Companies and cost cutting measures to face economic challenges

There are cases whereby the Industrial court will take into account cost-cutting measures to stay in business. I would like to refer to 2 cases.  They are:-

JE Virus Pandemic/Covid-19

RIH Management Sdn Bhd v National Union of Hotel, Bar & Restaurant Workers, Peninsular Malaysia [2003] 3 MELR 545.

In this case the hotel management was facing a revenue drop because of the Japanese Encephalitis or "JE virus" pandemic.  The hotel management entered a collective agreement or "CA" on the workers' annual increment due on 1 January 2000.

The Union claimed that the hotel management had failed to pay their annual increment.  The hotel management countered their argument by saying because of the JE virus the hotel in not doing well and they cannot fulfill the CA.

The court accepted the reasoning by the hotel management treated it a "special circumstances" and the hotel management entitled to vary the CA.

The court allowed the increment to be deferred  pending renegotiation of the CA.

Salary reduction and company shut down

In the case of Viking Askim Sdn Bhd, Butterworth v National Union of Employees In Companies Manufacturing Rubber Products (1985)1 MELR 130, the company had shut down their operation to minimise losses, and decided to pay 50% per cent of the workers' salary.

The workers agreed to the shut down the company but wanted full salary. 

The court were of the view that it is fair on the payment of 50% per cent of the salary since there is no work and it is an equitable solution to maintain industrial hamony.

Ramu