The court established that 'profit' in the collective agreement includes group profits of a holding company, requiring bonus payment despite individual losses.

[1] This is an application for an order of non-compliance of art. 44 of the collective agreement dated 5 September 2006 between Kesatuan Kebangsaan Wartawan Malaysia (hereinafter referred to as "the union") and Utusan Melayu (M) Bhd (hereinafter referred to as "the respondent"), cognizance number 281/2006 (hereinafter referred to as "the said collective agreement"). The application was made by the union.

[2] The respondent did not pay its employees a bonus of two months wages for 2009. The respondent had given its employees an ex gratia payment of one month wages each for 2009.

[3] Article 44 in its original language read:

Bayaran bonus dua (2) bulan hendaklah merupakan satu ikatan bagi syarikat mengeluarkannya untuk para pekerja tiap-tiap tahun, jika syarikat mendapat keuntungan dalam tahun yang berkenaan.

Submissions By Counsel For The Union

[4] Counsel for the union contended that the respondent had made profits in the financial year ending 31 December 2009. It has several subsidiary companies. Its profits as a group was RM5,120,938 as shown in the Directors' Report and Audited Financial Statements as at 31 December 2009 vide Bundle RB2, p. 1.

[5] The income statement of the respondent as an individual company showed a loss of RM26,169,490 as at 31 December 2009 vide Bundle RB2, p. 15. Counsel for the union contended that the loss of RM21,624,448 for the depreciation of property, plant and equipment should not be taken into consideration in deciding the profits of the respondent.

[6] He cited the decision of the Industrial Court in Pangkor Island Resort Sdn Bhd, Ipoh v. National Union of Hotel, Bar and Restaurant Workers ; [1989] 2 ILR 750 (Award No. 241 of 1989) (Unreported), Case No 1: 2/2-318/88, in support of his contention. That case was a trade dispute on the terms of a collective agreement where the Industrial Court had to decide on the financial capacity of the company to pay a salary adjustment, annual increment and bonuses to its employees.

[7] He submitted that RM29 million which was for "doubtful debts" and which was under the head "other expenses" in the income statement for the respondent as an individual company should not be taken into consideration in deciding the profits of the respondent.

[8] RW1, the Chief Financial Officer of the respondent testified that the amount for doubtful debts was in accordance with the Financial Reporting Standard 139 which came into force in 2010. The respondent had not made any demand on its subsidiary companies which owed it money. RM19 million is owed by Utusan Printcorp Sdn Bhd and RM8.4 million is owed by Utusan Publications and Distributors Sdn Bhd which are subsidiary companies of the respondent.

[9] She admitted that the RM37.5 million which is owed by Utusan Media Sales Sdn Bhd which is another subsidiary of the respondent came from the operating profits of the respondent. The employees of that subsidiary company were given a two months bonus in 2009.

[10] She also admitted that RM76,140,702 is due from the subsidiaries of the respondent as at 31 December 2009 under the item "other receivables" vide Bundle RB2, p. 67.

[11] Counsel for the union cited the decision of the High Court in Sykt E-Rete (M) Sdn Bhd v. Kesatuan Sekerja Pembuatan Barangan Galian Bukan Logam & Anor; [1991] 1 ILR 708 in support of his contention that depreciation and investment in subsidiaries should not be taken into consideration in deciding whether or not a company had suffered financial losses.

[12] In that case, there was a judicial review of the decision of the Industrial Court which had held that the retrenchment of employees on the grounds of redundancy as a result of financial losses had not been proved by the employer which was a company.