Malaysia Proposes Amendments to the Industrial Relations Act 1967 to ‘Strengthen Industrial Harmony’

Significant changes to Malaysian industrial relations laws aimed at “strengthening industrial harmony” are in the pipeline following the passing of the Industrial Relations (Amendment) Bill, which was passed by the Dewan Rakyat on October 9, 2019, and amends the Industrial Relations Act 1967 (IRA).

Below are the key sections of the bill.

Removal of the Minister’s Discretion

The proposed amendments to the IRA would confer many powers previously vested in the Minister of Human Resources to the Director General of Industrial Relations (DGIR).

This is reflected in Section 20(3) of the bill, whereby the discretion of the minister to refer representations on dismissals would be transferred to the DGIR.

Similarly, under Section 9(1D) of the bill, the DGIR would have the power to determine whether a workman is employed in a managerial, executive, confidential, or security capacity, a power previously accorded to the minister.

Unfair Dismissal Claims

Referral of Unfair Dismissal Claims to the Industrial Court

Currently, under Section 20 of the IRA, when parties are unable to reach a settlement in cases of unfair dismissal, the Minister has the discretion to refer representations to the Industrial Court as he deems fit. However, under the Bill, such discretion would be removed, and instead, when parties are unable to settle during conciliation meetings, the DGIR would automatically refer such cases to the Industrial Court for an award.

This essentially means that the decision to refer an unfair dismissal complaint to the Industrial Court would no longer be subject to judicial review by the civil courts. As such, there are concerns that the removal of such discretion would increase the likelihood of frivolous and vexatious claims.

Representation During Conciliation Meetings

Amendments to Sections 20 6(a) and 6(b) would provide an additional option for representation during conciliation meetings, whereby parties would be represented by any person except an advocate or solicitor, provided there is written authorization and permission of the DGIR.

The bill also includes a new section, Section 20(6A), which would allow the next of kin of a workman under a mental disability to apply to the High Court to appoint a guardian ad litem.

Sole Bargaining Rights

New provisions have been included in relation to sole bargaining rights. Section 12A would provide that when more than one trade union has received recognition by the employer to represent a class of employees, the employees would be given the flexibility to decide which trade union would have the sole bargaining rights.

If there were no agreement, an application in writing would be made to the DGIR, which would, by way of secret ballot, ascertain which trade union would have sole bargaining rights, based on the number of votes received.

Further, Section 12B would provide that when a trade union has obtained sole bargaining rights, no other trade union would have the same rights until a period of three years had elapsed or if the trade union were to cease to exist.

Collective Bargaining

Under the current Section 13(3) on collective bargaining, trade unions are limited to raising in the course of discussion only the general character with regard to procedures of promotion of workmen.

With the new amendment, Section 13(3) would allow a trade union to raise in the course of discussion all questions of general character with regard to:

• promotion of any employee from a lower to a higher grade or category;
• transfer of an employee within the organization, provided such transfer does not entail a change to the detriment of the employee’s terms of employment;
• employment of an employee in the event of vacancies in the establishment;
• discharge of an employee by reason of redundancy or reorganization of the establishment;
• dismissal and reinstatement of an employee; and
• assignment or allocation to an employee that is consistent or compatible with the terms of employment.
  

Further, amendments to Section 26(2) would provide that where a trade dispute relates to a refusal to commence collective bargaining or a deadlock in collective bargaining, reference to the Industrial Court could not be made without the consent in writing of the parties, (a) unless the trade dispute refererred to the first collective agreement; (b) unless the trade dispute referred to any essential services specified in the First Schedule; (c) unless the trade dispute were to result in an acute crisis if not resolved expeditiously; or (d) if parties were not acting in good faith to resolve the trade dispute.

Appeal Process

Under Section 33B(1) of the IRA, an award, decision, or order of the Industrial Court shall be final and conclusive, and shall not be challenged, appealed against, reviewed, quashed, or called in question in any court. The only redress available is to file an application for judicial review with the High Court.

Under the new Section 33C, a person who is dissatisfied with an Industrial Court award could appeal to the High Court within 14 days from the date of receipt of the award. Procedure for the appeal would follow the Rules of Court 2012 and be treated as an appeal from a Sessions Court with the relevant required modifications.

Restraining Strikes and Lockouts

New Section 44A under the bill would give the minister additional powers to restrain strikes or lockouts that last beyond a certain time or extend beyond a certain scope, thus endangering the life, personal safety, or health of the whole or part of the population.

Penalties

The bill would increased a number of penalties in cases of contravention of the IRA.

(a) Section 40 – Picketing

The punishment of imprisonment would be removed, and the fine increased to MYR5,000 from MYR1,000.

(b) Section 46 – Illegal strikes and lockouts

The punishment of imprisonment would be removed, and the fine increased to MYR5,000 from MYR1,000.

(c) Section 47 – Instigation of illegal strikes and lockouts

The punishment of imprisonment would be increased to five years from one year, and the fine increased to MYR5,000 from MYR1,000.

(d) Section 48 – Giving financial aid to illegal strikes and lockouts

The fine would be increased to MYR5,000 from MYR500.

(e) Section 56 – Noncompliance with award or collective agreement

The fine would be increased to MYR50,000 from MYR2,000.

(f) Section 60 – General

The fine would be increased to MYR50,000 from MYR5,000.

Comment

Whether the amendments to the IRA will strengthen industrial harmony will be known after the amendments are implemented.

One concern raised by commentators is regarding the amendment to the Industrial Courts whereby cases would automatically be referred to the Industrial Court by the DGIR if reconciliation fails. This is likely to result in an increase in industrial cases and open the floodgates to litigation, as the “filtering process” will have been removed.

Written by P Jayasingam, Wong Keat Ching, and Thavaselvi Pararajasingam of Zul Rafique & Partners and Roger James of Ogletree Deakins

© 2020 Zul Rafique & Partners and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.