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Navigating the Legal Labyrinth: A Guide to Choosing Between the Industrial Court and Civil Courts for Employment Matters

posted 7 months ago

Introduction

In the complex realm of employment disputes, knowing the appropriate legal forum for resolution is paramount. As individuals and organizations grapple with a myriad of workplace issues, the decision to pursue justice through either the Industrial Court or the Civil Courts, (which comprises of the Magistrate, Sessions, High Court, Court of Appeal and Federal Court) becomes crucial.

This article aims to demystify the intricacies of these legal pathways, providing insight into the factors that influence the choice between the Industrial Court and Civil Courts for various employment matters based on the latest Court decisions available.

Whether you are an employee seeking redress for workplace grievances or an employer facing legal challenges, understanding the distinct jurisdictions and scope of these courts is essential to navigate the legal landscape effectively.

High Court

Initiating a case in the Malaysian Civil Courts involves several key steps.

Firstly, the process typically commences with the filing of a writ of summons or originating summons, outlining the plaintiff’s claims and legal grounds. Alongside this, a statement of claim must be prepared, detailing the facts and legal basis for the case.

Next, the plaintiff then serves these documents to the defendant, who responds with a statement of defence. After the exchange of pleadings, both parties may engage in discovery, disclosing relevant documents and evidence.

Following this, the court may schedule hearings for interim applications or proceed to trial. Throughout the process, parties may explore settlement options through negotiation or alternative dispute resolution mechanisms.

The Civil Courts have jurisdiction over every type of common civil matter, making it a crucial venue for seeking legal remedies in Malaysia.

Industrial Court

The Industrial Court is a special creature of the law under the jurisdiction of the Industrial Relations Department of Malaysia and is governed by the Industrial Relations Act 1967.

It has a fairly straightforward process which is illustrated below as follows:

Navigating the Legal Labyrinth: A Guide to Choosing Between the Industrial Court and Civil Courts for Employment Matters

If a dispute concerning unfair or constructive dismissal cannot be resolved amicably during the conciliation stage with the Industrial Relations Department, an employee in Malaysia, under Section 20 of the Industrial Relations Act 1967 (“IRA 1967“), has the right to submit a written representation to the Director General of the Industrial Relations Department.

The representation should outline the employee’s belief that they were dismissed without just cause or excuse by the employer. Subsequently, the matter is referred to the Industrial Court for adjudication and at this stage, the aggrieved employee can seek appropriate remedies from the Industrial Court, which may include options like reinstatement, compensation as an alternative to reinstatement, and back wages.

Recent Developments in Malaysian Case Law

Thus, understanding whether to pursue employment matters in the High Court or the Industrial Court is of paramount importance as it directly influences the legal process and potential outcomes of the case.

The choice of court determines the specific jurisdiction, rules, and procedures that will govern the resolution of the dispute. Making the correct decision between the two ensures that the case is heard in the appropriate forum, optimizing the chances of a fair and effective resolution tailored to the nuances of employment law and additionally streamlining the legal process, saving time and resources for both parties involved.

This was addressed in the recent case of 7-Eleven Malaysia Sdn Bhd v Ashvine Hari Krishnan [2023] MLJU 631, which was summarized exquisitely by our partner, Mr Rohan Arasoo Jeyabalah in our May Edition of Empower. In short, it was held in that case that The Court of Appeal, in allowing the Appellant’s appeal, held that Industrial Court is the appropriate forum for disputes relating to wrongful dismissals to be adjudicated, as an employee would only be entitled to the pay which the employee could have earned had he or she served the notice period as provided for under the employment contract if they filed their case in the civil courts.

This then leads to a very serious question, which is does the Civil Courts have any jurisdiction to hear employment matters. This has been addressed in the case of Ma Yanan v AAA Greencell Sdn Bhd dan satu lagi [2023] MLJU 2131, where it was pleaded by the Defendant’s solicitors that the Civil Court is not a forum to hear the Plaintiff’s claim because this claim is about severance compensation, which is an employment matter and ought to be tried in the Industrial Court, making reference to the above-mentioned case. However, the Court found that this was not the issue, and highlighted a passage from the 7-Eleven case as follows:

“[38] Thus, the proper question to be asked is whether in light of the common law’s stricture on the remedies that are available to an employee who claims to have been wrongfully terminated, or constructively dismissed (forced to resign etc.), and where all contractual dues have been paid, a claim in the civil court which is predicated on a claim for loss of employment and damages for constructive dismissal (together with other alleged associated causes of action) where substantial damages are sought, may be regarded as an abuse of process, and which ought to be struck out summarily.”. (emphasis added)

Thus, the Court held that this case must be distinguished from the 7-Eleven case as the claim in this case revolves around compensation pursuant to the contract of employment after dismissal and not the issue of wrongful dismissal or constructive dismissal. Accordingly, this Court has jurisdiction to hear the plaintiff’s claim. The Court further referred to the case of Ng Kim Fong v. Menang Corporation (M) Berhad [2020] 1 LNS 1263, where the Court of Appeal held that the Court has the authority to hear cases where the plaintiff’s claim is based on a contract and not on the basis of “wrongful dismissal”, regardless of whether it is an employment contract or not.

Conclusion

In conclusion, the decision of whether to pursue employment matters in the Civil Courts or the Industrial

Court in Malaysia holds significant implications for the legal process and has to be decided on a case-to-case basis. Knowing the correct forum and proceeding accordingly is a crucial first step that parties need to be aware of before enforcing their legal rights. It is for that reason, that a clear understanding of the distinctions between the Civil Courts and the Industrial Court is crucial for navigating the complexities of employment-related legal proceedings in Malaysia.

About the Author

Nicholas Devraj
Associate
Dispute Resolution
Harold & Lam Partnership
[email protected]

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