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2021 MarsdenLR 429
INDUSTRIAL COURT KUALA LUMPUR
ZAINOL RASHID NORDDIN – Appellant
Versus
MALAYSIA BUILDING SOCIETY BERHAD – Respondent
Award No: 1225 Of 2021 [Case No: 2(12)/6-610/20]
The court ruled that back wages and compensation granted in awards attract EPF contributions, interpreting 'less statutory deductions' as including such liabilities, guided by equity and previous judgments.
Headnote:(A) Industrial Relations Act 1967 [Act 177] – Interpretation of Award No 2869 of 2018 – Application for clarification regarding 'less statutory deductions' in awarded damages. The Court determined that EPF contributions indeed accrue on back wages and reinstatement compensation following principles of equity and the precedent in Harpers Trading case, affirming entitlement to these statutory benefits. (Paras 1, 9, 16)
(B) Case Law – Court clarifies distinction in earlier rulings regarding entitlement to EPF and related benefits post-dismissal. Majority opinion supported inclusion of these contributions while recognizing dissenting views in prior cases highlighting procedural norms. (Paras 9-14)
Facts of the case: The applicant sought an interpretation on whether RM360,000 awarded included EPF contributions and other employee benefits after wrongful dismissal. Specific entitlements were contested based on company policy documents outlining benefits after termination. (Paras 2-6)
Findings of Court: The court ruled that back wages and compensation entitled the applicant to EPF contributions and acknowledged the majority view supporting this. Dissenting opinions were also considered regarding the definition of statutory deductions. (Paras 10, 16)
Issues: Whether the awarded amount included EPF contributions and other benefits pursuant to dismissal without just cause. (Paras 5-6)
Ratio Decidendi: Back wages equate to wages for EPF purposes, reinforcing that the phrase 'less statutory deductions' encompasses mandatory contributions under prevailing laws, not limited to explicitly mentioned items. (Paras 15-16)
Result: Applicant entitled to EPF contributions as directed, to be paid within thirty days.
AWARD
The Application
[1] An application was made by Zainol Rashid Norddin ("the applicant") on 21 February 2021 through the filing of Form M to the Industrial Court under s 33(1) of the Industrial Relations Act 1967 [Act 177] ("the 1967 Act") requesting for an interpretation of part of the Award No 2869 of 2018 Zainol Rashid Norddin v. Malaysia Building Society Berhad in Case No 11/4-1762/12 ("the said Award") which related to the phrase "less statutory deductions (if any)". The issues arising for a determination before this Court is not only whether the amount of RM360,000.00 awarded attracted EPF contributions, but also that the amount awarded attracted the Staff Provident Fund (SPF) contributions, Retirement Gratuity, Service Gratuity and Subordinate Staff Gratuity to be paid by Malaysia Building Society Berhad ("the respondent") to be paid to the applicant.
[2] This Court has been asked to interpret the Final Order in the said Award which reads as follows:
"[52] The Court orders the Company to pay the claimant through the claimant's solicitors, Messrs N Saraswathy Devi in the sum of RM (200,000.00 + RM160,000.00 = RM360,000.00) less statutory deductions (if any) within 30 days from the date of this Award.".
[3] The applicant in Form M requested for an interpretation of the above paragraph for the purpose of removing ambiguity or uncertainty. It is the applicant's contention that:
"Read together with the Letter of Appointment of the claimant dated 10 December 1993 a copy of which is attached herein as Enclosure ZRN-1:
(5) Staff Provident Fund
You are eligible to join MBSB's Staff's Provident Fund on confirmation of appointment. The contribution will be 10% of monthly salary from you and 15% of monthly salary from MBSB.
And read together with the Company's Human Resources Manual And The Company's Circular dated 18 January 1994: RETIREMENT GRATUITY, SERVICE GRATUITY AND SUBORDINATE STAFF GRATUITY (a copy of which is attached herein as Enclosure ZRN-2):
A. i) Service Gratuity On Retirement
On retirement at the normal retirement age of 55 years for both male and female) the employee concerned be recommended for a lump sum payment not exceeding 10% of each of his/her actual basic monthly salary earned during his/her period of service with the Society (Company). If there is a break in the service, service before the break shall not be taken into account for the purpose of calculating the Gratuity.
...
iii) Service Gratuity on Termination of Service Other Than (i) and (ii) above
In the event of an employee after completing more than 15 years of continuous service with MBSB resigning therefrom for reasons other than those set in (i) and (ii) above, the employee concerned be recommended for Service Gratuity in the following scale:
a) With 30 or more years of continuous service:
- 5% of actual basic monthly salary earned during the employee's period of service with MBSB
d) With 30 or more years of continuous service:
- Half of the amount calculated in accordance with (a) above.
[4] The applicant submits that the provisions of para 52 of the said Award should be interpreted in the following manner:
"[52] The Court further orders the company to pay the following contractual payments to the claimant:
(1) EPF Contribution
EPF Contribution is 12% of RM360,000.00 = RM43,200.00
(2) Service Gratuity
The claimant has served the Company for more than 16 years and is therefore eligible for payment of Service Gratuity in accordance with the Company's Human Resources Policy then prevailing at the time of his dismissal. It is computed based on the total amount of salaries earned during his employment (which is RM1,072,224) X 10% X % = RM26,805.60".
[5] It was submitted that the question for the Court's determination is as follows:
i) "Is the claimant entitled to the above contractual payments in view of the Court's findings that his dismissal was without just cause and excuse?".".
[6] The said Award dated 8 November 2018 was handed down by the learned Ch
