KUALA LUMPUR – Fast-food chain 4Fingers Crispy Chicken has been ordered to pay RM309,000 to a former employee, who was the sole staff member retrenched by the company in 2020.
Industrial Court chairman Andersen Ong Wai Leong, in his judgement dated July 16 this year, rejected the company’s claim of financial difficulty during the Covid-19 pandemic as a justification for the retrenchment.
During the trial, the company argued that it had suffered severe financial losses during the movement control order (MCO), which began on March 18, 2020.
The company also stated that it needed to “restructure” and “reorganise,” making the ex-employee’s position redundant at that time.
However, the ex-employee, who was the company’s business development manager, argued that fast food chains did not suffer to the extent claimed by the company, especially since they expanded by opening several new branches after his retrenchment in April 2020.
He also claimed that he received no prior warning and was informed of his retrenchment via a Microsoft Teams meeting on April 16, 2020, followed by a formal letter the same day. He further contended that he was the only employee dismissed during the pandemic.
“(There is no) proof that the company was facing tight cash flow at the material time. But on the contrary, according to the company’s audited financial statement as of December 31, 2019, the company made a net profit (after taxation) of RM3,581,123 for financial year ended 2019, and there was still a significant amount of cash or cash equivalent totalling RM6,706,388 with the company as of that date,” said Andersen.
“As such, it is unlikely that the company would be facing a serious cash flow problem as early as February 2020, since the company had made a good net profit exceeding RM3 million in 2019.
“One of the company’s witnesses (4Fingers’ chief financial officer) admitted that they paid out RM336,000 in bonuses to its employees in March 2020, the month preceding the claimant’s retrenchment, in which, the company could have postponed the payment of bonuses to its employees in light of the Covid-19 pandemic and the MCO.
“Therefore, I am unable to agree that the claimant was retrenched due to the substantial losses incurred by the company and its difficulties in sustaining its business.”
Andersen said it is “doubtful” that the company was in such a dire financial situation necessitating the claimant’s retrenchment, especially when the company’s gross turnover for year 2019 is RM55,730,963 and its staff costs alone exceeded RM10 million, based on the company’s statement for the financial year ended December 31, 2019.
Andersen also noted that a broader retrenchment exercise would have been conducted if the company was genuinely in financial distress.
“The company’s contention that the claimant (ex-worker) role became redundant because they had frozen development and expansion of its business due to the MCO is untrue.
“There is no evidence that the claimant’s work had diminished prior to his retrenchment. The evidence before the court shows that the claimant was still performing his functions and duties up until he was dismissed by the company on April 16, 2020.
“Despite the many restrictions due to the MCO, the claimant’s work did not diminish with the implementation of the MCO.
“There is no evidence that the company aborted its business expansion plan when MCO was implemented. On the contrary, the company had continued with its business expansion plans,” he said.
Ong also said that 4Fingers’ decision to dismiss the ex-employee was clearly unfair and not made in good faith. – July 24, 2024
