Justice Azhahari Kamal Ramli said documentary evidence showed that Ismail Othman was appointed by Seacera Group Bhd (SGB) and placed in Seacera Properties Sdn Bhd.
“We are of the view that the Federal Court case of Ahmad Zahri Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd applies to this case.
“It was decided that, from an employment law perspective, the applicability of a ‘single economic unit test’ or ‘functional integrality test’ is significant in ascertaining the continuity of employment for the purpose of dismissal,” he said.
Azhahari said it was proven in this case that Ismail was appointed by SGB, which, for all intents and purposes, had the locus to issue the show-cause letter and the termination.
Azhahari, who sat with Justices Ahmad Kamal Shahid and Evrol Mariette Peters, said the High Court had erred when holding in 2023 that Ismail’s dismissal was unlawful based on the “separate legal entity” principle.
“The appeal is allowed. The High Court’s decision to dismiss the judicial review and the Industrial Court’s award of RM340,000 are set aside,” he said, allowing Seacera Properties’s appeal. The bench also ordered Ismail to pay RM30,000 in costs to the subsidiary company.
Lawyers Awang Armadajaya Awang Mahmud, Auzan Hasanuddin Sazali and Marwan Abdullah appeared for Seacera Properties while Aneera Joshini Chowdhury and Amin Firdaus represented Ismail.
The High Court had held that the Industrial Court, on Sept 1, 2022, was right to award compensation instead of reinstatement as Ismail had been constructively dismissed.
According to the facts of the case, Ismail, who began his employment with SGB, was transferred to Seacera Properties in 2014 as the project director and adviser for the company’s property division.
On March 20, 2019, Ismail entered into a fixed-term contract of employment with Seacera Properties.
He was later issued a suspension order and show-cause letter for four counts of misconduct but said he was not obliged to reply, as SGB was not his employer.
SGB issued a warning of serious action if Ismail failed to comply with the suspension order, as well as a letter informing him that he was obliged to do so as an employee of an SGB subsidiary.
Ismail also refused to attend a domestic inquiry, following which SGB found him guilty on Oct 8 of misconduct and terminated his employment.
He issued a letter to the company on Oct 18 saying that he considered himself constructively dismissed effective Oct 21.