INDUSTRIAL COURT OF MALAYSIA
CAS NO.1/2 - 280/01
SARAWAK COMMERCIAL BANKS ASSOCIATION (SCBA)
SARAWAK BANK EMPLOYEES' UNION (SBEU)
AWARD NO. 798 OF 2002
||ENCIK YUSSOF BIN
||- EMPLOYER'S PANEL
||ENCIK LAWRENCE VUN
||- EMPLOYEE'S PANEL
|DATE OF REFERENCE
Messrs. R Sivagnanam & Associates, Solicitors for
the Sarawak Commercial Bank Association.
Encik Abdul Jalil bin Mohamad (Encik
Draham Jaladin, Secretary of SCBA with
him) representing Sarawak Commercial
Encik Andrew Lo, General Secretary of
Sarawak Bank Employees' Union (Cik
Maureen Chua with him) for the Union.
The Honourable Minister of Human Resources referred to
this Court under Section 26(2) of the Industrial Relations Act 1967
("the Act") a trade dispute between Sarawak Bank
Employees' Union ("the Union") and Sarawak Commercial
Banks Association ("the Banks"). The dispute is over the terms and conditions of employment
to be incorporated into the Sixth Collective Agreement between the
A W A R D
Minister of Human Resources referred to this Court under section
26(2) of the Industrial Relations Act 1967 ("the Act") a dispute
between Sarawak Bank Employees' Union ("the Union") and
Sarawak Commercial Banks Association ("the Banks"). The Subject
matter of the dispute is the terms and conditions of employment to
be incorporated into the Sixth Collective Agreement between the
2. The Union filed its Statement of Case and the Bank filed a
Statement in Reply. On the first day of hearing the Union tendered:
i.) a Bundle of Documents
ii.) a Bundle of Authorities
and the Banks tendered:
i) two Bundles of Documents
ii) Four volumes of Bundle of authorities
Both parties have also filed their Comparison Tables.
The Court heard submissions of the parties for two days and also
received written submission from the parties.
3. The Banks in Malaysia have three regional associations namely the
Malayan Commercial Banks Association (for Peninsular Malaysia), the
Sabah Commercial Banks Association and the Sarawak Commercial Banks
Association. The bank employees likewise have three Unions. The
Malayan and the Sabah Banks and their employees Unions have
concluded their Collective Agreements. However the Sarawak Banks and
the Union failed to conclude theirs.
4. The Union's claim as in Exhibit SBEU 7 annexed to
its Statement of Claim is for better terms and conditions of
The Banks in their Statement In Reply state that Union's claim for:
i) enhanced starting salaries
ii) adjustment in salary
iii) enhanced annual increments
iv) enhanced employments benefits
v) the introduction of new benefit
are unduly excessive in view of the current economic situation.
The Banks made their counter proposals as in Appendix CO.1 attached
to the Statement In Reply.
5. At the commencement of the hearing the Court was informed that
the following Articles have been resolved: Articles 4, 5, 12, 13,
18, 33, 36 and 39. During the hearing a few more Articles were
agreed to. They are as follows:-
i) Article 1 - Parties
The Banks agree to the Union's proposal to include Finance Companies
in the Agreement provided that they are members of the Banks
Association and have accorded recognition to the Union.
The Union also dropped Article 1(3).
The remaining dispute under Article 1 is only the Union's proposal
in Article 1(2) to include a position of Senior Special Grade
employee as a new category.
ii) The parties have reached further agreements on the following
a) Article 15 - the parties agree to follow the same Article
in the Sabah Agreement
b) Article 17 - the parties also agree to follow the same
Article in the Sabah Agreement.
However for Article 17(2)(a) and (c) the Company accepts the Union's
c) Article 20 - Bonus
The Union drops its claim and agree to retain existing provisions.
d) Article 29 - same as above
e) Article 32 - same as above
f) Article 24 - Medical Benefits
(1)(e) - Union reverts to RM200/-
(3)(b) - Company accepts the Union's proposal
6. DISPUTED ARTICLES
1. Article 1(2)
The Union's proposal as stated earlier is
for the creation of a new category of employees to be known as
"Senior Special Grade" and to be included in the Agreement. The
Banks are opposed to this.
The Union's grounds are that employees have
assumed more responsibilities. It does not ask the Banks to promote
staff to this position but only to create the position. Some of the
Banks have paid special allowance to employees who perform extra
duties. The Union wants this to be formalized so that these
allowances are not later withdrawn as the current memorandum of
understanding governing this is of no legal effect.
The Banks in their submission state
that the creation of a new grade is the function of the management.
With regard to the Union's fear that these allowances may be
withdrawn the Banks' reply is that withdrawal of allowances not
provided for in an agreement but granted by way of existing benefits
is indeed permissible under Article 36(1)(a) & (b).
The Court agrees with the Bank's
submission. It is a management prerogative whether or not to create
a new category of employees. The Union's fear of withdrawal of the
allowances is groundless as there is protection in Article 36(1)(a)
2. Article 2 - Effective Date
The existing Agreement
continued to remain in force until 31 December 1999 and thereafter
until superseded by a new Agreement.
The Union proposed that the
Agreement to awarded by the Court should commence from 1 January
2000 and remain in force until 31 December 2002 and thereafter until
superseded by a new Agreement.
The Banks on the other hand
proposed that the effective date of the Agreement should be 1
The Union is aware of the
provision of section 30(7) of the Act which provides:
An award may specify the period during which it shall continue in
force, and may be retrospective to such date as is specified in the
Provided that the retrospective date of the award may not, except in
the case of a decision of the Court under section 33 or an order of
the Court under section 56(2)(c) or an award of the Court for the
reinstatement of a workman on a reference to it in respect of the
dismissal of a workman, be earlier than six months from the date on
which the dispute was referred to the Court.
but contends that by awarding 1 January 2000 to be the effective
date the Court is not contravening section 30(7). The said section
by using the word "may" does not make it mandatory that the
retrospective date be only six months from the date on which the
dispute is referred to the Court.
It also contends that the parties
have already agreed to this effective date during the negotiation
and signed a memorandum of understanding. It referred the Court to
Exhibit 4 in its Statement of Case. It provides:
"2. The Banks and the Union agree that the Agreement when
concluded will be effective from 1st Jan. 2000."
In the event of a deadlock and the matter is referred to the
Industrial Court the Banks and the Union agree the said effective
date will be 1st January 2000. Any arrears will also be from this
The Banks argued that the memorandum was part of the various
proceedings that took place during negotiations. The negotiations
did not reach a fruitful conclusion and there was no intention on
the part of either party to give effect to the memorandum. The Banks
also raised the issue that the memorandum was not deposited for
cognizance under section 16 of the Act. They cited the cases of
Beecham Products (Far East) Sdn. Bhd. v. National Union of
Petroleum and Chemical Industry Workers (1990) 2 ILR 588 and Socfin
Co. (Minyak Estate, Batang Berjuntai) v. National Union of
Plantation Workers (1986) 1 ILR 1020. The issue before the
Court is the validity of the memorandum of understanding in which
the parties had agreed that "in the event of a deadlock and the
matter is referred to the Industrial Court the effective date will
be 1st January 2000", and not a variation of a Collective Agreement.
The memorandum is admissible under section 54(1) of the Act which
Where a trade dispute relates to matters as to which negotiation or
conciliation proceedings have taken place under this Act, no
evidence shall be given in the proceedings before the Court as to
such negotiation or conciliation proceedings other than a written
statement in relation thereto agreed to and signed by the parties to
In the opinion of the Court such memorandum being admissible under
section 54 clearly shows the intention of the party to be bound by
it. It had specifically addressed the issue of what would happen if
the matter is referred to Court when negotiation breaks down. It
will be contrary to equity and good conscience to allow the Banks to
go back on their words. The Court would also agree that section
30(7) of the Act gives the Court a discretion on the backdating of
the award. By using the word "may" section 30(7) of the Act is not
The decision of the Court is supported by a
decision of the High Court in this case between the same parties
reported in (1990) 2 MLJ 315 where at page 317 Haidar J held:
"Mr. Varughese, counsel for the applicant, urged the Court to
read the word 'may' as "shall" thereby making sub-section 7 a
"For myself I would read the word 'may' as discretionary and at
most directory and I say for the following reasons:
(a) The restriction imposed on the power to make the award
retrospectively is applicable only in respect of cases where the
parties do not agree on the effective date of the agreement. This is
obvious as if the parties took time to settle the dispute on some
substantial matters but agreed on the date of its implementation and
thereby finally referred the dispute under section 26(2) of the Act
to the Minister of Labour late, then the whole scheme will be
defeated especially in view of the fact that this agreement is to be
a continuation of the previous agreement. In my view this will be in
conflict with section 30(5) which reads:
Court shall act according to equity, good conscience and the
substantial merits of the case without regard to technicalties and
In the circumstances the Court agrees with the Union that the award
shall be retrospective from 1st. January 2000 as agreed in the
memorandum of understanding between the parties. Therefore the
Collective Agreement between the parties shall be deemed to be from
1st. January 2000 to 31st. December 2002.
3. Articles 7, 8 and 9
It is contention of the Banks that the
Union's proposals in these articles are not trade disputes.
Therefore the Court has no jurisdiction to deal with them. Article 7
is on leave on trade union business, Article 8 is on inter-relations
committee and Article 9 is on Notice Boards. Trade dispute is
defined in section 2 of the Act as follows:-
"trade dispute" means any dispute between an employer and his
workmen which is connected with the employment or non-employment or
the terms of employment or the conditions of work of any such
The Banks quite rightly pointed out the difference between trade
dispute and matters that can be included in a Collective Agreement.
A Collective Agreement is defined in the same section 2 of the Act
"Collective Agreement" means an agreement in writing concluded
between an employer or a trade union of employers on the one hand
and a trade union of workmen on the other relating to the terms and
conditions of employment and work of workmen or concerning relations
between such parties.
Accordingly the Banks contend that while parties are free to
negotiate any and every matter governing terms and conditions of
employment and matters affecting their relations during collective
bargaining, when a dispute arises and the same is referred for
adjudication the Court can only look at matters which are trade
The Court agrees with the Banks' contention. The
subject matters of Articles 7, 8 and 9 are the relationship between
the Banks and the Union and are not connected with employment or
terms of employment or conditions of work.
If an authority is required it is the decision of the then Federal
Court in Non-Metallic Mineral Products Manufacturing Employees
Union v. Malaysia Glass Factory Bhd (1985) 1 MLJ236, in
which the Court held that "check off" is not a trade dispute.
Therefore the Court declines to make an award on
4. Articles 10, 14 and 16
Article 10 deals with Probation. Here the Union
seeks to retain the existing provision which specifies the probation
period and other matters. It also seeks to introduce a new
sub-article which determines the probationers' salaries.
Article 14 is on Temporary and Part-time
Employees. The Union seeks to retain the existing provisions which
spells out the Banks' right to appoint them in abnormal
circumstances and provide for their terms and conditions of
The Union now seeks to impose an important
condition under this Article as follows:-
(c) Other than permanent, temporary or part-time
employees, all other forms of employment (including outsourcing)
shall require the prior agreement with the Union before
The Court believes that this is one of the issues which
the Union feels very strongly that prevents the parties from
concluding their collective bargaining amicably.
Article 16 deals with Promotion. Again the Union makes
proposal governing promotion to Senior Special Grade Clerical.
The Bank seeks to amend the existing provisions so that
the Article does not offend against section 13(3) of the Act.
The Banks submit that the Union's proposals in these
Articles contravene section 13(3) of the Act which provides as
(3) Notwithstanding subsection (1), no trade union of workmen may
include in its proposals for a collective agreement a proposal in
relation to any of the matters, that is to say -
(a) the promotion by an employer of any workman from a lower grade
or category to a higher grade or category;
(b) the transfer by an employer of a workman within the organization
of an employer's profession, business, trade or work, provided that
such transfer does not entail a change to the detriment of a workman
in regard to his terms of employment;
(c) the employment by an employer of any person that he may appoint
in the event of a vacancy arising in his establishment.
In respect of Article 10 the Court is of the opinion that the
Union's proposal does not contravene section 13(3)(c). In the
Court's opinion what is prohibited is a proposal by a Union that any
person be appointed by an employer in the event of a vacancy.
Matters governing probation e.g. the length of the probationary
period and the terms and conditions applicable on probation may be
included and the Court may adjudicate on these proposals.
The Court therefore awards that the existing
provision in Article 10 be retained.
In respect of Article 14 on the Temporary and
Part-Time employees the Banks seriously object to the proposed
Article 14(c) which seeks to prohibit the Bank to outsource its
non-core functions to outsiders without the prior agreement of the
Union. The Banks do not agree that the existing provisions be
continued in respect of this matter. They claim these matters have
nothing to do with terms and conditions of employment between
serving members of the Union and the Banks. The Banks submit if by
outsourcing the Banks have to terminate the service of serving Union
members they can file for reinstatement under section 20(3) of the
Act. The Banks also claim that it is the prerogative of the
management of the Banks how they manage their business i.e. whether
to do their non-core functions in-house or to outsource them
provided that it is done fairly and there are sufficient safeguards
in the law against abuse of this prerogative. The Banks cited a
decision of the Australian High Court in the case of The
Judges of the Commonwealth Industrial Court & Ors. Ex-parte Cocks
and Others (1968) 121 CLR 313 which held:
"The Commonwealth Conciliation and Arbitration Commission has
no power under sections 23 and 32 of the Conciliation and
Arbitration Act 1904 - 1967 to make an award prohibiting employers
from having work done by independent contractors outside their
factory or workshop".
The Banks also submit that the regulatory authority for the banking
industry namely Bank Negara Malaysia has in fact encouraged
outsourcing because this will enhance efficiency and competitiveness
in the industry.
The Court holds that the right to outsource is
part of management's prerogative. It certainly does not require the
agreement of the Union. However in order that members of the Union
may be prepared for it and the possibility of Voluntary Separation
Scheme that may follow and for the sake of industrial harmony the
Court agrees that there should be consultation between the parties.
This is provided in the existing agreement and should be continued.
The dispute in Article 16 is again whether
the Union's proposal offends section 13(3) of the Act. While we
agree that the Union cannot include the post of Senior Special Grade
Clerk as one of the promotion posts the existing provision in our
opinion does not offend against section 13(3). In our opinion what
the section prohibits is for the Union to propose any workman to be
promoted. What the Union proposed still preserved the Bank's
prerogative on promotion. The proposals are also reasonable and have
not created any problem to the Banks.
In the circumstances the Court awards in
terms of existing provisions. However the Court is of the opinion
that the Agreement should not provide for the employment of school
leavers and Part-time employees and their terms and conditions of
5. Article 19 - Rates of Pay
The main dispute in this Article is the issue of
salary revision. The Union is asking for salary structure
improvement of 11% as granted to the Sabah Union and a salary
adjustment of 18% for non-clerical, 16% for clerical and 4% for
Special Grade. The Banks propose no adjustment at all. For Sabah the
Banks have agreed to grant salary revision of 12% to Non-clerical
and Clerical Grades and 11.5% to Special Grade.
The Union in its submission made a plea that the Harun
formula of granting only a salary revision of between 60% and 2/3 of
the increase in Consumer Price Index (CPI) since the last salary
revision should be abandoned and asked that full increase in CPI
should be allowed. It also made a point that the Harun formula
should only be followed if salary increase is based purely on
increase in CPI. It submits there are other factors that the Court
should take into account when considering salary revision and they
are the salary revision in comparable industry, rate for the job,
employers expectation of reasonable profits, employer's financial
capacity and finally the requirements of section 30(4) of the Act
which requires the Court to have regard to public interest the
financial implications and the effect of the award on the economy of
the country and industry concerned and also to the probable effect
in related or similar industries.
The main thrust of the Union's submission in the
Court's opinion is that since the same Banks operating in Sabah have
granted the revision mentioned earlier the Court should at least
grant similar rates of revision for Sarawak. The Union's claim for
higher rates of revision is based on the consideration that it
assumed the effective date of the Agreement to be awarded by the
Court would be 1st September 2000 and not 1st January 2000. It
quoted the decision of Harun J (as he then was) in a case between
the same parties (Award No. 178/81) which held:
"The majority of the bank employees in the three regions work for
the same employers and perform the same functions. The principle of
rate for the job should apply to all three regions".
The Court is impressed with this submission. Although the above
decision was handed down in 1981 as far as the Court knows the
position remains the same today. We do not consider the other
principles of wage fixation are as important in this case. The Banks
do not deny that they have the financial capacity to grant some wage
increase and they will not be deprived of reasonable profit in the
event a fair and equitable wage increase is granted.
The Banks submit that the Court should not even
grant the same salary revision as granted to Sabah employees. They
contend that the agreement the Banks entered with the Union in Sabah
was consensual agreement reached by the parties taking into
consideration their respective assessments of cooperation work
demands and other factors peculiar to their locations and
operations. The Court agrees that the level of cooperation between
the Banks and the Union in Sabah may be better than that between the
Banks and the Union in Sarawak. The Court is not satisfied that work
demand and other relevant factors in Sabah are different from those
in Sarawak. The Court cannot take into account the different level
of cooperation between the Banks and the Union in Sabah in
considering whether to award a salary revision or not and the
quantum of the revision. The Court will determine the issue based on
generally agreed principles. The best authority that the Court can
rely on would be Arab-Malaysia Development Berhad v. Perak
Textile & Garments Manufacturing Employees Union (Award No. 45/87).
The Court held in this case as follows:
"Over the years, the Industrial Court, including its predecessors
the Industrial Arbitration Tribunal, has, in deciding on the
question of wage increases, generally taken into account the
(a) Wages and salaries in comparable establishments in the same
(b) Any rise in the cost of living, since the existing wages and
salaries were last revised;
(c) The financial capacity of the employer to pay the increases; and
(d) The legitimate desire of the employer to make a reasonable
The Banks submitted at great length on the cost of living factor. In
short the Banks say the salaries of the Bank employees have been
revised many times and have addressed the need to offset inflation.
The Banks also say the Sarawak allowance should also be considered
as a measure to reduce the loss in purchasing power of wages due to
inflation. In summary the Banks say total CPI increase for the
period 1988 - 1999 is 35%, the total increase in salary has been
74.4% and 92.6% with the average increase in salaries being about
89.02%. The Court is of the opinion that the Banks have taken the
wrong period (1988 -1999) into consideration. The relevant period is
the period of the existing agreement i.e. 1.1.1997 - 31.12.1999.
What is the increase in CPI during the period? If the increase to be
allowed is based solely for the purpose of keeping pace with the
increase in the cost of living then the Court should allow salary
adjustment of between 60% and 2/3 of the increase in CPI. It is not
right under this principle to take into account previous salary
increases. In the cases of Firma Bulking Services Sdn. Bhd. v.
Kesatuan Kebangsaan Pekerja-Pekerja Perdagangan (1996) 2ILR 1690 and
Mutsui OSK Lines Malaysia Sdn. Bhd. v Kesatuan Kebangsaan
Pekerja-Pekerja Perdagangan (1997) 1 ILR 624 the Court
declined to award adjustments because salary revisions have been
made during the currency of the existing Collective Agreements.
Therefore the Court cannot agree with the Bank's submission that no
salary revision be made on account that there have been many
revisions in the past (but not during the currency of the existing
Financial capacity is not disputed by the Banks.
However the Court would say that if any revision is awarded by the
Court it is not solely on the ground that the Banks can afford it.
Having taken all the factors into consideration
and the requirements of section 30(4) of the Act and in particular
the principle that wages in comparable establishment in the same
region can be used as one of the factors the Court awards that
Article 19 of the Agreement between the Banks and the Sarawak Union
shall be the same as Article 19 of the Sabah Agreement. This means
the Banks shall grant to their Sarawak employees the same salary
revision as they did to their Sabah employees.
There are other Articles in dispute between the
parties. Having decided that Article 19 on salary should be the same
as in the Sarawak Agreement the Court based on the same
consideration hold that other disputed articles of benefits should
also follow the Sabah Agreement.
However there remains one final Article to be decided
i.e. Article 38. In this Agreement the Court is of the opinion that
the benefits of this award should also be extended to those
employees within the scope of the agreement including those who have
resigned before the date of the award. The Court feels it will be
inequitable to deprive them of the benefits of the Agreement merely
because they have resigned. It is different if they were dismissed.
The Collective Agreement between the parties taking into
account the award of the Court and the agreement between the parties
shall be as in the Annexure to this Award.
HANDED DOWN AND DATED THIS 20TH DAY OF SEPTEMBER 2002.
(YUSSOF BIN AHMAD)