is socially responsible and admirable of MOHR to exhort and direct on its website and online videos that companies keep their staff and salaries throughout the MCO period.
But in the end it will be the realities of the market and on the ground that force upon employers the hard decision finally to let their workers go.
Technically, a retrenchment is by law only allowed to take place in a situation of redundancy when a company has more staff than it needs to remain profitable and in business.
There are requirements that are laid out in the Employment Act and its regulations ( for employees who are citizens and permanent residents earning less than RM2,000 per month) and provisions under the Code of Conduct for Industrial Harmony 1975 for companies undertaking staff retrenchment to adhere to.
That being said, the Guidelines admit that retrenchment is an employer’s right of prerogative but one that must be undertaken responsibly, in good faith and only as a last resort.
A party to a contract is excused from having to do what he has promised to do for the other, if something terribly big and unexpected turns out making what he has promised to do either impossible or unlawful to carry out. This is termed in law “frustration of contract”.
Given that employment is in essence a contract of supply of labour, it too can be affected by the doctrine of frustration which in Malaysia is found under section 57 of the Contracts Act 1950.
Since by this stage almost everyone agrees that the current Covid-19 pandemic is a global emergency of economy-shattering and society-changing proportion, the idea that employment like other types of contracts of supply can be frustrated by MCO is not a remote or fanciful one.
Not every company can operate away from its physical premises or location by ordering its employees to work from home. In dire times like this telling companies especially most SMEs to obey the MCO and the Guidelines is like sending a trainee Taliban on a suicide mission. For a company to give all their staff a one month or more paid staycation at a time of zero income and running fixed costs is committing financial harakiri.
It is respectfully proposed here that the current types of work or occupation (other than those classified by law as critical and essential industries) can be grouped under 3 rough categories:
1) Location bound – these are work that requires employees to be at the office or factory site to carry it out. Working remotely or at home is physically and conceptually either impossible or out of the question for the forseeable future
2) Location dependent – these are work that can potentially be done from home but physically and conceptually requires technological, mental and institutional changes to happen first in order to do so.
3) Location flexible – these professions and jobs do not require a specific site and can be performed on a lap top anywhere including in a cafe or on the beach at the sound of lapping waves.
A reasonable case can be made that employers in categories ( 1) and ( 2) can justifiably treat their staff’s employment as frustrated if their work premises are forced by MCO to close – an act of government that clearly is beyond the employer’s control or calculation that affects business radically or fundamentally.
This can happen not just during the MCO when it is both impossible and unlawful to work, but also after. The end of MCO does not mean the end of the Covid-19 pandemic. When MCO is lifted, other forms of legal, social or health restrictions could still be in place then rendering the contracts of employment radically and unexpectedly different from what they were meant to be originally.
There are already a number of case law in both Malaysia and especially in England supporting frustration of employment under exonerating circumstances.
The Appeal Tribunal in the case of Spencer v Paragon Wallpapers (1977) allowed the frustration of employment contract of an employee on the grounds he wasn’t able to report back to work in a mill north of Manchester due to prolonged illness at a time when his company faced with increased customers orders was in urgent need of his service. In a careful judgement read out by Phillips J. the English court has this to say:
” It is obviously a hardship to any employee to be dismissed when he has been absent due to illness for only a few weeks …Every case depends on its own circumstances. The basic question which has to be determined in every case is whether, in all circumstances, the employer can be expected to wait any longer and, if so, how much longer?”
This too is the question a lot of SMEs are asking, especially after they are informed that under the Government’s recently announced RM250 billion Economic Stimulus package only RM600 per month will be paid for three months to company for each staff earning a monthly salary of less than RM4,000 that it retains on full salary and not retrench.
by Kerk Boon Leng & Rean Chang
From its origins in the American colonies in 17th century New England when taxpaying folks would gather in town halls to listen and talk to their politicians who would then bring up their views in parliament, the terms “town hall meeting” or “town halls” have expanded to describe any present day gathering of people in a hall or similar large community space to discuss issues with their elected leaders.
Of late the practice of holding informal meetings by groups of (usually disgruntled) residents of strata buildings under the guise of “town halls” is gaining some popularity and traction. Partly because as an after-work or weekend free-for-all event, residents can boldly and in the open pressure the invited committee members into answering their ad lib questions without the formalities, restrictions and decorum required by an EGM.
Not surprisingly, the committee of Joint Management Body (JMB) and Management Corporation (MC) are rather cautious about encouraging or attending these town hall meetings. They now ask whether such meetings should be allowed to be held using the facilities of the common property to discuss building matters without the approval of the committee beforehand.
DUTIES AND POWERS OF COMMITTEE
While we may applaud the effort and concern of residents in organising these democratic forums, they appear at odds with the duties and powers given to the committee under the law and seem to side step the procedures for meetings and dialogues spelt out in the Strata Management Act (“SMA”).
According to sections 21 and 22 of the SMA, the Committee acting on behalf of JMB or MC and vested with the duties and powers of overall management and control of the building and common property and of enforcing its by- laws (house rules), have the legal right to approve or impose condition on the use of the common property by residents including for town hall meetings.
The Committee, under the standard by-laws (section 4 of the Third Schedule) is charged with the duties and powers to “control, manage and administer” the common property for the “benefit of all the proprietors” except that it may in writing grant exclusive use to any proprietor on suitable terms.
RESIDENTS RIGHT OF DIALOGUE WITH COMMITTEE
Committee members are merely proprietors who are nominated by other proprietors to act on behalf of the JMB or MC, with honesty and without any pay or salary. In carrying out their duties, the Committee members are by no means acting as “representatives” of the proprietors in the senatorial sense so as to be answerable to them as constituents. They are not obliged to provide answers every time they get any question from the residents nor must they under the law turn up for the so-called town hall meetings to explain things each time they are invited to attend.
In fact, the Committee is by law obliged to only hold one general meeting a year with proprietors. This event is called an AGM. The rest of the time the law says that they must hold their own committee meetings which they must do at least once every two months. Residents can attend these committee meetings as observers but they must ask for permission first from the Chairman.
If more than one general meeting is needed, proprietors must call for it by following the strict procedures laid down under the law. These ad hoc additional meetings are called Extraordinary General Meetings (EGM).
Therefore, as the SMA has already made provisions for general meetings of residents with the Committee, the holding of “town-hall meetings” has really no basis under strata management law. In fact, set against the spirit of promoting harmonious community living as envisaged and espoused by Malaysia’s strata management laws, Town Hall meetings may end up serving just the opposite purpose.
Kerk Boon Leng
Measured by gini index, Malaysia is now Asia’s most unequal society ( more than even famously unfair countries like India and China).
The latest model BMWs you spotted in BSC, non-halal 12-course dinners and the lavish lifestyles of denizens of Damansara are an alien world apart from the majority of citizens in the Klang Valley : families of despatch riders, supermarket cashiers and lowly paid government servants returning home to their squalid flats with many large mouths to feed.
Ever since moving into KL’s urban space in increasing numbers in the 1960s and 1970s the Malays (unlike the crowd-loving Chinese and Indians) have never felt totally at home in the city.
Cut off from the security and support of their kins and kinds in the Kampongs the Malays suffer from what the French sociologists termed Anomie and what Germans called Angst.
Poverty, cultural disconnect, urban tension and the mental walls imposed by a Government-sponsored religion are potent ingredients for an incendiary social cocktail.
Understanding their pain and our compassion and kindness to one another is what our country needs now.
Caring for our poor, dispossessed and hungry no matter what race they are or what God they believe in is what truly matters. This is what will hopefully one day make Malaysia fair, multicultural and more equal.
Lately Malaysians have been spiraling into a vicious quarrel about whether this country should finally sign up to its United Nations obligations under The International Convention on the Elimination of All Forms of Racial Discrimination (ICERD). Bizarrely but not so surprisingly, Malaysia along with North Korea and Myanmar are the only noteworthy nations left in the world that haven’t signed.
ICERD is just another aspirational announcement by governments around the world to each other on their lofty intentions about vague and vogueish subjects like world peace, stopping climate change and freeing Palestine. These are not things for us common folks to worry about or fight each other for.
Plainly in such times of mass pain, hunger and ignorance, ICERD is absurd.
Kerk Boon Leng