What do you need to know about the upcoming amendments to the Industrial Relations Act 1967?
26 February 2020
The Industrial Relations (Amendment) Bill 2019 (“Amendment Bill”) has been passed by Dewan Rakyat and Dewan Negara on 9 October 2019 and 19 December 2019 respectively. The amendments are part of the government’s effort for a more robust industrial relations system in bringing transformation to the industrial relations landscape in Malaysia. The Amendment Bill contains salient improvements to enhance and improve workers’ protection and to ensure workers' rights are at par with international standards. The Amendment bill has also decisively devolved the power of the Minister of Human Resources (“Minister”) to the Director General for Industrial Relations (“DG”) in many aspects.
In this article, we aim to explore from the perspective of how the Amendment Bill is likely to impact a Company or the employers. For that, we have summarized the key amendments introduced under the Amendment Bill –
Representation on dismissal cases
The Amendment Bill had reduced the power of the Minister significantly as far as representations on wrongful dismissal cases are concerned. Under the existing Industrial Relations Act 1967 (“the Act”), the Minister has discretion to filter wrongful dismissal claims which are frivolous or vexatious. However, pursuant to the Amendment Bill, the Minister no longer possess such discretionary power and the DG shall refer a representation on wrongful dismissal to the Industrial Court for an award once the DG is satisfied that there is no likelihood of the representations being settled.
It would appear here that once parties are not able to reach a settlement during conciliation meeting the representation will be ‘automatically’ referred to the Industrial Court. This will certainly cause an influx of cases being referred to the Industrial Court.
Representation in Conciliation Meetings at the Industrial Relations Department
The Amendment Bill appears to have widened the choice of representation in conciliation meetings for wrongful dismissal claims at the Industrial Relations Department for both employer and workman. Under the Act, an employer and workman may be represented by way of self-representation or be represented by a member of trade union of employers or workmen or any official of an organization of employers/workmen (not being a trade union of employers/workmen) registered in Malaysia.
Pursuant to the Amendment Bill, both employer and workman now have the option to appoint any person (“Individual”) other than the aforementioned persons to represent them, provided that the Individual is not an advocate and solicitor, the appointment of the Individual is authorised by the employer or workman as the case may be and the appointment of the Individual must be with the permission of the DGIR.
It should be noted that although the Amendment Bill appears to have widened the parties’ options in choosing their representative, the parties are still required to obtain the DG’s permission in so far as their choice of representatives in the conciliation meetings are concerned.
Additional Powers Granted to the Industrial Court
Additional powers are given to the Industrial Court under the Amendment Bill as follows:-
- Continue to conduct the proceedings notwithstanding the death of the workman who made the representation.
- To award back wages or compensation in lieu of reinstatement or both to the next-of-kin of the deceased workman.
- To direct that an award made by the Industrial Court shall carry interest up to the rate of 8% per annum to be calculated from the 31st day from the day of the award until the award is fully satisfied.
Although the Amendment Bill appears to be favourable to the next of kin of a deceased workman who had made representation before the Industrial Court, the application of the Amendment Bill would be challenging. This is because in a trial before the Industrial Court, the claimant is required to prove his/her case by way of viva voce examination (giving oral testimony) and adduce evidence in the course of the trial. In the event where the claimant passed on before giving testimony before the Industrial Court and the proceedings proceed notwithstanding the death of the claimant, the Court will not be provided with sufficient evidence in deciding on the claim.
Appeal against an Industrial Court award to the High Court
Pursuant to the Amendment Bill, any person dissatisfied with an award of the Industrial Court may appeal to the High Court within fourteen days from the date of receipt of the award. This is a paradigm shift of the existing legislation where an aggrieved party is to file an application for judicial review before the High Court in the event that he/she/the company is dissatisfied with an award. Under the Amendment Bill, the procedure of the appeal would be subjected to the Rules of Court 2012 and the High Court shall have power as if the appeal is from a Sessions Court.
It is pertinent to note that the Amendment Bill not only changed the mechanism for appeal against an Industrial Court award, it had also reduced the duration for the same substantially from ninety (90) days (time given for an application for a judicial review under the existing legislation) to fourteen (14) days.
Separately, theoretically there should be a better prospect in succeeding an appeal against an Industrial Court award under the Amendment Bill as compared to the existing appeal mechanism – an application for a judicial review to quash an Industrial Court award. This is because the threshold for an application for a judicial review is relatively higher and more challenging as opposed to an appeal.
Increased of penalties
The Amendment Bill has increased the penalties for contravention of the Act as below:-
- The penalty for a person who gives financial aid to illegal strikes and lock-outs has been increased from RM 500 to RM 5,000.
- The penalty for non-compliance with an Industrial Court award or collective agreement has been increased from RM 2,000 to RM 50,000.
- The general penalty for any contravention of the Industrial Relations Act 1967 and / or any summons, order or direction given or made under the Act has been increased from RM 5,000 to RM 50,000.
This is a timely amendment as it would ensure that the parties affected, i.e.: the employers, take the Act more seriously.
Sole Bargaining Rights
With the inclusion of new provisions, the Amendment bill attempts to introduce Sole Bargaining Rights in the premise of multiplicity of trade unions in an organization. The new provisions provide that if there are more than one trade union that can represent employees, the trade unions concerned may decide among themselves which trade union shall have the sole bargaining rights.
If there is no agreement as to which trade union shall have the sole bargaining rights, the employees shall be accorded the right to vote by secret ballot to indicate their preference for the trade union that shall have the sole bargaining rights to represent them. This will ensure that only one trade union, which obtains the highest number of votes, to have sole bargaining rights to represent workmen in collective bargaining.
Where a trade union has obtained the sole bargaining rights, no other trade unions shall have the same rights for a period of three years, unless the trade union which obtained the sole bargaining rights has ceased to exist.
As it is silent under the Amendment Bill, it is unclear if voting should be done all over again after “a period of three years” to determine which trade union should gain the sole bargaining right.
Trade Union - Recognition and Scope of Trade Union Representation
The Amendment bill seeks to add two procedures in determining recognition to be accorded to a trade union of workmen which are by the trade unions of workmen or the Director General under the new Section 12A
Under the Amendment Bill, the employers, trade union of employers and trade union of workmen are prohibited from commencing collective bargaining prior to the period of 90 days before the expiry of the existing collective agreements.
Under the current law, trade unions can only raise matter pertaining to procedures of promotion of employees during collective bargaining. However, pursuant to the Amendment Bill, trade unions are allowed to raise questions of a general character relating to the following matters –
- the promotion of any employee from a lower grade or category to a higher grade or category;
- the transfer by an employer of an employee within the organisation of an employer’s profession, business, trade or work, provided that such transfer does not entail a change to the detriment of a workman in regard to his terms of employment;
- the employment of any person that he may appoint in the event of a vacancy arising in his establishment;
- termination of an employee due to redundancy or re-organisation;
- the dismissal and reinstatement of an employee;
- the assignment or allocation of a workman that are consistent or compatible with the terms of his employment.
The amendment certainly broadens the scope of discussing and bargaining of the Collective Agreement between the employers and workmen.
Trade Disputes Arising from Refusal to Collectively Bargain or Deadlock
The Amendment Bill also provides that any disputes arising from the refusal to collective bargain or a deadlock in collective bargaining can only be referred to Industrial Court with the written consent of the parties, unless:
- the trade dispute relates to the first collective agreement;
- the trade dispute refers to any essential services specified in the First Schedule;
- the trade dispute would result in acute crisis if not resolved expeditiously; or
- the parties to the trade dispute are not acting in good faith to resolve the trade dispute expeditiously
This amendment precludes the need for written consent to refer disputes arising from the refusal to collective bargain or a deadlock in collective bargaining to the Industrial Court under certain circumstances. These new provisions (iii) and (iv) as to the referral of dispute to the Industrial Court appear to be relatively wide. It may encourage the parties to refer more disputes to the Industrial Court which may lead to backlog of cases.
Restraint of strikes and lock-outs
By inserting a new provision under the Amendment Bill, additional power is given to the Minister to order a strike or lock-out to stop in the event that the strike or lock-out lasts beyond a certain time or extends beyond a certain scope, thus endangering the life, personal safety or health of the whole or part of the population.
However, it is to be noted that the Amendment Bill is silent on the “time” and “scope” which may trigger the Minister to order a strike or lock-out to stop. We opine that it may provide too much of power and discretion for the Minister to decide to stop a strike or lock-out initiated by the workmen.
It is certain that the Amendment Bill brings a significant change to both the workmen’ rights and impact on the employers. While most of the changes in the Amendment Bill are commendable, there has been ongoing debate on whether the removal of the Minister’s discretion in deciding whether to refer a representation to the Industrial Court is a plausible move. This is because all representations which cannot be settled at the stage of conciliation meeting will now be automatically referred to the Industrial Court, including those which are baseless and without merits. It remains to be seen as to how the Industrial Court will manage the influx of cases referred to it.
As for other amendments which we have discussed above, many of which could only be tested in the court of law or subsequently defined by further amendments, judicial decision or interpretation. Despite the uncertainties, we maintain a positive outlook on the constructive impact which the Amendment Bill may bring to the industrial relations landscape in the country.
Should you have any queries or require more information, please do not hesitate to contact Tay & Partners’ Employment and Industrial Relations Practice Group.
Pua Jun Wen