Malaysian Industrial Relations System:
Its Congruence with the International Labor Code
A background paper on the Seminar
M.A, Ph.D.(Wisconsin) Cert. I.T.P ( Havard)
Specialist in Industrial Relations
Faculty of Management
MULTYMEDIA UNIVERSITY
Cyberjaya, Selangor, Malaysia
International Labour Standards find expression in two forms: conventions and
recommendations. The term "International
Labour Code" is used to denote the whole body of convention and
recommendation adopted by the international conference of the International Labour Organization [ILO] since 1919.
International
Labor Standards reflect a consensus among employers as well as between them and
governments and trade unions of member states. Moreover, they are prepared by
technical experts on the basis of extensive study and survey of the best
prevailing practices.
In distinguishing between
conventions and recommendations, it should be noted that international labour
conventions are instruments explicitly designed to create obligations whereas
recommendations serve to define non-obligatory norms, which essentially have
the objective of orienting national action.
The member states that
ratify the conventions implement them through legislation. When conventions are
ratified by the national authority for making laws [Parliament] they become
binding international obligations. The member states are required to submit
reports to the ILO on both the ratified conventions and recommendations and the
position of their law and practice every two to four years depending on their
relative bearing on human rights. [1]
Evaluation On Congruence
In examining the extent to
which industrial relations law and practice in Malaysia is congruent with the
International Labour Code, we should compare the relevant international
convention governing workers' rights with the statutory provisions of our
labour laws and their practice as interpreted by the quasi-judicial and judicial authorities in Malaysia.
In addition corresponding to the international labour recommendations, which
are non-obligatory, we should also look into the provisions of our Code of Conduct for Industrial Harmony
and evaluate the extent to which they are reflected in industrial relations
practice in Malaysia. This obviously leads us to consider the degree to which
these code guidelines are taken into consideration in the awards of the
industrial court under section 30 (5A) of the Industrial Relations Act 1967.
Among the numerous
international labor standards, the relevant conventions and recommendations
governing workers' rights to form and join a trade union and participate in its
lawful activities, the following are important: conventions and recommendations
relating to freedom of association, the right to organize and protection of the
right to organize, collecting bargaining and enforcement of collective
agreement. In addition, international labor standards regulating the
termination of the worker's contract of employment are no less important.
Convention 87 of 1948: Freedom of
Association and the Protection of the Right to Organize
The objective of this
convention is to ensure workers' freedom to associate into organization of
their own choosing. Pluralistic Industrial Relations cannot become a reality
unless the workers have the freedom to join a trade union of their choice. The
hallmark of industrial relations pluralist is bilateralism in the rule making
process in the organization, that is joint determination of the terms of
employment and conditions of work through collective bargaining. In addition,
this convention stipulates that the trade union will be autonomous bodies with the right to draw up their own constitution
and rules, to elect their representatives in full freedom, to organize their
administration and activities and to formulate their programmes. The public
authorities are to refrain from any interference, which would restrict this
right or impede the lawful exercise thereof. While article 5 of this convention
recognizes the right to establish and join federation and confederations and
these federations and confederations have the rights to affiliate with
international organization of worker, article 4 stipulates that workers
organizations shall not be liable to be dissolved or suspended by administrative
authority.
In addition to the direct
provisions of convention 87 of 1948, interpretation of this convention include
the following issues concerned with freedom of association or protection of the
workers' right to organize [2]:
Malaysian Experience
Convention 87 of the 1948 is
basically addressed to the government of the member states because the
requirement under this convention have to be translated into legislation by the
national authority to ensure these basic workers’ rights. [3]. It is needless
to say that as in any other progressive countries, Malaysian Trade Union Act
1959 (T.U. Act) under section 21,22 and 24 guarantee unions immunity from criminal
conspiracy and civil proceedings for damages consequent on the activities of
trade union in contemplation or in furtherance in trade dispute.
Except for this positive
provision to promote bilateralism in industrial relations, and freedom to join the
registered union or not to join it, not only the statutory provision under the
Malaysian Trade Union Act 1959 fall short of the freedom the convention
envisages for workers but any claim that worker organization in Malaysia are autonomous bodies is a far cry from
reality. In fact, since the Government of Malaysia finds traditional trade
unionism as an obstacle to its developmental efforts, the control over worker
organization in Malaysia is comprehensive in that extends to the internal
affairs of unions besides regulating union-management relations.
Even cursory review of the
statutory provisions of the Trade Unions Act 1959 would reveal that it contains
extensive provision to control and regulate the unions over their name, time
scope of its membership, its size, and time composition of its executives; in
addition, the statutory provisions stipulate what should be the objects of the
union, control the use and investment of union funds, prohibits its political
activity and prescribe conditions for its affiliation to federations and
consultative bodies abroad. [4A]
In advance countries trade
union as autonomous bodies frame their own rules; but in Malaysia the Trade
Union Act 1959 stipulates that (a) not only the trade unions should formulate
rules on all matters included in the first schedule of the Act (b) but also the
rules so formed must not contravene the specific statutory provisions governing
these matters in the act itself. [5]
The Director General of
Trade Union shall refuse to register a trade union if he is satisfied that the
objects rules and constitution of the trade union conflict with any of the
provision of the act of any regulation (section 38(1) of T.U Act 1959).
Trade Union Act 1959 is the
Government’s principal means of control over organized labour in Malaysia; and
the epi center of this control is in the statutory requirement of compulsory
registration of trade unions. An unregistered union is an unlawful body to be
dissolved. Sweeping powers bestowed on he DGTU on register a new trade union of
workmen and deregister an existing union provide the lever for him to exercise
the control over its internal affairs. For example, the powers given to the
Director General to refuse registration to anew union or deregister an existing
union, if likely to be used for unlawful purposes is not only sweeping but in
the absence of criteria determining whether a union likely to be used for
unlawful purposes, it imposes on him “an improper duty of prophecy”. Secondly,
the power given to the Director General under section 12(2) of the Trade Union
Act 1959 to prefer a new union existing one, if he is satisfied that would
serve the interest of the workers is quite arbitrary since it should be the
workers, not the director General of Trade Unions who should decide whether the
union is in the workers interest or not.
It is interesting to note that while it is mandatory for
the Director General to refuse registration on the stipulated grounds, it is
only discretionary for him to deregister. This enables him to hold the threat
of deregistration over the recalcitrant union without actually deregistering
them. That is evident from the fact that Director General is empowered to
deregister a union on the grounds that it had contravened its own rules or
objects or failed to comply with the statutory requirements under the Act. For example such grounds include (a)
contravening section under 50 of the Trade Union Act 1959 which requires the
union to file its annual returns by the 1st Oct of every year; (b)
contravening its own rule by failing to hold general body meeting or elected
union officers overstaying their terms of office; and (c) violating the
provisions of the Act by undertaking illegal strikes.
If these requirements are enforced, great number of trade
unions will have to be deregistered. For example, roughly 45 per cent of the
unions in Malaysia fail to submit their annual accounts on time every year and
this amounted to 206 trade unions out of the 510 in May 1998 (NST 1 Feb, 1999).
The official attitude seems to be that it is better to have the defaulting
unions subdued rather than deregistered.
Finally, it is to be noted that if the Director General
is to cancel the certificate of registration given to a union on any one of the
possible grounds, nothing can sop him from doing so. Of course under the law,
the Director General is required to issue a show cause letter before canceling
the registration, but section 15(4) of the Trade Union 1959 stipulates that the
Director General may cancel the certificate of registration of a union (a)
which has failed to show cause or (b) which having shown cause, has failed to
satisfy him.
Instead of deregistering a union outright, the Director
General may suspend a branch of a trade union under section 17 of the Trade
Union Act if he is satisfied that it has contravened any provisions of the Act
or its own rules. During the suspension, the branch union is virtually
immobilized.
Similarly, under section 18 of the act the Minister for
Human Resource with the concurrence of the Minister for Internal Security can
suspend a union for a period of six months in the interest of public order or
security in Malaysia.
Finally, the enormous powers conferred on the Director
General of Trade Union to be exercised at his discretion is subject to appeal
only to the minister whose decision is final ad conclusive. Though the exercise
of discretion by the executive authority is subject to the judicial review, it
is difficult for the court to intervene when such discretion is conferred on it
by using phrases like “is satisfied” or “in the opinion of” etc. when an
authority is vested with such discretionary powers to be exercised according to
its subjective satisfaction, the courts do not normally enquire into the merits
of a discretionary action: when a competent authority has the power to act in
prescribed manner when it is satisfied that given facts exists, or if in its
opinion those facts exist, the opinion or satisfaction of that authority is
usually accepted by courts as conclusive.
This brief review of the statutory provisions of the
Malaysian Trade Union Act 1959 amply demonstrates that they are totally out of
alignment with the labor standards under convention 87 on freedom of
association. Specifically Trade Union Act Malaysia 1959 blatantly violates
among others the following three articles of convention 87.
i.
The
public authorities shall refrain from any interference which would restrict the
right or impede the lawful exercise thereof (article 3(2) )
ii.
Workers
and employers organizations shall not be liable to be dissolved or suspended by
administrative authorities and
iii.
The
law of the land shall not be such as to impair, the guarantees provided for in
the convention.
The weakness of the Malaysian Trade Union Movement
was deliberately designed by the British Colonial Government to eradicate the
subversive influence of the communists on the Malaysian Trade Union movement
[6]. The government action against the communist trade union movement took the
form of two amendments in 1948 to the
basis trade union enactment of 1940: the existence of federation of general
character was ended by the amendment which required the federations to be
confirmed to trade unions catering for workers in similar trade, occupation or
industries. The second amendment sought to drastically reduce the influence of
outsiders who were using union for their own ends by requiring that trade union
officials other than the secretary must have three years experience in the industry
of their union.
It is of crucial importance to note that after
Malaysia became independent, the Government of Malaysia, in consolidating the
existing laws and regulations of trade unions not only retained these two
amendments aforementioned but introduced a new definition of trade union: it
defined a trade union as any association or combination of workmen …within any
particular trade occupation or industry within similar trades, occupation or
industries. (section 2 of T. U Act). It should be emphasized that the
interpretation of what should be considered as ‘similar trades’ occupation or
industries for the purposes of the constitution of trade union comes within the
competence of the Registrar of trade unions and in the final resort, the
minister of labor. (Section 2(2) of the T.U Act.)
This provision limiting trade union membership to
workers in similar trades etc has been responsible for small trade unions and
the weak trade unions movement in Malaysia. It effectively preempted the
emergence of large powerful national unions envisaged by the Malaysian Trade
Union Congress (MTUC) and prevent the MTUC from being recognized as a
federation of trade unions under the Trade Union Act 1959. [7]
The Director General of Trade Unions in different
times refused to accept that food and drink industries or rail and road
transport industries are similar. The persistence of the government in not
allowing the national union of electrical workers to organize the electronic
workers on the ground that they are not workers ion the similar industries
illustrates the government policy not to intimidate the electronic
multinationals by allowing this powerful union to make inroads into the
electronic industry. The government frankly explained to the ILO that the
national union of electrical workers with around 45, 000 workers, if allowed to
organize the million electronic workers would have daunted the electronic
industry and would have frightened foreign investors to leave the country
creating the unemployment problem in its wake. The saga of organizing the
electronic workers in Malaysia is well known and under the pressure of the ILO
all that these workers could gain was to right to organize themselves into
in-house unions in electronic establishment, which are still reluctant in
accepting even this form of unionization for their workers. [8]
This is sad reflection on the efficacy of the ILO
machinery to enforce the labour standards ratified by the member states. Arne
Wangel, for example observed that ‘ILO intervention did not achieve much except
forcing the Malaysia government to enter into dialogue on the reason behind
their industrial relation policy’ [8]
While convention 87 relates to relations between the
state and the parties to labour management relations, convention 98 addresses
directly to the bilateral relationship between labour and management
specifically in satisfying workers right. Finally when the Malaysian government
looked East to Japan inspiration, it was enamored of reorganizing the Trade
Union movement into enterprises unions, (called in-house unions in Malaysia),
if necessary by fragmenting the national unions into in house-union. [9] The
Registrar of Trade Union in his enthusiasm in implementing this labour policy
registered a in-house union for May Bank officers these officers belonged to
the National Union of Bank Officers with affiliation from 16 commercial banks
in Peninsular Malaysia. As stated earlier, under the law, the Registrar
presumed he had the power to register a second union where one existed earlier,
if in his opinion. It is in the interest of the workers. But in deciding
whether it is in the interest of workers, the law requires him to consider the
interest of the workers in the whole occupation of bank not the officers of a
single establishment. When reviewing court quashed the decision of the
Registrar in certiorari proceedings,[10] the government without losing much
time amended the definition of trade union to include workers not only in the
same trade, occupation or industry but also in the same establishment. The
definition of Trade Union as its stands today is as follows: Trade union means
any association or combination of workmen within any particular establishment,
trade, occupation or industry within similar trades, occupation or industries.
Though the government desisted from fragmenting any other national union, this
amendment the definition of a trade union is an enabling provision to break up
the strong national unions, and hangs as a democles sword on the national
unions in Malaysia.
To sum up, we may sad that Malaysian trade union
movement is not strong. it has been so designed is evident from the fact that
only 10 unions out of 517 unions have more than 10,000 workers. In fact, the
top five with the largest membership do not belong to the manufacturing sector
where the multinationals are involved (WU Min Aun, 1995). The definition of
trade union has not only denied the MTUC the status of a federation of trade
unions under the Trade Union Act 1959 but has effectively preempted the emergence
of large powerful workers organizations. Finally the introduction of the word,
"establishment" in the definition of Trade Union in 1989 amendment to
the Trade Union Act 1959 is an enabling provision to break up national unions
by organizing in-house unions in establishments. Till 1980 the law stipulated
that trade union officials must have minimum of three years experience in the
industry of their union. it is of interest to note that the Government through
an amendment Section 29 (1b) to the Trade Union Act 1959 reduced the minimum
period from three to one year to speed up the process in-house formation in new
enterprise, not to conform to the labour standard.
Section 8 of the Employment Act 1955 and the section 5 of
the Industrial Relations Act 1967 prescribe the inclusion in the individual
worker’s contract employment any condition restricting the rights of workman to
organize, and join a union and participate in its lawful activities; section 5
and 7 of the Industrial Relation act 1967 list Unfair Labour Practices such as intimidation, dismissal or threat
of dismissal for joining a trade union or becoming an office bearer,
discrimination against a union member in regard to employment, promotion,
condition of employment and working conditions. Finally section 4 of the
Industrial Relations Act 1967 seeks to prohibit formation of ‘company union’ by
stipulating against employer interference in the establishment, administration
or functioning of a union including extending financial support with a view to
controlling or influence the trade union of workmen.
Victimization as an unfair labour practices is seriously
viewed in Malaysia [12]. Victimization may be an action on the part of the
employer prejudicial to the workmen on some pretext other than the real reason.
Here, we are concerned with victimization for trade union activities. Under the
Malaysian law, while the employer can refuse to employ a person and to promote
or suspend, transfer, lay-off or dismiss a workman for a proper cause, if he
does any of these because of the worker’s lawful trade union activities, he is
said to be victimizing the workers. (s 5(2) of I.R. Act)
Victimization cases principally under section 4,5 and 7
of the Act are handled through referral to the industrial court under section 8
of the Act. Termination of service of all kinds including dismissal or
retrenchment under the guise of victimization come under section 20 of the Act.
A proven act of victimization is a punishable offence, and the industrial court
is empowered not only to order reinstatement with back wages but also to
enforce its order by treating non-compliance with its order as a further
offence calling for more severe punishment in terms of a fine or a prison term
or both. (Section 59 of IR Act).
Collective bargaining is
generally reorganized as the keystone of organized labour management relations.
Convention no 98 of 1949 on the right to organize and collective bargaining
closely followed the historical Philadelphia Declaration calling for the
promotion of programs which will achieve the ‘effective recognition of the
right to collective bargaining’. Convention no 98 it self calls for measures appropriate
to national conditions to be taken … to encourage and promote the full
development and utilization of voluntary negotiation between employer and
workers’ organizations with a view to the regulation of terms and conditions of
employment by means of collective agreements.
A cornerstone of collective
bargaining is the obligation on both the parties to bargain in good faith or
bargain with sincere desire to reach an agreement, the freedom of association
committee of the ILO governing body has stressed the importance it attaches to
good faith bargaining by both trade unions and management but stopped short of
prescribing behavior standards indicative of bad faith bargaining in order to
enforce this obligation. [14]
The obligation on the part
of the parties to collective bargaining to negotiate with a sincere desire to
reach an agreement is implied (though not explicitly stated) in the in the
definition of ‘collective bargaining’ under section 2 of the Industrial
Relation Act 1967, where the Act defines it as “negotiating with a view to the
conclusion of a collective agreement”.
Malaysian law does not
provide for any special machinery like the National Labour Relations Board in
America (NLRB is an independent tripartite authority) either to spell out behaviors
indicative of bad faith bargaining or to enforce the statutory obligation of
good faith bargaining between the parties. [15]
However the Industrial Relations Act 1967 sought to
prevent two of the NLRB’s bad faith behaviors under trade dispute;
i.
Refuse
by the employer to respond to the invitation by the union to bargain within 14
days leads to a trade dispute under section 13(4) of the Act.
ii.
Refusal
to commence bargaining within 30 days after employer’s acceptance of union’s
invitation also gives rise to a trade dispute under section 13(b) of the Act.
There was no need to spell
out other bad faith behaviors such as failure of the employer to send for
bargaining session person with authority as required by the labour standards
[16] or parties engaging in delaying or dilatory tactics since the Industrial
Relation Act 1967 provides for an party to report to the Director General of
Industrial Relations of failure to reach an agreement. When conciliation by the
Director General fails on its notification, the Minister may refer the Dispute
to the industrial court for a binding award. (vide section 18 and 26 or the IR
Act)
In the context of effective
conciliation and arbitration provisions in the Act, the pressure on the parties
to bargain in good faith is evident because in the absence of it, ultimately
the industrial court would impose its own award on the parties. Hence under the
Malaysian law there is no need for any specialized machinery to enforce the
obligation to bargain in good faith.
Scope of
Collective Bargaining
The
subject matter of collective bargaining under industrial relations pluralism or
bilateral relationship between union and management is essentially a compromise
between the domain of collective bargaining and that of management prerogatives.
The paradigm shift in industrial relations from unitarism to bilateralism in
America has witnessed a trend toward a gradual erosion of management
prerogatives. Generally speaking, the scope and ambit of the rights of
prerogatives are dynamic and in state of permanent flux for it depends on the
relative bargaining power and the relative strength of the parties.
The
international labour standards (the collective bargaining convention 154 1981
[17] indicated broadly the bargainable issues or negotiable items but desisted
from spelling out non-negotiable issues. Specifically, this convention calls
for negotiations to: determining working conditions and terms of employment;
regulate relation between employers and workers; and regulate relations employers
or their organizations and workers’ organizations. Thus international standards
clearly include ‘relational matters’ as well as ‘economic issues’ as
appropriate for bargaining.
Such
relationship matters could encompass agreement on trade union representation at
the work place, grievances and disputes adjustment procedures (including no
strike and no Lock-Out provisions), disciplinary rules, redundancy procedures,
and a host of other matters limited only by the imagination and interest of
unions and management.
Under
the Malaysian Industrial Relation Law the scope of collective bargaining has
been included in the definition of the collective agreement under section 2 of
Industrial relations act 1967: “ it is in agreement… relating to the terms and
conditions of employment and work of workmen or concerning relations between
such parties”.
It
is needless to say that this wide ranging definition is fully reflective of the
spirit of International Labour Standards
in that could easily accommodate;
i.
Bargaining
demands relating to terms of employment such as wages, hours of work, fringes
and benefits
ii.
Bargaining
demands relating to the conditions of works including maters of its safety and
physical comfort; and
iii.
Relationship
between the parties regulating matters such as discipline, lay-off and
retrenchment.
However the wide scope of collective bargaining was
curtailed by the ‘management prerogative clause’ viz section 13(3) introduced
in the Industrial Relation Act in November 1971:
i.
This
management prerogative clause specifically precluded a trade union from raising
any bargaining demand concerning the recruitment, transfer or promotion of
workmen, his retrenchment by reason of redundancy or reorganization, his
dismissal and his reinstatement or allocating of his duties and tasks.
In other words, this clause
is restrictive because it removes ‘personnel matters’ from the scope of
collective bargaining, even though all these matters fall within the meaning of
the statutory definition of collective bargaining.
ii.
While
section 13(3) of the Act specifically prohibits a union from raising any
demands on these personnel matters, nothing in that section prevents an
employer from negotiating on prohibited personnel matters in the interest of
harmonious industrial relations. According to Wi Min Aun , “there are instances
when such negotiations have taken place to maintain goodwill and industrial
relation harmony”
iii.
Moreover,
the prerogatives given to the management under section 13(3) of the Act are not
absolute but very much qualified. For example, while dismissal of a workman due
to misconduct is a management prerogative, if it is not for just cause or
excuse, the union or workman may raise a dispute under section 20 of the Act.
Similarly while retrenching workmen is its right, if it is not due to
redundancy or reorganization, a dispute can be effectively raised under the
Malaysian law governing management prerogatives.
Nevertheless, it should be
noted in passing that in the opinion of K.T Raja [19]
Settlement of
Negotiation Disputes
Collective
bargaining disputes may arise from two sources: one when one party may refuse
to bargain on a demand made by the other party, if it questions whether that
particularly demand falls within the meaning of the statutory definition of
collective bargaining. Second since obligation to bargain in good faith does
not imply a compelling necessity for the parties to reach an agreement, even
with good faith or obvious sincerity to reach an agreement, negotiation could
be deadlocked. Both parties bargaining to an impasse is quite common on
interest disputes like wages and benefits, which affect the interest of a large
number of workmen.
The
settlement of the aforementioned negotiation dispute is central to the
Industrial relation Act 1967, and the standards process involves conciliation
by the government machinery and arbitration by the quasi-judicial authority.
Specifically arbitration in Malaysia is sad to be voluntary when both the
parties jointly request the Minister to refer the dispute to the industrial
court, failing which compulsory arbitration may ensure at the discretion of the
Minister when he refers the dispute to the industrial court under section 26(3)
of the Act.
Industrial
action by any party may not be the recourse to force a settlement since it is
illegal when the dispute is referred to the industrial court and parties are
informed of it.
Contract
Administration
Contract
administration under the industrial relation law refers to enforcement of the
collective agreement. In implementing the contract two types of disputes may
arise: (a) interpretation disputes and (b) breach of contract disputes.
Interpretation
disputes: A the time of writing up collective agreement the union and the
management may have been confident that they both agreed on the management of a
particular clause of the agreement. However when it is time to implement this
part of the agreement, it may become evident that the parties do not agree on
what should be the correct interpretation. [20]
The
collective bargaining recommendation no 163 of 1981 as well as recommendation
no 91 of 1951 of ILO both deal with disputes arising out of the application or
interpretation of collective agreement. The latter instrument provides that
such disputes “should be submitted to an appropriate procedure for settlement
established either by agreement between the parties or by laws or regulations”.
[21]
This is another domain of union-management relations
where the procedures for settlement of interpretation disputes under the Malaysian
law are in complete conformity with
the requirements of the International Labor Standards. Specifically it is
mandatory under section 14(2) (d) of the Industrial relation Act 1967 hat the
parties incorporate into the collective agreement a procedure to deal with both
interpretation and implementation disputes. Furthermore, section 33 of the
Industrial Relations Act 1967 includes all the statutory provisions governing
settlement of interpretation disputes. In other words Malaysia industrial
relation system provides the parties to collective agreement to settle
interpretation disputes either through voluntary arbitration by a third person
of their mutual choice under section 14 of the Act or through settlement of the
dispute in the industrial court under section 33 of the Act.
Since
the parties are not quite ready to resort to voluntary arbitration to settle
these categories of disputes. Typically collective agreement fulfill this legal
requirement by stating “any dispute relating to interpretation and implementation
of this agreement shall, unless settled by negotiation between the employer and
the union, be referred to the industrial court for decision”
Under
section 33(1) of the Industrial Relations Act 1967 interpretation disputes may
be referred to the industrial court either by the Minister of Human Resource or
any party bound by the agreement or award, and in settling interpretation
disputes, the court is empowered under section 33(2) to vary the terms of the
agreement solely removing any ambiguity or uncertainty.
Sometimes
section 33(5) creates problem since for interpretation the industrial court;
according to this section should have the same quorum as the one which one made
the original award or a court specifically constituted under section 22 of the
Act. In one case (22) the president of the court which gave the original award
was no more available, and therefore the same quorum could not be ensured; nor
a court could be specifically constituted under section 22 related to trade
dispute, not interpretation dispute. [23]. However the High Court while
agreeing that the industrial court should be specifically constituted for the
interpretation, held that section 52(2) of the Act states that the provisions
of the act relating to the trade dispute shall apply to any matter referred to or brought to the
notice of the industrial court under the Act an application for interpretation
of an award under section 33(1) of the Act is a matter referred to or brought
to the notice of the industrial court under the Act. The conclusion is that
specifically constituting a court under section 22 of the Act to interpret an
award is valid even though interpretation dispute is not a trade dispute. This
eminently illustrates how interpretation of a statute by the superior court
could enable the resolution of a seemingly irresolvable issue and establish an
industrial relations practice overcoming the inadequacy of a statutory
provision of the Act.
Finally
as if to add grace to beauty section 33(3) of the act states that in
interpreting the agreement or the award the industrial court must afford the
parties reasonable opportunity of being heard. In other words, the industrial
court observing the principle of natural justice in discharging its
interpretative functions is mandatory under his section of the Act.
Implementation
Issues
It is well established that no legally
enforceable contract results from the collective agreement. In common law the
collective agreement is not a legal contract of service binding the individual
workman and his employer because it is an agreement between the union and the
employer. The mutual obligation between employer and workman always results
from and individual contract of employment.
Whereas
under the general law of contract the terms of a collective agreement do not
automatically become part of the individual contract of employment, a workman
would however be bound by such terms if it can be shown that they are
incorporated into an individual contract by as statutory provision or express
incorporation or implied incorporation. Section 17(2) of the Industrial
Relations Act 1967 makes the collective agreement meet the requirement of the
general law of contract [24]. Specifically section 17920 accordingly stipulates
that the terms of the collective agreement are the implied terms contract
between the workmen and his employer bound by the agreement, and the rates of
wages to be paid and condition of employment to be observed under the
individual employment contracts shall be accordance with the collective
agreement. In sum, a collective agreement does not replace an individual
contract of employment but only regulates it.
The
significance of section 17(2) of the Act was made clear by the industrial
court.[25]. The court observed that section 17 of the Industrial Relations Act
1967 is a mandatory section. It follows, therefore that if any term in an
individual contract of employment is in consistence with the terms of the
collective agreement, the terms of the collective agreement will prevail.
However, the terms of a collective agreement will not prevail if they are less
favorable to the employee than the terms prescribed by the employment act 1955.
Again if the collective agreement is silence in respect of certain terms, then
the provision of the employment act will prevail. This means that the terms and
conditions of employment of workman under the Malaysian law shall be
combination of (a) the individual contract of employment, (b) the collective
agreement and (c) the employment act 1955. there is no need of any further
guarantee to protect the term of employment and conditions of work of a workman
in Malaysia. [26]
Be
that as it may, by virtue of the sub section 17(1), collective agreement taken
cognizance of by the industrial court shall be designed to be an award of the
court. As such any breach of the collective agreement can be enforced as a
violation of the award of the industrial court.
Complain
of non-compliance can be made under section 56 the Act direct to the industrial
court by the union or any person (workman or employer) bound by the contract.
Non-compliance with the award or agreement is a punishable offence; conviction,
the guilty party is liable to a fine of RM 2000 or prison term of year or both,
and a further fine of RM 500 for every day during which such offence continues.
It
is needless to emphasize that compliance with the collective agreement or award
is crucial for healthy industrial relations. However, salutary statutory
provisions notwithstanding, there are many complaints of breach of contract by
the employers. To put differently, enforcement of contract when there is
non-compliance is difficult even when the industrial court orders compliance
and non-compliance is a punishable offence. It is because punishment can follow
only after conviction; but conviction follows prosecution by the office the
Attorney General. The Attorney General cannot prosecute unless the police
investigation gathers sufficient evidence of non-compliance. The Attorney
General has no power over the police Department. Only on receipt of the Police
Department the A.G.S office could prosecute the employer but that too only when
it evaluates the evidence to be adequate to take action.
This
difficulty in enforcing compliance was sought to overcome by the 1989 amendment
to this section 56 of the act, which allowed claimants register the industrial
court’s awards as judgments of the High Court or Sessions Court, thus allowing
better redress to the claimant since industrial court orders become enforceable
as session’s or High Court order. [27]
Nevertheless,
Zainal Rampak, the MTUC president felt that it would be better to give punitive
powers to the industrial court by way of fines and jail terms to make people
comply, rather than taking it to the session’s or High Court, which means the
aggrieved party has to find the financial and legal means to get justice done
[28]
It
is to be noted that Zainal’s proposal is based on Singapore practice where the
industrial court has the same power to punish, as contempt of court, a failure
to comply with an order of the court as possessed by the High Court.[29]. The
fines and penalties for contempt of court are much heavier that those provided
for other offences under the Act. It is the suggestion of this author that if
the Government has some qualms about bestowing this punitive power on the
industrial court. It could consider conferring it on the industrial appellate
court when it materializes. [30]
Some
argue that non-compliance of industrial court awards is not a serious problem:
up to October 1987 the industrial court handed down 3206 judgments and of this
number between 15 and 20 awards had yet to be implemented by the parties
involved. In percentage terms between this is between 0.45 to 0.6 per cent of
the total number of awards handed down by the industrial court.[31]
This
view did not find favor with the Minister of Labor for he warned that the
consequences of non-compliance would reflect on the credibility of the
industrial court. The
Supreme court also stated that “one of the higher
interests of law is surely that an order of the court, and this includes the
awards of the industrial court, must be obeyed otherwise, the system of justice
will be thrown helter-skelter with grave consequences, leading to erosion of
public confidence in it”[32].
Reference
1.
The introduction note on
ILO is taken from Alan Gladstone, “The Managers Guide to International Labor
Standards” Management Development Series No 23, International Labour Office, Geneva,
1986.
2.
Ibid Chapter 3. pp 14-20
3.
Ibid Chapter 4 p21
4.
Rudner, Martin,
“Malaysian Labour in Transition: Labour Policy and Trade Unionism 1953-63,”
Modern Asian Studies, 1978. 7 (1) pp 21-45
4 (a).
A detailed account of all these constraints on Trade Unions can be found in
Anantaraman, V. Supra n 5 pp. 62-67
However
a word about trade union’s political activity is called for:
While it is the constitutional
right of every citizen, including a trade union leader, to contest elections to
the national legislature under the agis of any political party, it is against
law for him to occupy position in any governing or policy-making body of any
political party. Zainal Rampak’s action in resigning his party position in
segamant 46 in order to retain his position as the president o MTUC illustrates
the enforcement of this stringent provision against the political activity of
any union leader.
5.
V. Anantaraman, Malaysia
Industrial Relations: Law and Practice, Penerbit UPM 1999 p 65-66
For example while the first schedule requires union
constitution to include the objects of the union, these objects formulated by
the union should conform to the objects of the union spelt under section 2 of
the Trade Union Act. Failure to do so would entail refusal to register the union
by the Director General of Trade
Unions.
Secondly, while the first schedule requires the union
rules to cover election of members of the union executive, they must conform to
the eligibility criteria for such membership stipulated under section 28 of the
Act.
Thirdly, while the first schedule lists matters on
which decisions must not be taken without a secret ballot, section 40 of the
Act again incorporates the list of such matters. Furthermore while the first
schedule requires union rules to cover the procedure
for the conduct of secret ballot, section 40 of the Act contains elaborate
provisions to ensure its proper conduct.
Such a comprehensive control of union rules y
statutory provisions of the legislation governing trade unions is quite
extraordinary and make mockery of ILO requirement of union autonomy.
6.
V. Anantaraman, Supra n
5 pp 3-5
In 1947 the communist dominated ‘general labour union’
established in Singapore in October, 1945 was renamed the Pan Malaysia
Federation of Trade Unions (PMFTU). At
that time, it was estimated that of the 289 unions with a total membership of
nearly 200,000, 117 unions with about half the total membership were under
communist control effectively exercised through the PMFTU.
7.
It is well known that he
MTUC could be registered only under the Societies Act and the long range
objective of the MTUC to eliminate multiplicity of unions and held unions to
group themselves into 14 National Industrial Unions covering such section as
plantation, mining road transport, railways, factories, commercial workers,
government services, professions etc could not be realized because of this
‘similarity’ provision of the Act.
8.
V. Anantaraman, Supra n.
5
Vide section on “The Issue of the Electronic Workers”
pp. 13-14; 21-23; 221
9.
Grace, Elizabeth. K.P. “
Looking For a Way out by Look East Policy”, Kajian Malaysia, 8(2) (1990) p.8
10.
Persatuan
Pegawai-Pegawai Bank Semenanjung, Malaysia v Minister of Labour Malaysia,
91989) 1 MLJ 30
11.
Supra n 1, Chapter 4 pp. 20-23
12.
K.F.C Technical Service
Sdn. Bhd. v Kesatuan Kebangsaan Pekerja-Pekerja Perdagangan. Award no. 83 /
1989 and KFC Technical Services Sdn. Bhd. v The Industrial Court Of Malaysia.
Regardless of whether or not the industrial courts are
very much alive to deal with alleged victimization, the reviewing courts have
not spared even the multinationals for victimization o workmen. For example, he
High Court declared the closure of KFC Technical Services Sdn. Bhd. as real as Mala Fide and therefore its
retrenchment of 19 trade union members unlawful and upheld the decision of the
industrial court decision to order punitive compensation of two months salary
for each completed year of service since reinstatement (after closure) could
not be ordered.
The second celebrated victimization case is that Harris
Solid State (M) Sdn. Bhd. v Bruno Gentil & 21 others (1996) 3 MLJ 489. In
this case, the industrial court had dismissed the claims of the 21 members of the union that they had
been victimized for legitimate trade union activity. The Court of Appeal considered
this case as case of an employer who had chosen to dismiss his workmen purely
because of their trade union activity; in fact, it stated that there could be
no clearer case of victimization and unfair labour practice.
In reviewing the industrial court decision the court
of appeal went into the merits of the case quashed the decision of the
industrial court, substituted its judgment to that of the industrial court and
moulded the consequential relief without sending the case back to the
industrial court. In the circumstances of the case, the Court of Appeal did not
consider compensation as the proper remedy, ‘for otherwise’, observed the
judge, ‘employers will be encouraged to terminate the service of their
unionized workmen, confident in the expectation that all they have to face is
an award of compensation – a small price to pay for being rid of trade
unionist’.
13.
Supra N. 1 p.7
In the 1994 the International Labour Conference met in
Philadelphia and adopted the “Declaration of Philadelphia and incorporated it
in the ILO constitution. The declaration laid down two basis principle: First
that it must be the central aim of national and international policy to achieve
conditions in which all men and women can pursue their material well being and
their spiritual development in freedom and dignity, economic security, and
equal opportunity; and second that all national and international efforts
should be judged in the light of whether or not they help to further this aim.
Declaration can be said to have reformulated the ILO’s original mandate in more
comprehensive and positive terms. [Its original objective was to gain
international agreement for regulations of labour conditions so that employers
in all countries would face the same cost obligations by establishing minimum
living and working conditions through out the world].
14.
Supra P.
15.
V. Anantaraman, Supra 5
pp. 107-108
For the NLRA indices or behaviors as reflecting
absence of good faith, refer to section on bad faith bargaining disputes on p.
107-108
16.
Supra n. 1 p 29
Another point particular importance stressed by the
collective bargaining recommendation 163 of 1981 is that bargaining
representing both the parties should be those with appropriate status and
responsibility so as to be able to commit their sides.
17.
Supra n. 1 pp. 28-29
18.
Wu Min Aun, “ the
industrial Relations Law of Malaysia” Longman, Kuala Lumpur 1982 p 70
19.
K. T Raja “ Industrial
Relations And management Rights,” Malaysian Management Review, 13(2) 1978 pp
22- 28
20.
Aminuddin Merilyn,
“Malaysian industrial Relations” Mc Graw Hill, Singapore, 1990
This description of an interpretation disputes is not
only succinct but the case illustration given by this author is also perfect.
Here illustration is a Malaysian case,”
[Award no 223 of 1998].
In this case, the disputed clause of the collective
agreement stated that ‘with effect from 1st March 1998, all the
employees within time scope of the award shall be given a pay rise of 5 % to
their last drawn salary as at 28th Feb 1988 rounded off to the
nearest higher dollar”. The union argued that every employee should get the 5 %
pay rise, including those whose salary was on the maximum of their scale. The
company disagreed with this viewpoint. The industrial court in this case upheld
the management viewpoint by stating”
In the Federal Hotel Sdn. Bhd. v National Union of Bar and Restaurant Workers (1983) 1 MLJ 178, Judge Abdoolcader ruled that when the requirements under section 33(5) are not satisfied, the industrial court has no power to assume jurisdiction under section 33 on the grounds that it was inappropriately constituted.
However the High Court in Association Of Bar Offices, Peninsular Malaysia v Malayan Commercial Banks Association (1992) 1 MLJ 240 resolved the issue.