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2018 MarsdenLR 1695
INDUSTRIAL COURT KUALA LUMPUR
TANJONG ARU HOTEL SDN BHD – Appellant
Versus
KESATUAN KEBANGSAAN PEKERJA-PEKERJA HOTEL BAR DAN RESTORAN SEMENANJUNG.... – Respondent
Award No: 972 Of 2018 [Case No: 3(13)/3-112/14]
Employers cannot unilaterally use service charges to meet statutory minimum wage requirements, violating collective agreements and labor laws.
Headnote:This Ministerial reference involves a trade dispute over wage restructuring under the Minimum Wages Order 2012 between several hotels and relevant unions, specifically addressing the validity of a collective agreement and the legality of using service charges towards minimum wage compliance. The Court determined that service charge cannot unilaterally substitute the employer's obligation of paying minimum wage. The core issue is whether the Hotels could use a portion of service charge to meet minimum wage requirements. The Court ruled that such an approach is inequitable and non-compliant with statutory provisions. The Court also dismissed the Hotels' proposal to use service charge for meeting the minimum wage obligations as it violates existing laws and agreements. The Hotels are instructed to pay the minimum wage from their own funds and refund any utilized service charges from October 1, 2013.
| Table of Content |
|---|
| 1. background of trade dispute regarding minimum wage. (Para 1 , 2) |
| 2. judgment focuses on wage restructuring under the minimum wages order. (Para 4 , 5 , 6) |
| 3. court evaluations of collective agreements. (Para 10 , 12 , 14) |
| 4. arguments on the legality of using service charge. (Para 23 , 27) |
| 5. court observations on collective agreements and legal precedents. (Para 29 , 33) |
| 6. standing decisions emphasize negotiating terms as essential. (Para 34 , 46) |
| 7. key legal outcomes from previous case laws. (Para 39 , 49) |
| 8. summary of court's final decision and orders. (Para 51) |
[1] This is a Ministerial reference made under s 26(2) of the IRA dated 4 February 2014 arising out of the trade dispute in respect of "Perlaksanaan Gaji Minima" between Shangri-La Rasa Sayang Resort & Spa. (Substituted With Shangri-La Hotels (Malaysia) Berhad By Court Order On 8 April 2015) (the Hotel) and Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar dan Restoran, Semenanjung Malaysia (the Union).?
Background
[2] There are five (5) different cases involving five hotels in sequence from Case No 3(13)/3-109/14 to 3(13)/3-113/14 which were heard together by this Court because of common issues involved. These five (5) hotels are:
(a) Hotel Jen, Penang, which was formerly known as Traders Hotel Penang (hereinafter referred to as "Hotel Jen Penang");
(b) Shangri-La Hotel Kuala Lumpur (hereinafter referred to as "Shang KL");
(c) Golden Sands Resort (hereinafter referred to as "Golden Sands");
(d) Shangri-La's Tanjung Aru Resort & Spa (hereinafter referred to as "Tanjung Aru"); and
(e) Shangri-La's Rasa Sayang Resort & Spa (hereinafter referred to as "Rasa Sayang");
(collectively referred to herein as "the Hotels").
[3] The Hotels are part of the Shangri-La chain of hotels and resorts in Malaysia. Shangri-La Hotels (M) Berhad ("SHMB"):
(a) is the holding company of Komtar Hotel Sdn Bhd which owns and operates Hotel Jen, Penang;
(b) is the holding company of Shangri-La Hotel (KL) Sdn Bhd., which owns and operates the Shangri KL;
(c) is the holding company of Golden Sands Beach Resort Sdn Bhd which owns and operates Golden Sands; and
(d) owns and operates Rasa Sayang.
Tanjung Aru Hotel Sdn Bhd which owns and operates Tanjung Aru, is 40% owned by Orange Grove Holdings Private Ltd which in turn shares a common ultimate shareholder with SHMB, namely Shangri-La Asia Ltd
[4] The trade dispute between the Hotels and Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia (the Union) and Kesatuan Pekerja-Pekerja Hotel, Resort & Restoran Sabah (Sabah Union) arises from the deadlock during the negotiation of restructuring of wages. This was in relation to the implementation of the minimum wages at the Hotels which was carried out by the Hotels pursuant to O 6 of the Minimum Wages Order (MWO) 2012. The MWO 2012 came into effect on 1 October 2013 for the hotel industry.
[5] Pursuant to s 3 of the National Wages Consultative Council Act 2011 (the NWCC Act), the National Wages Consultative Council (NWCC) was established with the responsibility to conduct studies on all matters concerning minimum wages and to make recommendations to the Government regarding minimum wages orders according to sectors, types of employment and regional areas (p 3 of COB2). Following the recommendation of the NWCC, the Government, pursuant to s 23 of the said Act, by notification in the Gazette, made the Minimum Wages Order 2012 (pp 5 and 6 and 15 of COB2). Order 4 of the MWO 2012 provided that the minimum wage for an employee in Peninsular Malaysia be fixed at RM900 per month and for Sabah, Sarawak and the Federal Territory of Labuan at RM800 per month. Order 6 of the MWO 2012, inter alia, allows for an employee and a union to negotiate on the restructuring of wages before the MWO 2012 comes into operation and sets out the provisions for such restructuring (pp 14 and 15 of COB2).
[6] Paragraph 3 of the "Guidelines on the Implementation of the Minimum Wages Order 2012 " (the Guideli
