SASIKALA A/P SUPPIAH v AZZA MEWAH SDN BHD

Case Significance

Illustrates the application of the amended First Schedule of the Employment Act 1955 to termination benefits by reference to the date of termination, holding that giving effect to the amendment for an employee terminated after it came into force is not retrospective.

This High Court decision at Shah Alam is an appeal against a decision of the Director General of Labour concerning the calculation of an employee's termination benefits, and the effect of an amendment to the First Schedule of the Employment Act 1955. The appellant had been employed as an administrative clerk and her service ended on 31 December 2023, by which time her monthly salary had risen to RM4,000. The Director General had assessed her termination benefits at a modest sum, and the appellant appealed, contending that the calculation was wrong. A key question was the effect of the 2022 amendment to the Employment Act 1955, which took effect on 1 January 2023 and amended the First Schedule so that certain provisions ceased to apply only to employees earning above RM4,000 a month, thereby extending the statutory termination-benefit protection to the appellant's salary band. The employer argued that applying the amended schedule to the appellant amounted to giving it retrospective effect. The court rejected that argument. It reasoned that the appellant would become entitled to the benefit only upon the termination of her service, and that because her termination took effect on 31 December 2023 — after the amendment was already in force — there was no question of retrospective application. Finding that the Director General had erred in the calculation, in a manner not supported by the Act and its regulations, the court held that the error warranted appellate intervention. It allowed the appeal with costs and varied the decision to award the appellant the higher termination benefit she was due, limited to the amount she had actually claimed. The court's careful attention to the moment at which the right to termination benefits crystallises — the date of termination rather than the earlier period of service — shows how a change in the governing statute is applied to a benefit that is only quantified when employment ends. The judgment illustrates the application of the amended Employment Act 1955 termination-benefit provisions by reference to the date of termination.