INDUSTRIAL RELATION

Prepared by: ZARITH NADIA BINTI ZARONI 2013884818 BM7001DF Prepared for: ASSOC.PROF.DR.ROSHIDI HASSAN

Content
Overview of Malaysian Industrial Relation(IR) Trade union(TU) Collective Bargaining(CB) Collective Agreement(CA) Industrial Action Trade dispute (TD)

Industrial court (IC)

Principle of natural justice (NJ) Law of unfair dismissal

Overview of Malaysian IR

Definition of IR
Maimunah, (2011)
A study of industrial relation is to study the relationship between workers and their employer within work environment. Industrial relation is also known as employee, labour or employment relation.

Ivancevich & Konopaske, (2013)

A labour union can be define as an organization of employees that uses collective action to advance its members interest in regard to wages and working conditions.

IR stresses the importance of three major areas:

IR focus on the area of:

Law

The relationship between employer and trade unions

Disciplinary procedures and termination of the employment contract

The framework provided by the employment laws

and regulations which impact the parties at the work place Terms and conditions of work Rights and obligations of employers and employees Processed by which the rules and terms are made, i.e., the decision making process

Once workers unionize(join TU)

They have a collective relationship with their

employer. Union will represent the workers and speak on their behalf to the employer when necessary. If none of the workers join TU, then the relationship is between EY and EE is generally an individual one.

Workers
Officers and executive in HR and IR departments

Who need to study IR?

Trade union leaders

Lawyers

Managers

Parties in IR
Employer Employee Government

IR systems in Malaysia are tripartite. Key variable in IR is decision-making in the

areas relating to work life.

1) Unilaterally (employer) 2) Bilaterally (employer + employee) 3) Tripartite (employer + employee + government)

The rules and regulation on:

Compensation

Workers right

Discipline

Duties and performance of employees

Influence of international bodies

International Labor Organization (ILO)
Is an agency of the United Nations based in Geneva. Plays an important role in Malaysian IR. Provides international forum for discussion on all

matters relating to labour by holding annual meeting of members every June in Geneva. Many unions are affiliated to international bodies to whom they may appeal for help. *under ILO, affiliation is allowed.

Role of government in IR
Acts as legislator through Parliament Administrator through the Ministry of

Human Resources Participant by way of being the largest employer in the country

Ministry of HR
Responsible for administering and overseeing

the IR systems. Basic objectives are:

To protect the welfare of workers their safety,

health and rights. To promote good employer-employee relationship through a stable and peaceful IR systems. To equip the unemployed with basic industrial skills & to improve the skill level of the work force. To assist in maximizing the countrys manpower resources through manpower planning.

8 department in the ministry of HR

Department of Labour, Peninsular Malaysia

Department of Labour, Sabah

Department of Labour, Sarawak

Department of IR

Department of Trade Unions

Department of Occupational Safety and Health

Manpower Department

Department of Skills Development

Law governing IR
Employment Provident Fund(EPF) Employees Social Security Act (SOCSO) Occupational Safety and Health Act (OSHA) The Employment Act (EA) 1955 Trade Union Act (TUA) 1959 Industrial Relation Act (IRA) 1967
Malaysian IR

The differences between EA and IRA

EA EY EE relationship Applies only to Peninsular Malaysia IRA EY union relationship Throughout the whole Malaysia

Applies strictly to private sector

To both sectors (in real IRA do not apply to public sector)

Applies to two basic cases of EE: Applies to EE: 1) Basic wages of RM1500 and below 1) Regardless wages and occupation 2) EE in specific occupations eg: manual labour

Court and tribunals

Industrial Court

Labour Court

Malaysian IRA is governed by 2 courts:

Trade Union

History of TU in Malaysia
History (Maimunah, 2011) Union were first formed in Great Britain as a result of the development of the factory system in the 19th century which led to the exploitation of workers, poor working condition and job insecurity. First emerged in 1920s. 1920 1930 1940 1945-1948 1959

Current TU

Workers in Malaysia today have various rights: - Form or assist in the establishment of union - Join an existing union - Be involve in the activities of the union

List of TU in Malaysia

Public sector - CUEPACS Private Sector - MTUC Employers Union - MEF

Why workers join TU ?

To ensure their rights are protected

For social reasons

To improve their economic situation

TU objectives
To promote the industrial, social and intellectual interests of its members. To obtain and maintain for its members just and proper rates of remuneration; security of employment and reasonable hours and conditions of work. To promote the materials, social and educational welfare of the members. To promote legislation affecting the interest of the members in particular of trade unionist in

general.

Legal definition of TU
The Trade Unions Act (Section 2) defines a trade union as:

Any association or combination of workmen or employers whose place of work is in West Malaysia, Sabah and Sarawak
a)
b) c)

Within any particular establishment, trade, occupation or industry or within similar trades, occupations or industries and
Whether temporary or permanent and Having among its object one or more of the following - the regulation of relations between workmen and employers for the purpose of promoting good IR between them, improving the working conditions or enhancing their economic and social status or increasing productivity. - the regulation of relations between EE & ER. - the representation of either workmen or ER in TD. - the conducting or dealing with TD & matters related. - the promotion, organization or financing of strikes or lockout in any trade or industry or the provision of pay or other benefit for its members during a strike or lockout.

Implication of the legal definition of TU

A trade union need not to be called a union. Membership of unions is limited

geographically. Unions of a general nature are not permitted. EY and EE both have the right to form and join unions but they must be separate from each other and must satisfy the conditions. Any organization or group of workers established to achieve one or more of the objectives stated in the Act is considered having formed a TU, and must therefore conform to all legislative requirements of a TU.

Membership of TU

Right to form and join TU

Workers in Malaysia have the right to form and join TU. This is known as freedom of association and this right is protected in the Industrial Relation Act (section 5). The Act states that: No employer shall prevent workers from joining a union by putting a condition in his contract of employment. No employer shall refuse to employ a worker on the grounds he or she is a TU member or officer. No employer shall discriminate against a worker on the grounds he or she is a TU member or officer. No workers shall be threatened with dismissal or dismissed if he or she proposes to join a TU, or if he or she participate in union activities.

i.
ii.

iii.
iv.

Who can join TU ?

Any workers over 16 years old. Any person employed under contract of employment. Under 18 years old is restricted in their union activities. Under 21 years old cannot be elected as officer of TU. Student cannot join TU unless they are bona fide(those who are on study leave) workers and over 18 years old. 6) In public sector: Cannot join union by workers in the same occupation/ministry/department. Police, prison service cannot join(confidential service). EE in professional and managerial group in public sector cannot join.
1) 2) 3) 4) 5)

Employers attitude toward unions

Conflict or open hostility Controlled hostility

Accommodation

Co-operation

Creating a non-union environment

Some companies are proactive in their attempts to prevent their workers from joining TU. They take positive steps to reduce or eliminate the need for their workers to join TU. Such organizations:
Pay higher wages and give better benefits than those prevailing in comparable companies that are organized in the same locality. 2) Involve employees in all levels of decision-making and effectively implement an open-door policy by elimination of barriers of status. 3) Offer training, development and a measure of security of tenure. 4) Develop a climate of trust and loyalty in the organization
1)

Trade Union
Establishment(DGTU)

Registration(DGTU)
Recognition(DGIR) CB(DGIR) CA(DGIR)
Trade Dispute(DGIR)

Establishment of TU
1) 2) 3) 4)

Initiate by someone. The workers will go around and ask for the workers to form TU. When they manage to get people and agreed to form a TU, an InAugural general meeting will be called. During this meeting, they will elect 7 important post: president, vice secretary, treasurer & committee members.

5)
6) 7)

After they have formed the TU, they have to register in one month time to DGTU.
If one month is not sufficient, they can ask for extension up to 6 months, The document they have to submit: - A form with names, designation, signature of 7 committee members of newly form TU. - The minutes of InAugural general meeting - An amount of fees - A set of rules and constitution of the TU

8)

The DGTU will then go through the documents and decide whether to register the TU or not.

Reason why trade union be rejected

Registration by the Director-General of Trade Unions(DGTU) is by no means automatic. The DGTU will refuse registration in the following circumstances:
If any of the unions objectives are unlawful 2) If any part of the unions constitution conflicts with the TUA 3) If the name of the union is undesirable or identical to another already existing, or if the name is deceiving 4) If the union is likely to be used for unlawful purposes
1)

De-register/cancel TU
Section 12 of the TUA allows the DGTU to refuse to register a TU:
1)

2)

3) 4) 5) 6)

If there are more than one registered TU which represent the same group of EE in a trade, occupation or industry. (the group of union which has minority members will be de-register. If the registration of the union was issued by fraud or mistake If it is used for unlawful purposes If it does anything that contravene the TUA The funds of the union have been unlawfully used The union has ceased to exist.

Types of union
Public sector employees unions Private sector employees unions
1) National union

cover all workers in the same industry, trade or occupation(Peninsular, Sabah & Sarawak) 2) In-house union

members are all employed by the same employer Employers union

Disadvantages of in-house unions

In-house unions are generally weak because membership is

limited and confined to workers in one particular company. The leadership of such unions must be chosen from the small number of members which may give rise to the possibility of the employer trying to exploit such leaders. The unions financial strength will not enable it to carry out its normal TU activities. Fear of victimization among union leaders, particularly in relation to promotions, termination of employment, transfer and assignment of duties which are management prerogatives. In-house unions with small memberships will be unable to provide scholarships and other social benefits for their members.

Employers association
Employer have equal rights to form unions

which are mostly known ad association. The main objectives are:

1) To promote and protect the interests of their

members 2) To negotiate and deal with TU of employees 3) To represent their members in any trade dispute between an individual member and the employees union.

Union recognition

Definition of recognition Types of recognition Implication of recognition

Recognition of the union by employer, or two or more associated employers, to extent, for the purpose of collective bargaining (only registered union can involve in CB)

Limited recognition General recognition

Entitled to make representations on individuals grievances To negotiate on behalf of the members If it is establish that the majority of workers are members of the union.

Recognition of TU
After TU has been registered, the TU

members will go back & inform the EY that they already have a registered TU & wish to set recognition from the EY so that they can start CB. EY will then response to the TU of EE within 21 days on 3 conditions:
To grand recognition: process of CB proceed. To reject recognition: process of TD. To ignore: process of TD.

De-recognition
There are three main ground for de-

recognition:
1) The employer no longer employs 21 or more

workers. 2) The union no longer has enough support from workers in the bargaining unit the group of workers the union represents. 3) Union membership in the bargaining unit falls below 50%.

Collective bargaining

Definition
CB is the process by which representatives of the employees(the TU) meet together with the

employer to negotiate and decide upon workers wages and other terms and conditions of service. It involves joint decision-making by the employer and the employees and is, therefore, a form of bilateral rule-making. CB is a peaceful means by which workers can try to improve their wages, decrease their number of working hours and increase their benefits.

CB objectives
To protect workers rights by including

provisions to check any abuse of power by the employer and prevent him or her acting unjustly; and To allow workers to participate in decisionmaking in areas which are of vital interest to them.

Wages decision making

Decision-making on wages and other benefits is

mostly either unilateral or bilateral. There also exists a third method for setting wages in the private sector, viz, the Wages Councils. The Wages Councils Act, 1947 is a piece of minimum wage legislation meant for the protection of workers who do not have the machinery or power to get fair terms from their employers. 4 Wages Councils covering:
Shop assistants

Hotel and catering workers

Cinema workers

Stevedores and cargo handlers employed by private EY

CB
For CB to take place;
Workers must have the right to form and join union
Must be active in union Recognition must be granted to the union by EY Both EY and EE willing to bargain in good faith

Compromise Communicate negotiate with open mind the intention come to agreement

CB objectives
Improve wages Improve workers welfare Better working hours

Protect workers right Participate in decision making

Better working conditions

Procedures of CB
Either parties can start CB 1) TU EE will submit a CB proposal in writing & invite the EY to start CB negotiation. 2) The EY must reply in 14 days
i. ii. iii.

To accept & start CB To reject CB Ignore The EE will respond and conduct CB in 30 days(sign CA). Reject CB(intention) TU EE will report to DGIR. DGIR will asks EY to start CB. If still fail, DGIR will report to MOHR and refer the case to IC for arbitration.

3) Accept CB(intention)

Collective Agreement

What is CA?
A collective agreement is an agreement in writing between an

employer or a trade union of employers, and a trade union of workers relating to the terms and conditions of employment or the relations between two parties(Industrial Relation Act, 1967).
For the IC to take cognisance of the agreement:

It must specify the parties of involvement Must specify the duration of the agreement(not less than 3 years) Must include the procedures for modification and termination of agreement Must prescribe the procedure for the modification and termination of agreement Must prescribe the procedure for settling disputes between parties Should prescribe how to deal with matters pertaining to interpretation and implementation and references of any such question in IC Should not contain any terms and conditions of employment (management prerogative).

Types of CA
1) A national union & an employers association 2) A national union & directly with an individual company 3) An in-house union & the company itself

Recognition

Procedures

Items commonly found in CA

C&B

Union security

Existing benefits

Industrial action

What is industrial action?

When the peaceful method fail to settle

dispute, the TU might use more aggressive methods 2 types of industrial action permitted by law:
Pickets Strikes

Union might also used:

Boycott Sabotage
Not permitted

Picketing
The IRA(Section 40) allows workers to attend

at, or near, their workplace when they have a trade dispute for the purpose of peacefully giving information to the public and other workers, and to persuade other workers not to work if a strike has already been declared.

strike
IRA (Section 2), strike is the cessation of work by a body of workmen acting in combination, or a

concerted refusal or a refusal under a common understanding of a number of workmen to continue work or to accept employment, an includes any act or omission by a body of workmen acting in combination or under a common understanding, which is intended to or does result in any limitation, restriction, reduction or cessation of or dilatoriness in the performance or execution of the whole or any part of the duties connected with their employment.

Lock-out
IRA (Section 2), lock-out is the closing of a

place of employment, the suspension of work, or the refusal by an employer to continue to employ any number of workers employed by him, in furtherance of a trade dispute, done with a view to compel those workers to accept terms or conditions of work or affecting environment.

Trade Dispute

Definition

Any dispute between employer and his workers which is connected with the employment or nonemployment or the terms of employment or the condition of work of any such worker.

Causes

Individual who has grievance, and is represented by his union and who has exhausted the grievance procedure without getting satisfactory result A difference of opinion between a union and an employer as to the appropriate terms and conditions of service for the workers A difference of opinion as to the interpretation of a collective agreement or IC award The non-implement of an agreement or award

An individual who has grievances

Definition

A reasonable and legitimate complaint by the EE concerned which he brings to the attention of his immediate supervisor/officer and which is subsequently not settled to the satisfaction of the EE

Purpose

The grievances that arise is settled equitably and quickly as possible To settle the problem at the earliest stage/lowest level as possible to maintain good relations between both parties.

Preserving industrial harmony

Providing the union with certain physical facilities like notice board so that the TU EE can communicate with all members

Provide training for plant union leaders

Involving union leaders and members in company decisionmaking

Training supervisors to work together with union representat ive

Union leaders can be invited to brainstorm ideas in managerial meetings

Settlement of TD
Direct negotiation
Both parties willing to come together for discussion until a satisfactory compromise is reached.

Conciliation
Process of arriving at a settlement of TD with the help of a third, neutral party.

Mediation
A neutral third party is called in by the employer and the TU who are in the midst of a dispute to help them find a settlement.

Arbitration
An impartial third party is given the authority to settle the dispute by examining the information given by both sides and making a judgment (IC).

Industrial Court

IC
IC was established by IRA 1967
IC is Arbitration Tribunal not a court of law It deals with TD only It does not have powers to hear any types of case

IC objectives
To provide peaceful and unbiased means of settling TD between EY and EE Settling employment related disputes To carry out the function of arbitration Not only plays a major role in resolving conflicts

but it also effectively prevent conflicts from escalating (Section 44 IRA 1967, once the case has been referred to IC for arbitration, any industrial action in the form of strike becomes ILLEGAL)

Awards of the court

Decision of the court is called awards. IC award of interest to the publics are

published in the Industrial Law Report(ILR). IC awards are binding on the parties involved. Section 56 IRA 1967: any party who does not comply with the terms of an award is guilty of an offence and if convicted can be fined or jailed.

Principle of natural justice

Taking disciplinary action

The EA 1955 gives employers the right to punish employees for misconduct. The punishments listed in Section 14 of this Act include dismissal, downgrading, suspension without pay for maximum of 14 days as well as any lesser punishment which could include a warning. Under section 69(3) of the Act, an employee may file a complaint at the Labour Department if he

believes he has been punished unfairly or unjustifiably.

Section 20, IRA, 1967

Where a workmen, irrespective of whether

he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director-General to be reinstated in his former employment.

Guidelines in taking disciplinary action

Should be given in private Should be expected Action should be consistent

Should be immediate Should be progressive

Natural justice
1) Both side must be heard (fair hearing) 2) No man shall be judge in his own cause (rule

against bias) 3) In domestic inquiry (DI)

An EE should be given adequate opportunity to defend himself or to be heard The inquiry is to be conducted by officers who are not directly connected with the case.

Law of unfair dismissal

Unfair Dismissal Act 1977 to 2007

Unfair dismissal can occur where:
Your employer terminates your contract of

employment, with or without notice or You terminate your contract of employment, with or without notice, due to the conduct of your employer (constructive dismissal).

Unfair dismissals
Membership or proposed membership of TU or

engaging in TU activities. Religious or political opinions Legal proceeding against an EY where EE is a party or witness Race, colour, sexual orientation, age or membership of the Traveller community Pregnancy, giving birth or breastfeeding Availing of right under legislation to maternity leave, adoptive leave, carers leave, parental or force majeure leave Unfair selection for redundancy

Thank you