Wednesday, 22 November 2017

Secret Recordings: Are they admissible?

Authors: Donovan Cheah (Partner) and Denise Choo (Intern) (Donovan & Ho)
 The advent of technology has seen a plethora of recordings, ranging from your run of the mill song recordings to more insidious uses of the ability to covertly record conversations. When employer-employee disputes arise, it is always tempting to record any conversations that may occur.
We are regularly asked by clients whether they should “secretly” record conversations with the other party as a “safeguard”. Ethics aside, are these recordings even admissible as evidence in the Industrial Court?
The case of Sanjungan Sekata Sdn Bhd v. Liew Tiam Seng [2003] 2 MELR 362 concerned an employer who sought to terminate his employee by relying on a recording made without the knowledge of the employee. The Industrial Court referred to the following requirements (referred to in the criminal case of Mohd Ali Jaafar v. PP [1998] 4 CLJ Supp 208) in order to admit evidence of a tape recording:
          (a) The tape should be run through and found to be clean before the recording was made
          (b) The machine must be in proper working order
          (c) The tape must not be tampered with or altered in any way — it should be established in whose possession the tape was at all times
          (d) The officers (or other witnesses) must have played the tape over after making the recording and heard voices which they can identify
          (e) A transcript should be prepared of the voices, and
          (f) The officers (or other witnesses) should play over the recording and check it with the transcript to identify the voices in the conversation.
In addition to the above matters, there are also several precautionary steps that should be be taken, such as uttering introductory and closing words, breaking the safety tabs after the recording, and placing identification marks on the tapes.
Whilst the recordings in Sanjungan Sekata were held inadmissible as evidence due to its failure to comply with the procedures set out, the 2012 case of Sivakumar R Prumal v. Malayan Racing Association [2012] 1 MELR 717 allowed the recordings to be used as evidence as the party relying on the recording had successfully presented a clear chain of custody. Further to that, evidence on whose voices were on the tape were also submitted to the Industrial Court.



However, the recent years have raised a new aspect to this issue — handphone and digital recordings. The requirements above could almost be considered obsolete when it comes to recording a conversation on your iPhone, since there are no “tapes” to run through to be clean, no “safety tabs” to be broken and there is that troublesome impossibility of placing identifying marks on a digital sound file.
This came to light in a recent 2017 Industrial Court case of Justin Maurice Read and Petroliam Nasional Berhad (Petronas) [Award No. 965/2017] where the employee sought to admit recordings which he had recorded on his phone in secret and then transferred to a pen drive/compact disc. Here, the Industrial Court rejected the application of the requirements in Sanjungan Sekata as the modus operandi in recording the conversations was different. This implies that there could be a difference in the requirements for admissibility depending on the method of recording.
In the Justin Maurice Read case, the Industrial Court ultimately refused to admit the recordings as there was doubt as to the authenticity of the handphone recording. Among the factors considered by the Industrial Court were:
          • the recordings were obtained in an unethical manner
          • the transcripts prepared were not complete as several parts were inaudible, and
          • the employee failed to establish a chain of evidence in respect of the custody of the recordings to eliminate doubt of tampering.
The takeaway is that while courts may view secret recordings as unethical, it can still be admitted as evidence provided it fulfils certain thresholds regarding its authenticity and accuracy. This is in line with the general principle in Malaysia that illegally obtained evidence can still be admissible if it is relevant.
Parties intending to take this as a green light to start surreptitiously recording others in order to collect evidence for a pending case should heed this warning: In the case of Karen Liew Pui Leng v LYL Capital Sdn Bhd [2014] 1 MELR 328, even though the Court allowed the secret recording to be admitted as evidence, the Court assigned minimal weight to the employee’s evidence because she was the one who made the secret recording. The Court found that the employee in making the recording would have obviously prepared relevant questions to leverage her case, whereas the employer would have been oblivious and therefore more truthful and credible when he was being recorded. In dismissing the employee’s claim for unfair dismissal, the Court had harsh words to say about the Claimant’s ethics in making the secret recording:
“The legal maxim that “He who comes to equity must come with clean hands” cannot be applied to the claimant who had appeared in court with her tainted evidence…. These all boil down to the issue of the claimant’s credibility. She had postured her case right from the very beginning when she realised that she would be terminated for underperforming.”

In light of the cases above, perhaps the most important question to be asked when it comes to making secret recordings is not “Can you?” but “Should you?”.

Monday, 13 November 2017

Unfair Dismissal in Malaysia – Is there a need for reform?

Author: Donovan Cheah (Partner, Donovan & Ho)
The article was first published in the March/April 2017 edition of MGCC Perspectives, a publication of the Malaysian German Chamber of Commerce and Industry.

 “The Company has decided to terminate your employment. Pursuant to your employment contract, you are given 1 month’s notice of termination.”


There is no shortage of such brief and curt termination letters in Malaysia. No reasons are provided, and employers commonly believe that compliance with the notice clause is the extent of their legal obligations when it comes to terminating employees.

Tuesday, 7 November 2017

Refusing a Performance Improvement Plan

Author: Donovan Cheah (Partner) (Donovan & Ho)
Employers who are facing difficulties with poor performing employees may opt to place them on a performance improvement plan (or “PIP”). The PIP is an exercise, taking place over a number of weeks or months, and is usually meant to achieve the following objectives:
          • Making the employee aware of their shortcomings
          • Structuring an action plan to allow them to improve their performance, and
          • Giving them clear and measurable goals to achieve.
In the best outcome, the employee understands where they have been underperforming and uses the PIP as an opportunity to rectify their performance to a suitable standard. In the worst case, the employee fails to measure up despite the PIP and is terminated.
Employees who are subject to a PIP understandably don’t view this as a benevolent gesture by their employer. It is very human response to disagree with allegations that one is underperforming. There are cases where an employee refuses to participate in a PIP, alleging that the employer is biased, vindictive or otherwise telling lies about the employee’s performance.
Can an employee refuse to participate in a performance improvement plan?

Tuesday, 31 October 2017

Top 3 Reasons to attend the Wolters Kluwer Malaysian Budget Conference 2018

Let’s face it, budgets come and budgets go. Before a Budget, experts will speculate on what’s going to be announced. On the day itself, there’ll be running commentary on each item announced, whether through traditional media or social media. Post-Budget, the in-depth analysis starts streaming in.

However, at the end of the day, companies have to go beyond just finding out what’s been announced. They have to consider current trends, existing laws and how everything interrelates. Whatever’s announced in Budget 2018 must be put into context.


And that’s where the Wolters Kluwer Malaysian Budget Conference 2018 comes in. Just like the Budget itself, our conference is an annual affair, yet it’s anything but routine. There are plenty of other conferences going on out there, but let me tell you the Top 3 Reasons why you should come to OURS:

1. Extensive coverage: Our conference contains sessions that cover every important topic currently hotly discussed amongst tax professionals. From the broader perspective view of the current economic outlook and Budget 2018 highlights, right down to in-depth discussion of tax and GST audit processes. We look at the latest tax audit trends as well as the ongoing developments of international tax compliance matters.

2. All-inclusive: We get together the best minds from professional practice, the corporate industry AND the academic profession industry to discuss the topics mentioned above. Our priority is to ensure you get quality, substantive discussions from a variety of perspectives and expert viewpoints.

3. Practical and forward-looking: Our conference is focused on practical knowledge, whether it’s finding opportunities, learning how to minimise risk and making every Ringgit count. Look out for tips and tricks as our speakers impart useful guidance on handling the various critical issues that pop up in the tax world.

Just to give you one example, we all know that the Inland Revenue Board of Malaysia (IRB) are constantly looking for ways to boost the government coffers. Naturally, a key approach is to clamp down on non-compliance. As such, tax audits are expected to gain momentum even as we speak.
Fortunately, we’ve made the effort to get the authorities on our side to help us out. Joining us from the IRB in an exclusive session will be Pn Koh Sai Tian, the head of the Large Taxpayers Branch. Together with Soh Lian Seng of KPMG, we expect her to give us valuable insights into how the IRB will go about their audits and their direction. This is one session you cannot afford to miss!

We could go on and on, but if you have never attended this annual event before, you should start now. Get in touch with us now, our Annual Wolters Kluwer Malaysian Budget Conference is an event we are always proud to bring to you, as it is an experience to remember. We hope to catch up with you at this year’s edition!

See you there!

Monday, 23 October 2017

Thoughts for taxing the digital economy

Dave Namasivayam Ananth is a senior lawyer, a former Magistrate and advocate in Malaysia before taking up a position with the Inland Revenue Department in New Zealand as a Prosecutor. He now practises as a Tax Barrister, based in Auckland. He is an expert on Malaysian GST and a familiar speaker on the local Malaysian circuit, spending considerable time in Malaysia with a consulting firm working on GST. He also writes extensively on GST in Malaysia. He can be reached at davetaxnz@gmail.com.


There has been a lot of hype about the digital economy recently.  The Director General (DG) of the Royal Malaysian Customs Department (RMCD) clearly stated on 18 September 2017 that the GST Act 2014 will be amended to capture the GST impact on the digital economy. In New Zealand, this tax, sometimes also called the “Netflix tax”, came into force 1 October 2016. This tax is paid by the consumers of the product and not by the company.

I note the changing nature of doing business – the standard way will eventually give way to the digital economy. Tax collection year-on-year is declining, and that is likely to do with this new e-commerce way of doing business and the permanent establishment requirement. Therefore, we must recognise that GST on digital services is yet another example of digital transformation. It is here to stay and will get more complex as the style of doing business evolves to the next level.  
GST has always been intended as a broad-based tax on the consumer which is intended to cover the vast majority of transactions[1]. Virtual goods are increasingly commonplace (eg, Netflix, Uber, Alibaba, etc.) so they should not be exempt. It should be noted that these companies providing goods did not come up with some cunning tax plan to avoid charging it; they were just operating within the way the rules worked until the recent law change[2]. No one would have thought the rules of the game will change this soon. However, the GST committee, when introducing the first draft of the GST Bill in Parliament in 2009, should have considered the fact that e-commerce was already in place and downloading of software was a common occurrence at that time. Even if that was too early, the drafters could have included it in 2014 when the Bill became law. We have been living in the digital age for some time and the government needs to catch up with times.

Should the government choose to tax digital services, these are some points to be considered:

Monday, 9 October 2017

Talk before you punish, RMCD

Dave Namasivayam Ananth is a senior lawyer, a former Magistrate and advocate in Malaysia before taking up a position with the Inland Revenue Department in New Zealand as a Prosecutor. He now practises as a Tax Barrister, based in Auckland. He is an expert on Malaysian GST, an author and a familiar speaker on the local Malaysian circuit. He writes extensively in Malaysia and New Zealand on taxation. He can be reached at davetaxnz@gmail.com.




The Malaysian Reserve recently published an article on 25 September 2017 highlighting that MLM businesses that do not comply with GST law will be blacklisted and banned from travelling overseas. Dave Ananth muses over the effectiveness of blacklisting errant taxpayers to protect GST collection.


Blacklisting is not the answer unless all avenues have been exhausted. In any tax or revenue system, you will have recalcitrant taxpayers. Revenue laws in Malaysia, just like in New Zealand, have adequate laws to punish and even incarcerate them. However, that approach is changing across Organisation for Economic Co-operation and Development (OECD) countries.

Tuesday, 3 October 2017

If an employee is pregnant or on parental leave, can they still be made redundant?

Author: Lisa Qiu (Lawyer & Registered Migration Agent, Coleman Greig Lawyers)

Recently, the Federal Circuit Court (in Australia - ed) found energy company, BOC, had unlawfully terminated the employment of a pregnant employee when they made her position redundant, two days before she was due to start parental leave.


Caroline Power was to start parental leave on 6 November, 2015, but was made redundant on 4 November, 2015. Ms Power wasn’t the only BOC employee to be made redundant but all other affected employees were made redundant on 12 November, 2015. Although Ms Power’s redundancy was a genuine redundancy, the fact that her termination date was brought forward from 12 November (when she would have been on parental leave) to 4 November, meant that the decision to make her position redundant on the earlier date, was due to the fact that she was pregnant and about to commence parental leave, and was therefore tainted as “adverse action” as it was partly based on illegitimate grounds.