MALAYSIAN INDUSTRIAL RELATIONS
INDUSTRIAL RELATIONS
Definition
Systems that encourage industrial harmony
It is for the regulation of relations between employers
and workmen or employees and their trade union and
the prevention and settlement of trade disputes.
Focus on 3 aspects:
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Relation between employer and union
Employment law
Discipline procedures and terminating service contract
Importance of IR
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One of the important aspects in human resource
management
To create a harmonious relation between employer and
employee
To ensure that employees receive fair and just
treatment and avoid conflicts in organization
Industrial relations system in Malaysia
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Made up of three parties/or the tripartite
systems:
Employer
– Employees (represented by union)
– Government
Industrial Relations Act 1967 –use to
regulate the relation between
employer and employee
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Industrial relations system in Malaysia
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Code of Conduct for Industrial
Harmony 1975 was introduced to
maintain harmonious relation between
employer and employee
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There are 47 issues covered regarding
employer and union responsibilities,
collective bargaining, etc
Generally, IR in Malaysia is controlled by
the government.
Definition of Trade Union
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Section 2, under Trade Union Act- “Trade Union is any
association or combination of workmen or
employers...whose place of work is in West Malaysia,
Sabah or Sarawak...”
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a. Within any particular establishment, trade,
occupations or industries; and
b. Whether temporary or permanent; and
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…continued
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c. Having among its objects one or more of the following:
– The regulation of relations between workmen and employers for
the purposes of promoting good irs between workmen and
employers, improving the working conditions or enhancing their
economic and social status, or increasing productivity;
– The regulation of relations between workmen and workmen, or
between employers and employers;
– The representation of either workmen or employers in trade
dispute;
– The conducting of....or dealing with trade union disputes and
matters related thereto; or
– The promotion, organization or financing of strikes or lockouts in
any trade or industry or the provision of pay or other benefits for
its members during a strike or lockout.
Trade Union (TU)
TU Functions:
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Protecting TU members through collective strength;
Economic controller – represent employees on issues
such as salary and employment contract
Support and help employees, such as advise and
counselling,benefit
Input provider to government on issues related to
employees
Membership of TU
According to Industrial Relations Act (Section 5); workkers in Malaysia
have the right to form and join TU –FREEDOM OF ASSOCIATION
In addition, The Act states that:
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No employer shall prevent a worker 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 is a TU
member or officer;
No employer shall discriminate against a worker (for example in terms of
promotion) on the grounds he is a TU member or officer; and
No worker shall be threatened with dismissal or dismissed if he proposes
to join a TU, OR if he participates in union activities.
Joining a Union
All workers over the age of 16 yrs have the right to join an
appropriate union- one which represents workers in their trade,
occupation or industry (Peninsular Malaysia, Sabah or Sarawak)
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Union members under 18 yrs of age are restricted in their union
activities (not entitled to vote on matters involving strike, dissolution
of the union or ammendment of the rules in TU)
Union members under 21 years of age are not eligible to be elected
as officers of the union.Pekerja berumur kurang 16 tahun
Specified group of workers are restricted from joining TU.
These are members of the police force, armed forces and prison
service.
Why joining TU?
Dissatisfaction with management
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Underpaid salary
Dangerous work environment
No job security/warranty
Less concerned about employee welfare
Social Needs
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Platform to get to know other people
To benefited from facilities provided by union (e.g;
onsite day care centre)
Why joining TU?
Leadership opportunity
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Opportunity to demonstrate leadership abilities
There are organizations that incorporate union
leader’s position into their formal organizational
structure (usually the lower level management)
Peers Influence
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Pressures from supervisor and co-workers to join TU
Types of TU in Malaysia
Three types:
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Public Sector TU
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Private Sector TU
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Eg: National Union of the Teaching Profession; the Malayan
Nurses Union;
Eg: National Union of Bank Employees (NUBE)
Employer Association
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Known as association not union
Eg: The Malayan Agriculture Producer’s Association (MAPA)
Collective Bargaining(CB)
Bargaining process between employer and their employees
regarding terms and conditions of service/employment
Union will represent employees in CB
Union needs to be registered in order to get recognition from
employer before representing employees in CB
Four important issues usually bargained:
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Wage/benefit
Work hours
Employment terms and conditions
Grievances
Collective Bargaining
Prerequisites to effective CB are that the union:
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Be recognised by the employer;
Has adequate financial strength; and
Members are united.
The outcome of CB is known as collective
agreement
Collective Bargaining Process
Ready to bargain
Develop the bargaining strategy
Implement bargaining process
Signing of collective agreement
Collective Bargaining Process
First step: Ready to bargain
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Union needs to collect informations and facts to support
argument during CB process
Example of information: employee performance record,
overtime record
Union needs to clearly develop objective of the CB
Union needs to have knowledgeable and skillful bargaining
team
Collective Bargaining Process
Step 2: Develop Bargaining Strategy
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Union needs to understand its own power and the employer as
well
Union needs to identify the correct and proper strategies to be
used during bargaining
Strategy planning should be consistent with the information
collected during the first step and also to take into
consideration employer’s power
The final outcome of collective bargaining should be the “winwin” strategy
Collective Bargaining Process
Step 3: Implement the Bargaining Process
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Both sided (union and employer) should be patient throughout
the bargaining process
Bargaining team needs to be knowledgeable about
employment law and industrial relations system in Malaysia
Union needs to present all the facts collected during the first
step
Collective Bargaining Process
Step 4: Signing Collective Agreement
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Involves the process of collection of recommendations to be
included during signing the colective agreement
Collective agreement should be in written form (Industrial
Relations Act, 1967)
The content of colective bargaining agreement should be
stated clearly using the language that both parties can
understand well
Grievance
An individual worker’s complaints towards employer is
termed as “grievance”
Employee and its union have the right to make
complaints if they are not satisfied with their employer
Factors that lead to grievance:
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Employer denied employee’s right to be promoted
Employer does not appreciate outstanding achievement by employee
Employer exaggerate small mistake done by employee
Discriminate employee based on different religion, culture and race
Steps in Grievance
Union receives complaints from individual
employee
Union proposes complaints to employee’s
immediate supervisor to settle the
complaints
If the immediate supervisor fails to settle the
complaints, union can propose the
complaints to the top management in the
organization
Grievance
For a trade dispute to exist, the employee concerned must be
represented by their union to settle the grievance
Factors that enable union to represent employee in trade dispute:
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Employee finds no other ways to settle grievance
There exist conflicting opinion between employer and union regarding
terms and conditions of employment
The agreement results or the concerned laws are not implemented by
employer
There exist conflicting opinions regarding terms in collective
agreement or legal decision from Industrial Court
Grievance
Factors that hinder union to represent employee in
trade dispute:
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Individual worker has a complaint concerning alleged
interference by an employer with his right to join or not to join
a trade union
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The worker may complain to the Director-General of Industrial
Relations or refer to the industrial court
Individuals who believe that they have been dismissed without
just cause or excuse
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The worker may complain directly to Department of Industrial
Relations
Industrial Action by Employees
The only forms of employee industrial action
recognised by the labour laws are:
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Picketing
Strike
Picketing
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The most common form of industrial action taken by employee
Done to comunicate issues to the public and to embarrass the
employer
Prominent display of banners and placards with derogatory
comments about their employer and management
The Industrial Relations Act (Section 40) allows workers to attend at,
or near, their workplace during trade dispute for the purpose of
peacefully giving info to the public and other workers
and to persuade other workers not to work if a strike has already
been declared.
Only workers directly involved in the dispute can participate in the
picket (although an officer or employee of the union can be present
to ensure that the picketing is carried out according to the law)
Picketing must not intimidate anyone, and must be peaceful
Strike
Occurs when a group of workers refuse to work until
their employer accepts their demands
Involves stopping of work by a group of employees
including any attempt to limit or slow down production
on purpose
2 types of strike:
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Strike relating to collective bargaining
Strike that has no relation to collective bargaining
Strike
Strike relating to collective bargaining
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when employer is not willing to provide collective
bargaining or no resolution during collective
bargaining
Strike that has no relation to collective
bargaining
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Due to factors such as terms and conditions of
employment, retrenchment, layoffs and promotion
issues
Strike
Strike Procedures:
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Secret ballot must be held by those eligible to strike,
clearly stating the issues leading to the proposed strike
The results of this ballot must be sent to the DirectorGeneral of Trade Union s by the union secretary within
14 days of taking the ballot
Strike can only take place if two third of those entitled
to vote agree to the action
Strike can take place after waiting 7 days after the
ballot results have been sent to the Director-General
Secret ballot is only valid for 90 days, and if strike has
not taken place within this period, a new ballot will be
required if the union intends to continue with the strike
action
Employer Actions
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Employer also has the right to engage in industrial
action
The most common industrial action taken by employer
is the lock-out
Employer refuses to allow the workers to work until the
dispute between them is settled
Alternatively, the employer can take steps to fight a
strike by keeping the firm operating ; either by placing
managerial or non-union employees in the strikers’ job
or by hiring replacement workers
Settlement of Trade Disputes
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Direct Negotiation
Conciliation
Mediation
Arbitration
Settlement of Trade Disputes
Direct Negotiation
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The ideal method for settling a dispute
Discussion between employer and the union until a
satisfactory compromise is reached
Solutions arrived at by mutual decision between the
two parties without the involvement of an outsider
Settlement of Trade Dispute
Conciliation
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Arriving at a settlement of a trade dispute with the help of a
third, neutral party
Is carried out by officers of the Department of Industrial
Relations
Industrial Relations officer will meet the parties, either
separately or jointly
Conciliation can be voluntarily requested by either of disputing
parties or the Director-General of Industrial Relations may
intervene “in the public interest”, requiring the parties to
attend a conciliation meeting ( is known as compulsory
conciliation)
Settlement of Trade Dispute
Mediation
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Rare method of settling a trade dispute
Similar to conciliation in that a neutral third party is called in by
the employer and the TU who are in the midst of a dispute to
arrive to settlement
The mediator is not from the government , but a person
considered unbiased and impartial and is respected and
trusted by both parties
A politician or other local leader may intervene in a dispute
Settlement of Trade Dispute
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Arbitration
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When disputing employer and union cannot find a
solution by themselves or with the help of the
Department of Industrial Relations, arbitration
may be the only way to settle the dispute
An impartial/neutral third party is given the
authority to settle the dispute by examining
information given by both sides and making a
judgment
Only the Industrial Court has the power to
arbitrate labour disputes
Industrial could award need to be followed by
employer and union