Transfer: Choice or Lawful Order?

Transfer, is it a choice or lawful order?

It is well established that the transfer of employees from one post to another, from one department to another, from one branch to another or from one company to another within the group is management prerogative. This prerogative of management for transfer due to business reason or operational efficiency are provided in Industrial Relations Act, Section 13(3)(b).

Therefore, transfer of an employee is a lawful order by the employer and is not a choice for the employee to accept or refuse. Refusal to obey the order of transfer is tantamount to wilful disobedience and insubordination. This then may lead to warning and dismissal of the employee if the employee persists on refusal for the transfer.

When there is express clause in employment contract stating the employee is transferable, it is no longer an excuse to refuse a transfer. In the event, there is nothing stated in the employment contract with regards to transfer, the employee is still transferable to meet business and operational needs as it is management prerogative. The only time the employee is not transferable is when there is a clause in the employment contract stated explicitly that the employee is not transferable which is a rear case.

The duty of an employee to obey a lawful transfer order is equally trite. The courts have also consistently held that even if a transfer is perceived to be unreasonable, so long as it is lawful and within the scope of employment, the employee is duty-bound to comply.

B.R. Ghaiye in his book "Misconduct in Employment," quoted as follows with regards to transfer:

"The power to transfer is however subject to the following well recognized restrictions; (a) There is nothing to the contrary in the terms of the employment; (b) The management has acted bona fide and it is in the interests of its business; (c) The management is not actuated by any indirect motive or any kind of mala-fide; (d) The transfer is not made for the purpose of harassing or victimizing the workman; (e) The transfer does not involve a change in the conditions of service."

Southern Investment Bank Bhd/Southern Bank & Anor v. Yap Fat & Anor [2017] 8 CLJ 159 the Court of Appeal in examining the issues relating to reassignment of duties, held inter alia: "The law recognises that in pursuit of its legitimate interest, the management has the prerogative to assign or transfer employees from one area of operation to another provided that there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This is a privilege inherent in the employer's right to control and manage his enterprise effectively. For this reason, the courts often decline to interfere in legitimate business decisions of employers. In fact, Industrial relations laws discourage interference in employer's decision concerning the conduct of their business."

Conclusion:

Employees are transferable unless the contract of employment stated otherwise. Refusal to obey lawful order of transfer is wilful disobedience and insubordination. The employer has the right to terminate the employee who refuse to be transferred after warning given.