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2013 MarsdenLR 2501
INDUSTRIAL COURT KUALA LUMPUR
WARREN ZAWAWI HUSSEIN – Appellant
Versus
WAGNER GLOBAL SERVICES (M) SDN BHD – Respondent
Award No: 1914 of 2013 [Case No: 1/1-1374/12]
The employer's obligation to reimburse tax liabilities pertains only to income taxes incurred during employment, not to additional tax obligations from awarded compensation.
Headnote:(A) Industrial Relations Act 1967 - Section 56 - Income Tax Act 1967 - Jurisdiction of Industrial Court in non-compliance proceedings - The court has the jurisdiction to interpret award No: 343 of 2012 and to determine if the employer must reimburse tax liabilities - The liability to pay income tax falls on the employee, as stated in the Income Tax Act, and the employer must adhere to statutory duties regarding tax submissions. (Paras 39-41)
(B) Employment Contracts - The court found both letters of appointment valid and binding, ruling that reimbursement for local tax as per the first letter of appointment applies only to local income earned, excluding compensation awarded for dismissal. (Paras 47-51)
Facts of the case:
The complainant was awarded RM505,440 and contended that the respondent failed to pay the total award after accounting for the applicable taxes. The dispute arose over the interpretation of tax liability stated in his employment contracts.
Findings of Court:
The respondent must reimburse the complainant RM59,930.08 for the income generated in 2007; however, is not liable for the tax assessed on the award sum of RM131,414.40.
Issues: Whether the Industrial Court has jurisdiction to decide reimbursement of tax; the meaning of statutory deductions in the award; implications of employment contracts on tax liabilities.
Ratio Decidendi: The court reinforced the principle that reimbursement obligations hinge on the contract terms, and clarified that tax payments on award sums lie solely with the employee under the Income Tax Act.
Result: The court ordered the respondent to pay RM59,930.08 and clarified their lack of liability for the additional tax claim.
| Table of Content |
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| 1. claimant awarded rm505,440 but unpaid balance. (Para 1 , 1 , 2 , 3 , 4 , 13) |
| 2. employment contracts include tax reimbursement. (Para 5 , 6 , 7 , 10 , 11) |
| 3. fringe benefits and tax concerns for expatriate. (Para 8 , 9 , 12) |
| 4. respondent claims no jurisdiction on tax reimbursement. (Para 14 , 15 , 26 , 27 , 28) |
| 5. respondent's jurisdiction arguments on tax reimbursement (Para 16 , 18) |
| 6. case law on jurisdiction of industrial court (Para 29) |
| 7. claimant argues entitlement based on contract. (Para 36 , 37 , 38) |
| 8. court's authority clarified under industrial relations act. (Para 39 , 40) |
| 9. assessing tax liability lies with complainant. (Para 42 , 43 , 44) |
[1] This is an application for an order of non-compliance of Award No: 343 of 2012 which was handed down in dismissal case 27(23)/4-204/09 (Warren Zawawi Hussein v. Wagner Global Services (M) Sdn Bhd; [2012] 3 ILJ 34 ). The sum which was awarded to the complainant was RM505,440.00.
The Complaint
[2] The complainant contended that the Industrial Court had ordered the respondent to pay him the sum of AUD156,000 which was equivalent to RM505,440.00 based on the exchange rate of 3.24.
[3] The respondent had only paid him part of the award sum in the sum of RM293,408.16. The complaint is that respondent has failed to pay the balance of RM212,031.84 of the award sum. The particulars of the disbursement of the award sum are provided in RB2, p 21 as follows:
[4] The complainant contended that the respondent was liable to pay the local tax which was imposed on him by the Inland Revenue Board of Malaysia for the period he worked in Malaysia in 2007 and on the award sum which had been handed down by the Industrial Court. He contended the respondent was also liable to pay the penalty which the Inland Revenue Board had imposed.
[5] CLW1, the complainant testified that he is an Australian national. He had entered into two contracts of employment with the respondent. The first contract of employment was dated 13 March 2007 whereby he was appointed as the Commercial Manager of the Wagner Global Services Group (hereinafter referred to as the first letter of appointment) vide CLB, pp 38-41. There was a provision in the first letter of appointment which provided that the respondent would reimburse him for his tax expense. That covered any form of tax including the tax on the backwages which had been awarded by the Industrial Court. It read:
Local tax: If your incur a personal tax liability in Malaysia or in any country that you work for Wagners, you will need to pay the local tax authority yourself but you will be fully reimbursed for your tax expense. Under the OHQ provisions of our company in Malaysia, personal tax only accrues for actual days worked in Malaysia.
[6] He entered into a second contract of employment with the respondent dated 1 April 2007 whereby he was appointed as the Chief Financial Officer of the respondent (hereinafter referred to as the second letter of appointment) vide RB1, pp 47-50. He contended that both contracts of employment were complementary.
[7] He denied that the second letter of appointment had superseded the first letter of appointment. He contended that the Industrial Court had made a finding that both letters of appointment were binding on the parties vide CLB, pp 17 & 18. The second letter of appointment was for the purposes of obtaining a work permit. The position of Chief Financial Officer which was his designation under the second letter of appointment was for the purposes of obtaining a work permit as that position had been pre-approved. His position under the first letter of appointment as Commercial Manager had not been preapproved. He was not paid the salary of RM35,100.00 which was stated under the second letter of appointment.
[8] While he was working for the respondent, he was paid the fringe benefits which was stated in the first letter of appointment such as school fees for his children, accommodation, a car and a driver.
[9] As an expatriate,
