The Movement Control Order has given rise to a floodgate of question on the payment of salary between employer and employee. The Ministry of Human Resources has issued its FAQ’s on 19th and 20th Mac 2020 in an attempt to provide clarity but there remains contention that whether there exist any legal obligation to pay wages during this period.
In VIKING ASKIM SDN. BHD. v. NATIONAL UNION OF EMPLOYEES IN COMPANIES MANUFACTURING RUBBER PRODUCTS & ANOR [1991] 1 CLJ 552 Justice EDGAR JOSEPH JR as he was then held;
“If an employee is ready to perform his services during the period covered by his contract of employment, which provides for payment of wages at certain times, he is entitled to the wages, although the employer has no work for him.”
The High Court in Viking Askim considered the Industrial Court Decision of Dunlop Malaysian Industries Bhd. v. Kesatuan Pekerja-pekerja Perusahaan Dunlop Malaysia and upheld the decision in the Dunlop Malaysian Industries as in both cases which involved situations of a shutdown by the company on reason not attributable to the Employee. In both matters, the court has held that the employers during period of shutdown are still required to make payment of wages regardless.
Harun J (as he then was) in Dunlop Malaysian Industries speaking for the Court found “that the leave proposal of the company concerned, whether paid or unpaid, was an attempt to avoid the real issue. The Court further found that all the employees being monthly rated, the effect of the proposal was to deduct from salaries for the month in question sums equivalent to the number of days they were not required to work although there was no provision in the collective agreement concerned or the Employment Act which authorised the company concerned to do so”.
The importance of the reasoning by the learned justices in the cases cited above is that employees that are paid on a monthly rate which is the vast majority of most Malaysian employment contracts are able to perform their services but however during this period pursuant to the Government Order, companies under the non-essential category are not allowed to operate. Thus their employee is ready to perform their services but due to the unfortunate circumstances employers are not allowed to operate, hence the employees are not allowed to work.
It is important to note company providing essential services are still operating during this period and employees of these companies have to perform their services pursuant to their contract of employment.
Issues of Non-Work have been raised to support the argument of non-payment of wages during this Movement Control Order period on the simple basis that as there is no work done wages need not to be paid. Wages has been defined by Section 2 of the Employment Act 1955 is for work done in respect of his contract of service and this perspective may seem in doubt when we look at the general Malaysian employment contracts which usually states that wages payable are for a specified sum to be paid monthly.
When interpreted wholly, it provides that the salary payable is for the whole month and employees have performed their services until the commencement of the Movement Control Order and can still continue to perform their services but for the period of the Movement Control Order, their employer who are non-essential services are not allowed to operate. Hence employee cannot be denied wages as it is not them who refuse or fail to attend work during this period.
For those employees covered by the Employment Act, Section 24 of the Employment Act 1955 clearly provides that there can be no deduction of wages of any reason other than those authorized by the Act.
For employees that fall outside the scope of the Employment Act, reference can be made to the High Court decision in Supportive Technology Sdn. Bhd. Vs Chong See Wan [2015] 1 LNS 1291 which also dealt with a similar situation of shutdown and upheld the Labour Office decision pursuant to Section 69B Employment Act 1955 in awarding payment of wages that were not paid during a period of shutdown.
Principles of industrial harmony dictates striking a fair compromise between the competing interest of employers and employee and unless the employment contract or collective agreement provides specifically for situation faced under the Movement Control Order, the contract of employment should be interpreted in favour of the employee.
Caution must be observed by employers that unilaterally take action of not paying the monthly wages of employee during this period which may amount to unauthorized deduction of monthly salary which would attract liability in the form of claims made though the Labour Department (Jabatan Tenaga Kerja) and non-compliance on any decision or award under Section 69(4) Employment Act 1955 and 69E Employment Act where an employer is found liable, on conviction, to a fine not exceeding ten thousand ringgit
There is no doubt that the aftermath of this unprecedented situation has placed enormous strain on employers however it will only be prudent if not obligatory to effect payment of wages during this period of Movement Control Order.
Further serious thoughts have to be taken by employers in preserving industrial harmony as upon cessation of this Movement Control Order what would be the effect on its workforce in the long term if they decide against paying employees their salary during this period?
