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DRAFTING EMPLOYMENT CONTRACTS. BY LEE SWEE SENG LLB (HONS), LLM, MBA MANAGING PARTNER LEE SWEE SENG & CO ADVOCATES & SOLICITORS CERTIFIED MEDIATOR PATENT AGENT NOTARY PUBLIC Copyright www.leesweeseng.com sweeseng@tm.net.my. WHAT IS A CONTRACT OF EMPLOYMENT ?.

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drafting employment contracts
DRAFTING EMPLOYMENT CONTRACTS

BY

LEE SWEE SENG

LLB (HONS), LLM, MBA

MANAGING PARTNER

LEE SWEE SENG & CO

ADVOCATES & SOLICITORS

CERTIFIED MEDIATOR

PATENT AGENT

NOTARY PUBLIC

  • Copyright
  • www.leesweeseng.com
  • sweeseng@tm.net.my
what is a contract of employment
WHAT IS A CONTRACT OF EMPLOYMENT ?
  • It is an agreement between employer and employees which governs the relationship between both parties.
  • It may be implied from the surrounding circumstances.
  • s2 Employment Act 1950 defines a contract of service as any agreement, oral or writing, implied or express, where a person is engaged as an employee and serves his employer.
employment act 1955
Employment Act 1955
  • Contracts of Service;-
  • a) s6 EA 1950
  • every agreement lawfully entered between and employer and employee shall be binding upon parties
  • b) s7 EA 1950
  • any term of a contract or service, which is less favourable to an employee, shall be void and a more favorable provision of this Act shall be substituted therefor.
slide4
c) s7A EA 1950
  • Nothing in this provision shall prevent the employer or employee from agreeing to a more favourable term towards the employee.
  • d) s8 EA 1950
  • No term in any contract of service may restrict any right of an employee to ;-
  • i) join a trade union
  • ii) participate in trade union activities
  • iii) to associate with any persons with regards to a trade union
slide5
e) s10 EA 1950
  • All contracts of service shall be in writing if specified period is more than a month. It shall also include a termination clause by either party.
  • f) s18 EA 1955
  • A contract of service shall state the wage period and it shall be paid not later than the 7th day of the following month.
slide6
g) s60E EA 1955
  • Every employee is entitled to paid annual leave of ;-
  • i) 8 days for every 12 months of continuous service for a period of less than 2 years
  • ii) 12 days for every 12 months of continuous service for a period of 2 years but less than 5 years.
  • iii) 16 days for every 12 months of continuous service for a period of 5 years or more.
slide7
h) s60J EA 1955
  • The Minister may provide for the employees ;-
  • a) termination benefits
  • b) lay-off benefits
  • c) retirement benefits
termination or lay off benefits
Termination or Lay-off Benefits
  • According to Reg.6 of the Employment (Termination and Lay-Off Benefits Regulations 1980, employees are entitled to the above benefits as stated below :
  • a) 10 days’ wages under a continuous contract of service and employed less than 2 years
  • b) 15 days’ wages under a continuous contract of service and employed for 2 years but less than 5 years
  • c) 20 days wages under a continuous contract of service and employed for 5 years or more
retrenchment redundancy dr hc huang consultancy engineers s b v lim choon ntia 2000 2 ilr 330
Retrenchment & RedundancyDr HC Huang Consultancy Engineers S/B v Lim Choon Ntia [2000] 2 ILR 330
  • The claimant was terminated without retrenchment benefits during the 1997 economic crisis.
  • The Company terminated his services due to the economic downturn and recession causing the company to cease.
  • In Kumpulan Akitek, Kumpulan Dua (M) S/B v Mustapha B Harun [1987] 2 ILR 80, the Industrial Court held that it is the right of the employer to reorganise his business for the purpose of the economy and convenience provided it acted bona fide, this the Arbitration Court will not interfere.
retrenchment redundancy dr hc huang consultancy engineers s b
Retrenchment & RedundancyDr HC Huang Consultancy Engineers S/B
  • Similiarly in William Jacks & Co. S/B v V.S Balasingam [1993] 2 ILR 527. The Court of Appeal held that, retrenchment exercise conducted in bona fide cause is a question of fact but as long done in bona fide, the decision is immune from examination by the Industrial Court.
retirement benefits thong ah teh v eastern garment manufacturing co s b 2002 6 clj 133
Retirement BenefitsThong Ah Teh v Eastern Garment Manufacturing Co. S/B [2002] 6 CLJ 133
  • The claimant reached normal retiring age and was awarded RM37,765.16 as retirement benefit but he was dissatisfied with the payment.
  • He argued that he should be paid from 1st August 1966 onwards and not from 1st January 1980.
  • Retirement benefits are not compulsory benefit under law unless if it is provided in the employment contract,
slide12
In Petaling Rubber Estate Ltd v Nadarajah [1988] 1 MLJ 22 SC, the Supreme Court held that wages under s2 Employment Act 1955 is defined as all remuneration for work done under contract of service.
  • Wan Hamzah SCJ, opined that ‘work done’ is with respect of the contract of service as any payment made by employer ex gratia, not for work done, is not part of the wages.
slide13
However in this case, the claimant was provided with the benefit but due to company’s restructuring the scheme, his benefit does not act retrospectively.
  • The issue here is whether claimant entitled to benefit from 1966 onwards.
  • HELD, the claimant was entitled to the retirement benefits from 1966 onwards.
essential terms conditions
Essential Terms & Conditions
  • Job description
  • Period
  • Wage
  • Leave
  • Termination
  • Probation period
  • non-competition clause
contract of service contract for services
Contract of Service & Contract for Services
  • A contract of service is different from a contract for services.
  • The Courts use several tests to determine which is which:
    • Control Test
    • Integration Test
    • Multiple Test
    • Economic Reality/Entrepreneur Test
    • Mutual Obligation Test
other considerations
Other considerations:
  • EPF contribution
  • SOCSO contribution
  • Income Tax Deduction
  • Termination without need to assign reason
  • Required to engage own workers
  • Required to take professional indemnity
control test
Control Test:
  • The Court of Appeal in EPF Board v BATA SHOE CO (M)LTD [1968] 1 MLJ 236, upheld the High Court’s decision that shop managers were employees of BATA due to the considerable control which the company had over the shop managers.
  • In this case, there was no relationship of employer and employee between the BATA and the salesman employed by the shop managers of the company.
control test18
Control Test
  • As per the agreement between the company and the managers, the latter were given authority to employ assistants and it was stated that the managers would be responsible for payments under the EPF ordinance.
  • However a couple of cases considered the control test not conclusive (CASSIDY v MINISTRY OF HEALTH [1951] 2 KB 343 and MOREEN v SWINTON and PENDLEBURY BOROUGH COUNCIL [1965] 1 WLR 576)
intergration test
Intergration Test
  • Hence they turned to the integration tests. The integration test sees if the worker is ‘part and parcel’ of the business organization.
  • In STEVENSON, JORDAN and HARISSON LTD v MACDONALD and EVANS [1952] 1 TLR 101 , Dening LJ opined that under a contract of service, a man is employed as part of the business and his work is done as an integral part of the business, while under a contract for services, his work, although done for the business, is not integrated into it but only an accessory to it.
integration test
Integration Test
  • Denning LJ gave an illustration concerning a captain of a ship (employee of the ship owners) and the pilot who boards the ship only to steer it safely to a harbour (an essential service but not one which makes the pilot an integral part of the ship owners business).
control integration tests
Control & Integration Tests
  • Wan Suleiman FJ employed the above tests

(both control and integration test) in EPF Board v MS Ally & CO. Ltd [1975] 2 MLJ 89.

  • The Federal Court held that the working assistants who managed the business of MS Ally & Co, was rewarded by a share of the profits, as they were employees of MS Ally since there was sufficient control over the working assistants.
multiple test
Multiple Test
  • Mckenna J in READY MIXED CONCRETE v MINISTER of PENSIONS [1968] 2 QB 497, derived another test known as multiple tests.
  • The Plaintiff was in the business of making and selling ready mixed concrete. The Company had engaged an independent contractor to deliver concrete to customers but that contract was terminated and the Plaintiff decided to introduce a scheme whereby the concrete was to be delivered by the owner-drivers working under writtencontracts.
multiple test23
Multiple Test
  • The owner-drivers entered into a hire purchase agreement with the Plaintiff to purchase a lorry but the mixing equipment on the lorry is still owned by the Plaintiff
  • The Plaintiff later wish to know on what was the status of one of the owner, Mr Latimer.
  • The Minister replied that Latimer was employed under a contract of service but, on appeal to High Court, they held that Latimer was running a business of his own.
multiple test24
Multiple Test
  • This case was later applied in CASIO (M) Sdn Bhd v Wahab Tuan Idris [2110] 2 ILR 117.
  • The elements are ;-
  • a) did the worker undertake to provide his/her own work and skill in return for remuneration?
  • b) was there a sufficient degree of control to enable the worker fairly to be called a servant?
  • c) were there any factors inconsistent with the existence of a contract of service?
  • d) which would definitely negate the existence of a master/servant relationship. If there are not, then there is a presumption that, because the worker could be a servant, he should be so considered
economic reality test
Economic Reality Test
  • The recent test is known as the Economic Reality/Entrepreneur Test where it focuses on the inconsistency of seeking a profit from doing the work as an employee.
  • In Market Investigation Ltd v Minister of Social Security [1969] 2 WLR 1, Cooke LJ nearly made the economic reality test as the standing test today, however he still recognizes the previous test as relevant.
  • This test offers deeper advantages whereby the employer and worker have dressed up a master/servant relationship in the essence of a contract for service.
mutual obligation test
Mutual Obligation test
  • Although the ‘economic reality test’ is widely accepted, a further test came about namely ‘mutual obligation test’ whereby; -
  • a) the relationship of employer and employee cannot exist unless the employer perceives and acts on an obligation to supply work
  • b) and the worker feels obliged to undertake any work offered
terms and conditions in contract of service
Terms and Conditions in Contract of Service
  • A contract of service may be oral or in writing, but under Rule 5 (b) and 8 Employment Regulations 1957 the following terms must be given to an employee in writing on or before the commencement of his employment ;
  • i) name of employee/NRIC
  • ii) occupation or appointment
  • iii) wage rates (excluding allowances)
  • iv) allowances payable and rates
  • v) rates for overtime work
terms and conditions of contract of service
Terms and Conditions of Contract of Service
  • vi) other benefits
  • vii) agreed normal hours of work per day
  • viii) agreed period of notice of termination of employment or wages lieu
  • ix) annual leave
  • x) wage period
slide29
Other optional clauses;-
  • i) transferability
  • ii) restrain of trade
  • iii) IP rights
  • iv) Confidential Information & Trade Secrets
transferability clause ladang holyrod v ayasamy manikam 2004 2 clj 697
Transferability Clause;-Ladang Holyrod v Ayasamy Manikam [2004] 2 CLJ 697
  • The Respondents were told to transfer to a another division estate but they refused and told the Appellants to pay them termination and lay-off benefits pursuant to the Employment (Termination and Lay-Off Benefits) Regulations 1980.
  • Based on the facts, there was no written contract of service between the parties but there was a collective agreement.
slide31
The Court refered to Soon Seng Cement Products S/B v Non-Metalic Mineral Products Manufacturing Employees Union [1996] 1 ILR 414, where its established law under s13 Industrial Relations Act 1967, whereby the company has the right to transfer its employees within the organisation as long it is not a detrimental change of the employee with regards to the terms of the employment
slide32
The power to transfer, according to Ghaiye’s Misconduct in Employment at pg 238 ‘......the right to transfer is an implied right therefore no express term is required as it even exist in the absence of a contract.
  • This was found in various decisions:
  • Kesatuan Kebangsaan Pekerja-pekerja Ladang v Kesatuan Pekerja-pekerja di dalam Kesatuan Sekerja [1992] 2 ILR 326.
  • Georgetown Pharmacy (M) Sdn Bhd v NUCW [1992] 2 ILR 377.
slide33
The transfer is subjected to the following restrictions;-
  • a) nothing contrary in the employment terms
  • b) management acted bona fide and in the interest of business
  • c) management is not influenced by an indirect motive
  • d) transfer is not made for the purpose of harassing and victimizing the workmen
  • c) transfer does not involve a change in the conditions of service
slide34
In considering the facts and circumstances, the Respondents contended that it is another 5km and additional 15 mins travelling time from the main division estate.
  • The Court of Appeal HELD that, the Appellant has acted in accordance with the above principles hence payment of indemnity is set aside.
restrain of trade wrigglesworth v wilson anthony 1964 mlj 269
Restrain of Trade WRIGGLESWORTH v WILSON ANTHONY [1964] MLJ 269.
  • The Plaintiff claimed an injunction to restrain the Defendant from practicing as an advocate and solicitor within a 5 mile radius from Kota Bharu for 2 years.
  • Clause 8 of the agreement between the parties stated that..... the Defendant shall not for a period of two(2) years after termination of his engagement by the Plaintiff practice as or carry on the business or profession of an advocate and solicitor within a radius of five(5) miles from Kota Bahru Town without first obtaining the written consent of the Plaintiff......
restrain of trade wrigglesworth
Restrain of Trade Wrigglesworth
  • The Plaintiff argued that s28 Contracts Act 1950 provides that any clause who restraints anyone from exercising any trade, business or profession, is void.
  • The Court opined, based on s28 Contract Act 1950, with respect of the 3 exceptions, anyone restraint from exercising a lawful profession is void, hence the Defendant, as a barrister can practice his profession in Malaysia.
  • HELD, the Plaintiff action must fail as any desire to restraint the Defendant is illegal and void.
restrain of trade stamford college group v raja abdullah raja othman 1991 2 clj 167
Restrain of Trade STAMFORD COLLEGE GROUP v RAJA ABDULLAH RAJA OTHMAN [1991] 2 CLJ 167
  • An agreement between the Defendant and the Plaintiff, contained a clause which prohibited the Defendant from working for 2 years in any other Company or Institutions as a lecturer or tutor without the consent of the Plaintiff.
  • The Defendant is also prohibited from utilizing any confidential information acquired during employment.
restrain of trade stamford college group
Restrain of Trade STAMFORD COLLEGE GROUP
  • The Defendant argued that the restraint clause goes against s28 Contracts Act 1950.
  • The Court refered to cases such as Wrigglesworth and Pertama Cabaret Nite Club v Roman Tham and concluded that the injunction is not meant to restrict the method of practising but literally practising as an advocate and solicitor.
restrain of trade stamford college group39
Restrain of Trade ;-STAMFORD COLLEGE GROUP
  • HELD, the balance of convenience favors the Defendant and if the injunction continues, the Defendant will face a tough time making a living hence the injunction is set aside.
intellectual property rights
Intellectual Property Rights
  • Protection of intellectual property rights and Confidential information:
    • By employee from employers in course of employment
    • By employee for employers in course of employment
intellectual property rights polygram records sdn bhd v the search 1994 1 lns 205
Intellectual Property Rights: Polygram Records Sdn Bhd v The Search [1994] 1 LNS 205
  • The Second contract between the parties contained certain amendments made ie.
  • Clause 6(v) of the agreement states that the group cannot perform with anyone for 2 years without prior consent of the Polygram.
  • The restrain applies after expiration and also during the currency of the contract.
  • S28 Contracts Act 1950 deals with restrain of trade hence the covenant containing exclusive recording right during the contract, does form as a restraint as s28 only deals with post contract and not during the contract
intellectual property rights polygram records
Intellectual Property Rights Polygram Records
  • The present action brought by Polygram is breach of contract and applying for an injunction to restrain the Group (D1-D5) and their Company(D6) from entering any contract with other recording labels, distribution of their songs and any recordings, sales, promotion, etc
intellectual property rights polygram records s b
Intellectual Property Rights;- Polygram Records S/B
  • The Court HELD that, Clause 6(v) of the agreement acts during the currency of the contract and post contract as well, hence the clause is void.
confidential information
CONFIDENTIAL INFORMATION
  • Confidential information will be protected if:-
  • the information is not public property and has a confidential quality to it
  • the information is imparted in circumstances which give rise to an obligation by the recipient to respect the confidential status of the information.
  • the recipient uses the information in an unauthorized manner to the detriment of the party communicating it.
confidential information45
CONFIDENTIAL INFORMATION
  • Confidential information includes ;
  • trade secrets (FACCENDA CHICKEN v FOWLER),
  • manufacturing processes,
  • secret formula (YEOHATA IND v COIL MASTER),
  • business strategies (CENDANA MAJU v APPAROO SINNIAH [2002] 3 ILR 507),
  • status of on-going negotiations with the customers (SCHMIDT SCIENTIFIC v ONG HAN SUAN)
employees duties in relation to confidential information
Employees duties in relation to confidential information
  • The duty of good faith or fidelity requires the employee not to disclose any confidential information gained in the course of his employment
  • An action by an employer to restrain a former employee from using confidential information belonging to the employer is not a restraint of trade as its based on the employee’s breach of duty of fidelity to his employer.
trade secrets
Trade Secrets
  • Trade secret:
    • Implied obligation of confidentiality
    • Information acquired during course of employment
  • Inventions
trade secrets cendana maju sdn bhd v apparoo sinniah 2002 3 ilr 507
Trade Secrets:CENDANA MAJU SDN BHD v APPAROO SINNIAH [2002] 3 ILR 507
  • The Defendant was accused of divulging the Plaintiff’s secrets to the competitor.
  • According to Faccenda Chicken v Fowler [1986] 1 ALL ER 617, an employee of the company, was bound by his implied good faith not to use or disclose for the duration of his employment, confidential information gained in the course of his employment
trade secrets cendana maju sdn bhd
Trade SecretsCENDANA MAJU SDN BHD
  • Thus applying the above principle, the claimant in this case, had no right to or disclose the Plaintiff’s confidential information on its pre-cast building system to ATUS, which was the Company’s competitor at the material time.
  • At the same time, the claimant had in his possession costings and documents of other projects, which he was not involved and had no authority to possess them.
  • HELD, the Defendant’s dismissal was proven as he was found divulging trade secrets to the competitor.
trade secrets schmidt scientific sdn bhd v ong han suan ors 1998 1 clj 685
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD v ONG HAN SUAN & ORS [1998] 1 CLJ 685
  • The contracts of employment between the Plaintiff and the 2nd to 4th Defendant contained a fidelity clause which imposed an obligation on the 2nd to 4th Defendant not to have any interest in any business similar to the Plaintiff’s business and to keep confidential all information about the Plaintiff’s dealings, transactions, and financial matters.
trade secrets schmidt scientific sdn bhd
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • The Plaintiff applied for an injunction to restrain the 5th Defendant from using or disclosing any trade secrets of the Plaintiff and soliciting orders from the Plaintiff’s customers.
  • An injunction to restrain the 1st to 4th Defendants from disclosing to the 5th Defendant any confidential information and/or trade secrets of the Plaintiff.
trade secrets schmidt scientific sdn bhd52
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • An order that the Defendants deliver up the confidential documents of the Plaintiff
  • Defendant argued that the confidential documents, in order for it to be protected, the product has to be of unique intellectual work by the Plaintiff.
trade secrets schmidt scientific sdn bhd53
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • HELD, the duty of good faith or fidelity does not only prohibit an employee from misusing or disclosing information whilst still in the employer’s employ but also prohibits the employee from using any confidential information obtained during his employment without the employer’s consent for his own or someone else’s use after the employment contract ends.
trade secrets schmidt scientific sdn bhd54
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • If there exists a confidential relationship, then it can be inferred that an implied contract arising out of that confidential relationship.
  • To succeed in a breach of confidence, the Plaintiff must show that the information sought to be protected is ;-
    • of a confidential nature
    • was communicated in circumstances importing an obligation of confidence
    • was used in an unauthorized way to the detriment of the Plaintiff
trade secrets schmidt scientific sdn bhd55
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • Trade secrets is not only limited to manufacturing processes or secret formulas but extends to information relating to customers, suppliers, cost prices and the specific needs and requirements of the customers
  • the method of compilation of the lists of customers, their specific needs and cost prices was confidential even if the method of arriving at the selling price of the equipment was neither a unique intellectual work nor ingenious.
trade secrets schmidt scientific sdn bhd56
Trade SecretsSCHMIDT SCIENTIFIC SDN BHD
  • The allegation of restraint of trade failed as the Plaintiff was not attempting to restrain the Defendants from entering into the same trade but from using or disclosing confidential information and/or trade secrets of the Plaintiff to the detriment of the Plaintiff.
trade secrets yeohata industries sdn bhd v coil master sdn bhd 2001 6 clj 418
Trade SecretsYEOHATA INDUSTRIES SDN BHD v COIL MASTER SDN BHD [2001] 6 CLJ 418
  • Interlocutory injunction to restrain disclosure of confidential information
  • Plaintiff’s alleged that the Defendants has unlawfully used the confidential relating to the production, operation and marketing of the Yeohata to profit for themselves by manufacturing and selling imitation machines (‘Coilmasters MK1)
trade secrets yeohata industries sdn bhd
Trade SecretsYEOHATA INDUSTRIES SDN BHD

5 serious triable issue:-

  • whether the process in the development of the Yeohata was capable of being patented and whether Coilmaster MK1 was an imitation of the Yeohata
  • whether the Defendants were entitled to make use of the confidential information for their private advantage
trade secrets yeohata industries sdn bhd59
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • whether the misrepresented by the defendants was fraudulent and misleading
  • whether the Defendants discharged their duty of good faith and fidelity
  • whether there was a conspiracy to injure the Plaintiff’s business.
trade secrets yeohata industries sdn bhd60
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • The Defendant is the managing director of Moscoil Ent Sdn Bhd and is alleged to have acquired confidential information relating to customers portfolio, marketing strategy, supply of materials, etc.
  • The 3rd Defendant was the engineer and also acquired technical information, know how, source of manufacturing materials, etc.
trade secrets yeohata industries sdn bhd61
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • The Plaintiff’s alleged that the Defendant’s have unlawfully made use of the confidential information and have unlawfully made profit for themselves to the detriment of the Plaintiffs by the manufacture and selling of the imitation machines.
trade secrets yeohata industries sdn bhd62
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • 1st criteria:-
  • First issue- invention capable of being patented
  • Second issue- in the course of development, Plaintiff imparted confidential information to the Defendant thus whether Defendants are entitled to make use of the information for their private advantage whilst acting as the managing director for MESB.
trade secrets yeohata industries sdn bhd63
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • Third issue- Defendants unlawfully made use of the confidential info and unlawfully made profits for themselves to the detriment of the Plaintiff’s by the manufacture and selling an imitation machine.
  • Fourth issue- whether the 2nd and 3rd defendants have discharged their duty of good faith and fidelity.
  • Its trite law that duty of good faith does not only prohibit an employee from misusing or disclosing information whilst still in the employer’s employ but
trade secrets yeohata industries sdn bhd64
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • also prohibit the employee from using any confidential information obtained during his employment without the employer’s consent for his own or someone else’s use after the employment contract
  • Fifth issue- conspired to injured the Plaintiff by not disclosing about the incorporation
trade secrets yeohata industries sdn bhd65
Trade SecretsYEOHATA INDUSTRIES SDN BHD
  • 2nd & 3rd criteria
  • Defendants submitted that the nature of the injunction amounted to a restrain of trade on part of the Defendants.
  • HELD that the Plaintiff’s are not trying to restrain the Defendants from trading in mosquito coil making machine but from using or disclosing confidential information and or trade secrets of the Plaintiff to the detriment of the Plaintiff
injunction to enforce express or negative covenants
INJUNCTION TO ENFORCE EXPRESS OR NEGATIVE COVENANTS
  • S20(1)(b) and S54(f) Special Relief Act 1950 prevents the Court from enforcing a personal service contract either by Specific Performance or injunction
  • But S55 enables the Court to enforce, by an injunction, the express or implied negative undertakings of a contract containing both positive and negative stipulations
injunctions pertama cabaret nite club v roman tham 1981 1 mlj 149
Injunctions PERTAMA CABARET NITE CLUB v ROMAN THAM [1981] 1 MLJ 149
  • The Defendant agreed not to sing anywhere in Kuala Lumpur for a period of 3 months from the date of termination.
  • The Court approved the interim injunction until the trial date.
  • The reason behind this is if the injunction was not approved, then the Defendant will take advantage and perform elsewhere or even return back to Hong Kong.
  • HELD, an interim injunction was granted to restrict the Defendant from performing anywhere in Kuala Lumpur excluding the Plaintiff’s club.
injunctions pertama cabaret nite club
Injunctions PERTAMA CABARET NITE CLUB
  • S55 illus (c) was mentioned here whereby the respondent agreed not to sing anywhere else for a certain period
  • together with this, LUMLEY v WAGNER [1979] 1 CH 227, The contract here also contained both positive and negative stipulations i.e. Not to sing for anyone else during the period of contract.
  • WILLIAM ROBINSON & CO v HUER [1892] 2 CH 451, Defendant agreed to devote his whole time to the Plaintiff’s company and during his engagement, he is not to engage in any business relating to goods of any description made or sold by the company
injunctions pertama cabaret nite club69
Injunctions PERTAMA CABARET NITE CLUB
  • WARNER BROS PICTURES v NELSON [1937] 1 KB 209, Defendant agreed with the Plaintiff to perform as an actress for a certain period for the company and during that period of engagement not to render similar services for any other motion picture or stage production
injunctions pertama cabaret nite club70
Injunctions PERTAMA CABARET NITE CLUB
  • Its clear from the above cases that the Defendants were prevented from breaking their express negative agreements by an injunction
  • They fall within s55(c) SRA as the injunction orders them to perform their negative covenants
injunctions pertama cabaret nite club71
Injunctions PERTAMA CABARET NITE CLUB
  • it must be noted that although the above contracts were breached, the employers did not elect to rescind the contracts nor did they failed to perform their obligations, hence they clearly fulfilled the proviso to s55 entitling them to enforce their negative undertakings by an injunction
certact pte ltd v tang siew choy ors 1991 4 clj 716
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • D1 and D2 were former employees of the Plaintiffs who had access to confidential information of the Plaintiff’s products, marketing strategies, etc.
  • Its alleged that D1 D2 breach their contract of employment or fiduciary duty or statutory obligation under s157(2)CA 1965
  • the 3 D had unlawfully conspired to cause harm to the Plaintiffs and unless restrained they would repeat the wrongful acts, causing Plaintiffs incalculable loss, prejudice and irreparable injury
certact pte ltd v tang siew choy ors 1991 4 clj 71673
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • The Plaintiffs were granted an injunction but the Defendants argued that the restraining order amounted to a restrain in trade, they there was no secret or confidential information and that the scope of the injunction was too vague and wide
  • D1 had access to highly confidential information and/or trade secrets
  • During and after contract of employment, D must not misuse any confidentiality information to any 3rd party.
  • D2 is not to engage in any activity contrary to the interest of CERTACT
certact pte ltd v tang siew choy ors 1991 4 clj 71674
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • Unless restrained, D1 would induce other suppliers and deliberately allow the stock position to reach unprecedented low levels
  • While still in employment, D1 D2 had divulged/unlawfully made use of confidential information and/or trade secrets which were entrusted to them as the employees of CERTACT to promote their own interests including the D3, Axiom.
certact pte ltd v tang siew choy ors 1991 4 clj 71675
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • The Court, on deciding the issue of restrain of trade, stated that it only;-
  • Restraints the Defendants from divulging or making use of confidential information and trade secrets which both D1 D2 had acquired in the course of their employment
  • Restraining them from interfering with existing contractual arrangements between the Plaintiffand their suppliers and customers
certact pte ltd v tang siew choy ors 1991 4 clj 71676
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • There was no restraint of trade clause in the respective contracts of employment which prohibited both D1 D2 from starting a business in the same trade as the Plaintiff or from being employed by another who was engaged in a similar trade.
  • Hence the interim injunction only prohibited the Defendants from doing certain specific acts.
certact pte ltd v tang siew choy ors 1991 4 clj 71677
CERTACT PTE LTD v TANG SIEW CHOY & ORS [1991] 4 CLJ 716
  • The Court was satisfied of all the above criteria

in relation the case before them.

  • The Court held that, in view with the conditions l

aid down in AMERICAN CYANAMID v ETHICON

LTD [1975] 1 ALL ER 504, the Plaintiffs have

satisfied all requirements, ie. The plaintiffs would be

irreparably damaged unless the interim injunction

against the Defendants should continue and the

balance of convenience was in favor of the Plaintfifs.

employment manual
Employment Manual
  • Some terms and conditions are in Employment of the company eg calculation of retirement benefits
  • Most Employment would retain the right to vary such terms from time to time.
variation of contract
Variation of Contract
  • Haji Ismail Haji Tar v Brunei Shell Petroleum Co Sdn Bhd [1988] 2 CLJ 605
  • Amendment made to the term of services was a removal of a right to redundancy payment.
  • There was clause for Shell to in their discretion vary such terms from time to time and so the removal of the payment was validly made.
slide80
In Lam Yuk-Ming & Ors v AG of Hong Kong [1980] HKLR 815
  • It was held that the Govt reserves the right to alter unilaterally terms and conditions of employment because clause reads: ‘…the Govt reserves the right to alter the terms and conditions as may become necessary from time to time.”
conclusion
Conclusion:
  • Contracts may clearly delineate and describe rights and obligations of employers and employees.
  • However mutual trust and confidence has to go beyond the letter of the law to the spirit of the dynamic relationship between the parties.
conclusion82
Conclusion:
  • In any employment relationship both employer and employee must appreciate that they are there for the common good of the corporation they serve.
  • Trust may be engendered by clear written terms but cannot end with it.
  • Rights and obligations have to be worked out in the rough and tumble of a competitive environment where the corporation operates its business.