Chinese New Year is a time of renewal, gratitude and prosperity. Many companies use this occasion to show appreciation to their employees through festive gestures such as giving red packets (ang pow). However, are employers obligated to give red packets (ang pow) every year?
The Industrial Court provided an answer to this in Kesatuan Pekerja-Pekerja Perusahaan Simen Semenanjung Malaysia v. Tasek Corporation Berhad (Award No. 171 of 2025).
Brief Facts
- Tasek Corporation Berhad (“the Company”) discontinued its long-standing practice of providing a special angpow to employees who worked during Chinese New Year in 2022.
- According to the Kesatuan Pekerja-pekerja Perusahaan Simen Semenanjung Malaysia (“Union”), the practice of the special angpow payment stemmed from the early sixties, when the Company’s plant was predominantly dominated by Chinese employees. To maximize the full capacity of the production, the plant had to operate 24 hours except for maintenance repairs. Hence, the Company would make a special angpow payment to encourage Chinese employees to work during the Chinse New Year and this payment was also intended to compensate employees for sacrificing their Chinese New Year’s reunion dinner.
- The Union also relied on an internal circular issued by the Company that states the rates of special ang pow to be paid.
- The Company took the position that it had the discretion to decide whether any ang pow is to be granted.
- This led to the Union lodging a complaint of non-compliance of the 16th collective agreement to the Industrial Relations Department and this escalated to the Industrial Court.
Court’s Findings
As a starting point, the Court noted that the granting of bonuses and salary increases including ang pow (if any) is based on the management’s discretion.
The Court also found that there was no clause in the collective agreement, letter of exchange or circular document that obligates the Company to pay the special ang pow.
The Court recognizes that in some cases, bonuses are part of a productivity scheme where employees earn extra pay for exceeding a set target. In such cases, bonuses don’t have to be tied to the company’s profits.
Ultimately, the Court held that the employees were entitled to receive the special ang pow payment for 2022 as a token of appreciation for their hard work and in recognition of the festive spirit of the Chinese New Year celebration. However, the Company retained the discretion to discontinue such payments in future years. The Court did not provide further reasoning as to why the ang pow should be paid in 2022, despite acknowledging the Company’s discretion in determining whether to continue the payment.
Key Takeaways
Whilst this decision recognizes that bonus payments are generally made at the discretion of management, this discretion is not unfettered. Once clear terms and goalposts for the bonus have been set by the management, management will be expected to uphold it.
Therefore, employers must be exceedingly careful when drafting bonus schemes for employees. Once a policy relating to bonus is released, revoking it may not be so simple as employees would have relied on it for the current year. Therefore, when introducing a bonus scheme, employers must also be ready to commit to it.
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This article was written by Leow Ho Eng (Associate) from Donovan & Ho’s employment law practice.
Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.
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