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2024 MarsdenLR 2344
INDUSTRIAL COURT KUALA LUMPUR
KESATUAN SEKERJA INDUSTRI ELEKTRONIK WILAYAH BARAT SEMENANJUNG MALAYSIA – Appellant
Versus
CHEMI-CON (MALAYSIA) SDN .... – Respondent
Award No: 85 Of 2024 [Case No: 21/3-853/20]
The retirement benefit formula outlined in the Employee's Handbook is binding for non-management employees, and financial statements do not establish employment terms.
Headnote:(A) Industrial Relations Act 1967 – Section 26(2) – Dispute regarding retirement benefits calculation – Employee contended that retirement benefits should be calculated based on one month per year of service, while the Company applied a formula of 12% of total base salary as per Employee's Handbook – Court found that the formula in the Handbook was applicable to non-management employees, and the calculation provided by the Company was correct. (Paras 10, 19, 40)
(B) Employment Contracts – Terms and conditions of employment are governed by the Employee's Handbook, which serves as a binding document – Financial statements do not establish employment terms. (Paras 27, 28)
Facts of the case: The dispute arose from the calculation of retirement benefits for Rajandran, who claimed the Company used an incorrect formula, while the Company maintained the calculation was in accordance with the Employee's Handbook. (Paras 2, 4)
Findings of Court: The Court found that the retirement benefit formula applied by the Company was correct and dismissed the Union's complaint. (Paras 40, 41)
Issues: The main issue was determining the applicable retirement benefit formula for Rajandran. (Para 10)
Ratio Decidendi: The Court ruled that the formula in the Employee's Handbook was binding for non-management employees, and the reliance on financial statements was misplaced. (Paras 27, 40)
Result: The Union's complaint was dismissed.
AWARD
Reference
[1] The dispute before this Court emanates from a Ministerial reference dated 15 July 2020, wherein the Honourable Minister of Human Resources, Malaysia whilst exercising his powers under s 26(2) of the Industrial Relations Act 1967 pertaining to a trade dispute between the Company and the Union regarding the retirement benefits from the service of Rajandran a/l Natarajan ("Rajandran").
Brief Facts Of This Dispute
[2] Rajandran commenced his employment with Toshiba Electronic (M) Sdn Bhd ("Toshiba Electronic") on 22 November 1976. Effective from 15 October 1984, Toshiba Capacitor (M) Sdn Bhd ("Toshiba Capacitor") took over its electrolytic capacitor manufacturing activities from Toshiba Electronic. Rajandran accepted Toshiba Capacitor's offers to continue his employment under the same terms and conditions of employment as Toshiba Electronic. This includes maintaining his salary, benefits and a continuous contract of service calculated from the date he commenced his employment at Toshiba Electronic. In August 1995, Toshiba Capacitor changed its name to Chemi-Con (M) Sdn Bhd.
[3] By a letter dated 14 October 2019, the Company formally notified Rajandran of his retirement from his position as an assistant supervisor, with his last date of employment set for 27 December 2019. The letter also provided the computation of Rajandran's retirement benefits, amounting to RM110,708.07. This calculation was based on a retirement benefit rate of 12% applied to his total base salary of RM829,040.19, in accordance with the provisions outlined in Item 13.4(iii) of the Employee's Handbook.
[4] By a letter dated 12 December 2019, Rajandran raised a dispute regarding the calculation of his retirement benefit, alleging that the Company had applied an incorrect computation and formula to determine his retirement benefits (See p 11 of UOB-1). Rajandran supported his claim by referencing and citing a statement made in the 2nd. sentence of para 9 of the Company's Financial Statements for the year ended 31 March 2018. He argued that according to the said statement the correct retirement benefit formula for him is 'one month per each year of Service' and he contended that the retirement benefit amount should be RM159,901.00.
Paragraph 9 Of The Company's Financial Statements For The Year Ended 31 March 2018
[5] The whole of the above paragraph reads as follows:
"The Company makes contributions to a defined benefit plan that provides pension benefits for employees upon retirement. Under the scheme, eligible employees are entitled to a retirement benefits of a factor of the last drawn monthly salary for each completed year of service upon the retirement age of 60 (2017:60)"
[6] The Union relies on the underlined sentence as the basis of its complaint. The Company then communicated with Rajandran, clarifying that the formula of one month per each year of service stated in the Company's Finance Statements for the year ended 31 March 2018 applied exclusively to management-level employees (Grade A and above), whereas Rajandran had held the position of assistant supervisor (Grade D), classifying him as a non-management employee.
[7] In response, the Union through its solicitors, issued a letter of demand seeking Rajandran's retirement benefit to be calculated based on a formula of one month for each year of service. (See pp 13 to 14 of UOB-1). The Company, through its solicitors, explained that the applicable retirement benefits formula for Rajandran was as provided for in Item 13.4 of the Company's Handbook, which specifies the formula as 12% x Total Base Salary for an employee who had completed 15 years or more of service with the Company. The Company's solicitors further explained that the formula relied on by the Union as being the applicable formula was only applicable to management employees of which the Claimant was not. The Claimant was a non-management employee (Grade D) at the time of his retirement. (See pp 11
