There has been a practical concern in unfair dismissal cases involving companies within a group structure. What happens if the actual employer is wound up, insolvent, or no longer financially able to satisfy an Industrial Court award? Can the employee then bring in the holding company, sister company, or another related entity simply because they are part of the same corporate group?

This was the concern behind many applications to join or substitute parties in the Industrial Court. The earlier approach, especially after the decision in Asnah Ahmad v Mahkamah Perusahaan Malaysia & Ors [2015] 4 MLJ 613 (“Asnah”)¹ appeared to give the Industrial Court a wider and more flexible hand. If there was some connection between the employer and another company in the group, such as common directors, common shareholders, shared address, or group branding, that related company could potentially be joined first, with liability to be decided later.

From a worker-protection point of view, this made practical sense. The Court wanted to avoid a situation where an employee wins a case, but the award becomes meaningless because the employer no longer exists or has no money.

However, the recent Court of Appeal decision in Hubline Berhad v Intan Wazlin Ab Wahab & Ors [2025] CLJU 2677 (“Hubline”)² has now drawn a much clearer line.

The Case in Brief

The employees in Hubline were employed by companies within a corporate group. After the employing company was wound up, the employees attempted to bring in the holding company and another related company into the unfair dismissal proceedings.

Their argument was based mainly on group connection. They pointed to common shareholding, common directors, and shared addresses. The Industrial Court allowed the application, and the High Court upheld it.

However, the Court of Appeal took a different view.

The Court of Appeal held that the Industrial Court’s power to add, strike out, or substitute parties under Section 29(a) of the Industrial Relations Act 1967 is procedural. It does not allow the Court to ignore basic company law principles. In simple terms, the Court cannot treat a holding company, subsidiary, or related company as the employer merely because it belongs to the same group or appears to have deeper pockets.

What the Court Made Clear

The most important point from Hubline is this: a company remains a separate legal entity from its shareholders, directors, holding company, subsidiaries, and related companies.

This principle may sound technical, but in HR and IR practice, it is very important.

A related company cannot be made a party to an unfair dismissal case merely because:

• it has the same shareholders;

• it shares the same directors;

• it operates from the same address;

• it uses the same group branding;

• it is financially stronger than the employer; or

• it belongs to the same corporate family.

The correct question is not whether the related company can afford to pay an award. The correct question is whether that related company was legally responsible for the termination.

In other words, the focus is now on responsibility, not convenience.

What This Means for HR and Employers

For employers, Hubline brings useful clarity. It reduces the risk of holding companies or related companies being dragged into Industrial Court proceedings simply because the actual employer is insolvent or no longer operating.

However, this does not mean group companies are completely protected in every situation.

If there is evidence that the group structure was abused, or that another company was in fact controlling the employment relationship, giving instructions, issuing termination decisions, or using the employer company as a shell, the Court may still look behind the structure. This is especially so where there is fraud, sham arrangement, or misuse of corporate identity to avoid legal responsibility.

Therefore, the practical lesson is not simply “group companies are safe”. The better lesson is: keep the employment structure clean, consistent, and properly documented.

The Hubline decision does not remove the Industrial Court’s power to add or substitute parties. What it does is place proper discipline around that power. A related company can no longer be joined merely because it is connected, convenient, or financially stronger. There must be a real legal basis to show that the related company was responsible for the dismissal or that the corporate structure was misused.

Practical Lessons for HR Practitioners

From an HR and IR perspective, the Hubline decision is a useful reminder of some basic but often overlooked housekeeping points.

Reference: (1) Hubline Berhad v Intan Wazlin Ab Wahab & Ors [2025] CLJU 2677

(2) Asnah Ahmad v Mahkamah Perusahaan Malaysia & Ors [2015] 4 MLJ 613