KUALA LUMPUR: The Industrial Court has ruled that AirAsia Bhd's decision to retrench two aircraft engineers during the Covid-19 pandemic was "improper" and "unfair," as it was based on their high salaries.

Court chairman Andersen Ong said that the airline had "adopted the wrong principles" when it made its licensed aircraft engineers redundant despite the "financial adversity" it faced during the pandemic, FMT reported.

He said that AirAsia failed to justify the "last-in, first-out" principle in retrenching Faisal Sulaiman and Izwan Nezar.

In two separate awards on May 23, Ong concluded that targeting the claimants for retrenchment due to their higher salaries lacked good faith. Faisal and Izwan, who had each served AirAsia for 16 years, were awarded a combined sum of RM788,670 in back pay and compensation instead of reinstatement.

Faisal, with a last-drawn salary of RM15,048, was awarded RM403,286. This included 24 months of back pay totalling RM361,152, reduced by 55 per cent to RM162,518.40 due to post-dismissal earnings, and RM240,768 as compensation instead of reinstatement.

Izwan, earning RM14,380 per month, received RM385,384, which included back wages of RM155,304 after a similar deduction, plus RM230,080 as compensation instead of reinstatement.

However, the court reduced the amounts payable to Faisal and Izwan by RM57,444 and RM55,440 respectively, to account for compensation payments already received.

In the awards, Ong acknowledged that the Code of Conduct for Industrial Harmony (CCIH) prescribed by the Human Resources Ministry does not have the force of law and that the "last-in, first-out" principle is not a mandatory requirement in retrenchment exercises.

But the Industrial Relations Act 1967 (IRA) and the CCIH, Ong highlighted, share a common objective, which is to promote and maintain industrial harmony.

Section 30(5A) of the IRA allows the court to consider any minister-approved agreement or code.

He said that employers must provide strong reasons for not following CCIH procedures in retrenchment.

Ong also noted that the claimants were unfairly targeted for their higher salaries, calling such action unjust and discriminatory against experienced employees who contribute significantly to the company.

AirAsia had argued that the pandemic forced it to halt operations and ground 96 per cent of its fleet, leading to a net operating loss of RM457 million in 2019 and RM953.3 million in the first quarter of 2020.

The airline said it had to implement cost-containment measures, including manpower reductions, salary cuts, and restructuring.

Despite these challenges, Ong ruled that the airline acted against the spirit of the CCIH. He emphasised that selecting employees for retrenchment based on salary disregards their contributions and can lead to age discrimination, as more experienced employees tend to earn higher salaries.

S Selvarani of the Malaysian Trades Union Congress represented the claimants, while Wendy Lam and Wong Jia Ee represented AirAsia.

https://www.nst.com.my/news/crime-courts/2024/05/1056713/court-rules-airasias-retrenchment-high-salary-engineers-during