Court says retrenchment based solely on high salary 'unfair and discriminatory'
One of Malaysia's top private universities has been ordered to pay more than RM530,000 for "unfairly" retrenching two associate professors with five-digit salaries in a bid to cut costs.
Malaysia's Industrial Court ruled that the retrenchment process of Taylor's University was carried out "unfairly and unjustly" for basing solely on who was earning a high salary.
"The company's decision to target the Claimants for retrenchment based on their higher salaries lacked good faith, improper and unfair," the court said in its decision.
Employment dispute
Taylor's University retrenched in 2019 two associate professors in its Bachelor of Biotechnology programme as it was the least profitable and a "loss-making programme" for the institution.
The two academics affected were Tam Sheh May and Wong Ching Lee, who had the highest salaries in the programme with a five-figure pay.
May, who started at the university in 2012, was earning RM12,630 at the time of the retrenchment. Lee, who also started at the university in 2011, was earning RM14,118.
The university told the court that its decision to retrench both associate professors was to achieve cost efficiency. It also confirmed that they were selected because of their high salaries and that is the selection criteria.
'Grossly unjust' retrenchment
But the court ruled that such action was "grossly unjust" because associate professors' high salaries were due to the company's own decision.
"Retrenchment based solely on high salary is unfair and discriminatory or biased against more experienced employees who have worked longer for the employer," the court said.
According to the court, employers should select employees to be retrenched in accordance with objective criteria that are fair and form part of its employment policy.
"These criteria should not be arbitrary but should align with the formal policies of the organisation," it said. "Surely, the company in our present case does not have policy that include targeting employees for retrenchment or victimising them merely because of their higher salaries."
The court added that targeting these academics based on salary overlooks their contributions and may undervalue their loyalty and dedication.
"Furthermore, it could perpetuate age discrimination, as older employees tend to have higher salaries due to their tenure and experience," it stated.
As a result, the university has been ordered to pay May a total of RM256,742.40 in back-wages. It has been also ordered to pay Lee RM276,480.00 in back-wages.
