Industrial Relation Law recognizes that a company has the right to transfer its employees from one department to another or from one post of an establishment to another or from one branch to the other or from one company to another within its organization:
A company can even exercise the right to transfer even if there is no transfer clause in the contract of employment. The employer always retains its implied right to transfer as decided in LadangHolyrood v. Ayasamy a/l Manikam& [2004] 2 CLJ 697:-
“Nevertheless, an employer always has the implied right to transfer its employees. As the right is one that is ‘implied’, no express term in the contract of service is necessary. The right to transfer exists even in the absence of a contract of service unless there is a contract to the contrary. The transfer, however, must not be actuated by mala fide or any improper or indirect motive and must not involve a change in the terms of employment to the detriment of the employee.”
The prerogative of management on the transfer of employees is subject to well-recognized restrictions as follows:
1. There is nothing to the contrary in the terms of employment;
2. The management has acted bona fide and in the interest of its business;
3. The management is not actuated by any indirect motive of any kind of mala fide;
4. The transfer is not made for the purpose of harassing and victimizing the workmen; and
5. The transfer does not involve any change in the conditions of service.
The implication of exercising the right of transfer poorly would allow an employee to justify a claim for constructive dismissal. In the alternative, if it is exercised rightly and if disobeyed by an employee it is an act of major misconduct which could justify termination.
Examples of cases where the Industrial Court in the following have always upheld the right of transfer:-
In the case of Loh Hon Chong v. Aerobus Industries Sdn Bhd; Award No 883 of 2012 of June 2012, “As such, the order to transfer the claimant was lawful and it was the duty of the claimant to obey the transfer order. Since the claimant refused to do so, the claimant’s refusal was misconduct and the company was justified in dismissing him.”
In the Industrial Court Case of Yeoh Cheng Cheng v. APM Automotive Holdings Berhad, [2014] 1 ILR 313, “It is a well-established principle that the prerogative to transfer is a managerial prerogative and the right to transfer exists even in the absence of a contract of service unless there is a clause to the contrary. The company had every right under her contract of employment to transfer her from “position to position or from one section to another at the discretion of the Management.”
However, in some cases where the transfer has been masked for the ulterior motive of driving the employees out of employment and in essence was done in bad faith, the Industrial Court has allowed such claims for constructive dismissal.
Govindasamy Munusamy v. Industrial Court Malaysia &Anor (2007) 10 CLJ 266, “showed that the transfer per se was not bona fide, but with a view to eliminate the applicant from the service of the second respondent by transferring him to a different entity which was not part of the contractual term.”
Keh Soe Sian v. KTC Human Resource Consultants Sdn Bhd; [2020] 1 ILR 385, “Thus, the company, by its actions, had shown an intention to no longer be bound by the contract of employment. Thus the prerogative always remains with the employer provided it is exercised in good faith and not done to exert pressure on employees to leave the Company.”
It is always advisable that to exercise transfer of an employee the contract of employment should expressly provide the employer with such right and in practice exercising the right of transfer provides for a fair time and incorporating a reasonable transfer allowance as part of best practices to be adopted by any employer.
Premjit Singh is the Managing Partner of Prem & Associates and he can be contacted at 012-5236755 or email to prem@premlaw.com
