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The Right to Collective Bargaining in Malaysia in the Context of ILO Standards

Published online by Cambridge University Press:  16 April 2015

Rabiu Sani Shatsari  and
Kamal Halili Hassan
Rabiu Sani Shatsari
Affiliation:
Bayero University, Kano, Nigeria
Kamal Halili Hassan
Affiliation:
Universiti Kebangsaan, Malaysia
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Abstract

Collective bargaining is the best mechanism to attain a cordial relationship between employers and employees. It is also an effective forum to agree on terms and conditions of employment. In order to achieve such purposes, industrial relations systems in a country must provide legal mechanism to enable parties to bargain collectively with a view to concluding a collective agreement. The ILO has adopted a convention providing a framework for member states to enact laws that would facilitate such a mechanism. In this respect, Malaysia has enacted the Industrial Relations Act 1967, which provides among others a mechanism for collective bargaining. In this article we argue on the extent of the right of Malaysian workers to collective bargaining in the context of the ILO standards. Here we argue that despite the legal mechanism available that facilitates collective bargaining between the two parties, Malaysian workers and their trade unions face some difficulties in bargaining with their employers.

Type
Research Article
Information
Asian Journal of Comparative Law , Volume 1 , 2006 , pp. 1 - 20
Copyright
Copyright © Faculty of Law, National University of Singapore 2014

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References

1 See Caire, Guy, “Freedom of Association and Economic Development”, (Geneva: ILO, 1997) at 78 Google Scholar. Trade union weakness in developing countries is attributable to factors such as: smallness of size, lack of competent and purposeful leadership, apathy from the rank and file, etc..

2 Ibid. at 99.

3 See Forde, M., “The European Convention on Human Rights and Labour Law” (1983) 31 American Journal of Comparative Law 301 at 314 CrossRefGoogle Scholar.

4 Arthurs, Harry “Understanding Labour Law: The Debate on Industrial Pluralism” (1985) 1 Current Legal Problems 83 CrossRefGoogle Scholar.

5 See Cordova, E. “Collective Bargaining” in Blanpain, R, ed., Comparative Labour Law and Industrial Relations, 2nd ed., (Deventer: Kluwer, 1985) 308 Google Scholar.

6 See Annotation to the case of Council of Civil Service Unions and Others v. Minister for the Civil Service [1985] 5 ILLR 35 at 52.

7 See E. Cordova in R. Blanpain, supra n. 5 at 309.

8 See M. Forde, supra n.3 at 315. In Sweden, for instance, the 1936 Act on the Right to Organise and Negotiate guarantees under section 4 ‘the right to institute negotiation regarding conditions of employment or relations between employers and employees in general.” See Schmidt and Dahlstrom v. Sweden Eur. Ct. HR, Series A, No. 21 (1976).

9 See Guy Caire, supra n.1, 26.

10 This was an observation of a member of the ILO Conference Committee who was trying to emphasize the fact that the non-ratification of C78 by Malaysia would diminish the freedom of association of Malaysian workers. See the General Observations of the Conference Committee on the Application of Conventions and Recommendations, in Documents on Malaysia available at ILOLEX: <http://www.ilo.org/ilolex/english/newcountryframeE.htm>.

11 See the ILO Declaration of Fundamental Principles and Rights at Work of 1998. See also Convention No. 154 concerning the promotion of collective bargaining; the Convention was adopted in 1981. This Convention does not supercede Convention No. 98. The aim behind its adoption was to ginger up member States towards making more efforts in achieving the objectives behind the earlier instruments on freedom of association.

12 See Paul Weiler, “Reconcilable Differences: New Directions in Canadian Labour Law”, Carswell Toronto, 1980, 25; John Pencavel, “The legal framework for collective bargaining in developing economies” <http://www.econ.stanford.edu/faculty/workp/soup97008.pdf> (1996) at 10.

13 See Harry Arthurs, supra n. 4 at 84.

14 See Paul Weiler, supra n.12 at 26. 16 Ibid. at 30.

16 Herzog, Peter, “The Legal Nature of Collective Agreements” (1986) 34 American Journal of Comparative Law 317 CrossRefGoogle Scholar.

17 See Klare, Karl E. “Labour Law as Ideology: Toward a New Historiography of Collective Bargaining Law,” (1981) 4 Industrial Relations Law Journal 450 Google Scholar.

18 The debate concerning the relationship between economic development and industrial relations has been more intense in Southeast Asia than in any other region. For more information regarding ‘the close relationship between economic development and industrial relations’, see Kuruvilla, Sarosh and Venkataratnam, C.S. “Economic development and industrial relations: the case of South and Southeast Asia,” (1996) 27 Industrial Relations Journal, 14 CrossRefGoogle Scholar. Note especially the assertion at p.21 that “… in the successful countries of Southeast Asia, industrial relations policies and institutions are closely tied to economic development strategies, and as economic development strategies change, so do IR policies and practices.” Noteworthy is also this assertion at p.12: “There is evidence that the goals of export oriented industrialisation and a restrictive and exclusive labour policy are highly congruent.” As to whether there is, in reality, a conflict between labour law and economic development, see Schregle, Johannes “Labour Law and development in South-east Asia,” (1976) 113 International Labour Review 283 Google Scholar. Schregle admits that there could be conflict between the goals of development which may for instance necessitate keeping wage costs within competitive limits and the protective goals of labour law which may for instance involve the fixing of minimum wage in order to bring about a more equitable form of income distribution. According to him, there is no magic formula for the resolution of this conflict. But he clearly cautions against a unitary approach in solving the problem. In his view, “. the only practical and feasible procedure is negotiation between trade unions, employers, government planners and politicians, a give-and-take process reflecting the ever changing societies of the countries concerned.” See p.292. Schregle further predicts that “trade unions will increasingly insist on the removal of those statutory provisions which in some Southeast Asian countries still obstruct the development of strong and representative trade unions with full freedom to organize themselves in the way they choose.” See p.298.

19 In an article published as recently as the year 2002, Professor Anantaraman informs us that the Malaysian restrictive industrial relations model is conducive to foreign direct investments. According to the learned professor, “Within the perspective of the Malaysian Industrial relations strategy, development imperatives have been given precedence over the rights of trade unions of workmen to autonomous existence. Since the rights of trade unions and workers are seen as subordinate elements to the transcendental goal of economic development, state policy towards labor has generally been extended to control worker organisations rather than to enlist their cooperation in the nation's development effort.” See Anantaraman, V. “The Malaysian Model of Industrial Relations: Is it Conducive to Foreign Direct Investment?” (2002) 4 M.L.J. cxxii Google Scholar.

20 See Guy Caire, Freedom of Association and Economic Development (Geneva: ILO, 1977).

21 See Sugeno, Kazuo, Japanese Labour Law, trans. Kanowitz, Leo (Seattle: UWP, 1992) at 472 Google Scholar.

22 See for instance Brown, William, “Bargaining Structure and the Impact of the Law” in Carthy, William Mc ed., Legal Intervention in Industrial Relations: Gains and Losses (Cambridge: 1992) at 297 Google Scholar.

23 See Debabish Battercherjee “Organised labour and economic liberalization in India: Past, present and future <http://www.hartford-hwp.com/archives/52a/017.htm< (2000) at 5.

24 See William Brown, supra n. 22 at 304.

25 See 259th Report, Case No. 1450, para 216.

26 See for instance 265th Report, Case No.1480, paras 560, 564 and 566. Note especially para 560 wherein the reasons given by the MTUC for its opposition against the Government stated policy of allowing the electronics workers the freedom to form only in-house unions are contained. According to the MTUC, in-house unions were totally unsuitable because: “…by and large workers in the industry are not experienced in trade unionism; secondly, because the possibility of victimisation and/or favouritism cannot be ruled out; thirdly, because there is a real possibility that the employers will seek to influence the leadership of such unions by subtle financial and material contributions to the unions; and fourthly, the establishment of such unions is bound to create imbalance in the industry.”

27 See Debabish Battercherjee, supra n. 23 at 6.

28 See the Digest of 1985, para 597.

29 See 243rd Report, Case No. 1348, para 289.

30 See 240th Report, Case No. 1348, para 289.

31 See Ozaki, M., “Labour relations in the public service: Method of determining employment conditions,” (1987) 126 International Labour Review 286 Google Scholar. Note especially Ozaki's definition of public service, a term which according to him “refers to all levels of public administration (national provincial and local) and includes public education, the postal service and public health services but excludes national railways and all other public enterprises or corporations.” Note that the definition of the term ‘public service’ as given in a particular country is critical in determining the extent of the exclusion of public servants from collective bargaining in that country. Ozaki's definition is broader than what the ILO allows for exclusion because it is not restricted to Government servants who are employed in ministries but also includes employees in public education, the postal service and the public health. As we shall see, in Malaysia, the category of public employees who are excluded from the purview of the IRA and by implication from collective bargaining, encompasses not only the workers listed by Ozaki in his definition but also those he has excluded; that is workers employed in public enterprises and corporations. The position in India seems to aim at the definition of public service as given by Ozaki because the IDA has brought within its purview all workers employed in an industry. The judicial controversy regarding the meaning of the term ‘industry’ seems to revolve around the status of public employees who are employed in postal services, public education and public health. The position seems to be that these categories of employees are excluded from the purview of the IDA because the sectors in which they work cannot be defined as ‘industry’.

32 A very interesting and illuminating study on the right to freedom of association of public employees in Latin America can be found in Cordova, Efren, “Labour relations in public service in Latin America,” (1980) 119 International Labour Review 579 Google Scholar. Note especially the reasons Cordova says are behind the denial of full trade union rights to public servants in most Latin American countries: the fact that historically, public servants used to enjoy more favourable conditions of service compared to their private sector counterparts; the recognition that public employment is of statutory not contractual nature; the fear being entertained by many governments that allowing trade unions that are allied to the political opposition to operate within the public administration would lead to the politicisation of the public service and erode loyalty; and the myth that all the activities of the State are essential services. See p. 583.

33 See M. Ozaki, supra n.31 at 286.1

34 See Paul Weiler, supra n.12 at 217.

35 See ILO Report vii: Freedom of Association and Industrial Relations, International Labour Conference, 30th Session, Geneva, 1947, 109.

36 See Paul Weiler, supra n.12 at 214.

37 See M. Ozaki, supra n.31 at 291.

38 See Peter Herzog, supra n. 16 at 321; See also the Presidential Executive Order 10988, signed by President Kennedy on January 17, 1962.

39 See s.52(1), IRA 1967; see also Lembaga Kumpulan Wang Simpanan Pekerja v. Kesatuan Kakitangan Lembaga Kumpulan Wang Simpanan Pekerja [2000] 3 M.L.J. 65.

40 See Lobo, B., “Privatisation and Its Impact on Trade Union Membership in Malaysia” (1992) 2 Industrial Law Report, i Google Scholar.

41 See Individual Observations of the Committee of Experts on the Application of Conventions and Recommendations, in Documents on Malaysia available in ILOLEX.

42 See M. Ozaki, supra n. 31 at 387.

43 See Individual Observations of the Committee of Experts on the Application of Conventions and Recommendations in Documents on Malaysia available in ILOLEX, supra n 41

44 See Individual Observations of the Committee of Experts on the Application of Conventions and Recommendations in Documents on Malaysia available in ILOLEX, supra n. 41.

45 See International Labour Office, The trade union situation in the Federation of Malaya: Report of a mission from the International Labour Office (Geneva: International Labour Offuce, 1962) 81.

46 See Sharma, Baldev, “Managerial Unionism: Implications for Industrial Relations,” (1990) 24 Indian Journal of Industrial Relations 335 Google Scholar.

47 Ibid. at 341.

48 Ibid. at 340.

49 See Germana, Be, “Protecting Managerial Employees under the National Labor Relations Act” (1991) 91 Columbia Law Journal 405 at 410 Google Scholar.

50 Ibid. at 421.

51 See Baldev Sharma, supra n. 46 at 338.

52 See 284th Report, Case No. 1591, para 595.

53 The case of Menteri Sumber Manusia v. Association of Bank Officers, Peninsular Malaysia (1999) 2 M.L.J. 337 Google Scholar indicates that workmen employed in executive capacity do bargain collectively through trade unions composed exclusively of workmen of their kind. However, the case also indicates that the term ‘executive capacity1 is, contrary to the ILO position, defined broadly. In that case, the promotion of bank receptionists and tellers to the status of ‘internal officers’ removed them from the purview of the membership of the National Union of Bank Employees and brought them into the fold a trade union of executive officers.

54 See Baldev Sharma, supra n. 46 347.

55 Under the Act, “‘workman’ means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work, for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act, in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person-(iii) who is employed mainly in a managerial or administrative capacity; or (iv) who being employed in a supervisory capacity, draws wages exceeding one thousand six hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”

56 See Efren Cordova, “Collective Bargaining” in R. Blanpain, ed., supra n .32 at 324.

57 See Hanami, T.A., Labour Law and Industrial Relations in Japan, (Deventer: Kluwer, 1979) at 108 CrossRefGoogle Scholar.

58 See Kazuo Sugeno, supra n.21 at 468-488.

59 Dewan Undangan Negeri Kelantan & Anor v Nordin bin Salleh & Anor [1992] 1 M.L.J. 697.

60 Check-off is an arrangement under which the employer deducts union dues from the pay of his employees and hands them over to the trade union. See Cordova, Efren, “The Check-off System: A Comparative Study”, ILR, Vol. 99 (1969), 464 Google Scholar

61 See Sime Darby Malaysia Bhd. v. National Union of Commercial Workers (Award 13/71).

62 See William Jacks & Co (M) Sdn Bhd. v S Balasingam [2000] 7 M.L.J. 1 at 5.

63 See Aun, Wu Min, The Industrial Relations Law of Malaysia, 2nd ed., (Malaysia: Longman, 1995) at 124 Google Scholar.

64 See Hanami, T. A., Labour and Industrial Relations in Japan (Deventer: Kluwer, 1979) at 109 CrossRefGoogle Scholar.

65 See Ramos, Elias T., “Growth of Collective Bargaining in the Philippines” (1978) 14 Indian Journal of Industrial Relations 559 at 563 Google Scholar.

66 See Individual Observations of the Committee of Experts on the Application of Conventions and Recommendations in Documents on Malaysia available at ILOLEX. The ILO Committee however seems to go after some prerogatives (such as dismissal or transfer) rather than others (such as assignment of particular tasks). The report further states that “while a collective agreement would not normally deal with individual cases of transfer, dismissal and reinstatement, it should be possible to include for example, as is often found in collective agreements in many countries, the general criteria and procedures concerning these issues. The Committee urges the Government to amend the legislation to bring section 13(3) into full conformity of the Convention”.

67 See 239th Report, Case No.1206, para 134; 284th Report, Case No. 1619, para 360(a); 294th Report, Case No. 1686, para 292.

68 See Kazuo Sugeno, supra n.21 at 488; T.A Hanami, supra n. 64 at 111.

69 See Anantaraman, V., Malaysian Industrial Relations: Law and Practice (Serdang, Malaysia: UPM, 1997) at 95 Google Scholar.

70 For instance Ayadurai (1998, p.62) notes the failure of the Act to indicate what is to happen in a situation where there is bargaining but the bargaining is unsuccessful. The author indicates that in practice, a trade dispute is also deemed to exist just like in the case of refusal to bargain.

71 See s 13(1)(2).

72 See s 13(4).

73 See s 13(5).

74 See s 13(6); Penang (Motors) 1950 Sdn. Bhd. v. National Union of Commercial Workers (Award 57/78).

75 See s 13(7).

76 See Non-Metallic Mineral Products Manufacturing Employees Union v. South East Asia Fire Bricks Sdn. Bhd [1975] 2 M.L.J. 67; [1976] 2 M.L.J. 67 [1980] 2 M.L.J. 165.