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2021 MarsdenLR 4102
INDUSTRIAL COURT KUALA LUMPUR
KESATUAN EKSEKUTIF BANK PERTANIAN MALAYSIA BERHAD SEMENANJUNG – Appellant
Versus
BANK PERTANIAN MALAYSIA BERHAD – Respondent
Award No: 1152 Of 2021 [Case No: 1/1-1707/20]
The court affirmed that salary increments under a collective agreement can be discretionary, allowing the employer to exercise judgment based on financial considerations without breaching contractual terms.
Headnote:(A) Industrial Relations Act 1967 – Section 56(1) – Collective Agreement – Non-compliance – Application filed by Union regarding salary increments – Court held that payment of annual salary increment is discretionary under Article 4 of the CA as per Article 4.5, hence no breach occurred by the Bank. (Paras 11, 12, 16, 23)
(B) Employment Law – Interpretative Principles – The court ruled that the ordinary meaning of words in a collective agreement should be applied, emphasizing that the term 'discretion' grants management the flexibility over salary decisions. (Paras 12, 14)
Facts of the case: The Union filed a complaint asserting that the Bank failed to comply with Article 4 of the CA concerning annual salary increments for 2020, despite the Bank's profit. (Paras 5, 9)
Findings of Court: The Court found that the Bank's non-payment of salaries was within its discretion and justified given the circumstances of the economic crisis. (Paras 21, 23)
Issues: The main issues were whether the salary increment was mandatory or discretionary and if the Bank breached the terms of the CA. (Para 11)
Ratio Decidendi: The Court concluded that the payment of annual salary increments is discretionary based on a plain reading of the CA and not an outright entitlement for employees. (Paras 16, 21)
Result: The Union's case is dismissed.
AWARD
Award
[1] This is an application filed by Kesatuan Eksekutif Bank Pertanian Malaysia Berhad, Semenanjung (the Union) pursuant to s 56(1) of the Industrial Relations Act 1967 for an order of non-compliance of Article 4 (Annual Salary Increment) of the Collective Agreement (Cognizance No. 179/2019) for the period of 1 Januari 2019 to 31 December 2021 between Bank Pertanian Malaysia Berhad and Kesatuan Eksekutif Bank Pertanian Malaysia Berhad, Semenanjung (the CA).
[2]The following documents have been filed and referred to during the hearing:
i. Statement of Case;
ii. Statement in Reply;
iii. Rejoinder;
iv. Union's Bundle of Documents (CLB-1);
v. Bank's Bundle of Documents (COB-1);
vi. Witness Statement of Basharuddin Bin Shariff (CLWS-1); and
vii. Witness Statement of Siti Aishah Binti Md Lassim (COWS-1).
[3] Bank Pertanian Malaysia Berhad (the Bank) is a financial institution and was corporatised under the Companies Act 1965 and commercially known as AGROBANK, a Government owned bank under the purview of the Minister of Finance Incorporated. The Union represents employees of the Bank who are covered under the Collective Agreement (the Executives).
[4]On 3 April 2019, the parties had entered into the CA, which took effect from 1 January 2019 for a period of three (3) years and expiring on 31 December 2021. Article 4 of the CA provides as follows:
"Artikel 4 : Kenaikan Gaji Tahunan
1. Kenaikan gaji tahunan untuk Eksekutif dalam semua kategori adalah ditetapkan pada 1hb Januari setiap tahun.
2. Jumlah kenaikan gaji tahunan Eksekutif akan dikira mengikut peratusan gajinya, seperti mana yang ditentukan oleh AGROBANK tertakluk kepada jumlah hari dia berkhidmat pada tahun penilaian prestasi dijalankan.
3. Eksekutif layak menerima kenaikan gaji tahunan pada 1hb Januari setiap tahun berdasarkan prestasi, sehingga dia mencapai tahap maksima julat gajinya, melainkan kenaikan gaji tahunannya ditunda atau ditahan.
4. Eksekutif baru yang telah berkhidmat kurang dari satu (1) tahun akan dibayar kenaikan gaji tahunan pertama apabila genap setahun dia bekerja. Seterusnya, tarikh kenaikan gaji tahunan adalah pada 1hb tahun berikutnya.
5. AGROBANK dengan budibicaranya berhak memutuskan kelayakan Eksekutif untuk menerima kenaikan gaji tahunan beserta jumlahnya.
6. Bagi kegunaan klausa atau fasal ini, julat gaji bererti julat- julat gaji pokok yang berkaitan dengan gred peribadi Eksekutif."
[5] Vide a letter dated 1 June 2020 (U-2 CLB-1), the Bank had informed its employees as follows:
i. The Bank had achieved the profit before tax of RM205.4 million for the financial year of 2019;
ii. The Board of Directors and the Ministry of Finance had approved the bonus payments for the fiscal year 2019 to the eligible employees of the Bank and the same had been duly credited into the employees account on 22 May 2020; and
iii. The Bank had decided not to grant annual salary increments to all its employees for the fiscal year 2020.
[6] Dissatisfied with the Bank's decision not to grant any annual increments for the year 2020, the Union lodged a complaint of non-compliance (Form S) under rule 24A(1) Industrial Relations Rules 1967 and s 56(1) of the Industrial Relations Act 1967 (the IRA 1967) claiming that the Bank had failed to comply with Part 1 Article 4 of the CA.
The Law On Non-Compliance Complaints
[7] It is trite that in an application for an order of non-compliance under s 56 of the IRA 1967, the burden is on the complainant to prove to the satisfaction of the Court, that the Bank had breached an article in the CA. The Industrial Court in the case of Kesatuan Pekerja-pekerja Perkilangan Perusahaan Makanan v. Gold Coin Specialities Sdn Bhd ; [2017] 2 ILR 260, referred to the Supreme Court case of Holiday Inn, Kuala Lumpur v. National Union of Hotel, Bar and Restaurant Workers , , which held as follows:
"Now, s 56 is concerned with the enforcement in a summary manner of an award made by the Industrial Court or of a collective agreement which has been taken cog
