Transfer Clause in Employment Contracts

My main intention of writing this post is to tackle the issue of transfer to another branch/location which was not in existence during the time of the making of the contract.

Let me provide an example to the above scenario.

Company employed Mr. A in year 2010. In 2011, company bought another company called XYZ Co. Now, Mr. A is transferred to XYZ Co. because in his contract of service, the following was stated:

“Company reserves the right to transfer throughout the entire duration of your work here.”

It is commonly known that since the company has the right to transfer, it can mean transfer to anywhere else as long as it is the same company.

The following is the position of the law on this point:

In Metaldek Industries Sdn Bhd v Kamaruddin bin Tokimon (1998) 7 MLJ 342, the Court held:

“An employer has a right to shift its employees from one place to another, such a right being an incident of service. However, this right cannot be implied into situations where the branches or premises were non-existent at the time of the making of the contract.”

This case clearly illustrates that the Court is not in a position to accept a term to be incorporated after an agreement has been reached. Time to revisit your company’s employment contract?