Reference no: EM133506032
Case Study: Pelangi Sdn Bhd is a company that operates a 3-star hotel in Johor. The company has 80 employees handling the operation of the hotel and a restaurant located next door to the hotel. It has been in operation for the last twelve years but due to the Covid-19 pandemic, the company is experiencing loss. As part of the company's effort to cut costs, the company intends to retrench some of its employees. Last week the company sent out a notice of retrenchment to 30 of its current employees on grounds of financial difficulties and redundancy. The notice states that the concerned employees will be laid off since their positions are found to be redundant and their last day of work is at the end of the month, which is barely fifteen days away. Among the employees affected are Amir, Raj, Vina, and Shawn.
Amir is the Hotel Manager. His assistant, Lionel, was asked to take over Amir's job as the management say that they do not need a manager to manage the hotel. Amir, however, argues that Lionel does not have the experience nor the qualification to be a manager and oversee the running of the hotel. This is because Lionel has been with the hotel for only four years and his educational background is not in hospitality but rather a Bachelor in Agricultural Science.
Raj is one of the chefs in the restaurant while Vina and Shawn work in the front office. They are very upset with the decision as they have been serving the company loyally for many years. Raj is especially angry because he has been with the company since the beginning of the hotel's operation, but the company choose to retrench him instead of another chef, Ali, who has only served the company for 3 years. The company's justification is that Ali have higher qualifications as a chef compared to Raj. As for Vina and Shawn, the company claims that since the company has invested in a hotel management software, the hotel are able to automate most of the front office work and reduce the manpower needed.
The retrenched employees also questioned the company's decision because just last week the company hired a new manager for the Marketing Department. To add insult to injury, they found out that the company has decided to maintain the service of 3 Nepalese workers because the cost of paying their salaries is cheaper compared to paying the locals.
Required:
(a) Can a company retrench employees due to financial difficulties? Describe the evidence that Pelangi Sdn Bhd must produce in court to justify their decision to retrench the employees in the above scenario.
(b) Amir, Raj, Vina and Shawn would like to challenge the company's decision to retrench them. Based on the facts given in the above scenario and the Malaysian labour law principles, discuss whether they would be successful in their claim against Pelangi Sdn Bhd. You need to analyze their case individually before you can conclude whether the company's action is justified.