Addenda To An Employment Contract: Their Significance

The High Court in its decision dated 20th December 2018 in the case of Niall Atholl Murray v Baker Hughes (M) Sdn Bhd & 2 Ors (Application for Judicial Review No.: WA-25-204-08/2018) upheld the decision of the Industrial Court (Award No. 1194 of 2018) which had recognised the parties’ original agreement contained in the main employment contract and found that the addenda thereto did not alter the very nature of this original agreement.

This echoes the decision of another High Court dated 12th November 2018 in a similar case – John Brian Chesson v BHM & Anor (Application for Judicial Review No. WA-25-96-04/2018).

The Claimant had been employed by International Professional Resources Ltd (“IPRL”), a company incorporated in Dubai, as an internationally mobile employee and was assigned to BJ Services (M) Sdn Bhd (“BJ Services”) as the Engineering Manager.

It was made clear that the IPRL employment contract was the primary agreement and that the documentation to facilitate his assignment i.e. the assignment agreement and the local contract with BJ Services (for immigration purposes) were addenda to the IPRL contract. The parties also agreed that the Claimant would at all material times during the assignment be and remain as an employee of IPRL.

Owing to poor performance, the Claimant’s employment was terminated by IPRL and as a consequence, his assignment was also put to an end.

The Claimant filed an action against BJ Services in the Industrial Court for wrongful dismissal, contending that the fact that BJ Services had been named as his employer in the local contract, employment pass and Malaysian income tax returns meant that an employer-employee relationship existed between him and BJ Services. Baker Hughes (M) Sdn Bhd (“BHM”), a company related to BJ Services, was also cited as a party to the proceedings.

In arriving at its decision, the Industrial Court observed that the local contract was simple and did not contain the usual terms of employment i.e. the provisions for scope of work, sick leave, termination of employment and the applicable notice period. The Industrial Court held that the local contract did not stand on its own and was merely to facilitate the employment pass application without which the Claimant would be unable to perform his assignment as required under the IPRL contract.

The Industrial Court held that, as it had been agreed that IPRL would remain as the Claimant’s employer during the assignment and the local contract would constitute only an addendum to the IPRL contract, the Claimant could not renege on his obligations under the IPRL contract and deny the existence of an employer-employee relationship between him and IPRL.

Significantly, the Industrial Court also recognised the parties’ agreement to submit to the exclusive jurisdiction of the laws of Dubai International Financial Centre, Dubai, United Arab Emirates and hence, held that the IPRL contract was subject to those laws.

Accordingly, the Industrial Court decided in favour of BJ Services and BHM. The Claimant applied for judicial review of the Industrial Court award. The decision of the Industrial Court was upheld by the High Court and the Claimant’s application was successfully dismissed on 20th December 2018.

The abovenamed companies, Baker Hughes (M) Sdn Bhd and BJ Services (M) Sdn Bhd, were represented by R. Ravindra Kumar (ravindrakumar@rdl.com.my) and Tham Li Vyen (livyen@rdl.com.my), partners in our Employment and Industrial Relations practice group.




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