Apex court to hear if related companies can be named as employers

2026-03-17 - 10:34

The Federal Court will, among others, determine the correct test applicable to joinder and substitution applications under Section 29(a) of the Industrial Relations Act 1967. PUTRAJAYA: The Federal Court, in a split decision, has granted 21 dismissed workers leave to appeal on issues relating to the substitution and joinder of companies. Bench chairman Justice Abu Bakar Jais said he would have disallowed the applications, while Justices Vazeer Alam Mydin Meera and Ahmad Terrirudin Salleh took the view that the merits of the case should be heard. “As chairman, I have been outvoted, and this reflects the healthy state of the judiciary,” he said. The applicants’ appeal will be based on four legal questions, having met the threshold under Section 96 of the Courts of Judicature Act 1964, that the proposed appeal raises novel legal or constitutional questions of public importance that have not been previously determined. The Federal Court will, among others, determine the correct test applicable to joinder and substitution applications under Section 29(a) of the Industrial Relations Act (IRA) 1967. This follows differing approaches adopted by four Court of Appeal panels, which applied the necessity, responsibility, nexus or liability tests. Last year, the Court of Appeal, in appeals filed by Hubline Bhd and Highline Shipping Sdn Bhd, set aside Industrial Court awards that had allowed their joinder and substitution, respectively. The claimants wanted to substitute Hub Shipping with Hubline Bhd and join another company, Highline Shipping Sdn Bhd. The court considered whether third parties, such as related or parent companies, could be made liable for unfair termination claims in the Industrial Court. Justice S Nantha Balan, now retired, held that there must be a reasonable factual or legal nexus between the proposed party and the dispute before the Industrial Court, and that the proposed party must be among those legally responsible for the termination of employment. He also ruled that the doctrine of separate legal personality – under which the corporate veil may be lifted only in limited circumstances – cannot be disregarded in Industrial Court proceedings. The panel also comprised Justices Lim Chong Fong and Noorin Badaruddin. The Industrial Court case involved claims by the workers for reinstatement to their positions at Hub Shipping Sdn Bhd and EM Shipping Sdn Bhd following what they alleged were unfair dismissals. Hub Shipping and EMS were subsidiaries of Hubline Bhd. While the case was ongoing, Hub Shipping was wound up and a liquidator was appointed. The workers then applied under Section 29(a) of the IRA to substitute the insolvent company with Hubline, the parent company of Hub Shipping. They also applied to join Highline Shipping, which shares common directors and shareholders with the company in liquidation. In January 2019, the Industrial Court allowed the employees’ joinder and substitution applications. The High Court upheld the awards in 2021. In today’s proceedings, lawyers Robert Low, Ryan Ng and Nathaniel Low appeared for Hubline, while Alex De Silva and Jessica Chew represented Highline Shipping. Counsel G K Ganesan, Muhendaran Suppiah and Chong Wan Loo represented the workers.