redzuan yaacob v. bank kerjasama rakyat …malaysianlawreview.com/sample/melr_2017_1_404.pdfv. bank...

[2017] 1 MELR404

REDZUAN YAACOBv.

BANK KERJASAMA RAKYAT MALAYSIA BERHAD

Industrial Court, PenangFredrick Indran XA NicholasAward No: 113 of 2017 [Case No: 18(9)/4-839/13]13 January 2017

Dismissal: Misconduct — Breach of fiduciary duty — Conflict of interest — Taking portions of refunded premiums rightfully belonging to bank’s customers without their knowledge — Whether claimant breached his position of trust and confidence — Whether discrepancies in domestic inquiry could be appraised in trial before Industrial Court — Whether claimant’s dismissal with just cause or excuse — Whether this case requires the intervention of Industrial Court in favour of claimant

The claimant was the bank’s Branch Manager in Sabah. The claimant ceased from his erstwhile service with the bank with effect from 6 September 2012. The bank, vide a show cause letter had charged the claimant with helping himself to portions of refunded premiums rightfully belonging to the bank’s customers; without the knowledge of those customers. The claimant pointed to the bank’s ‘Garis Panduan Operasi Bil. 123’ and stated that based upon that provision, he was authorised to do what he did. Being dissatisfied with the claimant’s reply, the bank framed charges of serious misconduct against the claimant. As a result of the domestic inquiry (‘DI’) that was convened, the claimant was dismissed from service. The claimant’s appeal against the decision was turned down by the bank. The claimant challenged the accuracy of the dates stated in the charge letter. The claimant contended that although this point was raised by him during the DI, the panel saw it fit to continue with the proceedings regardless, thus denying him the right to defend himself ‘properly’. The claimant thus came before this court to declare that his dismissal from employment was without just cause or excuse; and was contrary to the principles of equity, good conscience and natural justice. He prayed to be reinstated to his former position without loss of seniority, wages or benefits, monetary or otherwise, together with arrears of salary. The bank denied the claimant’s charge and contended that it was completely justified in dismissing the claimant for his transgression.

Held (dismissing the claimant’s claim):

(1) The discrepancies of the DI panel does not have a particularly crucial bearing with regard to the proceeding before this court. The trial here took the form of a rehearing of the entire matter, and whatever discrepancies that may have arisen at the DI can be appraised afresh; where the propriety of the evidence taken as a whole once again may be properly assessed and evaluated. Moreover, whatever may have been the findings at the DI, it does not in any way bind this court. (para 22)

Redzuan Yaacobv. Bank Kerjasama Rakyat Malaysia Berhad

[2017] 1 MELR 405

(2) The ‘Garis Panduan’ concerned was clearly to be read in conjunction was the phrase therein which provided “... samping menambahkan sumber pendapatan bank.”; but here the claimant directed the deductions to another entity (the staff welfare fund). This action could not be tolerated by the bank, notwithstanding that the claimant may not have personally profited nor used the funds for private use. He was placed in a position of trust and confidence in his high office of Branch Manager, which he clearly breached in this instance. (paras 27-28)

(3) It was plain and obvious that the claimant ought to have known that what he was doing could not be legitimate; and that it was improbable that he could not have known the true nature of his act; and as a corollary, that he was in fact deliberately wilful in doing what he did notwithstanding the very real possibility of serious detriment to the bank, had it become common knowledge that the bank’s officers were helping themselves to portions of refunded premiums rightfully belonging to their customers; and certainly without the actual knowledge of those customers. (para 45)

(4) The claimant had committed a wrongdoing inconsistent with the trust and responsibility reposed in him by virtue of the fiduciary relationship of employer/employee between him and the bank. The claimant had acted in conflict of interest of his trusted position as a Bank Branch Manager; and thus betrayed the loyalty that he owed to the bank qua employer. It was therefore unsafe and indeed unreasonable to expect the bank to continue his employment in the entire circumstances of this case. The bank had established, on a balance of probabilities, the appropriateness of their action against the claimant. Therefore, this case does not require the intervention of this court in favour of the claimant. (paras 45-47)

Case(s) referred to:

Azahari Shahrom & Anor v. Associated Pan Malaysia Cement Sdn Bhd [2010] 1 MELR 169 (refd)

Bumiputra Commerce Bank Bhd v. Mahkamah Perusahaan Malaysia & Anor [2004] 3 MELR 884; [2004] 2 MLRH 369 (refd)

Cellular Communications Network (M) Sdn Bhd v. Ilhami Mohamad [2001] 1 MELR 117 (refd)

Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong [1998] 2 MELR 815 (refd)

Esso Production Malaysia Inc v. Md Yusop Nordin [1995] 2 MELR 488 (refd)

Goon Kwee Phoy v. J&P Coats (M) Bhd [1981] 1 MLRA 415 (refd)

Hong Leong Equipment Sdn Bhd v. Liew Fook Chuan & Other Appeals [1996] 1 MELR 142; [1996] 2 MLRA 286 (refd)

Ireka Construction Berhad v. Chantiravathan a/l Subramaniam James [1995] 1 MELR 373 (refd)


[2017] 1 MELR406

Milan Auto Sdn Bhd v. Wong Seh Yen [1995] 2 MLRA 23 (refd)

Perwira Habib Bank (M) Bhd v. Tan Teng Seng @ Lim Teng Ho [1995] 2 MELR 499 (refd)

Smith v. City Of Glasgow District Council [1985] IRLR 79 (refd)

Taylor v. Parsons Peebles Ltd [1981] IRLR 119 (refd)

Telekom Malaysia Kawasan Utara v. Krishnan Kutty Sanguni Nair & Anor [2002] 1 MELR 4; [2002] 1 MLRA 188 (refd)

Union Of Construction, Allied Trades And Technicians v. Brain [1981] IRLR 224 (refd)

Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1987] 1 MELR 32; [1987] 1 MLRA 346 (refd)

Wong Yuen Hock v. Syarikat Hong Leong Assurance Sdn Bhd & Another Appeal [1995] 1 MLRA 412 (refd)

Legislation referred to:

Industrial Relations Act 1967, s 20(1), (2), (3)

Other(s) referred to:

Alfred Avins, Employees’ Misconduct, pp 537 & 538

BR Ghaiye, Misconduct in Employment, Chapter XIX, p 650

Dunston Ayadurai, Industrial Relations In Malaysia: Law & Practice, 3rd edn, pp 297, 325 & 326

Counsel:

For the claimant: R Palaniappan; M/s Palani

For the company: Abdullah Abdul Karim; Malaysian Employers Federation

AWARD

Fredrick Indran XA Nicholas:

The Reference

[1] Redzuan Yaacob (‘the claimant’) ceased from his erstwhile service with Bank Kerjasama Rakyat Malaysia Bhd (‘the Bank’) with effect from 6 September 2012. Being aggrieved by the circumstances surrounding this cessation of employment, the claimant made representations to the Director General for Industrial Relations under s 20(1) of the Industrial Relations Act 1967 (‘the Act’) on 31 October 2012. The conciliatory labours undertaken by the Director General’s office proved fruitless and for this reason, the Honourable Minister of Human Resources, Malaysia was duly notified of the unsuccessful reconciliation process under s 20(2) of the Act. Upon the perusal of this notification, and by virtue of s 20(3) of the Act, the Honourable Minister found it fit to exercise those powers under that section to refer the matter to the Industrial Court of Malaysia. As a result, the claimant’s initial representations were transformed into a Ministerial Reference


[2017] 1 MELR 407

for an award before this court. The said Ministerial Order was dated 27 March 2013. This order of reference was received firstly by the Court’s Registry at Kuala Lumpur on 10 April 2013; and subsequently by the Registry of this Division of the Industrial Court based at Georgetown, Penang.

The Track Before, During And After The Trial

[2] This reference was first mentioned before Industrial Court No 9 sitting in Alor Setar, Kedah on 4 June 2013. After a number of mention dates fixed between 9 July 2013 and 12 November 2014, for administrative and file management purposes, the trial of this matter commenced on 5 August 2015. Evidence in the form of the examination-in-chief, followed by cross-examination was recorded from the Bank’s first witness (designated ‘COW1’ — one Rohizam bin Abdul Rahman — a Branch Executive of the Bank); after which the learned counsel for the claimant requested that the then presiding officer recuse himself from further hearing the matter. No reason for this request could be gleaned from the notes of evidence, apart from the fact that the Bank’s erudite Representative had no objections to this matter being transferred to Industrial Court No 18 for the continued hearing thereof. In the event, this case was transferred to Court 18, where on 21 March 2016, this first witness completed his testimony. No inquiry was made with regard to the reason for the earlier Chairman’s recusal, to avoid the possibility of provoking another such application viz the current Chairman, if perchance anything untoward were to be uttered or referred to thereby by the parties hereto, which may have been the trigger for the first such application. Perhaps and under the circumstances, better not to know. The trial then continued with the bank’s next witness (‘COW2’ — Zuraini binti Abd Wahab — currently the Branch Manager of the Bank’s Arau Branch), who completed her testimony that day. On 22 March 2016, the Bank called it’s third witness (‘COW3’ — Fauzi Najib bin Sahabudin — an Assistant Vice President with the Bank), who completed his testimony that same day, upon which fresh dates were fixed for continued hearing. On 17 May 2016, the Bank’s final witness (‘COW4’ — Nor Haimee bin Zakaria — The Bank’s Chief Finance Officer) was called, upon which the Bank closed its case. The Bank having closed its case after this fourth witness — the matter continued on that date; when the evidence of the claimant (‘CLW1’), in the form of his examination-in-chief was recorded. The matter was then adjourned for continuation on the morrow (18 May 2016), when the claimant’s testimony was completed; and his witness (‘CLW2’ — described later in this award) was called to give evidence. At the conclusion of this full trial on that last date, the erudite representative for the Bank requested that parties present written submissions; which request was supported wholeheartedly by the learned counsel for the claimant. As a matter of convenience then, this court directed that written submissions be filed by the parties following a fixed timetable. Although both sides did not abide strictly to that timetable, written submissions were eventually filed upon some slight cajoling by the court.


[2017] 1 MELR408

[3] All that now remains is for this court to hand down its award — which it does as follows:

The Matrix

[4] At the time that the claimant ceased employment with the Bank, he held the post of Regional Manager, Sabah. He first joined the bank on 1 August 1984 as a Clerk. He then progressed merrily on his way; and from sometime in 2006 he found himself in that High Office of Manager at the Bank’s branch in Kangar, Perlis; which post he held till 8 November 2011; when he was transferred to Sabah. It was as a result of what transpired during that period of time in Kangar that brought the parties before this court.

[5] On 25 April 2012, the cank issued a show cause letter to the claimant (for ease of reference, it is reproduced in full and in its original language — found at pp 7 & 8 in bundle ‘CLB’):


[2017] 1 MELR 409

1*


[2017] 1 MELR410Redzuan Yaacob

v. Bank Kerjasama Rakyat Malaysia Berhad

[2017] 1 MELR 411

[6] To this the claimant replied in writing on 15 May 2012 thus; (exact copy reproduced - found at pp 10 to 15 in bundle ‘CLB’):

2*


[2017] 1 MELR 413Redzuan Yaacob


[2017] 1 MELR 417

[7] Being dissatisfied with the claimant’s reply the Bank framed charges of serious misconduct against the claimant under the Bank’s “Garis Panduan Am Bil. 10 para 3.1.2 & 3.2.1.11 & Kaedah Operasi Bil. 123”. The said Notification reads (in its original language at pp 18 to 20 of bundle ‘CLB’):

3*


[2017] 1 MELR420

[8] As a result of the domestic inquiry that was convened, the following letter was issued to the claimant by the Bank dated 5 September 2012 - effectively dismissing him from their service with effect from 6 September 2012; (exact copy - found at pp 22 & 23 in bundle ‘CLB’):

4*


[2017] 1 MELR422

[9] The claimant appealed the decision in writing on 9 September 2012; (exact copy - found at pp 25 to 28 in bundle ‘CLB’):

5*


[2017] 1 MELR 425

[10] Which appeal was turned down by the bank vide their letter of 29 October 2012; (exact copy - found at p 3 in bundle ‘COB’):

6*


[2017] 1 MELR426

[11] The claimant now comes before this court to declare that his dismissal from employment was without just cause or excuse; and was contrary to the principles of equity, good conscience and natural justice. He prayed to be reinstated to his former position without loss of seniority, wages or benefits, monetary or otherwise, together with arrears of salary.

[12] The Bank, on the other hand, has denied the claimant’s charge and contended instead that it was completely justified in taking the action that it did in imposing the ultimate sanction in industrial jurisprudence — ie that of dismissal, against the claimant for his transgression. It prayed that the claimant’s claim herein be dismissed.

The Issue

[13] As there is no dispute as to the actual factum of dismissal in this case — the sole issue to be resolved was whether the claimant was dismissed with just cause or excuse; reference is made to the principle stated in the oft quoted authority of Wong Chee Hong v. Cathay Organisation Malaysia Sdn Bhd [1987] 1 MELR 32; [1987] 1 MLRA 346; per Salleh Abas LP (of the then Supreme Court of Malaysia) which went like this:

“When the Industrial Court is dealing with a reference under s 20, the first thing that the court will have to do is to ask itself a question whether there was a dismissal, and if so, whether it was with or without just cause or excuse.”

The General Principles

[14] In Colgate Palmolive (M) Sdn Bhd v. Yap Kok Foong [1998] 2 MELR 815, it was held as follows:

“In a s 20 reference, a workman’s complaint consists of two elements: firstly, that he has been dismissed, and secondly that such dismissal was without just cause or excuse. It is upon these two elements being established that the workman can claim his relief, to wit, an order for reinstatement, which may be granted or not at the discretion of the Industrial Court. As to the first element, industrial jurisprudence as developed in the course of industrial adjudication readily recognises that any act which has the effect of bringing the employment contract to an end is a ‘dismissal’ within the meaning of s 20. The terminology used and the means resorted to by an employer are of little significance; thus, contractual terminations, constructive dismissals, non-renewals of contract, forced resignations, retrenchments and retirements are all species of the same genus, which is ‘dismissal’.”

[15] As there is no challenge to the fact that there was a definite dismissal of the claimant by his employer and bearing in mind the fact pattern in this case, I now take cognisance of the decree of Mohd Azmi FCJ in the cases of Wong Yuen Hock v. Syarikat Hong Leong Assurance Sdn Bhd & Another Appeal [1995] 1 MLRA 412 and Milan Auto Sdn Bhd v. Wong Seh Yen [1995] 2 MLRA 23, wherein the late Lordship spoke of the two-fold task of the Industrial


[2017] 1 MELR 427

Court under a s 20 reference — to paraphrase; it was in terms of first — the determination of whether the alleged misconduct had been established; and second — whether the proven misconduct constitutes just cause or excuse for the dismissal.

[16] In Goon Kwee Phoy v. J&P Coats (M) Bhd [1981] 1 MLRA 415, Raja Azlan Shah CJM (as Al-Marhum DYMM Paduka Seri Sultan Azlan Shah Sultan Perak Darul Ridzuan then was) speaking for the Federal Court held that:

“Where representations are made and are referred to the Industrial Court for enquiry, it is the duty of that court to determine whether the termination or dismissal is with or without just cause or excuse. If the employer chooses to give a reason for the action taken by him, the duty of the Industrial Court will be to enquire whether that excuse or reason has or has not been made out. If it finds as a fact that it has not been proved, then the inevitable conclusion must be that the termination or dismissal was without just cause or excuse. The proper enquiry of the court is the reason advanced by it and that court or the High Court cannot go into another reason not relied on by the employer or find one for it.”

[17] Dr Dunston Ayadurai in his text Industrial Relations In Malaysia: Law & Practice 3rd edn at p 297 states:

“A workman can seek a remedy under s 20 only if he had been dismissed. More often than not, there is no dispute that there was an actual dismissal of the workman by his employer. The only issue for the Industrial Court to determine is whether the dismissal had been for just cause or excuse, the onus of proving the existence of the same being cast upon the employer.”

[18] And this onus or burden of proof on the employer is based on a standard of a balance of probabilities (see the cases of Union Of Construction, Allied Trades And Technicians v. Brain [1981] IRLR 224, Smith v. City Of Glasgow District Council [1985] IRLR 79, Ireka Construction Berhad v. Chantiravathan a/l Subramaniam James [1995] 1 MELR 373 and Telekom Malaysia Kawasan Utara v. Krishnan Kutty Sanguni Nair & Anor [2002] 1 MELR 4; [2002] 1 MLRA 188).

[19] Where, as in the instant case, a domestic inquiry has been conducted, the court is required at the onset to examine the inquiry notes and verify whether the inquiry was valid, whether the notes were accurate and whether a prima facie case has been made out against the claimant (see Bumiputra Commerce Bank Bhd v. Mahkamah Perusahaan Malaysia & Anor [2004] 3 MELR 884; [2004] 2 MLRH 369).

The Domestic Inquiry (‘The DI’)

[20] The notes of the DI in this case appear at pp 13 to 97 in bundle marked ‘COB’.


[2017] 1 MELR428

[21] The claimant did not challenge the accuracy of those notes; but rather the accuracy of the dates stated in the charge letter which ran from 2 March 2009 to 21 March 2011. The annexure to the charge sheet at p 20 of ‘CLB’ (see *3 above) details the relevant transactions for the period 1 June 2009 to 14 July 2010. The claimant’s complaint, in gist, was that although this point was raised by him during the DI, the panel saw it fit to continue with the proceedings regardless, thus denying him the right to defend himself “properly”.

[22] Whatever may be the reason for the DI panel to have done that, does not have a particularly crucial bearing with regard to the proceeding before this court. The trial here took the form of a rehearing of the entire matter, and whatever discrepancies that may have arisen at the DI can be appraised afresh; where the propriety of the evidence taken as a whole once again may be properly assessed and evaluated. Moreover, by virtue of the authority of Hong Leong Equipment Sdn Bhd v. Liew Fook Chuan & Other Appeals [1996] 1 MELR 142; [1996] 2 MLRA 286; whatever may have been the findings at the DI does not in any way bind this court. Enough said.

The Evidence

The Bank’s Case

[23] The claimant was found guilty and was terminated from service upon Charge 1(i) & Charge 2 (see 3* above for the pertinent Charges).

[24] The bank is licensed to offer various financial products to qualified members of the public which includes loans for different purposes like ‘personal financing’, ‘housing loans’, etc.; and as far as loans are concerned, a condition precedent is that the loan is insured by an insurance product known as ‘Decreasing Term Assurance’ (‘DTA’). The arrangement for this insurance cover will be made by the Bank through its panel of Insurers; and the premiums for the same form part of the loan amount granted to their customers. The DTA covers the total duration of the loan period and where a customer manages to settle up the loan before the expiration of this loan period, the customer is entitled to a refund of the prorated sum of the premium paid. At the material time, not all customers were aware of this entitlement, but to those who were, made their application for refund from the Insurers with the aid of the Bank. As customer claims of this nature were somewhat erratic and unpredictable, thereby allegedly causing disruption to the usual duties of the Bank’s staff concerned — the claimant, as the Branch Manager of the Bank’s Kangar, Perlis branch at the time, took it upon himself, on or about 1 June 2009, to decide to standardise the request for this premium refund from the Insurers by getting his staff to make applications for all customers who had settled their loans early. This was regardless of whether any particular customer had made a request for the same or not. As he disallowed the Bank’s staff concerned to claim overtime payments, as such work was to be conducted after banking hours, he directed the deduction of 25% of the amount of premium refunded for


[2017] 1 MELR 429

each customer; and had it paid into the branch staff welfare fund which had its account in another bank. This deduction was in effect for the service rendered by the Bank’s staff. This staff welfare fund had naught to do directly with the Bank’s operations; and was in place to create staff loyalty and promote their welfare. It was also used to organise social events, sponsorship and contributions in various forms to those in need. The total amount of those deductions paid into that account amounted to RM99,381.16, for 30 transactions, over a period stretching from 1 June 2009 to 14 July 2010 (see p 20 of 3* above). The said deductions were made without the knowledge or acquiescence of the customers concerned.

[25] When this scheme was discovered by the Bank, the claimant was asked to explain. He pointed to the Bank’s “Garis Panduan Operasi Bil. 123” and stated that based upon that provision he was authorised to do what he did.

[26] The said document is reduced below:


[2017] 1 MELR430

7* (document marked ‘COB2’):


[2017] 1 MELR434

[27] What the bank pointed out, was the folly committed by the claimant was not so much that he had charged the customers for the service, such as it was; but that it had been done so with the ignorance of the customers; and equally importantly, without the reference and/or permission of the higher management of the Bank. The “Garis Panduan” concerned was clearly to be read in conjunction was the phrase therein which provided “... samping menambahkan sumber pendapatan bank”; but here the claimant directed the deductions to another entity (the staff welfare fund).

[28] This action could not be tolerated by the bank, notwithstanding that the claimant may not have personally profited nor used the funds for private use. He was placed in a position of trust and confidence in his high office of Branch Manager, which he clearly breached in this instance. That the claimant claimed that the decision to carry out this action was a collective decision between his staff and himself, did not hold water with the Bank. He was the Branch Manager and so the “buck must stop with him” — it was he, as “the leader”, who had to shoulder the bulk of the burden of blame. In any case, the other officers concerned were duly punished by the bank for their respective roles in this episode. Nothing else need be said about that issue in this award.

[29] All in all, having considered the severity of the implications of the claimant’s action in this case; and how it could detrimentally affect the overall reputation of the bank, the decision was reached to terminate the services of the claimant, and indeed to turn down his appeal.

The Claimant’s Case

[30] The claimant had himself and one other as witnesses.

[31] The essence of the claimant’s stand was that he had not breached any guideline of the Bank and had in fact acted within the discretion allowed to him by the second para of the Bank’s very own “Garis Panduan Operasi Bil. 123” (see 7* above). Further, he was not a signatory of the bank account (of the branch staff welfare fund) into which the relevant deductions were paid; and did not benefit personally in any way from that fund. In point of fact, some of those funds were actually used for charity and for various programs to promote the good name and reputation of the Bank.

[32] The claimant averred that his intentions were pure and that his actions in this instance was merely to assist customers who may not have been aware of their right to claim their excess premiums. Otherwise, the excess premiums would remain unclaimed at the Insurance companies. He asserted that his actions here were in the best interest of the customers and for the image and reputation of the Bank. In fact, this practice that he initiated at the Kangar branch was adopted and executed by the Bank’s Head Office sometime in July 2010; whereby from then on all such claims were made through the Head Office, admittedly, without the 25% deductions that he (the claimant) had imposed by his scheme.


[2017] 1 MELR 435

[33] As far as the claimant was concerned, there were no complaints from any of the customers about the deduction of the 25% from their returned premiums; and most, if not all would have been quite happy to have received this probably unexpected windfall. The customers certainly did not suffer any wrongful loss in any case, as the RM99,381.16 was refunded in full to the Bank — RM30,000.00 from the staff welfare fund concerned and the balance of RM69,381.16 from the claimant’s own pocket. This money, as far as he knows, was returned to the customers concerned.

[34] Given all the circumstances, the claimant was of the view that he had been wrongfully dismissed based upon mala fide intentions on the part of the bank and in complete breach of the fundamental principles of natural justice and good labour practice. In effect, he felt that he had suffered double penalty at the hands of the Bank, ie made to pay first and then got dismissed.

[35] The claimant’s witness, designated ‘CLW2’ — one Zulkarnain bin Taman, a former employee of the Bank who was in the position of Assistant General Manager Risk Management at the time; was part of the three-member committee whom made the final decision as regards the claimant’s punishment of dismissal. In substance, the testimony of this witness was that he was not informed that the claimant himself had paid back RM69,381.16 of the RM99,381.16 involved in this case. He expressed the view that had he known of this fact he may have decided differently and not gone with the majority as far as the punishment was concerned.

The Evaluation; In Conjunction With The Specific Jurisprudence In This Area Of Industrial Adjudication

[36] I will start by bearing in mind those useful words of that learned Chairman, Mr Tan Kim Siong, in the case of Perwira Habib Bank (M) Bhd v. Tan Teng Seng @ Lim Teng Ho [1995] 2 MELR 499:

“The banking industry belongs to a special kind of business and services rendered to the public. It is entrusted with other people’s money. Therefore a high quality of discipline and conduct of the highest order is expected of its staff to win public confidence. The bank demands from its employee’s absolute honesty and impeccability. The claimant, as a Bank Manager, occupied a position of trust. He should not only be honest but be seen to be honest. Like Caesar’s wife, the claimant must be above all suspicion.”

[Emphasis Added]

[37] In the book entitled Industrial Relations In Malaysia: Law & Practice 3rd edn, the author Dr Dunston Ayadurai had this to say at pp 325 & 326:

“The Industrial Court has confirmed that it is for the employer to determine initially whether or not an employee has committed a misconduct, but that in doing so the employer must act fairly and reasonably, after appropriate investigation, and on the basis of fact rather than assumptions.”


[2017] 1 MELR436

[38] In Azahari Shahrom & Anor v. Associated Pan Malaysia Cement Sdn Bhd [2010] 1 MELR 169, this court was of the view that:

“It is trite that the association between employer and employee out of necessity is fiduciary in nature. There has to be mutual trust and confidence that one would deal with the other in all fairness and rectitude over the rights and obligations flowing between the parties under the employment agreement. If one does an act or commits an omission which is inconsistent with that fiduciary relationship then that act or omission will be mala fides. This principle has equal application as against the employer and the employee in their respective positions viz the employment relationship between them.”

[39] In Esso Production Malaysia Inc v. Md Yusop Nordin [1995] 2 MELR 488, it was held that:

“It is settled law that the employee is required at all times to act in a faithful manner, and not place himself in a position where his interests conflict with his duties. If the employee does an act which is inconsistent with the fiduciary relationship with the employer, then it will be an act of bad faith ...”

[40] BR Ghaiye in his text Misconduct in Employment Chapter XIX at p 650 states:

“The servant stands in a fiduciary relation

The relation between an employer and an employee is of fiduciary character. The word “fiduciary” means belonging to trust or trusteeship. It means that whenever an employer engages a worker he puts trust that the worker will faithfully discharge the service and protect and further the interest of the employer. A fiduciary relationship exists between employer and employed: (a) whenever the former entrusts the latter with property, tangible or intangible, eg, confidential information and relies upon the other to deal with such property for the benefit of the employer, or for purposes authorised by him, and not otherwise, (b) whenever the employer entrusts the employee with a task to be performed, eg, the negotiation of a contract, and relies on the servant or agent to procure the best terms available. If the employee does an act which is inconsistent with the fiduciary relationship, then that will be an act of bad faith for which his services can be terminated ... The obligation to serve his master with good faith and fidelity arises out of necessary implication which is deemed to be engrafted on each and every contract of service. This ... condition is recognised on account of realisation of the need of full confidence between the employee and the employer ...”

[41] In Cellular Communications Network (M) Sdn Bhd v. Ilhami Mohamad [2001] 1 MELR 117, it was stated:

“The implied term of contract relied upon by the company can hardly be gainsaid. In ‘The Modern Law of Employment’ at p 446, G H I Fridman puts the matter this way:

The relation of master and servant implies necessarily that the servant shall be in a position to perform his duty duly and faithfully, and if by his own act


[2017] 1 MELR 437

he prevents himself from doing so, the master may dismiss him. There are thus two aspects of the employee’s duty under a contract of employment. He must provide a satisfactory performance of the work he has contracted to do; and he must act faithfully and in accordance with the interest of his employer.”

[Emphasis Added]

[42] And Professor of Law Alfred Avins in his book Employees’ Misconduct wrote at pp 537 & 538:

“The servant is bound to give faithful personal service to his master and, as a consequence, to refrain from any course of conduct the natural tendency of which must be to injure the master’s trade or business.”

[43] And in Taylor v. Parsons Peebles Ltd [1981] IRLR 119, the EAT held as follows:

“In determining the reasonableness of an employer’s decision to dismiss, the proper test is not what the policy of the employer was, but what the reaction of a reasonable employer would be in the circumstances.”

Was The Claimant Guilty Of Misconduct?

[44] That the claimant owed a fiduciary duty to the bank as its employee cannot be denied. That he believed that such a practice as he committed was permissible belies the fact that he could have risen to that high position of Manager of a bank without the intuition to discern that such practices were not only out of the ordinary, to say the least, but that it could have passed muster and be acceptable to any assiduous management authority, especially that of a bank, which in the main deals with other peoples money.

[45] From the assessment of the facts as it emerged in this case, this court is inclined to accept the Bank’s contention that it was plain and obvious that the claimant ought to have known that what he was doing could not be legitimate; and that it was improbable that he could not have known the true nature of his act; and as a corollary, that he was in fact deliberately wilful in doing what he did notwithstanding the very real possibility of serious detriment to the Bank had it become common knowledge that the bank’s officers were helping themselves to portions of refunded premiums rightfully belonging to their customers; and certainly without the actual knowledge of those customers. In the premises, the bank resolutely and convincingly argued that the claimant had committed a wrongdoing inconsistent with the trust and responsibility reposed in him by virtue of the fiduciary relationship of employer/employee between them. The claimant had clearly acted in conflict of interest of his trusted position as a Bank Branch Manager; and thus betrayed the loyalty that he owed to the Bank qua employer. It was therefore unsafe and indeed unreasonable to expect the bank to continue his employment in the entire circumstances of the case.


[2017] 1 MELR438

The Finding

[46] From the totality of the evidence, based on equity, good conscience and on the substantial merits of the case it is the finding of this court that the Bank has established, on a balance of probabilities, the appropriateness of their action against the claimant. The claimant himself has in fact positively admitted to substantial and material elements of the allegations against him; and has by this, shown a betrayal of the trust and confidence reposed in him by the bank. Briefly put, in the entire circumstances of this case, the misconduct perpetrated by the claimant fully justified his dismissal.

[47] It follows therefore that this is a case that does not require the intervention of this court in favour of the claimant.

The Final Order

[48] As the dismissal in this case was with just cause or excuse, the claim herein is hereby dismissed.


redzuan yaacob v. bank kerjasama rakyat …malaysianlawreview.com/sample/melr_2017_1_404.pdfv. bank...

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