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2025 MarsdenLR 2000
HIGH COURT MALAYA SHAH ALAM
JETVALET SDN BHD – Appellant
Versus
LUKMAN HAKIM MOHD ZAKI & ANOR – Respondent
[Criminal Trial No: BA-16-24-05/2024]
Productivity allowance is part of wages and cannot be unilaterally rescinded by an employer without mutual consent, constituting a fundamental breach of contract.
Headnote:(A) Employment Act 1955 - Subsection 24(1) - Appeal against Labour Department Director General's order for payment of productivity allowance - Court held that productivity allowance is part of wages and cannot be unilaterally rescinded without consent - Unilateral deduction constitutes fundamental breach of contract. (Paras 27, 31, 38)
(B) Employment agreements - Changes to terms must be mutually agreed upon - The court emphasized that employers cannot arbitrarily alter contractual terms. (Paras 30, 38)
Facts of the case:
The Appellant, a company providing private jet transportation, employed the Respondents as pilots under fixed-term contracts, including a productivity allowance. Following grounding of the aircraft, the Appellant attempted to rescind the productivity allowances without agreement from the Respondents, leading to a claim for unpaid allowances.
Findings of Court:
The Respondents' productivity allowance is deemed part of their wages and cannot be rescinded without mutual consent. The Labour Court's decision was upheld, affirming the Respondents' rights to the allowance.
Issues: Whether the productivity allowance constitutes part of wages and if it can be rescinded unilaterally by the employer.
Ratio Decidendi: The court ruled that the productivity allowance is integral to the employment contract and cannot be altered without agreement from both parties, highlighting the necessity of mutual consent in employment agreements.
Result: Appeal dismissed with costs awarded to each Respondent.
Introduction
[1] This is an appeal against the decision of the Labour Department Director General ("the Labour Court") dated 10 May 2024 ordering the Appellant to pay the Respondents their productivity allowance for the months of August and September 2023 ("the Order").
Factual Background
[2] The Appellant is a company that offers, among other services, private jet transportation exclusively for members of Amanah Pelaburan Berhad Cooperative ("KAPB"). The Respondents are pilots who were employed by the Appellant, with the Second Respondent serving as the Captain Pilot and the First Respondent as the First Officer.
[3] Both Respondents were appointed pursuant to a Pre-Contract Letter of Intent of Employment dated 5 March 2021 and a Letter of Offer of Employment dated 7 March 2021.
[4] Subsequently, the Appellant sponsored and fully funded the Respondents training in the United States to ensure their successful certification as Captain Pilot and First Officer. This was done under the Agreement for a Course of Conversion Training dated 19 May 2021 enabling the Respondents to obtain valid flight licenses.
[5] On the same date, the Respondents also executed a Fixed Term Contract to serve as flight crew for the Appellant, which required them to serve for a period of seven (7) years following their certification as qualified Pilot and First Officer.
[6] The First Respondent was employed by the Appellant under two agreements, both dated 19 May 2021, each with a fixed term of seven years. Under the Employment Agreement, the First Respondent's salary was RM12,000.00 consisting of RM9,000.00 in basic salary and RM3,000.00 in productivity allowance.
[7] The Second Respondent was employed by the Appellant under two agreements, both dated 19 May 2021, each with a fixed term of seven years. Under the Employment Agreement, the Second Respondent's salary was RM20,000.00 per month, with a productivity allowance of RM5,000.00 and a transportation allowance of RM5,000.00 per month, bringing the total gross salary to RM30,000.00 per month.
[8]"The Agreement for a Course of Conversion Training" (the "Conversion Agreement") is intended to qualify the First Respondent to operate the Appellant's aircraft, specifically the Hawker 4000 (the "Aircraft"). After undergoing training in the United States and obtaining certification as a Captain Pilot and First Officer, the Respondents were appointed as Captain Pilot and First Officer for the Appellant.
[9] It is undisputed that around November 2022, the Aircraft was grounded due to technical and/or mechanical issues. As a result, the Respondents no longer had an aircraft they were licensed to operate.
[10] On 16 February 2023, Ms Izyan Darlina binti Balia Yusof, the Manager of Legal, Secretarial, Compliance, and Human Resources, emailed the Respondents instructing them to report to the Appellant's office located at Level 18, Menara 2, Menara Kembar Bank Rakyat, 50470 Kuala Lumpur. This directive, with working hours from 9:00 AM to 6:00 PM, was issued following the grounding of the Appellant's Aircraft, which had become inoperable.
[11] The Appellant relied on cl 5.2 of the Fixed Term Contract for Flight Crew, which, according to the Appellant gives it the authority to assign the Respondents to administrative duties and to any part of its operations, as the Aircraft is no longer in service. Clause 6.1 further requires the Respondents to adhere to the Appellant's designated working hours. Despite not flying, the Respondents continued to receive their full salary, productivity allowance, and transportation allowance while stationed at the office.
[12] On 13 June 2023, the Respondents were reassigned to report to the Appellant's Jetvalet Hangar Office in Subang, as instructed via an email from Ms Izyan on 12 June 2023. On 14 August 2023, the First Respondent sought clarification about a scheduled flight for the Premier 1 aircraft on 16 August 2023. In response, the Appellant's Director, Captain Sha
