LXEB 2307: Industrial relations in Malaysia

NAME: DYLAN CHONG FOO SIANG

MATRIX NUMBER: LEB110113

DEADLINE OF SUBMISSION: 8HB APRIL 2016 – 4.00 pm

LECTURER:

Professor Madya Dr.Siti Zaharah Binti Jamaluddin

Soalan tugasan LXEB 2307

1. Arahan kepada pelajar:

(i) Tugasan ini membawa 30 markah.

(ii) Tugasan ini perlu dihantar ke pejabat am pada Jumaat, 8 April 2016 sebelum

jam 4.00 petang.

(iii) Pelajar dikehendaki untuk memasukkan nota kaki dan bibliografi di dalam

tugasan.

(iv) Tugasan ini hendaklah tidak melebihi 3,000 patah perkataan.

2. Soalan tugasan:

“Adakah kita perlukan sebuah kesatuan sekerja?” Bincangkan pernyataan

itu dengan merujuk kepada:

(a) peranan kesatuan sekerja di Malaysia kini;

(b) peranan kesatuan sekerja di Malaysia apabila Malaysia menjadi sebuah

negara berpendapatan tinggi pada tahun 2020;

(c ) Bandingkan kesatuan sekerja di Malaysia dengan kesatuan sekerja di

salah sebuah negara-negara ASEAN.

Terjemahan:

“Do we need a trade union?” Discuss the statement with reference to:

(a) the role of a trade union in Malaysia now;

(b) the role of a trade union in Malaysia when Malaysia becomes a high

income nation in 2020;

( c) Compare the trade unions in Malaysia with the trade unions in one of the

ASEAN countries.

Table of Contents

(A) The role of a trade union in Malaysia now ..................................................................................1

1.0) Introduction ...........................................................................................................................1

2.0) Five main function of the trade Union ...................................................................................2

a) Service function .....................................................................................................................2

i. Providing legal services to its member ...............................................................................2

b) Representative function .........................................................................................................2

i. Trade union plays the role of negotiating a collective agreement ........................................2

c) Regulatory function ...............................................................................................................3

i. Trade union to regulate the membership requirement .......................................................3

ii. Trade union regulate the number of trade union ...............................................................3

iii. Regulate the member right to carry an act of strike .......................................................3

d) Government function .............................................................................................................4

i. Trade union as settlement entity through arbitration process ............................................4

e) Public administration function ..............................................................................................4

i. Promoting government policies and training program .......................................................4

ii. Working hand in hand with the Director general of Trade Union ......................................4

(B) The role of a trade union in Malaysia when Malaysia becomes a high income nation in 2020 .....5

3.0) Methods that Malaysia trade Union can adopt ...................................................................5

i. Inter country Trade union organization establishment ..........................................................5

ii. Foreign workers’ inception: legislation reform to include the law to protect domestic

workers .........................................................................................................................................5

iii. trade union to lobby for the change in employee’s related legislation .................................6

iv. Trade union role in voicing the effect of TPPA to the government in the future .................6

(C) Compare the trade unions in Malaysia with the trade unions in one of the ASEAN countries. ...7

4.0) Singapore government emphasize arbitration as their first dispute resolution while

Malaysia is of vice versa ................................................................................................................7

i. Long title of Chapter 136 and long title of IRA 1967 ..........................................................7

ii. Arbitration as the first option in Singapore and not in Malaysia ........................................7

iii. The trade union limited representation for the executive employee in Singapore ...........8

iv. Tripartite mediation process as dispute resolution for the executive employees. .............8

5.0) Conclusion .............................................................................................................................9

6.0) References ........................................................................................................................... 11

6.1) Statutes ............................................................................................................................ 11

6.2) Case Law ......................................................................................................................... 11

6.3) Books ............................................................................................................................... 11

6.4) Articles ............................................................................................................................. 11

6.5) Website ............................................................................................................................ 11

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(A) The role of a trade union in Malaysia now

1.0) Introduction

A trade union is a group of workers who have associated together with the common purpose

of improving their working lot by negotiating with their employer as a group in order to obtain

better terms and conditions of employment. The action of collaborating by a union in conducting

collective bargaining is to put the representative of the employee on an equal bargaining platform

with the employer in order to be able to negotiate for a better welfare, social and economic

opportunities for its member. The Malaysian legislation under the Trade Unions act 1959 (TUA),

section 2 has defined a trade union as “any association or combination of workmen or employers,

being workmen whose place of work is in West Malaysia, Sabah or Sarawak….” A legit

example would be the federation trade Union - Malaysian Trade Union Congress (MTUC) who

has a membership of 500,000 presenting workers from both private and public sectors while the

Congress of Union of employees in the public and civil services in Malaysia1 or known as

CUEPACS acts as the spokesman for the Malaysian civil servant.2As of January 2016, the labor

force of Malaysia recorded a total of 14,150,000 of workers being employed in both the private

and public sector.3 Therefore, it is vital to have a collective union to represent workers in

negotiating the welfare of the workers.

1 See MTUC official website : http://www.mtuc.org.my/about-us/

2 See CUEPACS official website : http://www.cuepacs.my/index.php/cuepacs-23/visi-misi-

objektif.html

3 See Monthly principal Statistics of labor force, Malaysia, January 2016 under the Department

of Statistics Malaysia, official Portal :

https://www.statistics.gov.my/index.php?r=column/cthemeByCat&cat=124&bul_id=bnZaNUpx

SCtDWmdrUk9YdGE2aU5mZz09&menu_id=U3VPMldoYUxzVzFaYmNkWXZteGduZz09

2

According to K.D Ewing, trade union has five main functions which are the service function,

regulatory function, representative function, government function, and also the public

administrative function.4

2.0) Five main function of the trade Union

a) Service function

i. Providing legal services to its member

The trade unions provide a range of services to their members. This would ranges from

giving out friendly society benefits such as sickness insurance or death benefits to the provision

of legal advice and assistance.5 CUEPACS actually made provision of legal assistance to its

member as one of its main objective. Section 25 of the TUA empowers the trade union to sue

under its registered name. in the event where the employer does not abide by the terms and

conditions agreed upon the collective agreement, such as underpayment of wages or bonus, the

trade union can sue on behalf of its member against the employer.

b) Representative function

i. Trade union plays the role of negotiating a collective agreement

It is inevitable that a big chunk of the trade union role is to negotiate a collective agreement

with the employer as stated under section 14 of the industrial relations act 1967 (IRA). In order

to have a uniform employment conditions that bind the workers from that particular industry, the

trade union has to have majority consent of the particular worker in order to enter into a

collective agreement with the employer. This is because the trade union plays a role not as an

agent, but the principal between the members and the employers as to what the terms and

conditions of service should be for the parties specified in the agreement. The terms and

4 See Ewing, KD 'The Function of Trade Union' Industrial Law Journal Vol 34 No 1 pp 1–22.

5 See H.Collins, K.D.Ewing, M. Aileen, “Collective labour right”, page 492

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conditions will be something that is on par or better than the benefits as stated in the current

legislation of employment act 1955.

Under section 17 (1) (a) of the IRA, the effect of the collective agreement would also have

implication to the rest of the workers from the particular set of industry, or practice.6 In the case

of Sykt Pemandangan Sinar Sdn Bhd & Anor v Kesatuan Kebangsaan Wartawan Malaysia,7 the

federal court decision by Abdul Malek Ahmad JCA held that word “the parties to the agreement”

in section 17 (1) (a) means that the agreement would be binding upon the members who is

related to the collective agreement. The trade unions have to negotiate for terms and conditions

that are at least an on par with the provision of the employment act 1955 or better.

c) Regulatory function

i. Trade union to regulate the membership requirement

Section 26 of the trade Union acts only allow minors above age of sixteen and not over

twenty one to be registered as a member of a trade union. For an adult employee to be a member

of a trade union of that particular industry, other than professing the required education and

working certificate, he has to fulfill the requirement of being a bona fide employee and above

age eighteen under section 26.

ii. Trade union regulate the number of trade union

Trade unions whose members are employed within the similar particular industries may be

amalgamated into one trade union upon one half of the votes from each trade union who express

desire to amalgamation of unions. This is coupled with a total of sixty percent of the total votes

of all trade unions vote taken into account.8

iii. Regulate the member right to carry an act of strike

6 Section 17 (1) (a)

7 [1998] 1 MLJ 337

8 Section 32 Trade Unions Act 1959

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The trade union governs the conduct of its members by not allowing member to carry act of

strike unless they comply with section 25A of the TUA. A two third majority vote has to be

obtained before they can carry an act of strike, and the result has to be submitted to the director

of general within 7 days as stated under section 25A (1) (a) and (b).

d) Government function

i. Trade union as settlement entity through arbitration process

The industrial relation act 1967 had imposed upon the trade union to bring the trade dispute

matter of its member to the compulsory arbitrary body such as Kuala Lumpur regional Centre for

Arbitration. Under this new set of rules, it is illegal to continue to strike after the trade dispute

has been referred to the industrial arbitration court. This would curb prolonged workers’ strike,

court trial and provides a winning settlement for both sides in a shorter period of time.

e) Public administration function

i. Promoting government policies and training program

Other than the labor department and the industrial relation department, the trade union also

plays a part as the government word of mouth in promoting government training and policies.

For example whenever the government organized a talk on certain worker’s right; the trade union

plays a role in helping to spread to its member of this event.

ii. Working hand in hand with the Director general of Trade Union

As the purpose of an establishment of a trade union is to ensure the collective workers would

negotiate for their rights in compliance with the law, the trade union is bound to adhere to the

rules and regulations as set in by the TUA and IRA by dealing with the middleman of the

government- the Director General of Trade union (DGTU). This can be seen in the desire of the

union to held a strike in the event the obtain a two third majority support from its member9, they

would have to send the result to the DGTU. The DGTU will then inform the government. In

certain event when the government thinks that the demand of the union is reasonable, the

9 Section 25A (1) (a) of the TUA 1959

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government will ask the representative to negotiate with the employer to come a middle ground.

Vice versa, the government would allow the union to strike in the hope of pressuring the

employer to switch their mind and come to a concession with the union’s demand.

(B) The role of a trade union in Malaysia when Malaysia becomes a high income nation in

2020

3.0) Methods that Malaysia trade Union can adopt

i. Inter country Trade union organization establishment

With the signing of the TPPA agreement, under chapter 19 related to the labor right,

Malaysia will have to abide by the international standard of workers’ right. This means that

whenever any developed nation has a major change in their employment legislation, Malaysia is

ought to comply to it as well. However to do so, Malaysia government should empower the trade

union in Malaysia such as the MTUC the power to be a part of the stakeholder in negotiating

inter binding national labor law. This concept is similar to the concept of a European parliament,

where they appoint representative from every country to the European parliament. Malaysia

would have to empower the trade union the power to be a representative of Malaysia in order to

negotiate for future workers’ right in the international arena with other TPPA signing nations.

ii. Foreign workers’ inception: legislation reform to include the law to protect

domestic workers

The TPPA would have it boon and bane. The boon side of it is that more foreign investment

and businesses would be established in Malaysia. And the side effect to it is that local workers

might have to compete with foreign workers in term of job opportunity. The trade union should

be given an authority in negotiating terms and conditions subjected to the particular industry in

order to protect local infant industry; a good example is Uber Company, a foreign developed taxi

apps company that had step into Malaysian public transport industry causing thousands of taxi

drivers to have difficulty in getting passenger. A proposal to that is that a form of binding

“collective agreement is ought to have entered between the local worker with the particular

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industry entered by the foreign worker” in order to give legitimacy to the local worker to have

local standi to negotiate with the foreign company. Not to forget that in a commercial

transaction, foreign company would have the leverage of excluding the application of Malaysia

law. It is wise for the terms and a condition negotiated by the trade union to include an

arbitration clause to enable the application of various laws to be applied in the event of a trade

dispute arises. In conclusion, Malaysian trade union needs to be granted the authority and power

to have a negotiating voice with the foreign counterpart as to their labor right.

iii. trade union to lobby for the change in employee’s related legislation

Trade Union or MTUC plays an important role in lobbying for a change in the provision of

the legislation or for a creation of new workers legislation. It is impossible for the government to

seek advice and to interview every single employee one by one in order for them to get the

required information in order for the government to draft new law in for the worker. For that, the

trade union such as MTUC or CUEPACS plays a role in bringing forward issue that affects the

workers to the government. Issues that have been mooted or debated through the annual general

meeting held by the trade union such as wage issue, working time, holidays, and others will be

informed towards the ministry of human resources.

iv. Trade union role in voicing the effect of TPPA to the government in the future

Unfortunately, the newly pass Trans-pacific partnership agreement (TPPA) in the Malaysian

parliament in the early January 2016 would requires the trade union to negotiate and discuss with

the government on the amendment and creation of new employment and industrial relations act

in relation to the compliance to the international labor Organization (ILO) as signified under

chapter 19 of the TPPA. This also includes amendment to other legislation that might pose

disadvantages to the domestic worker. The agreement requires the Malaysian government to

comply with the International Labor Organization (ILO).10 For Malaysia to leapfrog to the

standard required by the international community, the trade union in Malaysia plays an important

role in accessing the capability of Malaysian domestic worker on whether they are capable to

comply with international standard.

10 See http://www.nst.com.my/news/2016/02/129002/labour-policy-revamp-under-tpp

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(C) Compare the trade unions in Malaysia with the trade unions in one of the ASEAN

countries.

4.0) Singapore government emphasizes arbitration as their first dispute resolution while

Malaysia is of vice versa

The Asean countries that will be compared are Malaysia and Singapore. The current

Malaysian legislations related are the Trade Unions Act 1959 (TUA) and the Industrial Relations

Act 1967 (IRA), while the Singaporean counterpart has the Trade Union Act (chapter 333) and

Industrial Relations Act (chapter 136).

i. Long title of Chapter 136 and long title of IRA 1967

The mechanism employed by Malaysia is more of a state-employer dominated model which

involved the talks by two entities between the employer and trade union while Singapore runs

with a tripartite system with the collaboration between the Singapore ministry of manpower

(MOM), the national Trades Union Congress (NTUC), and Singapore National Employers

Federation (SNEF). Not only that The Singapore law system includes in its legislation chapter

136 where its long title reads “dispute resolves through conciliation and arbitration and for

tripartite mediation of individual disputes” whereas the Malaysia IRA maintains the dispute

solving mechanism between the employer and employee by themselves. The Singaporean system

adopts an arbitration industrial court as the first table talk dispute resolution. The uniqueness of

this system is that it involves the representative of the government selected by the president, the

trade union representative and the employee and representative from the other trade union11.

ii. Arbitration as the first option in Singapore and not in Malaysia

The difference can be shown that in Malaysia legal system, arbitration is never an option

render to the parties to the dispute. In comparison to Singapore, the parties to the dispute may

write to the president of the industrial arbitration court to refer the matter to the arbitration.12 In

Malaysia, the duty to arbitrate lies with Kuala Lumpur regional Centre for arbitration (KLRCA),

11 See section 6 of Chapter 136 – appointment of panels

12 See section 31 of Chapter 136 – reference to arbitration body

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which cost a leg for the legal fees.13 This enable dispute to be resolved fast in Singapore. Vice

versa in Malaysia, matters can be prolonged and need to go through the minister which would

eventually transfer the case to the industrial court to resolve it.

iii. The trade union limited representation for the executive employee in Singapore

The number of executive employee14 amounts to more than one third of the total population

of Singaporean workers.15 The recent amendment to the Singapore Industrial relations act in year

2015 has given the senior management and certain categories of executive to be collectively

represented by the union. This can be seen through section 30A of part IV of the Chapter 136,

where paragraph (1) empowers the union to empower the executive individually and not as class.

It also empowers the union to represent the executive employee for matter such as re-

employment dispute.16 In Malaysia, despite executive employee has never appear in the

interpretation section of the IRA, section 5 (2) (b) touches on the prerogative right of the

employer of having the authority to preclude a person who has been appointed or promoted to a

position of managerial, executive or a security post to become an officer or member of a trade

union catering to the demand of workmen from the same position of managerial, executive and

security. In a nutshell, the restriction to the representation of executive employee in Malaysia is

still there and therefore executive employee in Malaysia cannot have representation through the

trade union to voice out concerns and issues related to the their standard of demand.

iv. Tripartite mediation process as dispute resolution for the executive employees.

13 Refer to the http://klrca.org/about/ and the procedure to apply for arbitration through the

arbitration act 2005

14 Executive employee refers to an employee held the managerial position or an executive

position by the employer.

15 Report of Singapore labor market as of December 2015 recorded a number of 3656,200

numbers of workers.

16 Refer to Section 30A (1) (e) of Chapter 136

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The Singapore government recognizes that the executive employee would seek for a different

demands compare to its subordinate employee. 17 The process of conciliation between employee

and executive employee will be carried out first, failure to which the next process of mediation

will take place. The Singaporean government encourages the process of tripartite mediation to be

carried out between the employer and employee together with a government appointed mediator.

With that in mind, a mediation advisor will be appointed to mediate the dispute as stated under

s30K of chapter 136.

If the process of both conciliation and mediation fail to meet its objective, then both parties

will be referred to the arbitration court. The award given by the Singaporean industrial

arbitration court is binding upon both parties as stated under section 40 of chapter 136.

In Malaysia, the situation is completely the reverse. The process of conciliation only

occurs at the ground level where the DGTU only have the power to interpret uncertainty clause

and to give award for noncompliance of the collective agreement. This is not helping at all as the

executive employee may have different sets of terms and conditions that bind them with the

employer, such as different scale of salary, longer working hours and etc.

5.0) Conclusion

In conclusion, Malaysia is about to reach the status of year 2020 and with the inception of

the Trans-pacific partnership agreement (TPPA) that allows foreign workers to step into

Malaysia, more executive employee or in Malaysian term “white collar” worker would flood the

working market. Malaysia trade union act and industrial relations act must keep abreast with the

number of executive employee that it has. The framework of arbitration body cannot be

exclusive to the KLRCA only. It is time for the government to establish one and provision

related to arbitration and perhaps the Singapore tripartite mediation process should be adopted as

a part of the dispute resolution mechanism in the trade union act and industrial relationship act. If

we need to cross from one end to the other of the Sungai Rajang of Sarawak, we might be able to

17 Section 30F (a) defines executive employee are those receiving above 4,500 Singapore dollar

in salary

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do it with a sampan. But if we were to cross from one end of the South China Sea to the other

using the same sampan, we might end up submerged in the middle of the sea. It is time for

Malaysia to reflect the type of vessel that they will continue to sail towards “Wawasan 2020”!

(2999 words)

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6.0) References

6.1) Statutes

a) Industrial relations act 1967 (act 177)

b) Trade unions act 1959 (act 262

c) Industrial relations act (chapter 136) – Singapore

d) Trade unions act (chapter 333)

e) Employment act 1955

6.2) Case Law

a) Sykt Pemandangan Sinar Sdn Bhd & Anor v Kesatuan Kebangsaan Wartawan

Malaysia [1998] 1 MLJ 337

6.3) Books

a) Siti Zaharah Jamaluddin, edisi kedua, “Undang-undang Perhubungan

Perusahaan di Malaysia, Penerbit Universiti Malaya, Kuala Lumpur.

b) Alex Josey, Trade unionism in malaysia , Singapore, D,moore (1954)

c) Alex Josey, its past, present and future, (1980), University of Queensland

press

d) Nick Humpreys, trade union law, (1999), Blackstone press.

e) Sharifah suhana, Industrial relations in malaysia, cases and materials, (2012),

University of Malaya Press.

6.4) Articles

a) Azizan, A study of national labour centre, Malaysian trade union congress

(1949 -1981) , published July 1989

b) Carsten Jensen, trade Unionism, differences and similarities – a comparative

view of Europe , usa, and asia

c) Tripartite guideline on extending the scope of union representative for

executives –obtained through singapore ministry of manpower website

d) Labor market report 2015 – singapore ministry of manpower website

e) Daresh kuruvilla, “Change and Transformation in Asian Industrial Relations,

published by Cornell university ILR school

6.5) Website

a) Ministry of manpower singapore

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b) Malaysia Trade Union Congress website

c) Cuepacs website

d) Malaysian ministry of human resources website

e) Strategic advice in relation in Singapore

http://www.rodyk.com/usermedia/documents/Rodyk_ReporterApr15-

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