TOPIC 3a

Industrial Relations Law

1
Lesson learning outcome
 At the end of this lesson students should be able
to:
Describe and explain Employment Act 1955.
(CO1:PO3)
Describe and explain Trade Unions Act 1959.
(CO1:PO3)
Describe and explain Industrial Relations Act 1967.
(CO1:PO3)

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Industrial Relations :
Definition
• industrial relations refers to relations between employers,
employees and their trade unions.

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 LABOUR LEGISLATION AND
INDUSTRIAL RELATIONS

• Labour legislation was first enacted about

120 years ago, in certain parts of Peninsular
Malaysia to regulate the employment of
immigrant Chinese and Indian labour in the
mines and the plantations, and sought to
legislate the conditions under which such
labour could be employed culminated (end,
especially to reach a final) in the Employment Act 1955
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 LABOUR LEGISLATION AND
INDUSTRIAL RELATIONS (cont.)

 Laws governing trade unions and trade disputes

were enacted only in 1940, and it applied only in
certain parts of Peninsular Malaysia.

 Today, their modern equivalent, the Trade

Unions Act 1959 and the Industrial Relations Act
1967, apply throughout the country.

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The principal laws affecting
industrial relations in Malaysia:

• The Employment Act 1955,

• The Trade Unions Act 1959, and
• The Industrial Relations Act 1967.

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Other laws affecting industrial relations in
Malaysia:
• safety and the health of workers (primarily, the
Factories and Machinery Act 1967,OSHA 1994)

• Social security (such as the Employees Social

Security Act 1969, the Workmen's Compensation
Act 1952, the Employees Provident Fund Act
1951, various Pensions Acts) and

• wages in "depressed" industries (namely, the

Wages Councils Act 1947)
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The 3 principal laws affecting
industrial relations in Malaysia (cont)

• Under the Malaysian Constitution, labour matters,

including industrial relations, fall within the
preserve (bear on) of the Federal Government, rather
than within that of the State Governments.

• Consequently, all three laws are federal laws, and

are administered by various departments in the
same federal agency-the Ministry of Labour (now
the Ministry of Human Resources). 8
The 3 principal laws affecting industrial
relations in Malaysia

• However, the Employment Act 1955 presently

applies only in Peninsular Malaysia (private
sector only).

• The Trade Unions Act 1959 (public and private

sector) and the Industrial Relations Act 1967
(primarily to the Private Sector ) apply
throughout the country.
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 The Employment Act 1955
• Regulates the employment relationship as well as the
terms and conditions under which employers may employ
employees.

• The employment relationship foreseen by the Act is the old

"master and servant" (now replaced by the more egalitarian
(favoring social equality, classless) "employer and employee") relationship,

i.e. the well-known "contract of service“ relationship.

• And among the terms and conditions regulated by the Act

are the hours of work and wages, as well as other terms
and conditions of employment and work.
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The Trade Unions Act 1959
• Regulates trade unions and union federations
per se (with respect to its inherent nature, intrinsically).

• This Act defines trade unions, delineates

(represented accurately or precisely, describe in vivid detail) their

membership prescribes (set down as a rule or guide, fixed or

established especially by order or command) their registration,

and describes their rights and

responsibilities. 11
The Industrial Relations Act
1967

• Regulates the relations between

employers and workmen and their
trade unions, and provides for the
prevention or the settlement of
differences or disputes arising
between them.
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The Industrial Relations Act 1967(cont.)

• This Act enshrines the principles underlying

Malaysian industrial relations, namely:
• (i) Trade Unionism - the principle that workmen (and
employers too) are entitled to basic trade union rights
such as the right to form unions, the right to join
unions, and the right to participate in the activities of
unions.

• (ii) Union Recognition - the principle that employee

unions must be recognised by employers before they
may represent workmen, whether individually or
collectively.
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The Industrial Relations Act 1967(cont.)
• This Act enshrines the principles underlying Malaysian
industrial relations, namely:
• (iii) Collective Bargaining - the principle that employee unions may
negotiate with employers the terms and conditions of employment
and work of workmen, and may conclude with employers binding and
enforceable written agreements incorporating the terms and
conditions agreed upon.
• (iv) Dispute Resolution - the principle that disputes between
employers, workmen and their unions should, if possible, be
prevented through a grievance (ketidakpuasan hati) machinery or collective
bargaining, and if not, be settled through conciliation (rundingan damai) or
arbitration, rather than industrial action (i.e. strikes, lockouts (a
management action resisting employee's demands; employees are barred from entering the workplace until they
agree to terms, sekat masuk kerja) etc.).
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However, the Act makes it clear that these principles apply primarily to the
Private Sector.
 INDUSTRIAL RELATIONS:
ISSUES AND RESPONSES
• The need for government Involvement in Industrial
relations in the Private Sector.
• in any society, there is necessarily (inevitably) conflict in
industry between employers and workers, between the
owners of goods and services and those who work to
produce these goods and services.
• The objective of an industrial relations system should be
to direct the forces producing conflict towards constructive
ends.
• In a parliamentary democracy like Malaysia, it is the
accepted view that these conflicts should be resolved by
the parties concerned with as little government 15
intervention as possible.
 INDUSTRIAL RELATIONS:
ISSUES AND RESPONSES (cont.)
• The need for government Involvement in Industrial
relations in the Private Sector.
• In accordance with this philosophy, employers and workers
have grouped together to advance and protect their
separate interests.
• Trade Unions have long been accepted as lawful, and the
right to strike and bargain collectively have been similarly
recognised.
• Likewise, employers have been allowed to organise
themselves into groups and to take legitimate (lawful) action to
protect their interests
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 INDUSTRIAL RELATIONS:
ISSUES AND RESPONSES (cont.)
• The need for government Involvement in Industrial
relations in the Private Sector.
• As part of this philosophy, it has also been accepted that
the government should provide the facilities to help the
parties agree, but NOT actively interfere to impose a
settlement on them.
• In most cases, government intervention has taken the
form of laws which regulate the structure and operation
of organised workers and employers.
• A legal framework now exists within which the
government has sought to define the public interest, and
the boundaries of conflict resolution between workers 17
and employers.
 The Employment Act 1955
The Contract Content:

• Part I – Preliminary: interpretation of terms e.g. “Director

General” means the Director General of Labour appointed
under section 3(1); “employer” means any person who has
entered into a contract of service to employ any other
person as an employee and includes the agent, manager or
factor of such first mention person
• Part II – Contract of service e.g. terminations, validity,
conditions
• Part III – Payment of wages e.g. wages period, time of
payment, advances 18
• Part IV – Deduction of wages e.g. lawful deductions
The Employment Act 1955
• Part V – Relating to the truck system e.g. payment
of wages through bank, wages to be paid in legal
tender, remuneration
• Part VI – Priority of wages e.g. priority of wages
over other debts
• Part VII – Contractors and principals e.g. liability of
principals and contractors for wages
• Part VIII – Employment for Women e.g. prohibition
of night work, prohibition of underground work
• Part IX - Maternity protection e.g. length of eligible
period and entitlement to maternity allowance,
payment of allowance to nominee 19
The Employment Act 1955
• the Employment Act 1955 applies to all employees in
Peninsular Malaysia and Federal Territory of Labuan
whose monthly wages do not exceed RM1,500 and all
manual labourers irrespective of their wages.

• employers may draw up the contract of service but it

should not contravene (go against) the minimum benefits
stipulated under the law.

• employees who earn between RM1,500 and RM5,000 a

month can seek redress (compensate, a sum of money paid in compensation for loss or injury)
at the Labour Court on terms and conditions in their 20
individual contracts of service.
The Employment Act 1955
 regulates the hours of work, including over
timework. It also regulates wages - the payment
of wages, advances on wages, deductions from
wages, etc. and

 provides for the priority of wages over other

debts, and the liability of principals and
contractors, as well as employers, to pay wages.

 however, it does not specify a minimum wage,

nor fix wage rates. 21
The Employment Act 1955
 Provides for a Rest Day, Public Holidays, Annual
Leave, Sick Leave, Maternity Leave, Maternity
Allowance, and Termination and Layoff Benefits.

 Every employee, whether unionised or not, is

entitled to all the benefits provided by the
Employment Act 1955, and

 Every employer, whether local or foreign, is

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obliged to provide these benefits.
Obligations of an employer under
the Employment Act 1955;
 Every employee must be given a written contract
of service containing the term and conditions of
the employment, including provisions relating to
the termination of contract

 Maintaining of labour register pertaining to

personal particulars of employees, payment of
wages and deduction of wages

 Special provisions for the protection of female

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employees pertaining to night work and maternity
benefits
Obligations of an employer under
the Employment Act 1955;
 Normal hours of work and other provisions
relating to numbers of working hours

 Entitlement of paid annual leave, sick leave and

public holidays

 Rate of payment for overtime and extra work

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The Employment Act 1955
 These benefits have effectively become the "minimum"
below which no employer may go, and to which every
employee is entitled.

 However, in order to promote foreign investment while

maintaining a measure of protection for employees, the
Industrial Relations Act 1967 provides that any collective
agreement affecting a "pioneer company", i.e. one
granted pioneer status under the Promotion of
Investments Act 1986, cannot contain terms and
conditions of employment and work more favourable to
employees than the terms and conditions contained in the
Employment Act 1955, for at least 5 years from the time 25

such a company commences operations in Malaysia

The Employment Act 1955
 This restriction (Industrial Relations Act 1967) has effectively made the
benefits provided by the Employment Act 1955 the
"maximum" beyond which affected employers need not
go, and affected employees cannot demand; it has also
impeded (made difficult or slow) the development of employee
unions in "pioneer companies".

 In the Public Sector, the terms and conditions of

employment and work are determined primarily by
salaries commissions or Committees and are
administered mainly by the Public Services Department.
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Trade Unions Act 1959
• Under the Trade Unions Act 1959, the following
classes of persons can neither join nor be
accepted as members by any trade union:
• (i) any person below the age of 16 years;
• (ii) any student of an educational institution
established by or under a Written law, unless
he is employed as an employee and is over the
age of 18years;
• (iii) any person employed or engaged in a
trade or occupation or industry other than the
one in respect of which the trade union is
registered; and 27
 Trade Unions Act 1959
• (iv) any "public officer" i.e. any person in the permanent
or temporary employment of the Federal or a State
Government. However, the King may exempt from this
prohibition either wholly or conditionally any category or
class of public officers, other than:
• members of the Armed Forces, the Police Force, and any prison
service;
• public officers prohibited under any written law from being
members of a trade union;
• public officers engaged in a confidential or security capacity; and
• public officers holding any post in the managerial and
professional group, except such public officers in this group as
are excluded from this prohibition by a written direction issued
by the Chief Secretary to the Federal Government
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 Industrial Relations Act 1967
The Content:

• Part I – Preliminary: interpretation of terms e.g. “Board” means the Board of Inquiry
appointed under Part VIII; “collective agreement”, “collective bargaining”, “contract
of employment”, “strike”, “trade dispute”, “trade union”, “workman”.

• Part II – Protection of Rights of Workmen and Employers and Their Trade Unions
e.g. expression “trade union”, rights of workmen and employers, Prohibition on
employers and their trade unions in respect of certain acts, leave on trade union
business etc.
•
• Part III – Recognition and Scope of Representation of Trade Unions e.g. claim for
recognition, prohibition of strike, lock-out, picketing (Picketing is a form of protest in which people (called
picketers) congregate outside a place of work or location where an event is taking place. Often, this is done in an attempt to dissuade
others from going in ("crossing the picket line"), but it can also be done to draw public attention to a cause. Picketers normally endeavor to
be non-violent) and termination of service pending recognition of a trade union, etc.

• Part IV – Collective Bargaining and Collective Agreements

• (Collective bargaining is a process of negotiations between employers and a group of employees aimed at reaching agreements that
regulate working conditions. The parties often refer to the result of the negotiation as a collective bargaining agreement (CBA) or as 29
a collective employment agreement (CEA).)
 Industrial Relations Act
1967
• Part V – Conciliation e.g. reference of disputes for conciliation,
Information, documents and compulsory conference for
conciliation etc.

• Part VI –Representations on Dismissals e.g. Representations on

dismissals. ((1) 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.)

 Part VII – Industrial Court e.g. Industrial Court, Constitution of the

Court, Divisions of the Court, Protection and immunity to
members of the Court, Power of the Court, Awards, Agreement
during proceeding, Effect of an award, Interpretation and
variation of awards and agreements and etc. ((1) For the purposes of this Act,
there shall be an Industrial Court which shall consist of - (a) a President who shall be appointed by the Yang di-
Pertuan Agong and (b) a panel of persons representing employers and a panel of persons representing
workmen all of who shall be appointed by the Minister: Provided that before appointing the panels the Minister
may consult such organisations representing employers and workmen respectively as he may think fit.)

• 30
Part VIII – Investigation and Inquiry e.g. Investigation and Inquiry
into trade disputes, Committee, Board and Reports.
 Industrial Relations Act
1967
• Part IX – Trade Disputes, Strikes and Lock-outs and
Matters arising Therefrom e.g. pupil not to take part
in trade disputes, intimidation (a communication that makes you afraid to try
something , ugutan), picketing, breach of contract liable to

injure person or property, conspiracy in trade

disputes, Restrictions on strikes and lock-outs in
essential services and etc.

• Part X – Miscellaneous e.g. Application,

Appointment of public officer, exclusion of evidence
as to certain matters, Secrecy, Non-compliance with 31
award or collective agreement and etc.
 Industrial Relations Act
1967
 Accords workmen as well as employers
 the right to form trade unions
 the right to join trade unions, and
 the right to participate in the activities of trade unions

 In order to buttress these rights, it also imposes (enforce) various

duties on employers, workmen, and their unions, some of
which are fairly general in nature, while others are quite
specific.

 This Act applies primarily to the Private Sector.

 None of the aforementioned rights is absolute: all are

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qualified by the Industrial Relations Act 1967 itself or by the
Trade Unions Act 1959
 Industrial Relations Act
1967
The Industrial Relations Act 1967 regulates
relations between employers and workmen and
their trade unions, including the prevention and
settlement of trade disputes. The act outlines
the following:

 Protection of the legitimate rights of employers

and workmen and their trade unions
 Procedure for submission of claims for
recognition and the scope of representation of
trade unions and collective bargaining 33
 Industrial Relations Act
1967
 Matters NOT allowed to be included in the proposals for
collective bargaining are those relating to promotion,
transfer, recruitment, retrenchment, dismissal,
reinstatement, allocation of duties and prohibition (forbiddance)
of strikes and lockouts over any of these issues

 The Act emphasizes on self-government within industries as

the key to industrial harmony whereby employers and trade
unions negotiate and settle their differences without
intervention. In the event that the negotiation fails, the
parties may refer to the Industrial Relation Department for
conciliation. Where the matters fails to be resolved, it may
be referred to the Industrial Court of Arbitration
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 Industrial Relations Act
1967
• The Ministry of Human resource may
intervene and refer at any stage of any
trade dispute to the Industrial Court for
Arbitration

• A prohibition of strikes and lockouts once a

trade dispute has been referred to the
Industrial Court on any matters, covered by
a collective agreement or by an award of 35
the Industrial Court.