Court of Appeal Decides on Senior Management’s Responsibility

Last month, the Court of Appeal unanimously dismissed an appeal by three former senior-level employees. They argued that the Industrial Court failed to consider their subordinates who were directly involved in the mill operation at a factory had been charged for causing an estimated revenue loss of RM1.8 million.

The appellants held senior management posts in the company. They were entrusted with the duty to administer, supervise and monitor the operation of low-quality rice at a factory.

Although they acknowledged that the company had suffered losses of RM1.8 million, they denied any accountability for it and instead blamed an engineer. 

Despite this, none of the appellants reported the engineer's alleged wrongdoing to the company's management, especially considering that he was their subordinate.

 

Responsibility of senior-level employees

In industrial relations law, an employee who holds a senior position should not be allowed to absolve himself of accountability as he tried to avoid ultimate responsibility.

Considering the appellants' senior position, the Industrial Court decided that their proven misconduct had shattered the company's trust and confidence in them.

The appellants could have prevented or reduced the sizeable loss had they acted responsibly and dutifully in their senior positions. It is what they had failed or neglected to do, although it was reasonably expected of them. 

The High Court reaffirmed the Industrial Court's decision as it found no grounds for intervention in exercising its supervisory function in judicial review proceedings. 

The Court of Appeal upheld the High Court's and the Industrial Court's decision.

It was highlighted to the Court of Appeal that given the company's role as Malaysia's partner in the rice industry, the Appellants' fiduciary duties to the company also extend to the public at large. 

The Court of Appeal then upheld both the decisions of the High Court and Industrial Court and agreed that:

1. The three senior-level employees were guilty of their dereliction of duty to administer, supervise, and monitor the operations at the factory;

2. The responsibility of administering, supervising, and monitoring the operations at the factory rested solely on the shoulders of the appellants collectively; and

3. Therefore, the appellants could not push or divert their responsibilities to their subordinates.

 

Partner Shariffullah Majeed, and associate Arissa Ahrom, of Lee Hishammuddin Allen & Gledhill represented the company. 

For more information about the case, please read it here.

Articles that might interest you 
What You Need to Know About Program Subsidi Upah (PSU) 4.0
What You Need to Know About EPF's i-Saraan
​KPDNHEP Allows Further Relaxation to More Sub-Sectors