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 - CHAIRMAN ENCIK MATHIALAGHAN A/L VERA RAGHVAM EMPLOYEE'S PANEL PUAN SARITA A/P BERAM SHAH @ RAJARAM EMPLOYER'S PANEL : Mahkamah Perusahaan Malaysia, Kuala Lumpur

VENUE

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.

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.

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

(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];

(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

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-

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 2 : Article of Agreement Article 2 : Proposed Varied Collective

Effective Date : 01.03.1999 28.02.2002 and Effective Date : Opening of Resort until thereafter unless superseded. 28.02.2010, or 3 years from opening, whichever is later, and thereafter unless 7

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 : Article 5: Settlement of Dispute Stage 2 - 5 days Stage 3 - 7 days Stage 4 10 days. Article 6 :

Recognition and Scope of Agreement Lists 6 Recognition of Categories Spa employees is excluded categories. a new excluded category. Hotel not to employ temporary workers. Article 7 : Deletion of restriction on Hotel to employ temporary workers. Article 8: period 3 months, plus 3

Probationary period of 3 months, plus 1 Probationary month extension. months. Article 8 : Effect of promotion on entitlements and Increment. Article 10 : 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 : 8 Charge

Points Charge Points structure varied as in Appendix II and Increment structure varied. Article 11: Revised payment for work on rest day. Article 13 : Annual Leave Less than 5 years 14 days. 5 10 years 18 days. More than 10 years 22 days. Article 14 :

Sick leave less than 2 years 16 days 2 5 years 18 days more than 5 years 22 days.

Sick leave Less than 2 years 14 days 2 5 years 18 days more than 5 years 22 days

Hospitalization : 4 months full salary and 4 Deletion of this clause months half salary. Limit of hospital fees RM6,000.00 Article 14 : Limit of hospital fees increased to RM8,000.00 Article 15 :

Specific provisions on maternity leave for Deletion of this specific provision. certain category of female employees. Article 15: Drug rehabilitation leave. Article 24 : Deletion of this Article. Article 24 :

Cash advance payable 10 days before relevant Cash advance payable 14 days before relevant festival. festival. Deduction in 3 installments. Deduction in 2 installments. Article 25 : Overtime pay twice hourly substituted with days off. Article 26 : Split shift allowance RM3.50 Article 27 : Overnight shift allowance rate. Article 25 : Not Overtime pay is 1 times hourly rate or replacement days off. Article 26 : Split shift allowance RM3.00 Article 27 : Overnight shift allowance structure revised.

Article 28 on Special relief allowance and Deleted Article 29 on Outside Catering Allowance. Article 30 on Service Charge. 9 Replaced by Appendix II revised structure.

Article 31 : Salary Revision and Annual Increment. Article 32 : Annual Bonus Article 33 : Retrenchment/redundancy benefits Article 34 : Retirement/Death benefits 30 days. Basic salary Article 35 of Existing Benefits. Article 38 on Individual Agreement. Article 40 :

Article 28 : Revised structure on Annual Increment. Article 29 : Revised Annual Bonus. Article 30 : As per Regulation 8 of Employment Act (Termination and Layoff Benefits) Article 31 : Retirement/Death benefits 20 days. Basic salary. Deleted Article 31 :

Medically Boarded Out 30 days basic salary. 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 Appendices Deleted 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 reopening 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

12

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 reopening 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

13

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

14

(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

15

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

17

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 18

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 with variation. [Emphasis added} .................................................................................................................

19

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. To reiterate, 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 for a 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 any terms 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 the two 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 21

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) of Appendix 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 22

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 ReAmended Form N [Enclosure 43], the Hotel states that the variation is necessary
23

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

24

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

25

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

26

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

27

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 reopening 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 Supplementary Agreement, 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 reopening 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 reemployed 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 reopening 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 reopening 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 :37

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 this Supplementary 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) above before 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

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