Member Article

IN THIS ARTICLE, NADIA ABU BAKAR DISCUSSES AN EMPLOYER’S PREROGATIVE TO TRANSFER EMPLOYEES

Introduction

There may be an instance where you receive a letter from your company with the following content:

“In light of the business requirements of the Company, you shall be transferred to xx with effect from xx.”

In such circumstances, can you refuse to be transferred? Is your employer liable to cover the cost of transporting your belongings as well?

Employer’s prerogative to transfer the employee

This issue was raised in the recent Industrial Court case ofNur Hasmila Hafni Binti Hashim dan 9 Orang Perayu Lain v Hong Leong Bank Berhad[1](“Hong Leong Bank Berhad”). In that case, the Industrial Court affirmed Hong Leong Bank Berhad’s (the “Employer”) prerogative to transfer its employees. Although the proceedings before the Industrial Court was conducted ex-parte because the 27 claimants in that case had decided not to participate in the hearing, the Industrial Court found that the Employer had proven that the dismissals of the employees were with just cause or excuse.

Fact of the case

The Employer undertook a Centres Hubbing and Relocation exercise which involved the transfer of employees from one State to another State and from one branch to another branch within the same State. The Employer provided three months’ notice to the employees, a relocation package, a monthly housing allowance and a cash advance of 50% of the reimbursement was made available to the outstation employees. The Employer decided to defer the effective date of the transfer, whereby the employees concerned were ultimately given five months’ notice to transfer. The said relocation exercise involved about 300 employees but only the 27 employees, which were the claimants in this case, refused to proceed with the transfer. Due to the employees’ refusal, the Employer terminated their services.

This case affirmed the legal position that an employer has the implied right to transfer its employees as held in the Court of Appeal case ofLadang Holyrood v Ayasamy Manikan & Ors[2]. In that case, the issue before the Court of Appeal was whether the employer had any right under the contract of service to transfer its employees. The Court of Appeal referred to the judgment of the Industrial Court in the case ofSoon Seng Cement Products Sdn Bhd & Anor v Non-Metallic Mineral Products Manufacturing Employees’ Union[3]which held,

“It is well established in Industrial Law that the right to transfer an employee from one department to another or from one post of an establishment to another or from one branch to another or from one company to another within the organisation is the prerogative of the management and the Industrial Court will ordinarily not interfere. But if the transfer is actuated with improper motive, it will attract the jurisdiction of the Court. The power to transfer is, therefore, subject to, according to Ghaiye’s Misconduct in Employment (at pages 254 and 255), the following well recognised restrictions:

1. there is nothing to the contrary in the terms of employment;
2. the management has acted bona fide and in the interests of its business;
3. (the management is not actuated by any indirect motive or any kind of mala fide;
4. the transfer is not made for the purpose of harassing and victimising the workmen; and
5. the transfer does not involve a change in the conditions of service.”

Hong Leong Bank Berhad further reinforces the position that an employer has just cause or excuse to dismiss an employee who refuses to obey a valid transfer order.

While there is no legal obligation on the employer to bear the transportation cost, it is good industrial practice for the employer to provide a relocation package which includes the cost of transporting the employees’ belongings.

Hong Leong Bank Berhad also made reference to the case ofSabah Bank Berhad v Hargopal Singh a/l Inder Singh Gill[4]. In that case, the employee accepted the transfer order from Kuala Lumpur to Kota Kinabalu but requested to travel by air and to send the household belongings by ship, which was approved by the employer. However, the employer restricted the costs of transporting to 600 cubic feet and would not cover the cost to transport the employee’s car. The employee then refused to be transferred.

The Industrial Court held that the employer was not compelled to bear the cost of transporting the household goods on transfer and did not consider it reasonable for the employee to refuse to obey the transfer order on this ground. The Industrial Court further held that the employee should have proceeded with the transfer and appealed against the decision of the management in restricting the cost of transferring the personal belongings and disallowing the transportation of the car.

Conclusion

In view of the decision in Hong Leong Bank Berhad, the legal position stands that an employee is not at liberty to refuse a transfer order and must proceed with the transfer, even if the employee proceeds under protest.

[1]Nur Hasmila Hafni Binti Hashim dan 9 Orang Perayu Lain v Hong Leong Bank Berhad.

[2]Ladang Holyrood v Ayasamy Manikan & Ors.

[3]Soon Seng Cement Products Sdn Bhd & Anor v Non-Metallic Mineral Products Manufacturing Employees’ Union.

[4]Sabah Bank Berhad v Hargopal Singh a/l Inder Singh Gill.