NORAINI BINTI ISHAK D/A VERMILLION NETWORK v RAMNAH BINTI SUPA'AT

Case Significance

An employer's appeal against a termination-benefits award dismissed, the claimant being an employee under the Employment Act 1955 on the substance of the dealings despite the absence of a written contract of service.

This High Court decision is an appeal against a decision of the Director-General of Labour allowing an employee's claim for termination benefits. The appellant, the employer, disputed the award on the footing that the claimant was not an employee at all, advancing two grounds: that there was no contract of service between them, and that there was no evidence establishing the claimant's daily working hours.

The threshold question was therefore whether an employment relationship existed, since the entitlement to statutory termination benefits depends on the claimant being an employee. The Director-General had found that the claimant was an employee within the meaning of section 2 and the First Schedule of the Employment Act 1955, having been engaged by the employer since March 2009. Crucially, the absence of a formal letter of appointment or written terms and conditions of service does not negate the existence of a contract of service: an employment relationship can be established from the substance of the parties' dealings — the fact and continuity of engagement, the provision of work and the payment for it — rather than from the presence of a signed document. The Court examined the facts against that principle and was satisfied that the material showed the claimant to have been the employer's employee.

The Court held that the appellant's complaint was without merit and that the Director-General had not erred in allowing the claim; the computation of termination benefits had been carried out in accordance with the formula prescribed by the Employment (Termination and Lay-Off Benefits) Regulations 1980, and there was no basis to revisit it. The appeal was dismissed. The judgment is a useful illustration of how an employment relationship is established from the substance of the parties' dealings rather than the existence of a written contract, and of the limited scope for disturbing the Director-General of Labour's findings on a claim for termination benefits.