You are on page 1of 18




Collective agreement is an agreement between employers and employees

which regulates the terms and conditions of employees in their workplace, their duties

and the duties of the employer. In addition, the collective agreement is in fact the

result of the collective bargaining process between employers and labor unions

representing the workers. Other than that, it also means a contract signed between

workers and managers of an organization or business where the contents of the

agreement have been prepared after consultation between the two sides of the

managers and employees. The agreement is also related to working conditions in the


According to section 2 of the Industrial Relations Act, 1967 as follow, ³an

agreement in writing concluded between an employer or a trade union of employers

on the one hand and a trade union of workmen on the other relating to the terms and

conditions of employment and work of workmen or concerning relations between

such parties´. Based on this definition , the agreement must have the form of an

agreement between employers and trade unions and an agreement between trade

unions and employers.

Moreover, in this collective agreement must meet the conditions required

importances which are required by statute under section 14 of the IRA. The

conditions are all collective agreements must be in writing, the names of the parties

to the agreement must be clear, the parties named or authorized representative must

reduce their signature, this agreement should specify the period in which agreements

must be accepted and the term is not less than three years, should not contain the

working conditions are less favorable than, or conflict with the law applicable to

employees covered by the agreement, it also should prescribe how to deal with

matters relating to the interpretation and application and referral of each of these

questions to the Industrial Court and the last one it should be prescribed procedure to

resolve all disputes between the parties.


All trade union need to comply with the requirements or contents of the

collective agreement. If the trade union does not comply with it, the Court may require

the party to amend the agreement. Meaning to say that, if the parties are not

complying with the requirements needed the Court may refuse to approve the

establishment of the parties. When the parties are not complying with the agreement,

the Court will interpret or take actions against the parties. The agreement also will

become an award of the Indus trial Court and it also will bind both parties.


# Meaning to say that in the collective agreement it must stated the name

both parties that involves or bound in the agreement. In the other word the both

parties which are the trade union of the organization and the organization itself. For

example is the agreement shall be known as Malayan Banking Berhad and

Association of Maybank Class One Officers Agreement from 1 st March 2008 to 28 th

February 2011.

 $%   $   $""$! #  


‘'() It must be specify the period it shall continue the agreement tha t valid or how

long it can be use. Meaning to say that, it must be specify how long the duration of

the agreement of the organization clearly. The duration cannot be less than three

years. In the other word for the effective duration, the agreement must be for a

minimum three years. Means that, the collective agreement needs to be renewing

once in three years. Within the period the parties also can adjust the terms with by

the mutual consent and it also must be brought to the Industrial Court. This is

because Industrial Court needs to know what they want to do on their agreement. In

the other word, they can or have the right to add some terms or conditions that they

think needed in their agreement.

For example is the Malayan Banking Berhad make collectiv e agreement

between Association of Maybank Class One Officers. Thus the duration of the

agreement is from 1 st March 2008 to 28 th February 2011. So, in the agreement it need

to be state it like this agreement shall be deemed to have come into effect on 1st

March 2008c and shall continue to remain in force until 28th February 2011 c and

thereafter until superseded by a new Collective Agreement.

 %   $   $%  " *

% !  Meaning to say that, i t must be specify the procedure

that to be used in order to settle any disputes occur over interpretation of the

agreement. In the other word if there is any dispute occur over the interpretation, they

know the procedure that they need to follow and the re lated people also know what

they need to do in order to settle the dispute. Any dispute relating to the interpretation

of the agreement need to be settled by negotiation. Meaning to say that, they need to

have the negotiation between the company itself and the Trade Union of the


In this case during the time of concluding the collective agreement the union

and the employer both may have been agreed on the terms in the agreement.

owever, when it is time to implement it, it may have that both two p arties may

disagree with it or does against the agreement.

The matters pertaining to the interpretation of the collective agreement is

provided in the Industrial Relations Act. In this Act said that if any question arises as

to the interpretation of any collective agreement is taken by the Industrial Court. The

party bound by the agreement may apply to the Court for a decision on the question.

This is to ensure that both parties company and trade union of the company satisfied

with the decision making la ter. Where the decision making that will be make is equal

for others and it also can avoid dispute among them. It also needs to be referred to

the Industrial Court for a decision.

For example is the union leader of Sabah Banking employee¶s Union in the

banking industry in Sabah is disappointed and protests the Alliance Bank where the

three branches will be closed. The bank had breach the agreement where it shall

require having early discussion with the union. Thus, then they had the peaceful

negotiation between them why this happen and to settle it. Thus at the same time

they can maintain their relation between them and to create harmonious relation

between them.

According to the Industrial Relation Act 1976(Act 177) section 14 (2) that the

agreement should be prescribed with the procedure for the adjustment of any

question that arise regarding with the implementation or the interpretation of the

agreement and the reference of the Industrial Court, unless there is a suitable

mechanism that is being set up by both parties in the in the agreement to settle the


³Trade dispute means as defined by the industrial relations act is ³any

disputes between an employer and his workers which is connected with the

employment or non - employment or the terms of employment or the condition of work

for any such worker´. Trade disputes are also known as industrial disputes. It can be

caused by four factors. Firstly an individual who has grievance and it is represented

by his union and who has exhausted the grievance procedure without getting

satisfactory result. Next factor is because difference opinion between employer and

union worker as to the appropriate terms and conditions of service for the workers.

Next factor is also the difference of opinion as interpretati on of collective agreement

or industrial court award and lastly the non - implementation of the agreement.

 + $  $""$! #  $%  " *

%  !  " According to Article 5 any dispute relating to th e

implementation of this agreement must be settled between the company and the

union and be referred to the industrial court for definite decision. In also must be

followed with the existences of Grievances Procedure as shall not prevent either

party to this Agreement initiating informal exchange of views between the union and

the company regarding on the matters of the mutual interest. The agreement also

need to be recognizing the value and importance of full discussion in clearing up the

misunderstanding and also preserve with harmonious relations as every responsible

effort shall be made by both the company and the union as to dispose any grievance

or complaints from employee or the company at the lowest possible level.

The first procedure is within the 5 working days of grievance arise, the

employee concerned may raise the grievance with his immediate supervisor or

alternatively if he so desire, he shall approach the officer to whom his immediate

supervisor is responsible and be accompanied by at least the two members of the

office committee. Next step, if the matter is still not settled within the further 7 working

days, the union can make formal presentation to the company in writing. On the

receipt of the union¶s letter the company will without delay offer arrangements for a

meeting between the branch manager and accredited official of the company and the

union which will be attended by the union branch secretary and also his appointed

deputy. Meeting should be held within 7 days of receipt of union le tter. But if the

matters remain is unsettled, the grievance may be discussed between a director of

the company and his credited officer and union¶s secretary and or with his appointed

deputy within 10 days of period. But again if the matter still remains u nsettled after

this meeting or any further meeting between the company and the union itself, then

only it will be referred to the ministry of human resource for conciliation. And the last

step, if the dispute end up still remain unsolved after the reconcil iation proceedings

by the ministry of human resource both parties may refer the dispute to the industrial

court for settlement under the provision of the industrial relations act 1967 or such in

other law as may then be in force.

+,  $    $""$! #  $& 

$%   %$ %    # According to

the article 4 modification and termination stated that the currency of this agreement

either the company and the union, save by the mutua l agreement shall seek to add,

vary, modify any of its terms and condition in any way or even to seek or impose any
new terms, condition and also the benefits. There is also should any legislation

supersede, vary, repeal, or add to any of the provisions of this agreement as the

provision for this agreements shall be amend accordingly if it is so required by the

said legislation. Whereby, this agreement will be terminated either by the party

serving on the 3 months of notice in writing, but no such notice sh ould be given

before the 3 months prior to the expiry date of the agreement.

+   $     $%%  #"

#! $ & $"%%   #  It means that any area of

some concern to management and union alike is the decision over what can and

cannot be included in the collective agreement. When union leaders negotiating a

collective agreement, they not only hope to improve the terms and condit ion of

employment of the workers concerned but also try to influence managerial decision

making which affect the welfare and the careers of their members. According to the

Section 13(3) Industrial Relations Act ³No trade union of workmen shall may include

in its proposal for collective agreement a proposal in relation to any following matter

which is the promotion by an employer of any workmen, the assignment or allocation

by an employer of duties or specific tasks to a workmen, the termination by an

employer of the services of a workman, the transfer by an employer of a workman,

the dismissal and reinstatement of a workman by an employer and lastly the

employment by an employer of any person. These prerogatives include promotion,

transfer, recruitment, dis missal, termination for redundancy and assignment of work.

owever, general issues relating to procedures on these matters can be, and

frequently are found in the collective agreement.

% ""*  "%  $ *   $%   "*

-$"!&"$! !*-

"-  "$&"  -. $!% &*  % # . A company that is

given pioneer statues under the Investment Incentives Act 1968 also enjoy certain

privileges (IRA S ection 15). For example the collective agreement made between an

employer and a trade union of workmen in pioneer industry should not certain

provisions that are more favorable to the workmen with regards to terms and the

conditions of the service. Even th ough the pioneer status is given 5 years, but it could

be extended by notifying in the gazette. According to IRA Section 14(3) that the

provisions made in the collective agreement must be part of better that what is

available in other written laws, otherwi se whatever is being provided for in the

collective agreement is void and be replaced by the provisions available in the written

laws which is been signed by the both parties. For example, terms that are less

favourable than the provision of Wages Council Acts 1947 and employment act 1955

cannot be included in the collective agreement.

D        /0 1

As we know according to Maimunah Aminuddin in the book of Malaysian

Industrial Relations and Employment Law, Si xth Edition, the collective agreement can

defined as an agreement in writing between an employer, or a trade union of

employers, and a trade union of workers relating to the terms and condition of

employment or the relation between the two parties. Collect ive agreements can

specify an employer or an industry sector.

While, the term of employer can be define under section 2 of the IRA as any

person or body of persons, whether corporate or unincorporated , who employs a

workman under a contract of employment and includes the government and any

statutory authority, unless otherwise expressly stated in the act.

According to section 17 (1) of IRA had state that the effect of collective

agreement which is a collective agreement which has been taken cognizance of by

court shall be deemed to be an award and shall be binding on:

(a) The parties to the agreement including in any case where a party is a

trade union of employers, all member of the trade union to whom the

agreement relates and their successors, assignees or transferees.

(b) All workmen who are employed or subsequently employed in the

undertaking or part of the undertaking to which the agreement relates.

(2) as from such date and for such period as may be specified in the collective

agreement, it shall be impli ed term of the contract between the workmen and

employers bound by the agreement that the rates of wages to be paid and the

conditions of employment to be observed under the contract shall be in accordance

with the agreement unless varied by a subsequent a greement or a decision of the


In term of industry sector, collective agreements provide unique advantages

to employer. Such collective agreements reduce competition between employers

themselves by reducing turnover and producing parity on wages. The high turnover

can be harmful to company¶s productivity if skilled workers are often leaving and the

worker population contains a high percentage of news workers. The parity on wages

used in the setting of wages to establish similar status to different work groups. New

hire transition time goes down as a result of uniform employment terms.

Other than that¶s, the effect of collective agreement that bringing goodness to

employer is them can manage a better human resource budgets by establishing

scheduled pay increases. Employer also can plan reallocation of staff through

advancement and retirement schedules. Employers see gain in employee productivity

as a result of collective agreement. Productivity gains result from greater staff morale,

increased staff retention and lower absenteeism. While, productivity for the employer

lead to increases in profits and better competitiveness in the market.

Furthermore, there is the condition where effect toward employer that they

need to know when involved in collecti ve agreement which is an employer cannot

change working conditions without renegotiating the contract when it expires. The

union monitors the workplace to ensure that the employer is not violating the

collective agreement. As we know, the establishments of collective agreement is to

give the rights of employee in a workplace, and are in effect for a set number of years

before they are either renewed or renegotiated. So, employer be determined to do

not violet the agreement between employer and employee in c ollective agreement.

A collective agreement also provides some benefit to the employer in term of

the union will not undertake strike action while the agreement is in effect. Strike

happen when two sides cannot agree often about issue like wages. owever, there

are a number of legal and illegal measures a union can utilize if issues with an

employer arise.

Last but not least, the effect of collective agreement toward employer is the

ability of employer to fire workers is limited, unless a case matches the condition set

down in the agreement. Usually the collective agreement included the issue of

section on wages, vacation time, health and safety, hours of work and many other

issues. Some of employer do not follo w the agreement that had negotiated with

employee in collective agreement from that company can not fire the employee

without the proper reason.

Î        0 12/ 

The relationship between the industry of entrepreneurs, worker s and their

unions are very important today as it was as a step for Malaysia to achieve the status

of the new industrial countries (NIC). If no problems arise between employers,

workers and union workers, this means that unions and employers can conclude t he

agreement. As stated in the Industrial Relations Law 1967 clearly led to one of the

best solutions among employers, employees and unions to resolve differences and

disputes between them that they were unable to resolve yourself to say the machine

complaints or collective bargaining.

In addition, one way is by way of conciliation of a dispute resolution method

to reach agreement and resolve the dispute either through the Department of

Industrial Relations in the Department of uman Resources. Another wa y is through

arbitration is statutorily and through industrial action by the parties involved in strikes

and lockouts. Finally, certain differences or disputes, for example, those over the

issue of union recognition, may be resolved by the Minister of uma n Resources

himself, with the help of the Director General for Industrial Relations. Furthermore,

employment contracts between workers and employers are bound by the award

which the wages payable to employees of employers should be parallel with the

award, unless they vary the following awards or agreement between the parties.

In Malaysia, a separate industrial relations system has been designed for the

public sector. Which this system is made up of the Commission Salaries and Salary

Committee, Department of General Services, the National Joint Council and the

Department of Joint Council, and the Court of Civil Service. Salaries and Wages

Committee of the Commission appointed by the Federal Government to review

salaries and other conditions , working conditions, employment and the

recommendations in whole or part of the Public Sector. In addition, there are also

constitutional and board fees are functioning and authority to appoint, confirm, place,

promotion, transfer and discipline of members of the public service for which authority

is conferred by the Constitution.

In addition, the collective agreement also provides benefits to workers,

especially in dealing with matters relating to their work. On the other hand, collective

agreement to provide benefits to employees to resolve their problems, especially

problems related to wages, holidays and so forth. In addition, this agreement can give

opportunity to employees in enforcing their rights and demand justice on the issue of

their work. The effect s of this collective agreement are also to promote the employee

to the employer, employees in the normal working hours and provide protection

against unfair dismissal, layoffs, and disciplinary action. In addition, employees can

also get flexible work arra ngements where there was none before. They can also

gain for better wages and scheduled pay increases and paid sick leave. Additionally,

they can ask for job longevity where it is important to them life outside of work

including to take out loans, buy home s, having children and making other life

decisions. Thus, the collective agreement allows representation of workers'

compensation appeal in the interests of workers and other workers.

In term of salary, employee can gain for better wages from their employer by

collective agreement. They also can get more incentive or benefits by collective

agreement with their employer. For example, some 2100 non -executive staff of

Perodua Sales Sdn Bhd (PSSB) will enjoy new benefits following the signing of the

2011-2013 Collective Agreement (CA) between PSBBB and its employees union

recently. The new CA also provides for the majority of the 2100 employees to enjoy

salary increments and adjustments rang ing from 8% to 10%. According to Aminar

Datuk Rashid Salleh in his speech, he said that the collective agreement between

management and union have reached in four discussion sessions within two months

only. In addition, opportunities for salary increases can also lead to increased

productivity of workers in a company and should contribute in line with the salaries

received by them.

On the other hands, employees can get protection against unfair dismissal by

doing collective agreement with their employer. R egarding this issue, employee have

right to argue their employer relating issue of unfair dismissal. They also have right to

protect their self from unfair dismissal by their employer. It is because workers have

rights which are protected by statute. One o f the more important of these rights is that

of security of employment. Employees in Malaysia cannot have their services

terminated at will by their employer. According to Industrial Relations act of 1967

effectively prevents an employer from dismissing an employee without good cause.

The purpose of this paper is to establish a profile of employees who have been

dismissed and who seek reinstatement according to the procedures laid out in

Section 20 of the Industrial Relations Act.

For instant, eight members of the National Union of Drink Manufacturing

Industry Workers (NUDMIW) have been dismissed by F&N Coca -Cola (Malaysia)

Sdn Bhd (FNCC). On top of that, the union¶s members claim the dismissal is unfair

and aimed at intimidating wo rkers. The dismissal was the culmination of a series of

disputes between management and the workers, which started in July last year.

According to the union, it said that management had disallowed paid leave for union

business, a practice that had been enj oyed by top union officials for 20 years. In

response to this change, workers refused to work overtime from Jan 12 to 21, a busy

period right before the Chinese New Year. Instead of working a 12 hour shift, the

workers worked 8 hour shifts. The union said that overtime is non mandatory under

the collective labour agreement, only 8 hour shifts are compulsory.

The union however, claims that FNCC used force and threatened the 36

workers involved in the incident. This led the deputy general secretary of the un ion to

lodge a police report against the company at the Seksyen 15 police station in Shah

Alam on Jan 14 2009. Of the 14 suspended union members, 8 of them were being

fired. The union has called the company¶s actions as blatant victimisation and an

unfair labour practise and have reported it to the Industrial Relation Department in

Shah Alam. This can be concluded that, employees have right against the employers

regarding issue of this unfair dismissal.


As a conclusion, there are man y terms and condition that the trade union

need to fulfil to ensure that their collective agreement is approve by Industrial Court. If

there is absence of any of the stated essential terms, the Industrial Court may refuse

the collective agreement. The col lective agreement is very important to the trade

union and it also will give effects on the employers and employees in the

organization. This agreement is important in order to protect employee¶s right benefit.

Through this they can voice out their dissati sfaction towards the organization. Under

the Industrial Relations Act 1967 , the rights of employers and workmen of employees

and their trade unions are protected through the collective agreement.

Through this agreement employees also can perform picketing that was

carried out at or near the place where employee works and where a trade disputes

exists. It will be illegal picketing and will lead to the peace. Every one of the members

of the union have the right to join it. Thus the Industrial Court cannot ta ke action on


Without collective agreement also employees may refers in it what are their

rights in the organization. So that, the employers cannot take advantage towards their

employees on all matters relating to the employees rights and at the sam e time

employees can protect their rights.