Employment Law: An Introduction to Industrial Relations Law in Malaysia

Introduction:-

The main source for Industrial Relations Law in Malaysia is founded in the Industrial Relations Act 1967 (Act 177) (‘the IRA’), which came into the operation with effect from the 7th day of August 1967.

As seen in the preamble of the IRA, it is primarily

‘An Act to promote and maintain industrial harmony and to provide for the regulation of the relations between employers and workmen and their trade unions and the prevention and settlement of any differences or disputes arising from their relationship and generally to deal with trade disputes and matters arising therefrom’.

The Purpose of the IRA

1. To maintain a good relationship and fair dealings between employers, workers, and their trade union

This is the bigger purpose of the IRA. 

It basically provides for mechanism in relation to recognition of a trade union, 

• dealing with collective bargaining and collective agreements between the trade union of the employers and workmen, 
• provides for conciliation procedures in trade disputes, and
• the settlement of any such differences or disputes via the Industrial Court, a special tribunal set up under the IRA.

Trade disputes may be developed into other forms such as

• strikes,
• lock-outs,
• picketing, and
• intimidation,

all of which are defined under the IRA together with the regulated measures to deal with such instances.

The IRA further provides that when ‘conciliation and settlement‘ mechanism for trade disputes not relevant in case of strikes and lock-outs, there is a ‘prosecution’ mechanism to counter such illegal acts under the IRA, with such power to conduct investigation given to certain quarters set up under the legislation.

2. To provide for specific remedies that are not available in common law or the Employment Act 1955

A distinct example of such specific remedy is the remedy of job ‘reinstatement‘ which forms the bulk of the claims in Industrial Court as provided under section 20(1) of the IRA:-

‘Where a workman, irrespective of whether he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director-General to be reinstated in his former employment; the representations may be filed at the office of the Director-General nearest to the place of employment from which the workman was dismissed.’ [Emphasis added in bold]

In simple words, save and except with ‘just cause or excuse’ an employer is prohibited from dismissing an employee, whether directly or indirectly. The latter is also known as constructive dismissal.

This provision is implied into all employment relationships, whether with or without a written employment contract.

This means, for as long as the aggrieved employee considered that he/she has been dismissed without just cause or excuse in Malaysia, the employee shall be entitled to his/her job back.

It is worth noting that the current form of section 20(1) of the IRA came into effect from 10.2.1989 under the Industrial Relations (Amendment) Act 1989 (Act A718). It was since then that section 20(1) of the IRA was made applicable to both the unionized and non-unionized employees who considered themselves to be dismissed without just cause or excuse, as pointed out in the case of 

Hong Kong Bank Malaysia Bhd v Kesatuan Kebangsaan Pekerja-Perkerja Bank Semenanjung Malaysia [1996] MLJU 452.

3. To provides for the employees in the private sector

It must be understood that section 52 of the IRA states that the provisions in the IRA

‘… shall not apply to any Government service or any service of any statutory authority or any workman employed by Government or by any statutory authority.’

In other words, any claims to the Industrial Court under the IRA by

• the Federal Government or the State Government’s servant; or
• any individual working with the statutory authority,
• being an authority or body established, appointed or constituted by any written law, and includes any local authority,

are bound to be struck by the Industrial Courts as seen in many precedents.

In fact, it is a general understanding that the employment regulations of the Government servants fall under the purview of the Public Service Commission established under the Federal Constitution of Malaysia; and Article 144(1) conferred the power upon the Public Service Commission to appoint, confirm, and exercise its disciplinary control over the Government servants.

Conclusion:-

Premised on the fact that the public attention to this area of the law is often reflective of the prevailing economic situation of the country, we believed that the ultimate purpose of the IRA to balance off the employers’ need for profit maximization and the employees’ right to be engaged in gainful employment as well as the security of tenure, which may not be forfeited unless with just cause and excuse.

About the Author:

 This article was written by Chia Swee Yik, Partner of this Firm, who endeavors to provide practical advice on industrial relations law.

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