SRI MAJU SARATA EKSPRES SDN BHD v SEGAR A/L MUNUSAMY & 35 ORANG YANG LAIN

Case Significance

Illustrates lifting the corporate veil to treat a group of companies operating as one entity as a single employer, and confirms that basic salary is a protected fixed component of wages not reducible by the number of trips undertaken under the Employment Act 1955.

This Court of Appeal decision concerns a wage dispute between a bus-transport operator and a group of its drivers, and turns on the lifting of the corporate veil and the proper treatment of basic salary under the Employment Act 1955. The dispute arose from claims by the workers over wages and other payments due under their contracts of service, which had come before the Labour Office. A central issue was whether related companies within the operator's group should be treated as a single employer. The court examined the corporate structure and found that the veil could be lifted because the company was being used as a façade to conceal the true facts, commit fraud or evade legal obligations, and because the companies operated as a single and unified entity with shared resources, common branding and administration, including a common payroll system, so that they could properly be treated as one employer for the purposes of the workers' claims. On the substance of the wage claim, the court addressed the jurisdiction of the Labour Office to decide disputes between an employer and employee in respect of wages and other payments in cash due, and any terms of the contract of service, and to make such orders as it deems just. It held that the basic salary of the respondents was a fixed component of their remuneration that was not subject to reductions dependent upon the number of trips undertaken. The court also considered section 7A of the Employment Act 1955, concerning the alteration of a condition of service to a term more favourable to an employee, in construing the workers' entitlements. The judgment is a useful illustration of the courts lifting the corporate veil to treat a group operating as one entity as a single employer, and of basic salary being a protected fixed component of wages under the Employment Act 1955.