Jetvalet Sdn Bhd v 1. ) Lukman Hakim Bin Mohd Zaki (BA-16-24-05/2024)

LUKMAN HAKIM BIN MOHD ZAKI

MOHD FARIDZ BIN ABU BAKAR (NO. K/P: 800327-05-5067) RESPONDEN-RESPONDEN ALASAN PENGHAKIMAN Introduction [1] This is an appeal against the decision of the Labour Department Director General (“the Labour Court”) dated 10 May 2024 ordering the Appellant to pay the Respondents their productivity allowance for the months of August and September 2023 (“the Order”). Factual Background [2] The Appellant is a company that offers, among other services, private jet transportation exclusively for members of Amanah 11/06/2025 11:22:18 Kand. 19 Pelaburan Berhad Cooperative (“KAPB”). The Respondents are pilots who were employed by the Appellant, with the Second Respondent serving as the Captain Pilot and the First Respondent as the First Officer. [3] Both Respondents were appointed pursuant to a Pre-Contract Letter of Intent of Employment dated 5 March 2021 and a Letter of Offer of Employment dated 7 March 2021. [4] Subsequently, the Appellant sponsored and fully funded the Respondents training in the United States to ensure their successful certification as Captain Pilot and First Officer. This was done under the Agreement for a Course of Conversion Training dated 19 May 2021 enabling the Respondents to obtain valid flight licenses. [5] On the same date, the Respondents also executed a Fixed Term Contract to serve as flight crew for the Appellant, which required them to serve for a period of seven (7) years following their certification as qualified Pilot and First Officer. [6] The First Respondent was employed by the Appellant under two agreements, both dated 19 May 2021, each with a fixed term of seven years. Under the Employment Agreement, the First Respondent’s salary was RM12,000.00 consisting of RM9,000.00 in basic salary and RM3,000.00 in productivity allowance. [7] The Second Respondent was employed by the Appellant under two agreements, both dated 19 May 2021, each with a fixed term of seven years. Under the Employment Agreement, the Second Respondent’s salary was RM20,000.00 per month, with a productivity allowance of RM5,000.00 and a transportation allowance of RM5,000.00 per month, bringing the total gross salary to RM30,000.00 per month. [8] "The Agreement for a Course of Conversion Training" (the "Conversion Agreement") is intended to qualify the First Respondent to operate the Appellant's aircraft, specifically the Hawker 4000 (the "Aircraft"). After undergoing training in the United States and obtaining certification as a Captain Pilot and First Officer, the Respondents were appointed as Captain Pilot and First Officer for the Appellant. [9] It is undisputed that around November 2022, the Aircraft was grounded due to technical and/or mechanical issues. As a result, the Respondents no longer had an aircraft they were licensed to operate. [10] On 16 February 2023, Ms. Izyan Darlina binti Balia Yusof, the Manager of Legal, Secretarial, Compliance, and Human Resources, emailed the Respondents instructing them to report to the Appellant’s office located at Level 18, Menara 2, Menara Kembar Bank Rakyat, 50470 Kuala Lumpur. This directive, with working hours from 9:00 AM to 6:00 PM, was issued following the grounding of the Appellant's Aircraft, which had become inoperable. [11] The Appellant relied on Clause 5.2 of the Fixed Term Contract for Flight Crew, which, according to the Appellant gives it the authority to assign the Respondents to administrative duties and to any part of its operations, as the Aircraft is no longer in service. Clause 6.1 further requires the Respondents to adhere to the Appellant’s designated working hours. Despite not flying, the Respondents continued to receive their full salary, productivity allowance, and transportation allowance while stationed at the office. [12] On 13 June 2023, the Respondents were reassigned to report to the Appellant’s Jetvalet Hangar Office in Subang, as instructed via an email from Ms. Izyan on 12 June 2023. On 14 August 2023, the First Respondent sought clarification about a scheduled flight for the Premier 1 aircraft on 16 August 2023. In response, the Appellant’s Director, Captain Shaz, issued an email with an official letter dated 15 August 2023, confirming that due diligence had been conducted, all legal requirements were met, and the relevant insurance policies were valid and fully covered the flight. [13] The First Respondent questioned the validity of being instructed to fly an aircraft other than the Aircraft owned by the Appellant. [14] The Appellant referred to the Cover Note Addendum dated 26 July 2023, which stated that the Premier 1 aircraft may be operated by any licensed pilot with at least 1,000 flight hours. The Appellant maintained that First Respondent met these requirements and was fully qualified, based on existing certifications, to serve as crew for the scheduled flight on 16 August 2023. There were no issues concerning the First Respondent’s qualifications at any relevant time. [15] On 3 July 2023, the Second Respondent informed Jet Valet management that his “Currency” or “Recency” certification was due to expire on 12 July 2023. Under his Fixed Term Contract, Jet Valet was responsible for arranging and funding the required training and examination. However, no action was taken by Jet Valet, and the certification, which had been scheduled for late July, was cancelled by Peter Broom who was acting on Jet Valet’s instructions. As a result, the Second Respondent as unable to maintain his certification to fly the Jet. [16] In August 2023, the Second Respondent’s Class 1 Medical Certificate was downgraded to Class

While a Class 3 Certificate is sufficient to fly the Jet under Part 91 of the Federal Aviation Rules, this is only valid if the “Currency” or “Recency” certification is also current, which in this case, it was not. On 17 August 2023, the Second Respondent renewed his Medical Certificate back to Class 1, a process that takes less than two hours. [17] The Appellant, through the email sent on 15 August 2023 by Ms. Izyan, requested the Respondents to promptly provide a copy of their 'Medical License Certificate'. [18] On or around 16 August 2023, Jet Valet issued a show cause letter to the Second Respondent alleging that the Second Respondent had breached the Fixed Term Contract because the Second Respondent did not have a Class 1 Medical Certificate. [19] In a letter dated 22 August 2023, the Second Respondent informed Jet Valet that his Medical Certificate is part of his License, but he also needed a valid “Currency” or “Recency” certification to operate the Jet. He reminded Jet Valet that the Jet had been unserviceable and grounded since 20 November 2022, and that his “Currency” or “Recency” certification had expired on 12 July 2023 both of which required Jet Valet’s action. He also noted that his Class 1 Medical Certificate was renewed on 17 August 2023 and provided to Jet Valet the same day. [20] The Respondents provided a copy of the 'First Class Medical Certificate' dated 8 February 2022, number 2002305533, for the Second Respondent, and a copy of the 'First Class Medical Certificate' dated 22 July 2022, number 2002305532, for the First Respondent, along with an image of the 'Computer Printscreen Regulation on Classes of Medical Certificates'. [21] On 28 August 2023, the Appellant sent a letter to the First Respondent stating that, despite the Aircraft being grounded, the productivity allowance had continued to be paid to the 1st Respondent "out of goodwill." The Appellant also mentioned that the failure to maintain the Class 1 Medical Certificate had disrupted operations and, as a result, the productivity allowance was rescinded under Clause 4.2 of the Employment Agreement. The letter required the First Respondent's execution, but he did not sign it and expressed his disagreement via email on 6 September 2023. In the email, the First Respondent stated that his employment objective was to fly the Aircraft, and the Conversion Agreement had qualified him specifically for that purpose. [22] The First Respondent argued that Clause 4.2 of the Employment Agreement relates to salary adjustments only when the Appellant exceeds leave entitlement, and does not give the Appellant the right to arbitrarily deduct salary. He further contended that the productivity allowance is contractual and not dependent on the serviceability of the Aircraft, so the claim that it was paid "out of goodwill" is incorrect. Additionally, he emphasized that salary is central to the employment contract, and any changes to it must be mutually agreed upon. [23] The Appellant’s position that the reduction in the productivity allowances only occurred when the Appellant discovered that the Respondents had failed to maintain their 'First Class Medical Certificates', resulting in the Appellant incurring losses due to the inability to carry out the scheduled flight on 16 August 2023. Moreover, the allowances that were reduced by the Appellant in August 2023 and September 2023 (until 22 September 2023) were only the productivity allowances, with no reduction to the Respondents' transportation allowances. [24] Despite the objection by the First respondent, the Appellant unilaterally proceeded to rescind the productivity allowance. Dissatisfied with the rescission, the First Respondent filed a claim with the Labour Department on 21 December 2023, arguing that the rescission was made without their consent. Subsequently, the Appellant terminated the First Respondent's employment, and the termination is now part of separate industrial proceedings initiated by the First Respondent in the Industrial Court. Analysis [25] The facts of this appeal is that the Respondents were certified pilots bearing licences issued by the Federal Aviation Administration (FAA). The Respondents were certified with type rating to fly the Hawker 400 type aircraft. A fact that is not in dispute is that the Hawker 400 was grounded. As a result of which, both the Respondents were unable to fly the said aircraft. When the Appellant ordered the Respondents to fly a Beechcraft in August 2023, the Respondents were unable to do so as they were not certified to fly the Beechcraft. [26] The Hawker 400 aircraft was not repaired and made serviceable by the Appellant. As a result of which, the Respondents could not carry out their duties in flying the Hawker 400. [27] Pertaining to the rescinding of the respondents’ productivity allowance, reference is made to subsection 24(1) of the Employment Act 1955 which provides: “No deductions shall be made by an employer from the wages of an employee otherwise than in accordance with this Act.” [28] According to subsection 24(1) of the Employment Act 1955 an employer is not permitted to deduct an employee's salary except as expressly allowed by the Act. [See: Sri Maju Sarata Ekspress Sdn Bhd v Segar a/l Munusamy & 35 Orang Yang Lain [2024] MLJU 2606] [29] Subsection 24 (1) of the Employment Act 1955 clearly states that no deductions can made unless it is done in accordance with the Act. In short, the Applicants are not permitted to make deductions unless as provided for in the Act. [30] The question is whether the productivity allowance is part of the wages of the Respondents. If the answer is in the affirmative, then there ought to be the agreement of the Respondents prior to the rescinding of the productivity allowance. [31] The Respondents salary structure includes their basic salary, productivity allowance, and transportation allowance. Therefore, this court finds the wages of the Respondents include the productivity allowance which cannot be rescinded unless with the agreement of the respondent. The facts clearly demonstrate that the Respondents did not agree to the deduction of the productivity allowance. [32] In the Federal Court in the case of Crystal Crown Hotel & Resort Sdn Bhd v Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar &

The service charge, being an entrenched part of the workmen’s contract of service, and which became due to them because they were workmen/employees employed by the hotel under a contract of employment or collective agreement, was an express and established term of their contracts of service. Accordingly, such contractual terms of service could not be unilaterally removed or varied without their consent. The Industrial Court could not therefore be faulted for refusing to remove or vary this express term of service which comprised a part of their ‘wages’ as a whole” [Emphasis added] [33] In this appeal, there is no dispute that the Respondents had objected to the deduction of the productivity allowance. [34] The Appellant argued that the rescission of the productivity allowance is within their discretionary powers as provided under Clause 4.2. of the Employment Agreement. Clause 4.2 reads: "Your salary may be adjusted at the absolute discretion of the Company. If you exceed your allowable leave as outlined in Clause 8 below, the Company has the right, at its absolute discretion, to deduct from your salary on a pro-rata basis, and any related benefits are confidential and cannot be disclosed without prior approval from the Company." [Emphasis added] [35] In this regard, section 2 of the Employment Act 1955 provides in full that: "wages" means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include-

the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;

any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;

any travelling allowance or the value of any travelling concession;

any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;

any gratuity payable on discharge or retirement; or (f) any annual bonus or any part of any annual bonus;” [36] In the case of National Union of Employees in Companies Manufacturng Rubber Products v Ansel Companies [2014] 4 ILR 381, the Industrial Court held that “basic wages” do not include allowances. [37] Nonetheless, even if this court were to consider the argument of the Appellants that clause 4.2 is applicable in this appeal, the productivity allowance in the view of this court, is not the basic salary but forms part of the Respondents wages. Therefore, the Appellant, in the view of this court cannot unilaterally rescind the productivity allowance of the Respondents. [38] The Employment agreement is just that. An agreement. Any change to the terms of the agreement, in the view of this court, ought to be mutually agreed by parties. It cannot be that one party is allowed to change the terms of the Employment Agreement, particularly when the Appellants have a better position compared to the Respondents. This court further opines that the unilateral reduction of the Respondents wages constitutes a fundamental and repudiatory breach of the contract of employment. Conclusion [39] For the aforementioned reasons, this court is satisfied the Labour Court had not erred in its decision. The decision of the Labour Court is upheld and affirmed. This appeal is dismissed with cots of RM5000.00 to each Respondent, subject to allocator. Date: 11 June 2025 (SHAHNAZ BINTI SULAIMAN) Judge High Court of Malaya Shah Alam Counsels: For the Appellant: Thilagan a/l Mehanathan Tetuan Shafee & Co. Advocates & Solicitors 25, Jalan Tunku, Bukit Tunku, 50480 Kuala Lumpur For the First Respondent: Muhammad Aizat bin Fakri Tetuan Ashraff Al-Hirzan & Associates Advocates & Solicitors D-8-1 & D-8-2, 2, Jalan Serai Wangi M 16/M, Alam Avenue2, 40000 Shah Alam, Selangor For the Second Respondent: Ahmad Shahrizal bin Abdul Aziz Tetuan Shah Aziz Advocates & Solicitors 02-24, Tingkat 2, Kompleks PKNS Shah Alam, Persiaran Tasik, 40505, Shah Alam,