Federal Court reserves judgment on when firms can join dismissal cases

The Federal Court has reserved judgment on the issue of when companies can be included in Industrial Court proceedings related to workers' dismissal claims. The case involves 21 workers who were retrenched by Hub Shipping Sdn Bhd and EM Shipping Sdn Bhd, both subsidiaries of Hubline Bhd, in 2015. The Industrial Court had previously allowed the workers to substitute Hubline for Hub Shipping and join Highline Shipping Sdn Bhd, the sister company, in the proceedings.

However, the Court of Appeal later overturned the Industrial Court's decision, leading to the Federal Court's reservation of judgment.

The lawyer representing the workers, Muhendaran Suppiah, argued that the Court of Appeal had applied the wrong test in determining whether the companies could be joined. He claimed that Section 29(a) of the Industrial Relations Act 1967 only requires a prima facie reasonable factual or legal nexus between a proposed party and the dispute.

Muhendaran pointed out that the workers needed to show a connection between the proposed company and the dismissal before it could be joined. He provided evidence of common ownership, directors, and company secretary among the companies, as well as shared addresses and uniform letterhead. Furthermore, the workers' employment contracts contained a clause allowing for transfer to another branch, subsidiary, or associate company.

Hubline and Highline's lawyers countered that the Court of Appeal had applied the correct test, which states that the proposed joinee must have a legal and factual nexus to the dispute and be held responsible for the termination of the employee. They argued that being part of the same corporate group, sharing addresses, and having common directors was not sufficient to establish such a nexus.

They also pointed out that the workers had primarily identified Hub Shipping and EM Shipping as their employers and that their termination letters were issued by those companies. The lawyers emphasized that there was no evidence of Hubline's involvement in the dismissals and that Hub Shipping's winding-up did not create a sufficient nexus to establish potential liability.