TOPIC 6 :

COLLECTIVE BARGAINING
&
COLLECTIVE AGREEMENT
Learning Outcomes
At The End Of This Lecture, Student Should Be Able To:
Collective Bargaining
Collective Agreement
 COLLECTIVE BARGAINING

• Meaning of collective bargaining

• Process of collective bargaining
• Managerial prerogatives
• Effects of collective bargaining
 DEFINITION OF COLLECTIVE BARGAINING
(CB)
• According to IRA 1967, collective bargaining is “negotiating with a view
to the conclusion of a collective agreement”

• “formal process that leads to a contract between employees and employer

on wages and other conditions of employment. Therefore, collective
bargaining is in effect of continuous relations between union
representatives and employer
“ a process of negotiation between management and union representatives for the
purpose of arriving at mutually acceptable wages and working conditions for
employees”
( Boone and Kurtz)
 CONDITIONS FOR CB
• Trade union must be registered under TUA1959.
• Trade union must receive the recognition from their employer.
PROCESS OF COLLECTIVE
BARGAINING
 PROCESS OF COLLECTIVE BARGAINING

REGISTERED &RECOGNIZED TU EMPLOYER REPLY

INVITE FOR CB

Requirement: Possible answer

i) In writing i) Accept invitation CB commence

ii) Set the proposal ii) Refuse to accept TU write to

DGIR for
conciliation

Outcome

i) CB commence= CA (harmonious
relations)

ii) CB does not commence = TD

(unharmonious relations)
TU write to DGIR
iii) No reply
For conciliation.
DGIR will report to
Minister concerned
 CONT’ ( PROCEDURES OF COLLECTIVE BARGAINING)

i) The inviter, either union or employer must send a written invitation together with
the proposals for a CA to commence collective bargaining. S.13(1)(2)

ii) The invitee(I e: employer) must reply within 14 days, either accepting or refusing
it.

iii) If an invitation has been made and accepted, CB must start within 30 days of the
receipt of acceptance.
iv) A series of negotiation meetings are held.

v) Once agreement is reached, the CA is signed and sent to industrial court for approval.

vi) But, if an invitation has been made and

a) it has not been accepted within 14 days or it has been refused,
OR

b) it has been accepted but bargaining has not commence within 30 days of the receipt of the
acceptance, the employees union / invitor must file a complaint in the form of written report to the
DGIR.
- The DGIR is authorized to take necessary steps to get the parties to commence collective
bargaining.
( S.13, IRA 1967)

vii) If there is still refusal to begin, a trade dispute exist.

The Minister is then empowered to invoke machinery for arbitration by referring the
dispute to Industrial Court for settlement.
 CONTENTS OF COLLECTIVE
BARGAINING
The content of CB is the proposal of CA

1) It must be in writing and signed by the parties to the agreement or by authorized

persons.
2) It must be set out the terms of the agreement.
3) Name of the parties
4) Specify the effective period which must not be less than 3 years from the date of the
commencement of the agreement
5) Prescribe the procedure for its termination
6) The contents (proposals) cannot include promotion, transfer, employment, termination,
dismissal and reinstatement and assignment of duties. (S.13(3) IRA) – managerial prerogatives

7) Items commonly included in the proposal for CB are the terms and conditions of employment
and employment matters.
(it is possible to review the terms of a collective agreement within 3 years by mutual consent.
Terms and conditions of employment Employment matters

 payment of wages Rules and regulations at workplace

 rest day Time in / out
 hours of work Safety procedures
 shift work Conditions at workplace
 holiday
 annual leave
 sick leave

Reference: Employment Act

 EFFECTS OF COLLECTIVE BARGAINING

1) CB allows workers to bargain as a team to satisfy their needs.

2) CB also allows management to negotiate efficiently with workers by bargaining.
3) The successful collective bargaining end with agreement. This agreement reflects
good relations between worker and their employer.
4) The unsuccessful collective bargaining ends with deadlock / trade dispute.
 QUALITIES OF A GOOD NEGOTIATOR

• PATIENCE
• GOOD COMMUNICATION SKILLS
• KNOWLEDGEABLE
• PHYSICALLY FIT
• WELL PREPARED
 PROBLEMS HINDER SUCCESSFUL CB PROCESS
• Delay reply by any party to the CB (why? Remember back the procedures)
• The refusal of any party to attend bargaining meeting / to commence CB (refer procedures)
• When the employees union bargain for matters that are listed under “managerial
prerogatives”.
(please find for more problems that they might encounter)
 IN A SIMPLE WORD…
• The bargaining process begins when a trade union submits a proposal for a collective
agreement to an employer and invites the latter to commence collective bargaining.

• The employer has 14 days in which to reply to the invitation. If the employer accepts
• the invitation, collective bargaining must begin within 30 days. If the employer refuses to negotiate, or fails to reply, a trade
dispute is deemed to exist and the
• union may notify the DGIR, who will take steps toward conciliation.

• If there is a deadlock in the negotiations, either party can request the DGIR to conciliate.

• If the parties are still unable to agree on terms, the Minister of Human Resources may refer their dispute to the Industrial Court
for arbitration.
• A collective agreement must be deposited, within one month of signing, with the
DGIR for recognition by the Industrial Court.

• Section 14 of the IRA requires that an agreement include, inter alia, the
procedure for its modification and termination, and the procedure for the
settlement of disputes arising from the implementation
or interpretation of the agreement.
• A collective agreement cannot contain any term or condition of employment that
is less favorable than, or in contravention of, any workmen’s laws in Malaysia,
and it must not include matters that are considered managerial prerogatives, such
as promotions, transfers, appointments, terminations for redundancy, dismissals,
and assignment of duties. However, questions of a general nature relating to the
procedures for promotion of workmen may be discussed.

• Once taken cognizance of by the Industrial Court, the agreement becomes

binding on all parties to the agreement and all employees employed in the
undertaking, regardless of whether or not they are union members.
 COLLECTIVE AGREEMENT
• Meaning of collective agreement
• Process of collective agreement
• Content of collective agreement
• Effects of collective agreement
 DEFINITION OF COLLECTIVE AGREEMENT (CA)

• IRA 1967 define CA as “an agreement in writing concluded between an employer and
TU of employees on the matters relating to the terms and conditions of employment
work of employees or concerning relations between such parties”

• “formal written document of agreement concluded at the end of a successful collective

bargaining. This document explains terms of employment, working hours, union
security, union recognition, compensation, benefits and relations between workers and
their employer”
 PROCESS AND PROCEDURES OF COLLECTIVE AGREEMENT (IRA S.14-17)
Agreement (successful
CB)

Finalized & signed the agreement

within 30 days

Jointly submit the agreement to the Registrar of Industrial Court Late submission
(within 30 days) Insd. Court refer to Minister

IC approved IC refuses approval

(agreement comply with S.14 IRA) (Agreement does not comply with S.14,IRA)

IC require amendment to the agreement

(to comply with S.14 IRA within 14 days)

Amendment made
(Agreement becomes Collective Agreement)

Award of the Court : A collective agreement that received approval/cognizance by the Court is seem to become an award
 CONTENTS OF COLLECTIVE AGREEMENT
(REFER TO PG:169, MAIMUNAH AMINUDDIN)

• Terms of agreement of the collective agreement as follows:

1) name of parties involve in the agreement

2) duration of agreement that cannot be less than 3 years

3) procedures to settle any dispute over interpretation or implementation of the agreement

4) procedure for modification and termination of the agreement

5) items that are considered as managerial prerogatives cannot be

included.

6) terms that are less favorable than the provisions of the Wages Council Acts 1947 and
Employment Act 1955 cannot be included.
 EFFECTS OF COLLECTIVE AGREEMENT

A Collective Agreement which has been approved by Industrial Court has 2 effects:

i) Collective Agreement Binds Parties to the agreement

ii) Collective Agreement Become an Implied Term of Contract

- From such date the CA binds both parties to the agreement, all terms and conditions of
employment practice at the workplace must be consistence with the CA.
 ROLES OF THE INDUSTRIAL COURT IN
TAKING APPROVAL OF CA
• All CA must be sent to the court within 1 month from the date of signing

• Court checks to ensure validity

• Court ensure the agreement follows requirements of the S.14 IRA (refer IRA)

• Court can require parties to amend any parts of the agreement which do not comply with the
S.14,IRA

• Once agreement received approval, it becomes binding