award no: 604 of 2012. shangri-la hotels (malaysia) berhad and national union of hotel, bar and...

7/29/2019 AWARD NO: 604 OF 2012. SHANGRI-LA HOTELS (MALAYSIA) BERHAD AND NATIONAL UNION OF HOTEL, BAR AND RE

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INDUSTRIAL COURT MALAYSIA

CASE NO. 4(1)(4)/7-1351/06

BETWEEN

SHANGRI-LA HOTELS (MALAYSIA) BERHAD

AND

NATIONAL UNION OF HOTEL, BAR AND RESTAURANT WORKERS,

PENINSULAR MALAYSIA

AWARD NO: 604 OF 2012.

CORUM : Y.A. TUAN P IRUTHAYARAJ A/L D PAPPUSAMY - CHAIRMANENCIK MATHIALAGHAN A/L VERA RAGHVAM EMPLOYEE'S PANEL

PUAN SARITA A/P BERAM SHAH @ RAJARAM EMPLOYER'S PANEL

VENUE : Mahkamah Perusahaan Malaysia, Kuala Lumpur

DATE OF FILING OF RE-AMENDED FORM N : 13.08.2010.

DATES OF MENTION : 21.08.2006; 11.09.2006; 11.10.2006; 04.12.2006; 08.01.2007;

22.03.2007; 20.06.2008; 21.07.2008; 21.08.2008; 30.09.2008;

12.11.2008; 16.12.2008; 16.01.2009; 17.02.2009; 17.03.2009;

19.05.2009; 08.06.2009; 29.07.2009; 11.09.2009; 29.01.2010;

21.04.2010; 12.08.2010; 06.10.2010; 20.10.2010; 03.12.2010;

19.04.2011; 06.05.2011; 15.07.2011; 19.10.2011; 15.12.2011;

18.01.2012; 30.01.2012.

DATES OF HEARING: 29.06.2009; 19.08.2010; 11.01.2011; 01.03.2011; 22.09.2011;

10.02.2012.

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REPRESENTATION: Dato' Feroz Hussein bin Ahmad Jamaluddin of Messrs Hafarizam

Wan & Aisha Mubarak with Cik Cheng Mai of Messrs

Puthucheary, Counsel for the Applicant.

Cik Shireen Selvaratnam of Messrs Sreenevasan, Counsel for the

Union.

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AWARD

This is a Re-Amended Application in Form N [Enclosure 43] (the Variation

Application) filed by Shangri-La Hotels (Malaysia) Berhad on 13.08.2010

(hereinafter referred to as the Applicant)(the Hotel) pursuant to Section 33(2)

of the Industrial Relations Act 1967 (the IR Act) seeking to vary (i) the 10th

Collective Agreement (01.03.2002 28.02.2005 given Cognizance No. 209/2003)

(the Collective Agreement) which had been entered into between the

Applicant and National Union of Hotel, Bar & Restaurant Workers, Peninsular

Malaysia (the Union) and (ii) the Supplementary Agreement dated 13.01.2005,

given Cognizance No. 2-209/2003-5 (the Supplementary Agreement) which

was entered between the same parties, in the following respects :-

(A) To vary the Collective Agreement, upon terms of the draft set out in

Annexure A of the Re-Amended Form N; and/or in the alternative;

(B) To vary Clause 3.1 of the Supplementary Agreement by adding :-

(i) the words Subject to Article 2.1 Clause (d) above before the words

It is hereby agreed; and

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(ii) after the words as if this Supplementary Agreement had not been

entered into the following but subject always to Article 2.1 Clause

(d) above as per marked in Annexure D.

[Note : where the term 'the Collective Agreement' appears in this Award it means the

current Collective Agreement or the old Collective Agreement and these terms are used

interchangeably].

The relevant cause papers that had been filed by both parties in respect of the

Variation Application are as follows :-

(i) Re-Amended Form N by the Applicant (Enclosure 43)[Variation

Application];

(ii) Statement in Reply by the Union [Enclosure 19];

(iii) Amended Substantive Reply on the Merits by the Union [Enclosure 47];

(iv) Affidavit of Arbind Kumar Shrestha affirmed on 07.09.2010 [Enclosure

51a];

(v) Affidavit of Christopher Sakayaraj affirmed on 17.09.2010 [Enclosure 51b];

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(vi) Affidavit In Reply of Emanuel A.S. Angelus affirmed on 04.10.2010

[Enclosure 53];

(vii) Affidavit of Christopher Sakayaraj No. 2 affirmed on 13.10.2010

[Enclosure 57];

(viii Affidavit of Emanuel A.S. Angelus No. 2 affirmed on 02.11.2010

[Enclosure 62]; and

(ix) Affidavit of Christopher Sakayaraj No. 3 affirmed on 26.11.2010

[Enclosure 65].

Brief Facts

The Applicant owned and operated a hotel/resort under its trade name which

was known as Shangri-La's Rasa Sayang Resort at Batu Ferringi, Penang

(hereinafter referred to as the old hotel). The Applicant embarked on a major

re-development and re-positioning of the old hotel which entailed a complete

cessation of business and the closure of the old hotel from 01.12.2004 for a

minimum of 18 months.The employees of the old hotel were retrenched and

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were paid retrenchment benefits.

The Applicant and the Union entered into the Supplementary Agreement dated

13.01.2005 which reflects the agreement reached between them following the

decision of the old hotel to close for renovations. When it re-opened on

28.09.2006, it was renamed Shangri-La's Rasa Sayang Resort and Spa

(hereinafter referred to as the new hotel).The Applicant commenced their

recruitment exercise around April/May 2006 in preparation for the re-opening of

the new hotel.

(A) The Applicant's Application for Variation of the Collective Agreement

The issue here is whether there is a legal basis for the Applicant in the instant

case to vary the Collective Agreement as set out in the attached draft

Collective Agreement marked as Annexure A (with the attached Annexure B)

pursuant to Section 33(2) of the IR Act?

The Applicant had filed into Court the Re-Amended Form N on 13 08 2010 for

the variation of the Collective Agreement as stated earlier. In addition to the Re-

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Amended Form N and Annexure A, the Applicant also attached Annexure B

(the attached Annexure B ).

For ease of reference the Applicant had stated that :

(i) the attached Annexure B sets out a summary of the main variations

sought, comparing the Proposed Varied Collective Agreement (in

Annexure A) with the old Collective Agreement dated 19.06.2003 (in

Annexure C); and

(ii) the attached Annexure C sets out the full terms of the old Collective

Agreement dated 19.06.2003.

In summary as contained in the attached Annexure B, the variations sought by

the Applicant are as follows :

Article of Old Collective Agreement Article of Proposed Varied Collective

Agreement

Article 2 :

Effective Date : 01.03.1999 28.02.2002 and

thereafter unless superseded.

Article 2 :

Effective Date : Opening of Resort until

28.02.2010, or 3 years from opening,

whichever is later, and thereafter unless

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superseded.

-

Article 3 :

Principle of multi-skilling.Article 4 :

Settlement of Dispute

Stage 2 - 3 days

Stage 3 - 5 days

Stage 4 - 7days.

Article 5:

Settlement of Dispute

Stage 2 - 5 days

Stage 3 - 7 days

Stage 4 10 days.

Article 5 :

Recognition and Scope of Agreement Lists 6excluded categories.

Hotel not to employ temporary workers.

Article 6 :

Recognition of Categories Spa employees isa new excluded category.

Deletion of restriction on Hotel to employ

temporary workers.

Article 7 :

Probationary period of 3 months, plus 1

month extension.

Article 8:

Probationary period 3 months, plus 3

months.

Article 8 :

Effect of promotion on Charge Points

entitlements and Increment.

Charge Points structure varied as in

Appendix II and Increment structure varied.

Article 10 :

Payment for work on rest day.

Article 11:

Revised payment for work on rest day.

Article 12:

Annual leave -

Less than 2 years 14 days.

2 5 years 18 days

more than 5 years 24 days.

Article 13 :

Annual Leave -

Less than 5 years 14 days.

5 10 years 18 days.

More than 10 years 22 days.

Article 13 : Article 14 :

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Sick leave

less than 2 years 16 days

2 5 years 18 days

more than 5 years 22 days.

Hospitalization : 4 months full salary and 4

months half salary.

Limit of hospital fees RM6,000.00

Sick leave

Less than 2 years 14 days

2 5 years 18 days

more than 5 years 22 days

Deletion of this clause

Limit of hospital fees increased to RM8,000.00

Article 14 :

Specific provisions on maternity leave for

certain category of female employees.

Article 15 :

Deletion of this specific provision.

Article 15:

Drug rehabilitation leave. Deletion of this Article.

Article 24 :

Cash advance payable 10 days before relevant

festival.

Deduction in 3 installments.

Article 24 :

Cash advance payable 14 days before relevant

festival.

Deduction in 2 installments.Article 25 :

Overtime pay twice hourly rate. Not

substituted with days off.

Article 25 :

Overtime pay is 1 times hourly rate or

replacement days off.

Article 26 :

Split shift allowance RM3.50

Article 26 :

Split shift allowance RM3.00

Article 27 :

Overnight shift allowance

Article 27 :

Overnight shift allowance structure revised.

Article 28 on Special relief allowance and

Article 29 on Outside Catering Allowance.

Deleted

Article 30 on Service Charge. Replaced by Appendix II revised structure.

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Article 31 :

Salary Revision and Annual Increment.

Article 28 :

Revised structure on Annual Increment.

Article 32 :

Annual Bonus

Article 29 :

Revised Annual Bonus.

Article 33 :

Retrenchment/redundancy benefits

Article 30 :

As per Regulation 8 of Employment Act

(Termination and Layoff Benefits)

Article 34 :

Retirement/Death benefits 30 days.

Article 31 :

Retirement/Death benefits 20 days.

Basic salary Basic salary.

Article 35 of Existing Benefits.

Article 38 on Individual Agreement.

Deleted

Article 40 :

Medically Boarded Out 30 days basic salary.

Article 31 :

Medically Boarded Out 20 days basic salary.

--- Article 32 :

Group Accident Policy RM20,000 for death

or permanent disability.

Article 42 :

Prohibition of Unfair Labour Practice Deleted

Appendices Appendices varied with new structure.

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The Applicant's Contention

In support of the Variation Application pursuant to Section 33(2) of the IR Act

with regard to the Collective Agreement, the Applicant had contented inter alia

as follows:-

(a) that the basis for varying the Collective Agreement is that the Applicant

is conferred with the right,(the said conferred right) pursuant to Clause

2.1 (d)(i) and (iii) of the Supplementary Agreement to the said Collective

Agreement, to determine the organizational structure, category and

positions of such vacancies and to offer new terms and conditions of

employment as may be set by the Applicant (the Applicant's proposed

new terms and conditions as per attached Annexure B) to 100 former

employees of the Applicant.;

(b) that arising from the negotiations and bargaining of the Supplementary

Agreement, it was agreed by mutual consent that the terms and conditions

and organization structure for the first collective agreement for the new

Resort would be determined by the Hotel;

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(c) that pursuant to the said conferred right of the Applicant to engage 100

former employees based on the Applicant's proposed new terms and

conditions as per attached Annexure B, it is therefore logical for the

Collective Agreement to be varied and/or amended to reflect these

proposed new terms and conditions, thereby removing any ambiguity as

to what are the precise terms and conditions of the Collective Agreement

upon re-opening of the new hotel;

(d) that in the spirit of goodwill and industrial harmony, the Hotel was

agreeable to allow the Union continued recognition in the new Resort, but

subject always to the structure and terms of the Collective Agreement for

the new Resort to be determined by the Hotel;

(e) that it was agreed between the Applicant and the Union that upon the re-

opening of the new hotel, the Collective Agreement will reinstated. It is

the Applicant's contention that an ambiguity arises in Article 3.1 of the

Supplementary Agreement when it is read together with Article 2.1.Clause

of the Supplementary Agreement. According to the Applicant the

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ambiguity here is how does the phrase upon re-opening of the Resort in

Clause 3.1 of the Supplementary Agreement rests with Clause 2.1(d)

which also refers to upon the re-opening of the Resort;

(f) that it was agreed between the Applicant and the Union that upon re-

opening of the new hotel the Collective Agreement (in its varied form) will

be reinstated. In this respect, it is the Applicant's submission that the

Collective Agreement to be reinstated must be the amended version as

envisaged by Clause 2.1 (d) (i) and (iii) of the Supplementary Agreement;

(g) that the variation of the Collective Agreement pursuant to Article 2 Clause

2(b) of the Collective Agreement is by way of mutual consent;

(h) that therefore the Collective Agreement containing the new terms and

conditions shall apply to all new employees of the Hotel when it re-opens

and not just to the former employees in the interest of equity and

maintaining of industrial harmony;

(i) that the Union wrote a letter to the Applicant dated 26.05.2006 (see Exhibit

A-1 Tab 6 of Enclosure 51(b)) informing the Applicant that the Applicant

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was entitled to extend new terms and conditions of employment only to

the Former Employees (namely those employees who had been retrenched

and subsequently offered new jobs in the Resort) whereas all other new

employees had to be employed upon the old terms and conditions set out

in the old Collective Agreement. Therefore, in the Applicant's view the

Union took the position that the new terms and conditions were only

applicable to Former Employees which the Resort was to offer positions

to, and all other fresh employees would have to be hired under the

old terms and conditions. The Applicant asserted therefore that such a

position was untenable as it would result in the Hotel having 2 separate

sets of terms and employment for the same body of employees (See Tab 8

of Exhibit A-1 Enclosure 51(b)). According to the Applicant, therefore

there was clearly an inconsistency and ambiguity between the 2 clauses

namely Clause 2.1(d)(i) and (iii) and Clause 3.1 of the Supplementary

Agreement which requires variation of Collective Agreement in the instant

case; and

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(j) that it would cause complete chaos to the business and operation of the

new Resort if the old Collective Agreement were imposed retrospectively

and prospectively without any variation because the new Resort has

implemented a completely different and new organization structure,

position and categories which are necessary to meet the requirements of

the new Resort and which are fundamental to the Redevelopment

Exercise.

It is therefore the Applicant's position that based on the above mentioned

grounds this Court should grant order in terms of the Applicant's application to

grant the Variation of the Collective Agreement as sought for by the Applicant.

The Union's Contention

In opposing the Variation Application with regard to the Collective Agreement

the Union had inter alia submitted as follows :-

(i) the end result for the Hotel if the Variation Application is allowed is that

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the Collective Agreement between the Hotel and the Union will be

replaced in toto by a new Collective Agreement;

(ii) that the terms of this new Collective Agreement as proposed by the

Applicant has not been negotiated with the Union and will be imposed on

the Union unilaterally;

(iii) that there is no ambiguity in the old Collective Agreement or the

Supplementary Agreement in view of the Interpretation of the

Supplementary Agreement vide Award No.468/2011 (the Interpretation

Award) as handed down by another division of the Industrial Court

which held that the terms of the old Collective Agreement will apply upon

the re-opening of the Hotel;

(iv) that the Interpretation Award is directly binding on this Court and must

be taken into account when the Court decides on the Variation

Application. The issue of what terms and conditions are binding on the

employees of the Hotel upon its re-opening is a common issue that arises

in both applications;

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(v) that this proposed variation does not fall within the ambit of section 33(2)

of the IR Act as the current Collective Agreement is neither ambiguous nor

uncertain and in fact there is no suggestion by the Hotel that there is any

ambiguity or uncertainty in the current Collective Agreement;

(vi) that it appears that the Hotel is attempting to rewrite the terms of the

Collective Agreement in bypassing or avoiding the collective bargaining

process which has been in place since 1975 between the parties by

substituting (without prior negotiation) the current Collective Agreement

with a new Collective Agreement;

(vii) a review of the Collective Agreement and the Supplementary Agreement

together with the proposed variations sought by the Applicant (as

summarized and tabulated in attached Annexure B & D to the Variation

Application) show that :-

(a) Paragraphs 1 to 8 of the Variation Application raise issues that do

not fall within the scope of section 33(2) of the IR Act; and

(b) there are no ambiguities highlighted by the Company in the specific

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Articles of the Collective Agreement and the Supplementary

Agreement for which variations are sought based on the above

reasoning.

Therefore it is the Union's position that based on the above grounds this

Honorable Court has no power to grant the Variation of the Collective

Agreement as sought and the Applicant's Variation Application must be

dismissed. Let me now deal with some of the applicable legal principles relating

to the Variation Application before dealing with the Court's finding on the

Application filed by the Applicant.

The Applicable Law Relating To Variation

The Applicant's application for variation of the Collective Agreement and

Clause 3.1 of the Supplementary Agreement were made pursuant to Section

33(2) of the IR Act which states that:-

The Court may, upon the application of any party, by order vary any of the terms of an award

or agreement, if it considers it desirable so to do for the purpose solely of removing ambiguity or

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uncertainty[ Emphasis Added]

With regard to Variation Application pursuant to Section 33(2) the following

principles must be borne in mind:

(1) The first principle involved in Section 33(2) of the IR Act is that a variation

of any terms of an award or collective agreement must be solely for the

purpose of removing any ambiguity or uncertainty. This principle was

clearly stated in the following decisions of the Malaysian Courts:-

(a) In the Court of Appeal case of Syarikat Kenderaan Melayu Kelantan

Bhd v Transport Workers Union [1995] 2 CLJ 748 (the Syarikat

Kenderaan) at page 768 where His Lordship Gopal Sri Ram JCA stated :

In my judgment, Parliament when it enacted the two subsections to s. 33 intended to

meet two distinct situations that so often arise in the course industrial adjudication.

The first type of case, i.e one coming within s33(1) of the Act is where all that is

involved is an interpretation of an award or an agreement. The second is where a

variation of an award or collective agreement is sought by one of the parties thereto.

Section 33(2) is intended to cover such a situation. The Court's power to vary under

the second subsection may be invoked or relied upon only in the event of an

uncertainty or an ambiguity in any award or agreement. Put shortly, the first

subsection deals with interpretation simpliciter, while the second subsection deals withvariation. [Emphasis added}

.................................................................................................................

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and at page 769 His Lordship stated :

A careful reading of the relevant statutory provisions, including Rules 14 and 15,

leaves me in no doubt that the interpretation I have placed upon s. 33 is correct. Toreiterate, that section houses two powers: interpretation and variation, the latter being

dependent for its exercise upon the existence of uncertainty or ambiguity.

I find support for my conclusion from the following passage in the judgment of

Abdoolcader J(as he then was) in Federal Hotel Sdn. Bhd. v. National Union of Hotel,

Bar & Restaurant Workers [1983] 1 MLJ 175 at 177:

Section 33(1).......empowers the Minister to refer any question as to interpretation

of an award or for any party to apply for this purpose to the Industrial Court fora decision thereon.....This leaves the provision of s. 33 (2) by virtue whereof the

Industrial Court may, upon the application of any party, by order vary any of the

terms of an award if it considers it desirable so to do for the purpose solely by

removing ambiguity or uncertainty (Emphasis added).

I ...........If I were to accede to his submission and treat the two subsections to s. 33

as conferring a single remedy, I shall with respect, be stultifying the true intention

of Parliament as expressed in this piece of social legislation. That, of course, I am not

prepared to do.

(b) In the High Court case Trengganu Bus Co. Sdn. Bhd v. Transport Workers

Union [1982] CLJ (Rep) at page 827, His Lordship Hashim Yeop Sani

stated that:

Under S.33 of the Industrial Relations Act 1967, the Industrial Court may vary anyterms of an award if it considers it desirable to do so, but the variation however, must

be solely for the purpose of removing any ambiguity or uncertainty. An award so

varied would become once again binding on the parties.[Emphasis added]

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The other issue to consider is what does the word 'ambiguity' or 'uncertainty'

means in Section 33(2) of the IR Act. The word 'ambiguity' is defined in the book

entitled 'WORDS, PHRASES & MAXIMS- Legally & Judicially Defined by

Anandan Krishnan as 'Doubtfulness; double meaning....'. As to the meaning of

word 'uncertainty' and when Section 33(2) of the IR Act is applicable it was

clearly illustrated by His Lordship V.C. George JCA in the Court of Appeal case

of Syarikat Kenderaan where he held at page 782 of the judgment as follows :-

In my judgment, Parliament had enacted the two ss. 33(1) and (2) each to cover

different situations, 33(1) in respect of the need for an interpretation of some term or

provision either in an award or in a Collective Agreement and 33(2) when seeking, not

an interpretation, but a variation which however can only be sought for the purpose of

removing some uncertainty or ambiguity in an award or in a Collective Agreement.

Encik Anand Ponnudurai of Counsel for the respondents I think aptly illustrated thetwo different situations that the two sub-sections were respectively designed for :

The application to the Industrial Court, the subject of this appeal, was for an

interpretation of back wages in the earlier award of the Court. What the applicant

wanted to know was whether on a true construction of back wages in the context,

bonuses and certain allowances referred to as SRA in the Collective Agreement, were

deemed to be included. This situation he submitted and I agree with this submission,

fell squarely within a s.33(1) situation. The expression back wages was used in the

context of the Collective Agreement and an interpretation of it vis a vis the award was

called for and could be and was properly sought invoking sub-section (1) of s.33.

For a situation calling for a s. 33(2) application the illustration given was a case of an

award directing that back wages be paid without fixing the date from which such

back wages should be computed. That calls for uncertainty that calls for a variation

of the award that would have the effect of fixing the date from which the backwages

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has to be computed. Such a variation would have the effect of removing the

uncertainty.

2. The second principle is that eventhough certain provisions in an

Agreement may be contrary to law that does not necessarily mean that

they are ambiguous or uncertain. In the case of Bal Plantations Sdn. Bhd.

Tawau v. Sabah Plantation Industry Employees Union [1993] 2 ILR the

Learned President of the Industrial Court Mr Tam Kam Weng stated at

page 398 :

By reading s. 33(2) of the Act, as it stands, the Court only has power to vary any terms

of the agreement if it considers it desirable so to do for the purpose solely of removing

ambiguity or uncertainty (emphasis supplied). And we agree with the Company that

paragraphs 2(d), (e), (g) and (h) of Appendix A of the 1991 Agreement, though they are

contrary to law, are not ambiguous or uncertain for paragraphs 2 (d), (e), (g) and (h) ofAppendix A of the 1991 Agreement are :

(1) not capable of double meanings (or ambiguous) or

(2) impossible to ascertain what the intention was (uncertainty).

In the absence of any ambiguity or uncertainty, the Court has no power to vary

the agreement. And we so hold accordingly.

On a Judicial Review Application High Court in Sabah Plantation Industry

Employees Union v. Bal Plantations Sdn Bhd [1997] 1 LNS 63 held that :

If a provision in the agreement is truly unlawful, it does not follow that the

provision is ambiguous or uncertain . It makes the provision unenforceable. An

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ambiguous or uncertain provision found in an agreement cannot by itself be said to

be unlawful. Similarly, an unlawful provision cannot by itself be said to be

ambiguous or uncertain. So, unlawfulness cannot be equated with [4] ambiguity or

uncertainty. ................................................................................................................

In considering the application, I agree with the finding of the Industrial Court that

there is nothing ambiguous or [5] uncertain in the provisions in the Agreement on

account of the inclusion of the impugned paragraphs in it. The impugned

paragraphs themselves are not ambiguous or uncertain.

3. The third principle is that [a document] is not ambiguous by reason

only that it is difficult of construction. If it is finally held to bear a

particular construction, that must govern its legal meaning,

notwithstanding any difficulty that the courts might have felt in

arriving judicially at the construction; it is only ambiguous when, after

full consideration, it is determined judicially that no interpretation can

be given to it. (As per Lord Davey in Higgins v Dawson [1902] AC 1 at

page 10) (the Higgins case).

Court's Finding on the Application for Variation of the Collective Agreement.

The Applicant has applied to vary the current Collective Agreement by

replacing it entirely with a new Collective Agreement. At paragraph 4 of the Re-

Amended Form N [Enclosure 43], the Hotel states that the variation is necessary

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to remove any ambiguity as to what are the precise terms and conditions of the

Collective Agreement upon the re-opening of the Hotel.

After having considered the submissions of the Applicant and the Union with

regard to the Variation Application of the Collective Agreement, the Court's

findings are as follows :-

(i) Based on the authorities mentioned above the proposed variation of the

Collective Agreement as stated in the attached Appendix B for

determining what are the precise terms and conditions of the Collective

Agreement upon the re-opening of the Hotel does not fall within the

ambit of section 33(2) of the IR Act 1967. This is because in the first place

the Applicant has failed to identify any ambiguity or uncertainty in the

current Collective Agreement which requires removal through variation.

What in fact the Applicant is attempting to do is introducing new terms

and conditions into the current Collective Agreement under the pretext of

removing ambiguities (when in fact no ambiguity exist) and converting it

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into a newly varied Collective Agreement (thereby superseding the old

Collective agreement) upon re-opening of the Hotel to allow the Applicant

the exclusive and unilateral right to determine the organizational

structure, category and positions of such vacancies without the

involvement of the Union through the collective bargaining exercise. We

are convinced that the Applicant's contention in this regard has never been

reflected in this manner in the Supplementary Agreement;

(ii) If the Variation Application is allowed it would mean that the present 10 th

Collective Agreement between the Hotel and the Union will be replaced in

toto by a new Collective Agreement where the terms of the proposed

varied Collective Agreement as stipulated in the attached Annexure B

which sets out a summary of the main variations sought, will be imposed

on the Union unilaterally and thereby bypassing the need for the collective

bargaining process which are governed by the statutory provisions of

sections 13 & 14 of the IR Act;

(iii) In the Court's view the Collective Agreement referred to in Article 3.1 of

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the Supplementary Agreement is clearly the existing CollectiveAgreement

as it has been defined in Article 1 of the Supplementary Agreement and

nothing more. The very presence of a Union in any company is to give it

its right to negotiate the employment terms on behalf of the employees. To

give up this bargaining right is completely repugnant to the provisions of

the Industrial Relations Act 1967 which the Union is not entitled to

contract out of. It is therefore completely untenable that the Union would

have ever agreed to the Hotel being able to re-write and replace the

existing Collective Agreement (as shown by the Hotel in the attached

Annexure B) unilaterally without the Union being able to first negotiate

with the Hotel as this is contrary to the spirit and intent of the Industrial

Relations Act 1967. In short, the Company in fact is attempting to re-write

the terms of the Collective Agreement without formally commencing the

collective bargaining process;

(iv) Furthermore, the proposed variations sought in the attached Annexure B

was not attached to the Supplementary Agreement when the

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Supplementary Agreement was signed by the parties;

(v) The Court is convinced that any alleged variation/suspension of the

Collective Agreement through the Supplementary Agreement was

intended to have only temporary effect i.e. during the period of the

closure only. The Supplementary Agreement therefore in our view does

not permanently vary the Collective Agreement and this was in fact the

agreement of the parties; and

(vi) The Court's recognized that the Hotel's letter dated 15.05.2006 which

purported to terminate the Collective Agreement was not done on a

without prejudice basis. This is therefore evidence of the Hotel's

understanding at the material time that the Collective Agreement was

intended to be revived upon the re-opening of the Hotel. If the Hotel had

genuinely understood that the Collective Agreement was not to be

revived, there would be no need to terminate the same.

Based on the above, it is the Court's finding that the Company has not satisfied

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the requirement under Section 33(2) of the IR Act which can only be sought for

the sole purpose of removing any ambiguity or uncertainty. Therefore, the

Company's variation application seeking a variation of the Collective

Agreement between the parties which has been given cognizance No. 209/03 is

hereby dismissed.

(B) Variation of Clause 3.1 of the Supplementary Agreement

The issue here is whether there is a legal basis for the Applicant in the instant

case to vary Clause 3.1 of the Supplementary Agreement by adding (i) the words

Subject to Article 2.1 Clause (d) above, before the words It is hereby agreed;

and (ii) after the words as if this Supplementary Agreement had not been

entered into the following , but subject always to Article 2.1 Clause (d)

above,;

Clause 2.1(d) & Clause 3.1 of the Proposed Varied Supplementary Agreement as

suggested by the Company provides as follows :-

2.1 Clause (d) The Company agrees that upon the re-opening of the Resort in

furtherance to the Redevelopment/Renovation Exercise, the

Company shall ensure that a minimum of 100 positions of various

categories are offered to the said Employees on the following basis :-

i. The Company shall determine the organizational structure,

category and position of such vacancies;

ii. All the said Employees who wish to be employed shall have the

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right to apply for any such vacancies. The Company shall ensure

that applications from the said Employees shall be considered

favorably; and

iii. Such said Employees will be employed upon new terms and

conditions as may be set by the Company.

3.1 Subject always to Article 2.1 Clause (d) above, it is hereby agreed

between the parties hereto that this Supplementary Agreement shall

expire and become null and void upon re-opening of the Resort.

Thereafter the provisions of the said Collective Agreement shall

continue to apply for such period as provided for in the said

Collective Agreement as if this Supplementary Agreement had not

been entered into, but subject always to Article 2.1 Clause (d) above.

The Applicant's Contention

The Applicant had submitted inter alia that the Court should exercise its powers

to vary Clause 3.1 of the Supplementary Agreement pursuant to Section 33(2) of

the IR Act for the following reasons :-

(a) the proposed variations would remove any ambiguity with regard to

whether the new terms and conditions are only applicable to Former

Employees as opposed to new employees (as originally contended by the

Union in their letter dated 26.05.2006 -Tab 6 Enclosure 51B);

(b) the proposed variations are necessary to remove any ambiguity or

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uncertainty arising from the effect and interpretation of Article 2.1 and 3.1

of the Supplementary Agreement on the Collective Agreement. The

Company further contended that this ambiguity or uncertainty has arisen

due to the Union's position, which was revealed in or around the middle

of 2006 in correspondence and meetings, which is completely at odds

with the true interpretation of Article 2.1 and 3.1 of the Supplementary

Agreement. In this regard, the Company referred to the Union's letter

dated 26.05.2006 and also to the Hotel's letter dated 15.05.2006 (see Tab 3

of Exhibit A-1 of Enclosure 51B);

(c) that the Applicant is conferred with the right, pursuant to Article 2.1

Clause (d) (i) and (iii) of the Supplementary Agreement dated 13.01.2005

to the Collective Agreement, to determine the organizational structure,

category and positions and to offer new terms and conditions of

employment to 100 Former Employees of the Applicant;

(d) given that the Applicant has the right to engage the Former Employees on

new organizational structure and terms and conditions, therefore the

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Collective Agreement must be varied and/or amended to reflect these new

organizational structure and terms and conditions. The variation to the

Collective Agreement incorporating the new organizational structure and

terms and conditions would remove any ambiguities as to what are the

applicable terms upon re-opening;

(e) it was agreed between the Applicant and the Union that upon the re-

opening of the Hotel, the Collective Agreement (in its varied form) will be

reinstated. In this respect the Collective Agreement to be reinstated must

be the amended version as envisaged by Clause 2.1(d) (i) and (iii) of the

Supplementary Agreement;

(f) the parties have by mutual consent as evidenced in Clause 2.1 (d) of the

Supplementary Agreement, agreed that the Hotel is entitled to determine

the new organizational structure and new terms and conditions of

employment. The Company had further submitted that the Union had

in its letter dated 26.05.2006 admitted that the old Collective Agreement

has been varied by the Supplementary Agreement (See Exhibit A-1 Tab 6

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of Enclosure 51 b) and therefore the Application for variation will remove

any ambiguity or uncertainty on this issue;

(g) that the proposed variation to Clause 3.1 of the SupplementaryAgreement,

by inserting the underlined words mentioned above, would remove the

ambiguity arising between the two clauses namely Clause 2.1(d) and

Clause 3.1 of the Supplementary Agreement;

(h) that such a variation would make it clear and certain that the Collective

Agreement which would apply upon re-opening is subject to the new

terms and conditions and organizational structure of the new Resort;

(i) that such a variation would clearly be consistent with the objective of the

Redevelopment Exercise of the new Hotel, which was to enable the

Applicant to establish a new Resort with a viable business model, both in

physical terms, as well as operational and organizational;

(j) that the Applicant is ready and willing to negotiate, pursuant to the varied

terms and conditions of the first Collective Agreement of the new Hotel,

the second Collective Agreement of the new Resort as envisaged in Article

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2 Clause (a) and (c) of the first Collective Agreement (see Exhibit A-1 Tab

3 of Enclosure 51B); and

(k) that it would cause complete chaos to the business and operation of the

new Resort if the old Collective Agreement were imposed retrospectively

and prospectively without any variation because the new Resort has

implemented a completely different and new organization structure,

position and categories which are necessary to meet the requirements of

the new Resort and which are fundamental to the Redevelopment

exercise.

The Union's Contention

In opposing the Variation Application with regard to Clause 3.1. of the

Supplemental Agreement the Union had inter alia submitted as follows :-

(i) Sometime around September 2004, the Union was informed by the Hotel

that they were going to embark on a major redevelopment and

repositioning exercise of the Hotel which would entail the complete

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cessation of business and closure of the Hotel from 01.12.2004 for a

minimum period of 18 months;

(ii) Following this announcement, the Union entered into negotiations with

the Hotel relating to the effect of their decision on the employees and the

status of the Union;

(iii) These negotiations culminated in the execution of the Supplementary

Agreement dated 13.01.2005;

(iv) The closure of the Hotel resulted in the termination of all employees

within the scope of the Collective Agreement. The Hotel duly paid these

employees retrenchment benefits;

(v) The Supplementary Agreement expressly provided that upon the re-

opening of the Hotel, the Supplementary Agreement was to expire and

become null and void and the provisions of the Collective Agreement

would continue to apply as if the Supplementary Agreement had not been

entered into Clause 3.1 of the Supplementary Agreement;

(vi) That the Supplementary Agreement was therefore intended to provide

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and subsists only for the period of the closure of the Hotel;

(vii) The Union had also managed to persuade the Hotel to agree to offer a

minimum of 100 positions of various categories to the retrenched

employees upon the re-opening of the Hotel [Clause 2.1(d) of the

Supplementary Agreement];

(viii) The Union contended that they understood the words such said

Employees will be employed upon new terms and conditions as may be

set by the Company in Clause 2.1(d)(iii) of the Supplementary

Agreement to mean that the Hotel was not bound to follow the terms of

employment stipulated in the Collective Agreement for such of those re-

employed employees who were hired during the period of closure;

(ix) This is based on common practice that in the Hotel industry it is common

for employees to be hired before a Hotel opens for training purposes. This

can be seen from the Hotel's letter dated 27.04.2006 where the Hotel

informed the Union that they will commence their recruitment exercise

shortly and the Hotel's letter dated 15.05.2006 where the hotel informed

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the Union that they were in the midst of their recruitment exercise;

(x) In any event, at all times, it is the Union's contention that Clause 2.1(d)(iii)

of the Supplementary Agreement must be read subject to Clause 3.1 which

expressly provides that the provisions of the Collective Agreement will be

revived upon the re-opening of the Hotel;

(xi) It is also the Union's position that during the negotiations of the

Supplementary Agreement, the Union's main concern was to ensure that

the Collective Agreement would continue to apply upon the re-opening of

the Hotel which led to Clause 3.1 of the Supplementary Agreement;

(xii) The Collective Agreement envisaged in Clause 3.1 is without a doubt the

existing Collective Agreement found at pages 1-29 Exhibit U-1;

(xiii) It is also the Union's position that at no point during the negotiations for

the Supplementary Agreement did the Hotel inform the Union that upon

the re-opening of the Hotel, the old Collective Agreement will be replaced

with a new agreement determined arbitrarily by the Hotel which will take

effect without prior negotiations with the Union. As stated above, Clause

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2.1(d)(iii) of the Supplementary Agreement was to have application only

during the period of closure for such of those re-employed employees who

were hired during the period of closure. At all times, Clause 3.1 of the

Supplementary Agreement would take effect immediately upon the re-

opening of the Hotel and this is very clear form the Supplementary

Agreement;

(xiv) The Union also contends that it would never have agreed to Clause 2.1(d)

of the Supplementary Agreement had the Hotel made known their

intentions then; and

(xv) The fact that the Hotel included a notice to terminate the existing

Collective Agreement shows that the Hotel must have also understood

that the Collective Agreement was intended to be revived upon the re-

opening of the Hotel.

Court's Finding on the Application for Variation of Clause 3.1 of the

Supplementary Agreement.

Clause 3.1 of the Supplementary Agreement is reproduced below :-

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It is hereby agreed between the parties hereto that this Supplementary

Agreement shall expire and become null and void upon re-opening of the Hotel.

Thereafter the provisions of the said Collective Agreement shall continue to apply

for such period as provided for in the said Collective Agreement as if thisSupplementary Agreement had not been entered into.

The question here is whether Clause 3.1 of the Supplementary Agreement

requires variation for the purpose solely of removing ambiguity or uncertainty

pursuant to Section 33(2) of the IR Act. In the Court's view, there is no ambiguity

or uncertainty in Clause 3.1 of the Supplementary Agreement since it conveys

the clear meaning that the Supplementary Agreement shall expire and become

null and void upon the re-opening of the Hotel and thereafter the provisions of

the current Collective Agreement shall continue to apply as if the

Supplementary Agreement had not been entered into. This is further reinforced

by the Interpretation Award handed down by another division of Industrial

Court which was referred too earlier which held that based on its interpretation

of Clause 2.1(d) and Clause 3.1 of the Supplementary Agreement, the current

Collective Agreement was in force from the date of the re-opening of the Hotel

and the Hotel did not have the right to unilaterally impose a new Collective

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Agreement on the employees upon the re-opening of the Hotel.

The Applicant states that Clause 3.1 is ambiguous when read together with

Clause 2.1(d) and so the variation sought is necessary to remove any ambiguity

relating to what the precise terms and conditions of the Collective Agreement

are upon the re-opening of the Hotel. In the Interpretation Award however the

Industrial Court held that based on their interpretation of Clause 2.1(d) and

Clause 3.1 of the Supplementary Agreement, the current Collective Agreement

was in force from the date of the re-opening of the Hotel and the Hotel did not

have the right to unilaterally impose a new Collective Agreement on the

employees upon the re-opening of the Hotel.

This Court is therefore convinced that there is no ambiguity on what terms

ought to apply upon the re-opening of the Hotel it is simply the terms of the

current Collective Agreement. Hence the need to vary Clause 3.1 of the

Supplementary Agreement by adding (i) the words Subject always to Article 2.1

Clause (d) abovebefore the words It is hereby agreed and after the words as

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if this Supplementary Agreement had not been entered intothe following, but

subject always to Article 2.1 Clause (d) above does not arise.

Conclusion

The Court have very carefully scrutinized the provisions contained in the

Collective Agreement and the Supplementary Agreement and the arguments

advanced by the Applicant and the Union in respect of the Variation Application

and it is therefore our view that there is no basis for Variation of the current

Collective Agreement or Clause 3.1 of the Supplementary Agreement in view of

the following :-

(i) the Court is convinced that there is no ambiguity or uncertainty in the

current Collective Agreement or Clause 3.1 of the Supplementary

Agreement pursuant to Section 33(2) of the IR Act;

(ii) the Court cannot ignore the Interpretation Award No. 468 of 2011 with

regard to the interpretation of the Supplementary Agreement which held

that the current Collective Agreement was in forced from the date of the

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Hotel re-opened. In the premises, the Variation Application filed by the

Company under the Re-Amended Form N [Enclosure 43] is hereby

dismissed.

HANDED DOWN AND DATED THIS DAY 09th MAY 2012

-signed-

(P IRUTHAYARAJ A/L D PAPPUSAMY)

PENGERUSI

MAHKAMAH PERUSAHAAN MALAYSIA

KUALA LUMPUR

award no: 604 of 2012. shangri-la hotels (malaysia) berhad and national union of hotel, bar and...

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