Wan Zainuddin Wan Muda v Small Medium Enterprise Development Bank Malaysia Berhad

(Award of the Labor Court n ° 1130 of 2021)

The Labor Court recently ruled that when the option to renew an employee’s fixed-term contract upon expiration is up to the employer, then it is up to the employer to choose to exercise that option.

The Applicant, who was a permanent employee of the Bank, was offered a fixed-term contract as Director of its Human Capital Management Division. He was then re-appointed as interim director of human capital for the group. The fixed-term contract stipulated that it would be for a period of two years (from October 2, 2017 to October 1, 2019), with an option for the Bank to renew the agreement for another year, subject to the employee’s performance. and the needs of the Bank. The contract extension clause was also to be at the option of the Bank and not of the employee.

Towards the end of the fixed-term contract, it was determined that the employee’s performance for the year 2018 was not up to expectations. The Bank’s Nomination and Remuneration Committee (CCN) also recommended that a new candidate be identified as Group Chief Human Capital Officer. The employee’s fixed-term contract was therefore not renewed when it expired on October 1, 2019.

At the start of the trial, the employee conceded that his job at the Bank was covered by a real fixed-term contract. His only complaint was that the Bank had decided not to exercise his option to renew the contract for another year, as he claimed that his performance was up to the required standards and that the Bank still needed a Group Chief Human. Capital Officer.

Finding that there had indeed been no dismissal of the applicant, the labor court found in particular that:

(a) Although the employee complained that his performance review for 2018 was not done properly and therefore should not have been considered poor performance, he never objected to the say “irregularities”. In any event, any alleged “irregularity” would have no bearing on a case where there was a genuine fixed-term contract;

(b) Since the employee was simply occupying the position of Human Capital Director of the “interim” group, this means that he was occupying that position for someone else in the interim. A new candidate was appointed to the post of Group Chief Human Capital Officer following the recommendation of the NCC and the employee’s post thus ceased to exist;

(c) A fixed-term employment renewal option is at the employer’s sole discretion and does not constitute a definitive promise; and

(d) Where there is a genuine fixed-term contract, the question of dismissal does not arise and the employee’s seniority with the Bank has come to an end naturally due to the passage of time.

In interpreting the terms of any fixed-term contract, the intention of the parties must first be determined. It is clear in this case that the employee, as an experienced human resources specialist, knew and accepted the conditions of his fixed-term employment. The President of the Labor Court also noted that despite the existence of an option to extend the fixed-term contract, it could not be denied that the parties clearly wanted the Bank to have the discretion to decide whether or not to extend the contract. the contract.

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