Thursday, 21 December 2017

Bitcoin and GST in Malaysia – Cryptic Times Ahead?

Dave 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. He also writes extensively on GST in Malaysia and other taxation issues in New Zealand.  He is a consultant for Wolters Kluwer on Malaysian GST. He can be reached at davetaxnz@gmail.com. 


Cryptocurrency, a form of digital currency is the new ‘digital money’ of the millennium. It is cash that you cannot see nor touch as it is not tangible. However, it is in the internet, mostly stored in a digital wallet and is being traded in many countries. Cryptocurrency is created by ‘miners’ using high powered computers using massive amounts of electricity.

If you have not heard about this digital currency, then you are lagging behind. It is the buzz word today with everyone jumping onto the bandwagon, and some not knowing what they are getting into.

Punters predict it will change the financial landscape completely, sceptics, on the other hand, believe it would not last, akin to the Dutch Tulip Mania in the 16th century. Tulip mania was the first recorded financial bubble. Tulips became fashionable and there was a mad rush to purchase tulips – causing their prices to increase to monumental levels which after a period, dramatically collapsed. Many are cautious – with one of them being Richard Harris, who wrote a damning article equating bitcoins to speculative derivatives and why it could trigger the next global financial crash.

Some countries have banned this form of currency while others have gone ahead to recognise it, amending the law and regulations to suit. 

My intention in this article is not to advise potential investors. I do not have a crystal ball for that. Instead, this article discuss GST options for the Government to consider in giving life to Bitcoin, which is the best-known cryptocurrency. 

Tuesday, 19 December 2017

The Law on Bonus Payments

Author: Donovan Cheah (Partner) with assistance from Natalie Ng (Intern) (Donovan & Ho)

As the year comes to an end, many companies are starting to offer bonuses to reward employees for achieving specific goals, or for overall good performance. However, bonuses are normally described as “discretionary”, which is understood to mean that the employer has a right to determine whether or not to grant a bonus that particular year, or how much bonus should be given.



The recent case of All Malayan Estates Staff Union v Revertex (Malaysia) Sdn Bhd gives an interesting perspective as to how a Company should exercise its discretion in granting bonus.

Wednesday, 13 December 2017

How to prevent misconduct at the workplace Christmas party

Author: Paul O’Halloran, a partner in the employment and safety team at Colin Biggers & Paisley

In brief — employers should consider risk of and take steps to avoid being held vicariously liable
End of year workplace social functions will soon be upon us. It is now well established that such occasions, even if held outside standard work hours and away from work premises, are sufficiently “connected” to the workplace such that any unlawful behaviour — for example, bullying, fighting or sexual harassment — engaged in by employees at those functions can be the subject of a workplace complaint or litigation.

Vicarious liability in workplace legislation
Most workplace legislation, for example, discrimination and sexual harassment laws, have provisions that allow the employer to be held “vicariously liable” for the conduct of its employees if the employer has not taken reasonable steps to prevent the unlawful behaviour from occurring. These laws usually extend coverage to work corporate events and even parties occurring after official events have ended.



Case examples
Here are some infamous Christmas party litigation cases from the archives:
  • An employee was dismissed after he urinated over the side of a balcony on to diners below at his employer’s Christmas party. Astonishingly, after he was dismissed for the behaviour he lodged a claim alleging his dismissal was unfair!
  • An employee was dismissed for sexual acts in front of several other employees in a hotel room booked by a group of employees, after the end of a Christmas party organised by the employer.
  • Four employees were prosecuted and fined by WorkSafe for breaches of occupational health and safety laws when an employee suffered severe burns at a Christmas party when another employee sprayed paint thinner onto his colleague’s bare torso, which then caught fire as a result of the flame from an already ignited spray can.
  • An employee was injured by a propeller after being pushed off a boat by another employee at a Christmas party. The employer was found liable for the injury.
  • A golf club was held liable for the conduct of its president who sexually harassed a female employee of the club at the end of year Christmas party.
Top 5 take away tips to mitigate legal risks
To ensure your end of year function does not result in workplace complaints and litigation, employers should consider taking the following measures when preparing for and managing end of year corporate functions and events in the workplace:

  1. Ensure that the organisation has in place current policies on equal opportunity, sexual harassment, bullying and workplace health and safety. Issues at Christmas parties generally fall into one of these categories. Policies should be reviewed now for compliance with current judicial expectations, as defective policies will be no defence. The policies should form contractual terms referenced in employment contracts. Circulate and reinforce workplace policies, and the Code of Conduct if you have one, prior to the end of the year.
  2. Ensure responsible service of alcohol. In McDaid v Future Engineering and Communication Pty Ltd [2016] FWC 343, the Fair Work Commission (FWC) held that employers must “take steps” to ensure that they serve alcohol responsibly. As the FWC does not always assume adults can be responsible for themselves, employees and others present should not be allowed to become heavily intoxicated. Consider sending unruly employees home in a taxi before anti-social behaviours develop.
  3. The corporate function should have a designated finish time taking into account the length of time employees have been present. Make sure no one who has been consuming alcohol has to drive home. Provide transport or cab vouchers.
  4. Designate someone to monitor hazards. In Keenan v Leighton Boral Amey NSW Pty Ltd [2015] FWC 3156, the FWC encouraged employers to appoint a manager to supervise the conduct of work events to avoid mishaps. Make sure the designated person is sober and is able to monitor and attend to occupational health and safety hazards at the Christmas party, such as wet floors, broken glass and loose electrical cables.
  5. Remind all staff by email before the Christmas party of the standards of behaviour expected of staff at workplace functions and the disciplinary consequences of failing to meet those standards, as provided in relevant policies. Employees should understand that just because the work function may be outside of standard working hours and may be at a non-work venue, normal workplace standards of behaviour continue to apply.

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!