INDUSTRIAL COURT OF MALAYSIA

CASE NO : 1/1–74/17
BETWEEN
KESATUAN PEKERJA-PEKERJA PERKILANGAN
PERUSAHAAN MAKANAN

AND

MALAYAN FLOUR MILLS BERHAD (LUMUT PLANT)

AWARD NO. : 1259 OF 2018

CORAM: YA TUAN EDDIE YEO SOON CHYE - PRESIDENT

EN. KAMARUL BAHARIN BIN MANSOR - EMPLOYEES' PANEL
EN. JAMILIN BIN TIASAN - EMPLOYERS' PANEL

VENUE : Industrial Court Malaysia, Kuala Lumpur.

FILING OF FORM S : 23.01.2017.

DATES OF MENTION : 01.03.2017; 12.04.2017; 09.05.2017; 13.07.2017;

14.08.2017; 21.09.2017; 13.12.2017; 09.01.2018;
30.01.2018; 12.02.2018; 27.02.2018; 13.03.2018.

DATE OF HEARING : 13.11.2017.

UNION'S
SUBMISSIONS FILED : 28.12.2017; 19.04.2018.

RESPONDENT'S
SUBMISSIONS FILED : 09.11.2017; 30.01.2018.

REPRESENTATION : Mohamed Dauzkaply Nor B. Ghazali

Representative for the Union/Complainant.

Andrew Pastors of Messrs Dharmen Sivalingam & Partners;

Counsel for the Respondent.

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 AWARD

[1] This is a complaint of non-compliance filed in Form S pursuant to Rule 56 (1)

Industrial Relations Act 1967 and Rule 24A (1) of the Industrial Court Rules 1967 in respect

of the Collective Agreement 2015/2017 (Cognisance No. 124/2015) registered on 24 June

2015 (RB1 pages 64 - 82) between Malayan Flour Mills Berhad (Lumut Plant) and

Kesatuan Pekerja-Pekerja Perusahaan Makanan for the period from 1 January 2015

to 31 December 2017.

[2] A complaint was hereby lodged by the Union that the provisions in Articles 21 (c);

Article 4 (e) & Article 30 of the said Collective Agreement have not been complied with as

follows:

ARTICLE 21: RETIREMENT.

Clause (c)
The Company shall pay 5% of this salary of such employee to the Employees
Provident Fund in addition to the present statutory 12% paid to the said Fund as
retirement benefit as from 1st January 1988.

ARTICLE 4: DURATION AND TERMINATION OF AGREEMENT

Clause (e)
However, should any new legislation provide for more favourable terms than those
covered by this agreement, then the terms of Agreement will be automatically
amended in accordance with such new legislation.

ARTICLE 30: LEGISLATION

Should any new legislation provide for more favourable terms than those covered by
this agreement, then the terms of Agreement will be changed automatically and
without negotiation to provide the minimum benefits in accordance with the
legislation.

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STATEMENT OF CASE

[3] The Union contends in paragraph 6 that pursuant to Article 21 (c) of the Collective

Agreement, the Company failed to pay the additional 1% in respect of the employees'

salary within the scope of the Collective Agreement even though the additional

contribution by the Company was increased from 12% to 13%.

[4] The Union contended in paragraphs 7, 8 & 9 that the Company failed to comply with

Articles 4 (e), 30 & 21 (c) of the Collective Agreement and therefore the Union prays that

the Court will order the Company to comply with the said provisions of the Collective

Agreement.

STATEMENT IN REPLY

[5] The Company in paragraph 2 denies any non-compliance as follows:

(a) When the said Collective Agreement was signed on 22 June 2015, the
employers statutory minimum rate of contribution was 13% and not 12% as
erroneously stated in the above article. The increase from 12% to 13%
occurred with effect from January 2012;

(b) At the time the increased rate came into force, the Company and the Union
were parties to the 2012/2014 Collective Agreement that was signed on 2
June 2012; and

(c) When the current Collective Agreement 2015/2017 was signed on 22 June
2015, the parties merely adopted the same Article 21 (c) from the previous
Collective Article because there was no agreement to increase the rate of
contribution from 17% to 18%.

[6] The Union is now attempting to circumvent the Collective Agreement negotiation

process by asking Court to order an increase from 17% to 18% under the guise of a non-

compliance complaint where there is no basis for such a complaint. If the Union was truly

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not agreeable to the terms of the Collective Agreement, the Union should have made an

application to the Court at the Collective Agreement negotiation stage rather than signed

the agreement and later allege non-compliance and this is a blatant abuse of the Court's

process. Therefore, the Company prays in paragraph 8 that the Union's application be

dismissed.

THE UNION'S CASE & SUBMISSIONS

[7] Union's witness is Nor Azmin Bin Tajul Arifin (UW1), Deputy General-Secretary

of the Union in his evidence states that there was a discussion with the Company's

representative Yong Yee Wan in respect of Article 21 (c) for the EPF contribution by the

Company of 4% or 5% to be credited into the employee's salary to which the Union was

not in agreement.

[8] Matkar Bin Siwang (UW2), the second Union's witness was the President of the

Union and he testified that he was involved in the discussion with UW1 pertaining Article

21 (c) of the Collective Agreement. The Union was not in agreement with the Company's

proposal and highlighted that in respect of Article 21 (c) of the Collective Agreement the

Company shall pay 5% of the salary of each employee to the EPF paid to the said Fund as

retirement benefits.

Union's Submissions

[9] The Union's representative submits that the action by the Company was in breach of

the Collective Agreement of Articles 21 (c), Article 4 (e) and Article 30 and that there was

no proof of the Company complying the same. The Company was aware that the

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employees' EPF contribution was increased from 12% to 13% since the month of January

2012 and the Company failed to comply with the said provisions of the Collective

Agreement.

THE COMPANY'S CASE & SUBMISSIONS

[10] The Company's first witness Yong Yee Wan (RW1) is the Plant Manager and his

evidence in chief is produced in witness statement marked as RWS1. Even before the

previous Collective Agreement was signed on 2 June 2012, the employer's contribution was

increased from 12% to 13% and the Union and the Company were aware of this increase

but merely reproducing the old article from the previous Collective Agreement to the new

2015 Collective Agreement with no intention of increasing the employer's contribution to

18%. As far as all parties were concerned, the Company was contributing 17% to the EPF

which is above the statutory minimum. As such there was no issue of non-compliance with

the EPF Act and therefore the clause was intact.

[11] RW1 explained that the Union actually agree to state 12% in Article 21 (c) of the

Collective Agreement for both the periods 2012 and 2015. The main negotiations of the

Collective Agreement occurred between RW1 and UW2 as the Vice President. The

2012/2014 template Collective Agreement was used for negotiating the 2015/2017

Collective Agreement and Article 21 (c) had the terms which stated 12% and 5%

contribution to EPF. This has been followed for many years and it was once again

readopted during the Collective Agreement negotiations. The Union representatives agreed

to this clause and signed their agreement on it based on the overall negotiations of the

other clauses. The Collective Agreement negotiations looked at the cumulative effect and

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since they had negotiated favourably for other clauses and considering that the Company

was already paying 17% which was over the statutory limit, it was agreed to maintain the

clause in the present condition as status quo.

[12] RW1 in Question 18 states that UW2 was the main person negotiating for the Union

and he agreed to the clauses including clause 21. When the Collective Agreement was

signed, the signatories did not raise any issue of trade dispute to the Court or allege that

there was a deadlock in negotiations of the Collective Agreement.

[13] In respect of Article 4 (e) of the Collective Agreement for the period 2015/2017, the

minimum contribution in the EPF Act was increased from 12% to 13% in January 2012 and

by that time the Company were cumulatively contributing 17% which is why the Union did

not allege any non compliance at the time. There has been no non-compliance of Article 4

(e) as there has been no new legislation incorporated in the said Collective Agreement.

[14] There was obviously no breach of Article 30 of the said Collective Agreement as

there was no new legislation introduced during the term of the current Collective

Agreement. This Article has no relevance to this complaint of non compliance.

[15] The Company's second witness is Elaine Fong Yee Ling (RW2), HR Manager

produced her evidence in chief by witness statement (RWS2). The Company's

understanding has always been that the Company will contribute 17% to the EPF. The

statutory rate for EPF contribution is 12% to 13% as the case may be depending on the

employee's salary but based on the Collective Agreement, the Company is contributing

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17% and the Article 21 (c) never changed.

[16] As for Article 4 (e), if any new legislation is introduced during the term of the

Collective Agreement providing for more favourable benefits that what is provided under

the Collective Agreement, then the Company should provide the more favourable benefit

provided by the new legislation. For example, if there were a new legislation stating that

the minimum contribution of the employer should be 18% then the Company should have

complied with that. As for Article 30 since there was no new legislation introduced during

the term of the current Collective Agreement the issue of non compliance does not arise.

[17] The Company embarked into a harmonisation exercise which has been implemented

across the group. (UB2 page 1). Under this exercise, the Company had proposed the top-

up to the EPF contribution (either 4% or 5%) depending on whether the employee was

enjoying 12% or 13% would be absorbed into the employee's salary. This shows that the

Union is fully aware that the Company has been contributing 17% to EPF and the

Company is fully in compliance with the EPF statutory rate of 12% or 13% as the case may

be. The Company issued a communication pack (RB2 p. 2) for their road show to

communicate the harmonisation process to all employees who were impacted. The

employees do not agree to the harmonisation process and the Collective Agreement was

maintained at 17% contribution to the EPF.

Respondent's Submissions

[18] The Respondent submits in paragraphs 3.1 & 3.2 that the law relating to EPF

underwent a change in the law in 2012 wherein the statutory contributions of an employer

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for its employees would be 12% of the employee's salary exceeded RM5,000.00 a month

and 13% of the employee's salary did not exceed RM5,000.00 a month. Since all the

employees covered under the Collective Agreement earned less than RM5,000.00 a month,

the employees ought to enjoy a statutory contribution rate of 13% from the Company

pursuant to Articles 4 (e) & Article 30 of the Collective Agreement which would modify

Article 21 (c) accordingly. The modification clauses should have been triggered and raised

in 2012 when the Collective Agreement 2012/2014 was in force. (para. 4.2.2)

[19] Counsel for the Respondent submits in paragraphs A of 4.1 & 4.2 that Articles 4 (e)

& Article 30 refer only to new changes in the law and since the change was in 2012, the

change in legislation has no effect to the terms of the 2015/2017 Collective Agreement.

The cumulative effect of Article 21 (c) amounted to a contribution of 17% to the EPF which

is higher than the new statutory rate of 13%. The application of non-compliance was filed

in bad faith as the Union was going against the agreed understanding and negotiations

conducted and concluded in respect of the 2015 Collective Agreement.

[20] It is crystal clear that the Company is paying an additional 5% to the EPF which

brings its cumulative contribution to 17%. Based on a literal interpretation of the disputed

articles, the Company was undoubtedly in compliance with the 2015 Collective Agreement

as the Company is contributing over and above the new statutory rate. (para. C 1.1 & 1.2).

Since no party has been aggrieved or deprived of their benefits as outlined in the Collective

Agreement, it is impossible to allege non-compliance and there is no enforcement function

left for the Industrial Court to fulfil. (para. D 2.4) The Company submits and pray that the

Court dismisses the Union's application.

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[21] The Company in their Submissions in Reply submits why the Company has duly

complied with Article 21(c), Article 4 (e) and Article 30 of the 2015 Collective Agreement

based on the following reasons:

(a) there was no change in the law relating to EPF after 2012;

(b) Article 4 (e) & Article 30 allow modification of the 2015-2017 Collective

Agreement wherever there is a new legislation;

(c) there was no new legislation passed except the amendments to the EPF Act

in 2012;

(d) the Company has duly complied with Article 21 (c) of the Collective

Agreement by paying 17% to the EPF of all the employees; and

(e) the Union ought to have raised the issue of modification clauses in 2012

when the 2012 Collective Agreement was still in force during the negotiation

of the instant Collective Agreement.

The Law

[22] The Industrial Court in the case of Kesatuan Pekerja-pekerja Perkilangan

Perusahaan Makanan v. Gold Coin Specialities Sdn. Bhd. [2017] 2 ILR 260 at p. 262

referred to a decision by the Supreme Court case of Holiday Inn, Kuala Lumpur v.

National Union of Hotel, Bar and Restaurant Workers [1988] 1 CLJ 133 in relation

the application of section 56 of the Industrial Relations Act 1967 as follows:

“Now, section 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 cognisance of by the court under section 17 after a
complaint has been lodged as to its non-compliance. The non-compliance of
a term of the award or collective agreement must exist as an antecedent fact
before the Industrial Court can exercise its power contained in subsection (2)
thereof. It is therefore, a condition precedent to the exercise of those

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 powers that there should be in existence a breach or non-observance of a
term of the award or collective agreement. There must be satisfactorily
established by the complainant.”

[23] The Supreme Court decided in the case of Dragon & Phoenix Berhad v.

Kesatuan Pekerja-pekerja Perusahaan Membuat Tekstil & Pakaian Pulau Pinang

& Anor. [1990] 2 ILR 515 at p. 616 as follows:

“In a complaint of non-compliance with any term of a collective agreement

or award under section 56 of the Industrial Court should, as a general rule,
look at the terms of the contract by confining itself to within the four walls
of the collective agreement or award and decide whether the term has or
has not been complied with. It is purely enforcement function.”

Decision

[24] The issue for the determination and decision of this Court is whether or not there

was a non compliance of the terms in respect Article 21 (c) of the 2015/2017 Collective

Agreement. By virtue of the non-compliance with Article 21 (c) the Company is said to be

in non-compliance with Article 4 (e) & Article 30 of the Collective Agreement.

Article 21 (c)

[25] The question for the Court's determination is whether the Company is in breach of

Article 21 (c) of the 2015 Collective Agreement when the cumulative payments made by

the Company to EPF of 17% exceeded the current prescribed statutory rate of contribution

for the employer of 13%. The Collective Agreement clearly spelt out the provision that the

Company shall pay 5% of this salary of such employee to the Employees Provident Fund in

addition to the present statutory 12% paid to the said Fund as retirement benefit as from

1 January 1988.

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[26] When the EPF rate was revised to 13%, Article 21 (c) of the Collective Agreement

was agreed upon and there is nowhere in the said Article that compelled the Company to

contribute 5% in addition to 13%. Even though the EPF contribution had been raised to

13% but the Company is paying 17% cumulatively which is higher than the statutory 13%.

[27] It is the unanimous view of the Court that the terms in the Collective Agreement in

respect of Article 21 (c) do not reflect anything new that can be a non-compliance in the

instant application. The Company was in compliance with the 2015 Collective Agreement

as the Company is currently contributing over and above the statutory EPF rate of 13%.

Article 4 (e) & Article 30

[28] The Union's witness (UW2) said in cross-examination there was no issue of the EPF

amendment being raised during the negotiations for the 2015 Collective Agreement as the

articles were never in dispute. Since the Union was in agreement to the contents of the

2015 Collective Agreement, the Union was in no uncertain terms fully aware of the effect

of the articles in the 2015 Collective Agreement.

[29] According to UW1, the Company should have paid the salary adjustments of 8%

incorporating into the January 2015 Union's members salary commencing 1 January 2012.

Reference is made to Article 6.1 of the Collective Agreement stating that the Agreement

shall take effect from 1 March 2012 and shall continue in force for a period of three (3)

years and thereafter, until superseded by a new Agreement.

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[30] The evidence by RW1 remains unchallenged. The Company's understanding has

always been that the Company will contribute 17% to the EPF and although the article

uses the words “in addition” it has always been agreed and understood between all parties

that the intended effect should be cumulative. The article is only worded as such because

the Company had adopted the same clause from the previous Collective Agreement over

the years. The meaning has always been clear to the Company in that the Company would

contribute 17% to the EPF. Consequently the Union's submissions that the Company was

aware that the employees' EPF contribution was increased from 12% to 13% since the

month of January 2012 and the Company failed to comply with the said provisions of the

Collective Agreement was devoid of any merits.

[31] On the contrary, the Court is inclined to agree with the Company's submissions that

the Union's contention for the Company to pay 13% and a further top up of 5% goes

against the mutual understanding of the parties that the total cumulative to EPF has

always been 17% and the top up of 5% to be adjusted accordingly to maintain the

cumulative 17% contribution.

[32] The Court observes that the Collective Agreement remained unchanged since 1988

and there has never been any application of non-compliance filed and there has always

been a mutual understanding of the terms and provisions of the Collective Agreement. It

was the undisputed evidence of the Company by RW1 that the Company is in compliance

of all the Articles stated in the complaint as the Company has been contributing 17% to

the EPF and the Union has accepted it since the previous Collective Agreements were in

effect.

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[33] Any issue of non-compliance could have been raised by the Union before the Court

during the Collective Agreement preceding the current Collective Agreement. In

furtherance to this RW2 in her evidence categorically states that the Company was in

compliance of three articles. The Company has always been contributing 17% to EPF and

the Union accepted it since the the previous Collective Agreement. The issue of non-

compliance was never raised before the Court during the last Collective Agreement. RW2

in her cross-examination said that the Company will cumulatively contribute 17% to the

contribution of EPF.

Conclusion

[34] The Court is of a unanimous view that the Union failed to prove satisfactorily the

existence of a breach and non-observance of a term of the 2015 Collective Agreement in

respect of Article 21 (c), Article 4 (e) & Article 30 and accordingly finds that there was

compliance of the said terms of the Collective Agreement. Accordingly, the application for

an order of non-compliance is dismissed.

HANDED DOWN AND DATED THIS 4TH JUNE 2018

~signed~

( EDDIE YEO SOON CHYE )

PRESIDENT
INDUSTRIAL COURT MALAYSIA

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