The unilateral withdrawal of non-contractual ex-gratia benefits by an employer is permissible if the agreement lacks legal standing due to non-registration.

AWARD

Zulhelmy Hasan:

Reference

[1] This is a reference by the Honourable Minister of Human Resources to the Industrial Court of Malaysia dated 11 January 2023 pursuant to s 26(2) of the Industrial Relations Act 1967 regarding the trade dispute between Kesatuan Pekerja-Pekerja Perusahaan Simen Semenanjung Malaysia (hereinafter referred to as "the Union") and Tasek Corporation Berhad (hereinafter referred to as "the Company") regarding the failure and/or noncompliance by the employer to pay unconsumed sick leave/medical ex-gratia benefits for the years of 2018, 2019, 2020 and 2021 for adjudication and an Award to be handed down.

Factual Backgrounds

[2] The Company is principally engaged in manufacturing both bag and bulk cement for general purpose usage for general concrete works. As alleged by the Union, the Company and the Union had entered into a Letter of Exchange (LOE) dated 8 December 2017 as part of the 15th Collective Agreement which provides for the payment of unconsumed sick leaves ex-gratia payment on the accruing unconsumed sick leave from the previous year, and this was an existing practice.

[3] The Union avers that this benefit was unilaterally withdrawn by the Company under the disguise of managerial discretionary powers ignoring the fact that the Union is also a signatory to the LOE. The Company, by its conduct, has committed to this practice and the employees had kept their medical leave in anticipation of monetary reimbursement for the unutilized medical leave.

[4] The Union states that pursuant to the terms of the Letter of Exchange (LOE) dated 8 December 2017, employees who did not exhaust their sick leave entitlement were entitled to receive an ex-gratia payment equivalent to their basic salary multiplied by number of unconsumed sick leave per annum. Thus far, the Company had made ex-gratia payment for unconsumed sick leave for the years 2016 and 2017. However, ex-gratia payment for the year 2018 onward has yet to be materialized.

[5] The Union contends that the Company cannot elect to impose its discretionary powers to unilaterally withdraw these monetary benefits, and the employees were eligible to claim payment for unconsumed sick leave ex-gratia payment, on the remaining medical leaves preceding the year. As such, the Company has been practicing payment for unconsumed sick leave ex-gratia benefit and by unilaterally discontinuing the ex-gratia payment for unconsumed sick leave, the Company had reciprocated this mutual exchange for the unutilized accrued sick leave whereby the employees were looking forward with great anticipation that their accrued sick leave would yield monetary benefit.

[6] Therefore, the present dispute pertains to the non-compliance and/or failure of the Company to the provision of cl 11 - Unconsumed Sick Leave / Ex-Gratia Payment, as stipulated in the Letter of Exchange (LOE) dated 8 December 2017. The Union has pleaded that the unilateral withdrawal of the ex-gratia payment/benefits is discriminatory in nature, and unfair practice that violates the principles of just and equitable employment which tantamount to uprooting the morale of the employees. The Company is bound by its prior conduct and the reasonable expectations it has created among its employees and must therefore maintain this practice.

[7] With the directive of this Court , the instant case (Industrial Court Case No 10/3-298/23) was heard together with the Industrial Court Case No 10/3-299/23, and the joint hearing for the two (2) cases proceeded on 2 September 2024 and the scheduled hearing on 3 September 2024 was vacated.

The Union's Case

[8] The working environment in the Company's plant is categorized as dirty, dangerous and demeaning whereby the workers are exposed to industrial dust and working under extreme temperatures, hence this hazardous working environment compromises the safety and health aspects of the workers. If the Company encourages an employee to retain their medical leaves in substitution for monetary