As the company goes through a financial decline, the management decided to make an offer for compensation to employees who are willing to be laid off. So, what if you take on the offer? Do you still have legal recourse against the company on grounds of unjust dismissal?
It is trite and clear that if an employee has been dismissed without just cause and excuse, the employee may bring an action against the company as provided by Section 20 of the Malaysian Industrial Relations Act 1967.
However, if an employee has signed a voluntary or mutual separation scheme, the employee is not considered to have been dismissed. Hence, no action for dismissal without just cause and excuse can be brought up against the company.
Voluntary Separation Scheme (“VSS”) is a scheme or method used by a company when they are not officially retrenching but they have to get rid of some employees to stabilize the company.
For VSS, a company will usually make an open announcement that they are not dismissing anyone but will welcome employees’ application to be considered for the VSS.
Mutual Separation Scheme (“MSS”), as the name suggests, arises when both parties, the employee and the employer come to an agreement to the terminate the employment relationship.
Even though VSS and MSS might be a bit different, essentially, the employee must agree to the scheme voluntarily.
The relationship between VSS and MSS can be illustrated as below:
For a VSS or MSS to be valid, they must be signed voluntarily. Clearly, a dismissal can only be construed if the employee is not released of his/her employment voluntarily.
Therefore, if the employee can prove that he has signed the VSS or MSS without his free consent, the termination of his employment can be considered as a dismissal.
The case of Jamil Arshad & Ors v CNA Manufacturing Sdn. Bhd. [2010] 2 LNS 1305 provided that the onus is on the employee to establish, by cogent evidence, that he was forced to agree to the separation scheme.
The court has previously laid down considerations on whether or not a VSS or MSS can be construed as a dismissal. Some of these cases have been summarised in the table below:
In a nutshell, employees who have signed on to a VSS or MSS are generally deemed to have made the decision to relief themselves of their employment with the company voluntarily. However, an element of coercion may enable an employee to take legal action on grounds of unjust dismissal against the employer.
Seri can't describe herself—she is an eclectic mix of complication and simplicity wrapped in the form of a petite hijabi lawyer. She does have unusually colourful vocabulary though, but only when most people aren't listening. Much.
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