Introduction
For many years, in answering the question of whether group companies may be joined as parties in unfair dismissal proceedings, the Industrial Court was perceived as a forum prepared to look beyond corporate form in order to ensure that employment remedies were effective in practice. Where the named employer was insolvent, wound up, or commercially defunct, employees frequently sought to substitute or join related corporate entities, for instance, holding companies, subsidiaries, or group affiliates, on the basis that justice demanded a solvent party remain before the Court. That approach, while rooted in the protective philosophy of labour law, developed into an established practice following the Court of Appeal’s decision in Asnah Ahmad v Mahkamah Perusahaan Malaysia & Ors (“Asnah”).[1]
The recent Court of Appeal decision in Hubline Berhad v Intan Wazlin Ab Wahab & Ors (“Hubline”)[2] calls for a re-examination of that long-standing practice and marks a decisive recalibration of that position. While affirming the Industrial Court’s procedural powers under the Industrial Relations Act 1967 (“IRA 1967”), the Court of Appeal made clear that substitution and joinder applications must remain anchored to orthodox principles of company law, rather than being driven by the practical enforceability of a potential award alone.
The Statutory Starting Point and the Court’s Early Flexibility
The Industrial Court’s power to add, strike out, or substitute parties is found in Section 29(a) of the IRA 1967.[3] On its face, the provision is broadly framed and procedural in nature, and does not articulate substantive criteria governing when a non-party may properly be brought into proceedings. When read together with Section 30(5) of the IRA 1967,[4] which requires the Court to act according to equity, good conscience, and the substantial merits of the case, Section 29(a) of the IRA 1967 was historically understood as permitting a pragmatic and flexible approach to the identification and inclusion of parties in proceedings.
Earlier authorities accepted that, in appropriate circumstances, the Industrial Court could look beyond strict contractual privity to ensure that its awards were not rendered ineffective by corporate restructuring or insolvency.
This inclination can be traced to decisions such as Hotel Jaya Puri Bhd v National Union of Hotel, Bar & Restaurant Workers[5] where the Court recognised the economic realities underlying employment relationships. Comparative jurisprudence, particularly the Indian decision of Hochtief Gammon v Industrial Tribunal,[6] also influenced Malaysian courts in accepting that joinder may be justified where the presence of an additional party was necessary for effective adjudication. That reasoning was later adopted locally in Harris Solid State (M) Sdn Bhd v Bruno Gentil Pereira[7] reinforcing the view that joinder could be employed to prevent awards from becoming hollow.
The Earlier Approach: Asnah and the Expansion of Joinder
Against this backdrop, the Court of Appeal’s decision in Asnah became the cornerstone of the Industrial Court’s modern approach to substitution and joinder. In Asnah, the Court endorsed what came to be understood as a relatively low threshold for joinder, focusing on whether there existed a reasonable factual or legal nexus between the proposed party and the industrial dispute.
Significantly, the Court held that the party sought to be joined need not be the formal employer, and that it was sufficient at the joinder stage to show a prima facie nexus, with liability to be determined later. In practice, this led to related corporate entities being joined on the basis of common shareholding, overlapping directors, shared premises, or group branding.
Over time, however, this approach began to blur the distinction between procedural joinder and substantive liability, and increasingly strained fundamental principles of company law.
The Facts and Outcome in Hubline
Hubline arose from retrenchment claims brought by employees of operating companies within a corporate group. When the employing company was wound up, the claimants applied to substitute the holding company and to join another group entity, relying primarily on common shareholding, common directors, and shared addresses. The Industrial Court allowed the application, and the High Court upheld that decision on judicial review.
On appeal, the Court of Appeal took a markedly different view. It allowed the appeals and subjected the prevailing joinder jurisprudence to close scrutiny. Central to its reasoning was the reaffirmation of the doctrine of separate legal personality, as established in Salomon v A Salomon & Co Ltd,[8] which recognises that a company is a legal person distinct from its shareholders, directors, and related entities. That principle, the Court emphasised, applies with equal force in industrial adjudication.
The Current Position After Hubline: Re-drawing the Limits of Section 29(a)
The Court of Appeal clarified that Section 29(a) of the IRA 1967 was never intended to operate as a mechanism to bypass corporate separateness merely because an employer is insolvent or unable to satisfy an award. Joinder, the Court held, is procedural in nature and cannot be used to retrospectively re-engineer the identity of the employer or to create a new debtor.
The Court of Appeal also rejected the proposition that a general “nexus” based on corporate group relationships is, without more, sufficient to justify joinder. The Court held that common directors, shareholders, or business addresses are ordinary features of corporate organisation and do not, by themselves, displace the principle of separate legal personality. The proper inquiry, the Court emphasised, must be directed at whether the proposed party was legally responsible for the termination giving rise to the industrial dispute. In the absence of such responsibility, joinder cannot be invoked as a means of extending liability beyond the true employer.
Where joinder is, in substance, an attempt to pierce the corporate veil, the applicant must satisfy the strict and exceptional criteria recognised in company law, such as fraud, sham arrangements, or misuse of corporate structures. In drawing this distinction, the Court made clear that joinder powers under Section 29(a) of the IRA 1967 cannot be used merely to secure the enforceability of an award, but must be grounded in legal responsibility for the termination itself, a position consistent with the approach in Co-operative Central Bank Ltd v Rashid Cruz Abdullah & Ors And Other Appeals[9] and the caution expressed in Law Kam Loy v Boltex Sdn Bhd.[10]
Practical Implications for Employers and Corporate Groups
For employers and corporate groups, Hubline provides welcome clarity and predictability. It significantly reduces the risk that holding companies or affiliates will be drawn into Industrial Court proceedings solely because they sit higher up the corporate chain or possess greater financial resources.
The decision reinforces the importance of maintaining proper corporate separateness in employment arrangements. Clear employment contracts, accurate identification of the employing entity, and disciplined observance of corporate boundaries are no longer merely best practices; they are critical safeguards against unintended exposure.
At the same time, Hubline does not immunise corporate groups from scrutiny altogether. Where there is evidence that corporate structures have been abused to disguise the real employer or to evade statutory obligations, the Courts retain the power to pierce the corporate veil, consistent with the broader principles affirmed by the Federal Court in Ong Leong Chiou v Keller (M) Sdn Bhd.[11]
A Recent Illustration in Practice
This stricter approach is already being reflected in subsequent Industrial Court proceedings.
In a recent matter in which we acted for Majlis Agama Islam Wilayah Persekutuan (“MAIWP”), former employees of a subsidiary sought to join MAIWP to the proceedings despite the absence of any employment relationship or involvement in the impugned termination. While the Court noted that MAIWP is a statutory authority and that its amenability to the Industrial Court’s jurisdiction is constrained by Section 52 of the IRA 1967,[12] the joinder application was in any event untenable on first principles. Applying the framework articulated in Hubline, the Court held that MAIWP is a separate legal entity and that there was no legal basis to extend liability beyond the actual employer. The joinder application was therefore rejected.
Conclusion
Hubline marks a clear recalibration of the Industrial Court’s approach to substitution and joinder. In the context of unfair dismissal proceedings involving corporate groups, the decision provides a more principled answer to the question of when, if at all, group companies may properly be joined as parties. While the Court remains guided by fairness, procedural powers under Section 29(a) of the IRA 1967 cannot be used to sidestep corporate separateness or to extend liability based solely on group connections or enforceability concerns.
Going forward, joinder applications will turn on legal responsibility for the impugned termination, not corporate proximity. Post-Hubline, the focus is no longer on whether a related entity can satisfy an award, but on whether it can properly be said to be legally answerable for the dismissal itself. For corporate groups, the decision underscores the importance of disciplined employment structures and clearly defined roles in managing exposure to industrial disputes.
For further information, please contact:
Melinda Marie D’Angelus, Partner, Azmi & Associates
melinda.Dangelus@azmilaw.com
- Asnah Ahmad v Mahkamah Perusahaan Malaysia & Ors [2015] 4 MLJ 613.
- Hubline Berhad v Intan Wazlin Ab Wahab & Ors [2025] CLJU 2677.
- s 29(a), Industrial Relations Act 1967.
- s 30(5), Industrial Relations Act 1967.
- Hotel Jaya Puri Bhd v National Union of Hotel, Bar & Restaurant Workers [1980] 1 MLJ 109.
- Hochtief Gammon v Industrial Tribunal AIR 1964 SC 1746.
- Harris Solid State (M) Sdn Bhd v Bruno Gentil Pereira [1996] 4 CLJ 747.
- Salomon v A Salomon & Co Ltd [1897] AC 22.
- Co-operative Central Bank Ltd v Rashid Cruz Abdullah & Ors and Other Appeals [2004] 1 MLJ 626.
- Law Kam Loy And Anor v. Boltex Sdn Bhd and Others [2005] 3 CLJ 355.
- Ong Leong Chiou & Anor v. Keller (M) Sdn Bhd & Ors [2021] 3 MLJ 622.
- Industrial Relations Act 1967, s 52.
