Syarikat Sen Joo Heng Sdn Bhd v Pua Ching Kiau

Case Significance

Confirms that an employee who has passed the minimum retirement age is not entitled to termination benefits for the cessation of employment, which is characterised as retirement rather than a dismissal, so a labour award overlooking the employee's age falls into error.

This High Court decision at Shah Alam concerns an employer's appeal against a decision of the Director-General of Manpower ordering it to pay a former employee termination benefits and salary in lieu of notice of RM16,058.83. The respondent had worked for the employer as a part-time packaging operator since 2015, paid on a piece-rate basis in cash, with deductions made for the Employees Provident Fund and the Social Security Organisation but with no written contract evidencing her employment or salary. She said that she had been verbally terminated, told that she was no longer needed because of her age, and had not been paid her salary for her final month or given any notice of termination. The Director-General found that the employer had terminated her without notice and, relying on section 13(1) of the Employment Act, computed termination benefits of RM16,058.83. On appeal, the employer's principal complaint was that the Director-General had failed to take into account that the respondent was, at the material time, 62 years old and had passed the minimum retirement age; indeed she had been told that her age was the reason for the termination. Drawing on the authorities on retirement and termination, including Colgate Palmolive (M) Sdn Bhd v Yap Kok Fong, the Court held that an employee who has passed the minimum retirement age is not entitled to the termination benefits the Director-General had awarded, since the cessation of employment in such circumstances is properly characterised as retirement rather than a dismissal attracting those benefits. Finding that the Director-General had erred in overlooking the respondent's age, the Court allowed the appeal. The decision illustrates the distinction between a dismissal, which may attract statutory termination benefits, and the cessation of employment on or after reaching the minimum retirement age, which does not. It also shows that the absence of a written contract does not defeat the existence of an employment relationship, the parties' conduct and the statutory deductions made for the employee being sufficient to establish it, though that did not assist the employee once her age was taken into account.