Every employee shall be entitled to his annual increment on the anniversary date of each calendar year and pro-rated to the nearest month, to the nearest Ringgit for employees who have served less than one (1) year. The rate of annual increment shall be as follows: Monthly Salary Annual Increment Less than RM1,000.00 RM60.00 RM1,200.00 to RM1,400.00 RM70.00 RM1,400.00 to RM1,600.00 RM80.00 RM1,600.00 to RM1,800.00 RM90.00 RM1,800.00 above RM100.00” 23 [40] With regards to the Union’s salary structure, the Industrial Court made the following finding: “[36] In Appendix B of the Statement of Case, the Union had proposed the starting basic salary of RM900.00 with a graduated salary structure of 17 steps as comparable with Crystal Crown Hotel’s case which has 20 steps for all different job categories. The basis of the Union’s claim is in line with MWO 2012. Toted that the Hotel has glaringly not countered any proposal in its Statement in Reply to oppose the Union’s proposal. It is settled law that if the Hotel is in disagreement with the Union’s proposal, then it ought to have been pleaded. The Syuen Built together with Ramachandran and Ranjit Kaur’s cases supra on pleadings are applicable here. [37] The court has considered the Hotel’s financials and is the view that it has the financial capacity to pay the salary revision and the new salary structure of its employees. The Union’s proposed Salary Structure in Appendix B shall therefore be adopted...” [41] The Hotel took the position that the fact the Hotel did not plead incapacity to pay does not justify the Industrial Court to decide outside the intent of the Minimum Wages Act 2012. Added to that, 24 even if the Hotel did not challenge the Union’s proposal in the Statement in Reply, the Industrial Court still has a duty to study the proposal made by the Union in order to ascertain if the proposal is reasonable, and in doing so, the Industrial Court has to apply her mind to section 30(4) and 30(5) of the IRA 1967. [42] Having considered the Award, I am of the considered opinion that the Industrial Court had correctly applied the cases on pleaded issues, in particular the Federal Court decision in Ranjit Kaur (supra), where the Court held as follows: “….Pleadings in the Industrial Court are as important as in the civil courts. The appellant must plead its case and the Industrial Court must decide on the appellant’s pleaded case. This is important in order to prevent the element of surprise and provide room for the other party to adduce evidence once the fact or an issue is pleaded. Thus, the Industrial Court’s duty, to act according to equity, good conscience and substantial merits of the case without regard to technicalities and legal form under s. 30(5) does not give the Industrial Court the right to ignore the Industrial Court Rules 1967 made under the principal Act.” 25 [43] Therefore, the Industrial Court has correctly held since the Hotel did not challenge the Union’s salary proposal in its Statement in Reply, then the Union’s proposal has been accepted. [44] However, the Industrial Court did stop at that. The Industrial Court went on to consider the merits of the Union’s proposal and held that the Hotel is in a financial position to implement the Union’s Salary Structure: “[26] Moreover, the audited accounts of the Hotel for the past three years show that the Hotel had been making profits as exhibited in COB3 and COB4 which were signed by the Hotel’s external auditors and directors: 2011 2012 2013 Hotel operating profit RM2,279,055 RM3,092,015 RM4,604,110 Depreciation RM2,192,702 RM676,104 RM560,638 RM4,471,757 RM3,768,155 RM5,164,748 [28] Under cross-examination, COW1 had agreed that depreciation is a book entry. Her evidence was that the Hotel had made profits of RM4,604,110 for 2013 and RM3,092,051 for 2012. The audited accounts further showed profit of RM2,279,055 for 2011. Her evidence 26 confirmed that the cash flow generated a very healthy account for the Hotel. It must also be noted that the figures above pertaining to the Hotel’s business are relevant only for the Hotel and not the other company as it was evident from COW1’s testimony that there are two companies operating under Imej Klasik Sdn Bhd.” (emphasis added) [45] Therefore, I agree with the Union that in light of the financial capability of the Hotel, the Industrial Court was correct to have accepted the Union’s Salary Structure. [46] The Industrial Court also takes into consideration that there will be industrial disharmony if the salaries of the employees are not adjusted according to their seniority. The Industrial Court held as follows: “[23] With the MWO 2012 maintaining RM900 as minimum wages, the minimum starting salary of different categories have to be adjusted to the same level of RM900 by the Hotel and if a percentage of increase is not given, the junior employees will be receiving the same salary as senior employees which would result in industrial disharmony …. …. 27 [30] The Hotel had not pleaded anything on the minimum salary and the number of steps to oppose Appendix B proposed by the Union. It is to be observed that since the rate for the job for a waiter/waitress has been fixed at RM400 and with the minimum wages at RM900, the rest of the job hierarchy has to be raised correspondingly, failing which will result in the junior employee drawing the same salary as the senior employee.” (emphasis added) [47] With regards to the issue of annual increment of 5% proposed by the Union which was accepted by the Industrial Court, the Industrial Court held as follows: “[32] The Union submitted that the annual increment should be based on 5% of the basic salary of the employees. The Court has observed that the Hotel had again failed to plead, objecting to this proposal.” [48] The Industrial Court then referred to other industrial court decisions which had similarly awarded an annual increment of 5%. The Industrial Court then made a finding of fact that the Consumer Price Index from 1.1.2011 to 31.12.2013 is 7.07%. Therefore, having considered the findings of the Industrial Court, I agree with the Union that the Industrial Court’s finding that the annual increment of 5% proposed by the Union is reasonable. 28 Conclusion [49] In view of the reasons enumerated above, I am of the considered opinion that the Award is not illegal or irrational as the Industrial Court have applied the correct legal principles in its findings. Therefore, I find no merit in this application and the same is dismissed with costs. (AZIZAH BINTI HAJI NAWAWI) JUDGE HIGH COURT MALAYA (Appellate and Special Powers Division 2) KUALA LUMPUR Dated: 25 September 2018 For the Applicant : A. Ramadass / M. Jothiletchimy Messrs Ramadass & Associates Kuala Lumpur. For the 1st Respondent : Shireen Selvaratnam / Lim Wei Jiet Messrs Sreenevasan Kuala Lumpur. Cases referred: