Airod union claims Mindef's slow approval led to unpaid salaries

Long delays in contract approvals from the Defence Ministry (Mindef) are what led to late salary payments by Airod Sdn Bhd for which the latter was recently fined to the tune of RM66,000, claimed its executive’s union.

Responding to a news report that revealed the hefty fine imposed by a Magistrate’s Court for 44 charges of failure to abide by the time frame for payroll disbursement, the union said this could have been avoided.

Explaining the salary disbursement delay, Airod Executives Union secretary-general Syamsul Azwan Mustar said Mindef’s practices were not in accordance with the time frame stipulated in the standard operating procedure for approvals of the order book with its contractors.

“After the acceptance letter is received, the company’s order book to Mindef needs to be approved and signed before invoicing can commence.

“Payments to the company are based on the approved order book and this is where the hold-up is.

“The order book should take between three to six months to approve but it takes at least eight to nine months,” he estimated.

Syamsul explained that the companies cannot issue monthly invoices even though work was already carried out.

This had a domino effect on the company’s ability toward salary disbursements and payments to vendors, he said.

Airod maintains, repairs, and overhauls military aircraft for Mindef and is a subsidiary of the National Aerospace & Defence Industries Bhd (Nadi).

Another Mindef vendor and Nadi subsidiary whose employees were found picketing outside Nadi in Jalan Subang, in April this year is ammunition and rifle maker, SME Ordnance Sdn Bhd (SMEO).

However, the 100 SMEO workers who resorted to picketing were retrenched workers from a factory in Batu Arang.

They were demanding the owed three- or four months’ wages.

Airod staff fear retrenchment

Syamsul said although the fines imposed on Airod addressed claims from 11 workers whose rights were covered by the Employment Act 1955, all other employees in the company experienced the same delays in salary payments.

“Sometimes the salary disbursement was made two weeks after the seventh day of the month,” he added.

Syamsul agreed that once the amendments to the Employment Act come into force next year to include those whose salaries are above RM5,000, such cases could lead the company to incur higher fines.

“There are more than 400 workers,” he said.

Syamsul said he was concerned that cash flow problems could push Airod to downsize its operations and retrench its workers. - Mkini