Authored BY: WONG KAI TONG
Multimedia University Melaka
Introduction
In order for an employee to exercise their right to collective bargaining with their employer, a trade union is a necessary instrument. A trade union movement can speak out for its members’ rights and welfare in the workplace, including fair pay, job security, appropriate hours, and working conditions. The Industrial Relations Act 1967 (IRA 1967) and the Trade Unions Act 1959 (TUA 1959) are currently governing trade union recognition in Malaysia. In this paper, an in-depth analysis of the implication of the case Chen Ka Fatt v Maybank Bhd [2018] 2 ILR 250 on the rights and liabilities of trade unions in Malaysia will be carried out.
Overview of the Case
Facts
The parties in this dispute are Chen Ka Fatt (‘The Claimant’) and Maybank Berhad (‘The Bank’). The dispute arose from the Claimant’s dismissal under Section 20(3) of the Industrial Relations Act 1967, following allegations of misconduct during his tenure as a Special Grade Clerk, a position he held after commencing employment with the Bank on 27.4.1981, with a final drawn salary of RM4033.00. At the material time, the Claimant was actively involved with the National Union of Bank Employees (NUBE), serving as a member of its Executive Committee and holding the post of General Treasurer, and had attended the International Labour Organisation (ILO) Conference in Geneva, Switzerland in May 2011. It was during this conference that the Bank alleged the Claimant, along with several other employees, had displayed a banner bearing the words “Maybank Robs Poor Malaysian Workers” within and outside the United Nations premises, with photographic evidence later appearing on the official NUBE website. In response to these allegations, the Bank issued a show cause letter dated 11.7.2011, requiring the Claimant to explain the purported misconduct, which included the public display of defamatory statements and the uploading of related images online, actions the Bank claimed had tarnished its image and reputation.
Despite receiving a written explanation from the Claimant on 28.7.2011, the Bank found it unsatisfactory and proceeded to initiate an internal investigation through a notice dated 23.8.2011. Although initially postponed twice at the Claimant’s request to allow time for preparation and witness coordination, the investigation was eventually held on 2.11.2011 and 3.11.2011, with the Claimant being represented by a NUBE official. Upon conclusion of the inquiry on 7.12.2011, the internal panel found the Claimant guilty of all three charges, leading to the termination of his services via a letter dated 30.1.2012, based on the Bank’s view that, as a serving employee, the Claimant owed a fiduciary duty to the Bank which had been compromised. The Claimant’s subsequent appeal against the dismissal, submitted on 28.2.2012, was ultimately rejected by the Bank.
Legal Issues
The legal issues were whether the wrongdoing said to have been committed by the Claimant has been successfully proven and whether the wrongdoing that is successfully proven, is a just cause or excuse that justifies the dismissal.
Court’s Decision & Reasoning
Outcome
In this case, the court ruled in favour of the Claimant, finding that his dismissal by Maybank Berhad was without just cause. After thoroughly reviewing the internal investigation proceedings conducted on 2.11.2011, 3.11.2011, and from 5.12.2011 to 7.12.2011, the court concluded that the Claimant’s act of holding and displaying a banner bearing the phrase “Maybank Robs Poor Malaysian Workers” during the ILO Conference in Geneva—though potentially perceived as damaging to the Bank’s image—did not amount to misconduct warranting dismissal. Consequently, the court ordered the Bank to compensate the Claimant for his unjust termination. In arriving at this decision, the court evaluated the fairness of the Bank’s internal inquiry, acknowledging the Claimant’s allegation that he was denied a fair opportunity to defend himself when the Bank refused a third postponement of the proceedings; however, considering that the Bank had previously granted two adjournments, the court was satisfied that sufficient time had been provided. Despite affirming the procedural fairness of the investigation, the court reaffirmed its authority to reassess the evidence and reach an independent conclusion.
The primary issue concerned whether the Claimant’s participation in displaying the banner and the subsequent publication of his photograph on the NUBE website constituted misconduct. The court held that such actions were in furtherance of the Claimant’s duties as a NUBE official and therefore did not amount to wrongdoing justifying termination. Even if these actions were interpreted as misconduct, the court was of the view that dismissal would have been disproportionate, particularly since similar banners had been used in numerous pickets nationwide and prominently displayed at NUBE’s headquarters in Kuala Lumpur, indicating that the statement was already public prior to the Claimant’s involvement. The court further determined that the Bank failed to demonstrate any actual harm or reputational damage resulting from the Claimant’s actions, thus no causal link could be established between the alleged misconduct and any injury to the Bank’s image. It was held that the Bank could not penalise the Claimant for fulfilling his duties as a trade union member simply because he also happened to be its employee.
While the Claimant sought reinstatement to his former position, the court found this remedy inappropriate due to the apparent motive of union busting on the Bank’s part and the strained relationship between the parties. Instead, the court awarded the Claimant a total compensation of RM145,188.00, comprising RM24,198.00 in back pay—equivalent to six months’ salary at RM4033.00 per month, as allowed under the Second Schedule of the Industrial Relations Act 1967 given the Claimant’s continued employment with NUBE—and RM120,990.00 in compensation in lieu of reinstatement, calculated based on the formula of one month’s salary for every two years of service across his 30-year tenure.
Ratio Decidendi
The ratio decidendi of this case centers on the legal principles governing unfair dismissal and, more significantly, the protection afforded to trade union members under the Trade Unions Act 1959 and the Industrial Relations Act 1967. In particular, Section 4(1) of the IRA 1967 prohibits employers from interfering with a workman’s right to join and participate in trade union activities, while Section 5(1), especially Subsection (d), protects employees from dismissal or disciplinary actions stemming from their union involvement. Relying on these provisions, the court reaffirmed that workers are legally entitled to carry dual roles as employees and trade union members, and that actions undertaken in furtherance of trade union responsibilities—such as the Claimant’s display of a banner with uncomplimentary remarks toward the Bank—do not constitute misconduct under the law.
The court further noted that the Claimant had obtained prior approval from the Bank for his leave to attend the ILO Conference in Geneva from 30.5.2011 to 11.6.2011, in accordance with Section 6 of the Act, which strengthens the argument that the Bank was fully informed of the Claimant’s participation in legitimate trade union activities. Thus, the Claimant’s conduct, carried out within the scope of his union duties and in a lawful manner, cannot be construed as a wrongful act or misconduct, and the Bank’s justification for termination is therefore invalid. Since the Bank failed to establish any actual wrongdoing on the part of the Claimant, the dismissal was found to be without just cause and constituted unfair dismissal.
The court also addressed the Claimant’s legal immunity from defamation under Section 22 of the Trade Unions Act 1959, which precludes any defamation claims arising from acts performed in the context of union activities. Despite the Bank’s contention that this immunity does not extend to employment matters, the court reiterated that the Claimant’s actions—displaying the banner, permitting its photographs to be uploaded to the NUBE website, and not preventing their publication—were all undertaken in his capacity as a union member and did not amount to misconduct. Moreover, the banner in question had already been widely used in other pickets and was displayed outside NUBE’s headquarters prior to the Claimant’s involvement, thereby negating any argument that his specific conduct caused new or additional reputational harm to the Bank.
As a result, none of the three charges brought against the Claimant by the Bank met the threshold of actual defamation or misconduct, and the Bank lacked both a cause of action under Section 21 and valid grounds for termination. In conclusion, the court held that it was incumbent upon the Bank to prove that the Claimant’s conduct rose to the level of misconduct sufficient to warrant dismissal; however, as this was not proven on the balance of probabilities, the court found in favour of the Claimant. This decision reinforces the legal protections available to trade union members and confirms that employers may not dismiss employees on the mere basis of their lawful participation in trade union activities.
Obiter Dictum
The obiter dictum in this case comprises several key observations made by the court that, while not central to the legal outcome, provide important reflections on the broader issues at hand. Firstly, the court acknowledged that while the Bank is entitled to expect its employees to prioritise their work obligations due to the fiduciary duties owed by employees, this expectation must not be used as a pretext to obstruct or suppress legitimate trade union activities. Though it is true that an employee must not engage in misconduct—such as defamation, which could justify termination if proven—in this instance, the court was clear in its view that the Claimant had not defamed the Bank, and that his actions were clearly undertaken in his capacity as a union representative. As such, the Bank cannot justify its disciplinary actions by invoking the Claimant’s duty to the Bank as a reason to override or deny his trade union responsibilities.
Moreover, the court highlighted that any decision regarding punishment for the Claimant’s alleged misconduct ought to have been made with appropriate consideration of his nearly 30 years of unblemished service with the Bank. The Claimant’s long-standing tenure, marked by loyalty and a clean disciplinary record, was a significant factor that should have weighed against imposing a harsh penalty such as dismissal. The fact that the Bank had itself recognised this record by presenting the Claimant with a Long Service Award further underscores the inconsistency and harshness of the termination. Taken together, the court’s observations emphasise the need for employers to balance their expectations of loyalty with the rights of employees to engage in lawful trade union activities, and to ensure that disciplinary measures are fair, proportionate, and grounded in valid reasoning.
Critical Analysis
Impact
The Chen Ka Fatt case reaffirmed the fundamental right of employees to form, join, and participate in trade union activities, holding that any dismissal on such grounds amounts to unfair dismissal. This ruling strengthens the legal framework that protects union members from employer retaliation, ensuring that workers can engage in union efforts to improve wages, working conditions, or protest management decisions without fear of being wrongfully terminated. It sends a strong message that the courts will uphold these rights, encouraging greater worker confidence in union participation.
This is clearly reflected in the peaceful picket held by 250 NUBE members in 2024, protesting against the excessive salaries of bank CEOs and alleged union-busting activities by several major banks, including Bank Islam, Standard Chartered, Hong Leong Bank, CIMB, and Maybank. Despite heavy police presence, the protest proceeded with public support, voicing concerns about wage disparity, lack of staff training, and unjust treatment of union members. While the Malayan Commercial Bank’s Association urged a return to negotiations, NUBE remained committed to advocating for workers’ rights.
This case also clarified the boundary between legitimate trade union activities and actual misconduct, stressing that participation in union-led efforts such as peaceful picketing or advocating for improved conditions, even when contrary to employer interests, does not amount to misconduct if carried out lawfully within union duties. This distinction empowers workers with a clearer understanding of what actions are protected, encouraging them to seek legal remedies like reinstatement or compensation if unfairly dismissed.
Furthermore, this ruling serves as a deterrent to employers, signaling that dismissals arising from legitimate union involvement are likely to be deemed unreasonable and without just cause. As a result, employers are expected to engage with unions through dialogue or collective bargaining rather than punitive action. By promoting a more constructive employer-union relationship, the ruling ultimately contributes to higher job satisfaction, reduced workplace conflict, and the upholding of fair labour standards.
Proposal
Various legislations and legal mechanisms are in place in Malaysia to protect the rights and welfare of trade union members against discrimination, unfair dismissals or any inappropriate and biased actions of the employer in the course of their business. Nevertheless, reforms to the current legislations and the existing framework ought to be made to provide trade union members with broader rights against large corporations who could easily turn their dual responsibilities as an employee and trade union member from a shield, to a sword against their own employment.
Thus, it is advised that trade unions push to enhance legal education, clearer employment contract provisions defending trade union’s rights, and more uniform social dialogue between employers and employees in order to further protect union members. To promote better employee relations and minimise conflict, Malaysia could also benefit from importing good faith bargaining principles and alternative dispute resolution procedures from Australia and South Africa, respectively.
Conclusion
The Chen Ka Fatt’s case highlights that lawful trade union operations should not be viewed as misconduct unless they exceed legal boundaries, even if they oppose the employer’s objectives. Trade union members are entitled to several rights, such as immunity from civil lawsuits for actions taken during trade disputes, as stated in the Trade Unions Act 1959. Consequently, the court’s ruling enhances the legal safeguards for trade union members and discourages employers from taking adverse action against employees who engage in trade union-related activities.
In conclusion, the case of Chen Ka Fatt v Maybank Bhd ultimately serves as a strong reminder of the importance of protecting employees’ rights and promoting a fair, transparent, and respectful relationship between employers and trade unions. No employee shall be dismissed without just cause or excuse just because they participated in trade union activities.
Reference(S)
Primary Sources
Legislation
Industrial Relations Act 1967, ss 4(1), 5(1), 5(1)(d), 6
Trade Unions Act 1959, ss 21, 22
Secondary Sources
Online Articles
Siti Suraya Abd Razak, ‘TRADE UNION RECOGNITION in MALAYSIA: LEGAL ISSUES’ (2018) 9 UUM Journal of Legal Studies 23 https://e-journal.uum.edu.my/index.php/uumjls/article/view/uumjls.9.2018.9103 accessed 13 April 2025 Soo. WJ, ‘Bank worker union launches nationwide picket over alleged union-busting, fight for fair salaries’ (Malaymail, 22 July 2024) <https://www.malaymail.com/news/malaysia/2024/07/22/bank-worker-union-launches-nationwide-picket-over-alleged-union-busting-fight-for-fair-salaries/144636#google_vignette> accessed 16 April 2025
1.Siti Suraya Abd Razak, ‘TRADE UNION RECOGNITION in MALAYSIA: LEGAL ISSUES’ (2018) 9 UUM Journal of Legal Studies 23 https://e-journal.uum.edu.my/index.php/uumjls/article/view/uumjls.9.2018.9103 accessed 23 September 2024
2. IRA 1967
3. TUA 1959
4. IRA 1967
5.IRA 1967
6.IRA 1967
7.IRA 1967
8. TUA 1959
9. TUA 1959
10.Soo Wern Jun, ‘Bank worker union launches nationwide picket over alleged union-busting, fight for fair salaries’ (Malaymail, 22 July 2024) <https://www.malaymail.com/news/malaysia/2024/07/22/bank-worker-union-launches-nationwide-picket-over-alleged-union-busting-fight-for-fair-salaries/144636#google_vignette> accessed 15 September 2024
