CHAPTER 10

INDUSTRIAL RELATIONS

BY: SYAHIRA BINTI SA’ABAN

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 INTRODUCTION
• Industrial relations is sometime known as labor
relations or employee relations.
• The relationship between an employer and his
employees. Employees are members of a trade
union.
• If employees do not belong to any union, the
management is more interested in human
relations.
In this lecture, we will be talking about industrial
relations that exits in a unionized environment.

2
cont’d..

• The purpose of regulating industrial relations

procedures such as:
– Collective bargaining,
– Conciliation of disputes,
– Rights of employees and employers,
- is to encourage the development of a
harmonious relationship between the two
parties i.e. employers and employees

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cont’d..
• A sound knowledge of industrial relations laws,
i.e. the Trade Unions Act 1959 and the Industrial
Relations Act 1967 is essential for all managers.
• Malaysia has tripartite system of industrial
relations.
• A national level, decisions on policies and
legislation are made jointly by representative of
the unions, the employer and the government.
• The National Labor Advisory Council (NLAC) is the
highest level at which tripartite discussion takes
place.

4
cont’d..
• One model of industrial relations recommends
that employers and employees’ unions should
work toward developing a harmonious
relationship in which both parties respect the
rights and role of the other.
• Tripartite nature extend to:
– The Industrial Court.
– Employees Provident Fund (EPF)
– Employees Social Security Organization (SOCSO)
– Malaysia Productivity Corporation.
In the international scene is the International
Labour Organization under the United Nations. 5
cont’d..
• The organization which represents
employers/employees at tripartite meetings
respectively are:
– Malaysia Employers’ Federation (MEF) – employers.
– Malaysian Trades Union Congress (MTUC) and Congress of
Unions of Employees in the Public and Civil Services
(CUEPACS) - employees.
MEF and MTUC are not trade unions; they are societies
that represent the interest of employers and trade
unions.
MTUC ‘s members are individual trade union that choose
to affiliate.
CUEPACS is a federation of trade unions in the public
sector.

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The Role of Ministry of Human Resources
in Industrial Relations

• Play a major role.

• Preparing legislation which establishes the
rights of employers and employees.
• The ministry is required to enforce the laws
passed by Parliament.
• The Department of Industrial Relations – The
Industrial Relations Act 1967.
• The Department of Trade Unions – The Trade
Unions Act 1959.
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 TRADE UNIONS
• Workers join unions – collectively push for
higher wages and better terms of
employment. As an individual has little
bargaining power.
• Unions protect their members rights and stop
unfair practices by the employers.
• Unions not only interested in the lives of their
members during working hours but also in the
quality of life of workers.

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cont’d..
• Three pronged approach - Union
activities focus on (i) individual
employers and the employer’s treatment
of his workers; (ii) on national issues
which are common to all employers and
affect all workers; and (iii) they represent
individual workers who request their
help.

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 cont’d..
UNION

Individual Employers National Issues Individual Members

Improving workers’ Recommending Representing
terms and conditions protective members with
legislation for grievances
workers
Protecting members Discussing with Providing benefits to
from unfair treatment government and members
employers current
issues

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 The Need for Trade Unions
• Some say trade that unions are outmoded
concept.
• Most employers resent – active unionists.
• Unions try to interfere in an organization’s
managerial and decision-making process.
• Employers refused to cooperate with union’s
leaders.
• However, most employers learn to accept and
come to terms with the reality, which may
bring good relationships in the time to come.

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 Forming a Union
• Any groups of seven (7) or more workers can
form a trade union providing they work in the
same trade, occupation or industry – be it in
the public and private sectors.
• Must register within one (1) month with the
Director-General of Trade Unions in order to
operate legally.
• The most important criteria for a union to be
registered is that its intended members must
come from the same or a similar trade,
occupation or industry. 12
 Joining a Union

• All workers over the age of 16 years

have the right to join an appropriate
union.
• Certain workers are restricted from
joining trade unions. They are police
force, the armed forces and the
prison service.

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 Trade Union Officers
• Executive Council comprises:
– President
• Only Malaysian citizens are
– Vice-President
eligible to stand for election.
– Treasurer • An office-bearer or employee
– Secretary of a political party is not
– Council members eligible.
• Those convicted of a criminal
Many of the larger offence are not eligible; and
unions employ full-time • Persons who are bankrupt
staff to run the union’s are not eligible.
affairs on a daily basis
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 Trade Union Funds
• Unions collect monthly subscriptions ranging
from RM3.00 to RM12.00 from their members
and they may invest their funds in order to
increase and safeguard them.
• Annual financial accounts must be submitted
to the Department of Trade Unions so that
they can be scrutinized to ensure the funds
have not been used for improper or illegal
purposes.
• Failure to submit accounts may lead to de-
registration of unions.
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 Type of Trade Unions

• They are classified into three groups:

– National and regional unions.
– In-house unions.
– Employers’ association.

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cont’d..
• National and regional unions are:
– The National Union of the Teaching Profession
(NUTP) - 130,000 members.
– The National Union of Bank Employees (NUBE) –
30,000 members.
– The Union of Plantation Workers (NUPW) – 28,000
members.
– Telekom Bhd. Employees Union (NUTE) – 13,000
members.
– The Transport Workers Union (TWU) – 10,000
members.
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cont’d..
• Union whose members are in a particular
industry but memberships is confined to a region
of the country.
• Trade Union Act does not permit workers in
Sabah and Sarawak to join the same union in
Peninsular Malaysia.
• In some industries the unions themselves choose
to take memberships from specific area in Pen.
Malaysia e.g. the Perak Textile and Clothing
Industry Worker Union which restricts its
memberships to workers in the textile industry in
the state of Perak only.
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cont’d..
• In-house unions:
– Are formed by workers in a company or
organization whereby membership is confined in
that particular company.
• E.g. the National Union of Cold Storage Employee and
British American Tobacco (Malaysia) Bhd. Employees
Union.
– Workers in the statutory bodies and local
authorities are limited by law to forming this type
of union.

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 cont’d..
• Employer’s Associations:
– Employers have formed their own unions in those
industries where a strong trade union of employees
exists.
• E.g. the biggest association are the Malayan Commercial
Banks Association (MCBA) and the Malayan Agricultural
Producers’ Association (MAPA).

Number Membership*
Private Sector Unions 439 433,702
Public Sector Unions & Statutory Bodies/Local Authorities 237 373,019
Employers’ Associations 14 673
Total 690 807,394
*As of December 2009
Source: Dept. of Trade Unions Membership of Unions as December 2009 20
 cont’d..
• It has been observed that the percentage of workers in
Malaysia who belong to a trade union is decreasing.
• The reason being:
– Workers are better educated and more of capable of
negotiating with employers on their own.
– Human resource management practices are improving – less
exploitation and not feel the need to be represented by a
union.
– Ineffective trade union as the leaders spend more time
fighting with each other rather than fighting with employers.
– The mindset of young workers who perceive trade unions to
be old-fashioned.
But the role of trade union remain unchanged – contribute
very much to NLAC – tripartite bodies.
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 THE COLLECTIVE BARGAINING PROCESS
• Collective bargaining is the process whereby
employers and employees negotiate the terms
and conditions of employment. Regulated by
the Industrial Relations Act 1967.
• Recognition - before negotiation, the union
must get recognition from the employers.
Requires under the Industrial Relations Act
1967 (section 13)
– Recognition to represent the workers to discuss
dispute and disagreement.

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 cont’d..
Recognition flow:
Union
Within 21
days If fail to get employer’s
recognition

Employer DG of Industrial Relations

Membership
check

Minister of Hum. Resource Depart. of Trade Unions

Final decision

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cont’d..
• Collective bargaining – is the function of trade unions.
– The best method to regulate the terms and conditions
of employment.
– Once recognition is approves, bargaining can starts
between the employers and the employees (which is
represented by the unions).
– when they have groups – negotiation will be
conducted by union of employees and the union of
the employers e.g. banks & plantation industry.
– Small firms may face problems when collective
bargaining is done at industry level.
– In Malaysia, bargaining is done at the enterprise level.
– The union of the employer can draft a set of proposals
for a collective agreement.

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cont’d..
• Collective Agreement – is a written agreement
between an employer and a trade union relating
to the terms and conditions of employment.
• To make it legal and binding, the agreement
must in writing, and signed by the parties to it.
• Agreements must specify their duration – most
common – 3 years – negotiation is repeated
every 3 years.
• All agreements must be deposited to the
Industrial Court within one month of their being
signed.
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cont’d..
• Content of Collective (CA)
Duration of CA , Scope of CA, New legislation,
Arbitration, Grievance procedures, Interpretation and
definition, Recognition of company, Recognition of
union, Leave of trade union matter, Probation,
Promotion, Working hours , Overtime, Rest day, Public
holiday, Exam and study leave, Casual/Compassionate
leave, Annual leave, Maternity leave, Medical leave,
Prolonged illness, Bonus, Safety equipment,
Retirement and benefits, Retrenchment and benefits,
Allowances /incentives, Safety, health and welfare,
Discipline, Notice of resignation, Existing benefits and
Wages.
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 INDUSTRIAL ACTION
• When conflict and disagreements cannot be
resolved, an effective industrial relations
system recognizes these differences and
provides machinery to settle disputes.
• Malaysian law recognizes two weapons that
could be used by workers and one that may
be used by the employers. These are:
– Picket (workers).
– Strike (workers).
– Lockout (employers).
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cont’d..
• The Picket – workers who belong to a trade union
and who have a trade dispute with their employer
have the right to picket within their work premise,
providing:
– They do not obstruct the exits or entrance.
– They do not intimidate anyone, and
– Their activities are peaceful.

The purpose of picketing is to publicize the worker’s

dispute. They continue working in the normal manner.
As pressure tactic. Conduct outside working hours,
before or after work or during lunch break.

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cont’d..
• The Strike – strike is permitted. Only
members of registered trade union may strike.
They must take secret ballot to hold the strike
to determine the percentage of supporters.
2/3 majority is good enough to go ahead with
a strike. The results of the ballot must be sent
to DG of Trade Unions for scrutiny before to
allow or not to allow strike to commence.
• In essential services, workers must give notice
to the employers and the latter must inform
the DG of Industrial Relations.
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cont’d..
• Strike is considered illegal under the following
conditions:
– Over an issue relating to the question of
recognition of a union.
– Relating to matters in a collective agreement.
– Relating to managerial prerogative.
– After a trade dispute has been referred to the
Industrial Court.

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cont’d..
• The following types of strikes are considered
illegal in Malaysia:
– General strike – a strike involving a wide variety of
workers from different industries – initiated by
political reasons – aimed at harming the government
in power.
– Wildcat strike – a strike which does not follow the
described procedures – they do not hold ballot.
– Sympathy strike – a strike to show their support for
another group of workers who are embroiled In a
dispute.
– Sit-down or sit-in strike – a strike where employees
enter the workplace but refuse to work thus stopping
other persons from carrying out their tasks. 31
cont’d..

• The Lockouts – Employers also has weapon

of locking out their workers to force them to
accept the employer’s demand.
• Shutdown of company operations undertaken
by the management to prevent union
members from working.
• The legal requirement for a lockout are similar
to that of strike.

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 SETTLEMENT OF INDUSTRIAL DISPUTES
• There two main methods:
– Conciliation.
– Arbitration.

 Conciliation – is a process whereby the Dept. of

Industrial relations helps to settle disputes between
employers and employees. The conciliator (officer
from the Dept. of Industrial Relations)has no power
to settle any dispute. He merely tries to bring about
a settlement buy using his skills as a “middlemen”. If
the dispute is not settle, the matter will be brought
to the attention of the Minister of HR and then to
the Industrial Court.
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cont’d..
 Arbitration – is the settlement of a dispute
between an employer and his employees by a
neutral third party. Under the Industrial Relations
Act, the Industrial Court is empowered to settle
trade disputes. In line with tripartite concept, the
court will consist of 3 panels - President/Chairman,
representative from trade union (MTUC) and
representative from the employer (MEF). In making
its decisions (known as awards), it takes into
account the public interest, the financial
implications of any such decision on the company
concerned and the country as a whole.

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cont’d..
• The Court has the authority to hear and settle
the following types of cases:
– Claim by workers that they have been dismissed
without just cause or excuse.
– Trade disputes between a union and an employer.
– Complaints of non-compliance with a collective
agreement or court award.
– Interpretation of a collective agreement or court
award.
The court awards are binding and cannot be
appealed except on questions of law.

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Thank you

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