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Raymond K.H. Chan Moha Asri Abdullah Zikri Muhammad

Labour Relations and Regulation in Malaysia: Theory and Practice

Working Papers Series

No. 40

March 2003

The Southeast Asia Research Centre (SEARC) of the City University of Hong Kong publishes SEARC Working Papers Series electronically. ©Copyright is held by the author or authors of each Working Paper. SEARC Working Papers cannot be republished, reprinted, or reproduced in any format without the permission of the paper's author or authors. Note: The views expressed in each paper are those of the author or authors of the paper. They do not represent the views of the Southeast Asia Research Centre, its Management Committee, or the City University of Hong Kong. Southeast Asia Research Centre Management Committee Professor Kevin Hewison, Director Professor Joseph Y.S. Cheng Dr Vivienne Wee, Programme Coordinator Dr Graeme Lang Dr Zang Xiaowei Editor of the SEARC Working Paper Series Professor Kevin Hewison

Southeast Asia Research Centre The City University of Hong Kong 83 Tat Chee Avenue Kowloon Tong, Hong Kong SAR Tel: (852) 2194 2352 Fax: (852) 2194 2353 email: [email protected]


Raymond K.H. Chan Dept of Applied Social Studies City University of Hong Kong

[email protected]

Moha Asri Abdullah School of Humanities Universiti Sains Malaysia

[email protected]

Zikri Muhammad School of Humanities Universiti Sains Malaysia

[email protected]

1 1.1

POLITICO-LEGAL FRAMEWORK Political and Administrative Structure

In many cases, when countries with ethnically divided societies face problems, which are related to ethnic divisions and cultural cleavages, they have four fundamental alternatives to solve their problems (Asna, 1999). These include: 1) the co-existence of separate ethnic group in a single polity; 2) ethnic cleansing; 3) assimilation; and 4) partition. For some countries with ethnically divided societies, they managed to maintain their political stability, while others failed to do so. Malaysia is not exceptional. Nonetheless, since ethnic groups in Malaysia are generally dispersed throughout country, the last alternative is not possible for the country. The second option, i.e. ethnic cleansing, is neither desirable nor viable. Even tough the third alternative, i.e. assimilation looks possible, this has never occurred nor it has been implemented in the past due to various reasons. Hence there is not likely to be an acceptable solution in the foreseeable future. In this relation, Malaysia has chosen the first option, which requires the ethnic groups in the country to learn to live together and tolerate each other's separate identities.

*This paper is part of a larger project on labour regulation funded by the Southeast Asia Research Centre, City University of Hong Kong. Studies of the situation in Singapore and Vietnam will also be published as working papers. Each report follows a similar structure. They will also become part of an Internet site that sets out the regulatory environment in those countries.

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This has been the experience of Malaysia and Malaysian constitutions since Independence in 1957 onwards. One of the main occasions of the process of consultation and bargaining took place among representatives of different ethnic groups was during the drawing up of the 1957 Constitution led by Lord Reid and known as Report of the Federation of Malaya Constitutional Commission 1957. Following the first nationwide election for the Federal Legislative Council, which was held in 1955, the coalition of the three main ethnic parties, the United Malays National Organization (UMNO), the Malayan Chinese Association (MCA) and the Malayan Indian Congress (MIC) won convincingly taking 51 of the 52 seats. The coalition known as the Alliance pressed ahead with the idea of independence with confidence for a move to full self-government1. The Reid Report made many recommendations on matters related to the legislative powers of the central government and the states, the positions of the Malay Rulers, nationality for the whole of the Federation; and the special position of the Malays as well as the legislative interests of other communities. After some changes as a result of consultations between the British government, the Malay rulers and representatives of the Alliance Party, the Federal Constitution was proclaimed and on August 31, 1957 the Federation of Malaya as an independent nation was born. As a result of the above process, Malaysia today is a federation of 13 states and two Federal Territories 2 . It has a Federal Constitution and 13 State Constitutions. The present state of Malaysia was a result of a merger of the Federation of Malay Peninsular, Sabah, Sarawak and Singapore, which took place in 1963. The original constitution of the Federation of Malaya was amended to accommodate the new Federation. After Singapore left the Federation in 1965, there has been no change, except the creation of the Federal Territories of Kuala Lumpur and Labuan and of the states of Selangor and Sabah respectively. The Federal Constitution forms the supreme law of the land, meaning that any law repugnant to the Constitution is to invalid. In that Federation, each state has its own head of state and an elected assembly. Nine of the states are ruled by hereditary sultans who, under a unique system, elect one of their own number to be the constitutional monarch or `Yang di-Pertuan Agong', as provided in the Constitution, for a period of five years. He is bound to

Initially known as the Alliance Party and in 1971, it was expanded and, in 1974, renamed the Barisan Nasional, which presently comprises 14 political parties and governed Malaysia since the first general election. The 14 political parties include: United Malays National Organisation (UMN0, Pertubuham Kebangsaan Melayu Bersatu), Malaysian Chinese Association (MCA), Malaysian Indian Congress (MIC), People's Progressive Party of Malaysia (PPP), Sarawak United People's Party (SUPP, Parti Bersatu Sarawak), Sarawak National Party (SNAP, Parti Kebangsaan Sarawak), Gerakan (Parti Gerakan Rakyat Malaysia), Parti Pesaka Bumiputera Bersatu Sarawak (PBB), Parti Bangsa Dayak Sarawak (PBDS), People's Justice Party (AKAR, Parti Angkatan Keadilan Rakyat), Liberal Democratic Party (LDP), Sabah Progressive Party (SAPP), Parti Bersatu Rakyat Sabah (PBRS), Pasok Momogun Kadasandusun Organisation (UPKO). 2 The 13 States are Penang, Perak, Perlis, Selongor, Johor, Kedak, Sabah, Sarawak, Pahang, Melaka, Terangganu, N. Sembilan and Kelantan; and the 2 Federal Territories are Kuala Lumpur and Labuan. Southeast Asia Research Centre Working Paper Series, No. 40, 2003 2


act on the advice of the Cabinet except in matters not related to affairs of the state. The sultans from the nine states and the four Yang Dipertua Negeri (formerly known as Governors) form the Conference of Rulers (Majlis Raja-Raja) established under Article 38 of the Constitution, with their states' Chief Minister (Menteri Besar), the Yang di-Pertian Agong3 and Prime Minister representing the Federal government. The Conference has limited functions, restricted to the election and removal of Yang di-Pertuan Agong and his Deputy, deliberate on questions of national policy, and decide on the extension of any religious matter to the Federation. The Malaysian Parliament comprises the Senate (Dewan Negara) and the House of Representatives (Dewan Rakyat). The Senators, whether appointed or elected, serve a six-year term, while members of the House of Representatives are elected for a five-year term in a single member constituency system. Elections to the House of Representatives have been held regularly every five years or less. As provided in the Constitution, general elections must be held within five years of the preceding polls. The majority party in the House of Representatives will form the government. The Cabinet, which is formed by the majority party in the House of Representatives, formulates Federal government policy, which is implemented through Ministries and Departments. Each Ministry is headed by a Minister and his Deputies and Parliamentary Secretary. The chief executive of each Ministry is the Secretary-General. The ministry in-charge of labour-related issues is the Ministry of Human Resources, which was initially called the Ministry of Labour. The major responsibilities of the Ministry are: a) to enforce labour standards as prescribed in relevant laws and regulations; (b) to promote skills training and development for the labour force; c) to ensure the safety and the health of employees; d) to register trade unions and union federations and to supervise their activities; e) to foster good employer-employee relations and to promote sound industrial relations; and f) to generate employment opportunities for citizens and to regulate the employment of non-citizens. The Ministry has three major Divisions. The Planning and Policy Research Division is responsible for the formulation and review of policies and strategies related to labour issues as well as private sector manpower and human resources development and training needs to ensure optimum utilization of human resources and the efficient functioning of the labour market. The Skill Development Fund Division assumes the responsibility to disburse loans from the Skills Development Fund to Malaysian full-time or part-time students pursuing accredited technical and vocational courses by the National Vocational Training Council, which meets the requirement of the Malaysian Skill Certificate

The Yang di-Pertuan Agong appears to be a member of the Conference only when it is convened for the purpose of electing the next Yang di-Pertuan Agong and the Timbalan (Deputy) Yang di-Pertuan Agong; and when the Conference deliberates on national policy. Similarly, the Prime Minister will only attend when national policy is discussed.


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Level 1 to 5 in public and private training institutions. This Fund took effect from 2 January 2001. The Management and Administration Division ensures that all programmes and activities are implemented efficiently and effectively to achieve the Ministry's objectives. The Ministry has seven executive Departments: 1. Department of Labour, Peninsular Malaysia, which administers the following laws in Peninsular Malaysia: Employment Act 1955 Children and Young Persons (Employment) Act 1966 Employment (Restriction) Act 1968 Employment (Information) Act 1953 Weekly Holidays Act 1950 Wages Council Act 1947 Workers' Minimum Standards of Housing and Amenities Act 1990 Workmen's Compensation Act 1952 South Indian Labour Fund Ordinance 1958 2. Department of Labour, Sabah, which administers the following laws in Sabah: Sabah Labour Ordinance 1949 Employment (Restriction) Act 1968 Employment (Information) Act 1953 Wages Council Act 1947 Workmen's Compensation Act 1952 Trade Union Act 1959 Industrial Relations Act 1967 3. Department of Labour, Sarawak, which administers the following laws in Sarawak: Sarawak Labour Ordinance 1952 Employment (Restriction) Act 1968 Employment (Information) Act 1953 Sarawak Weekly Holidays Ordinance 1956 Wages Council Act 1947 Workmen's Compensation Act 1952 Trade Union Act 1959 Industrial Relations Act 1967 4. The Manpower Department, which collects and analyses job market information, develops and upgrades skills, and provides employment services. 5. Occupational Safety and Health Department, which is responsible for reviewing, enforcing and promoting industrial safety and health.

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6. Department of Trade Unions Affairs, which administers the Trade Union Act 1959 and the regulations thereunder. 7. Department of Industrial Relations, which administers the Industrial Relations Act 1967 and the regulations thereunder.

Figure 1.1: Administrative Structure ­ Ministry of Human Resources



DEPUTY SECRETARY GENERAL DEPARTMENT 1. Manpower Department 2. Labour Department (Pen. Malaysia) 3. Labour Department (Sabah) 4. Labour Department (Sarawak) 5. Industrial Court 6. Industrial Relation Department 7. Trade Union Affair Department 8. Occupational Safety and Health Department 9. National Vocational Training Council STATUTORY BODIES 1. Social Security Organisation 2. Human Resource Department Council 3. Malaysian Migration Fund Board 4. Penang Port Labour Board COMPANY National Institute of Occupational Safety and Health







Source: Ministry of Human Resources, online at accessed at 29 November 2002.

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Legal Structure

Malaysia's legal system revolves around a hierarchy of the Federal Constitution, the State Constitution, Uniformity of Laws between Federal and States, delegation of powers to states, effects of emergencies on federal-state relations, and the constitutions provided for a constitutional monarchy. There are five basic feature of government provided for in the Federal Constitution (Wu, 2002). These include: i. Article 1 establishes the nation as a federation with the name `Malaysia' with provision for the admission of new states. Other articles provide for the division of powers between the Federal Parliament and the State Assemblies. Article 32 (1) read together with article 40 establishes a constitutional monarchy; the Supreme Head of the Federation taking on the title of the `Yang di-Pertuan Agong'. Chapter 4 of the Part IV establishes a system of parliamentary democracy. Article 3 provides for Islam to be the religion of the Federation but `other religions may be practiced in peace and harmony in any part of the Federation'. While Islam is the official religion, Malaysia is not a theocratic state. Various articles establish a Westminster type of parliamentary government with no separation of the legislative and executive branches. The judiciary remains separate and independent.

ii. iii. iv.


Under the federal system of Malaysia, Article 44 states that the legislative authority of the Federation `shall vest in a Parliament', comprising the Dewan Rakyat and Dewan Negara. `Parliament may make laws for the whole or any part of the Federation' and laws with extra-territorial effects, while a State Legislature `may make laws for the whole or any part of that state' (Article 73). There is a clear demarcation of subject matters between federal and state legislatures. There are at least three Lists, which are highly relevant. List I is the Federal List, in which the Parliament may legislate in such matters as external affairs, defence, internal security, education and others. List II is the State List, in which the State Legislature may enact laws, including land, agriculture, forestry, local government, fishing, Islamic law and several others. List III is the Concurrent List, in which both federal and states may make laws, which include social welfare, scholarships, town and country planning, protection of wild life, National Parks, drainage and irrigation and many others. In this regard, state legislatures are conferred powers to make laws with respect to any matter not enumerated in any List. This means that they posses residual power of legislation although there is very little that is left over from the extensive and detailed legislative lists. Article 75 of Constitution provides for the

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contingency of contradiction between federal and state laws, that is, `If any State Law is inconsistent with a federal law, the federal law shall prevail and the State laws shall, to the extent of the inconsistency, be void'. Article 76 of Constitution also allows the federal legislation to exercise full legislative control over land and local government in the states under the claim of uniformity. In addition to the three Lists that distribute the powers between the federal and state legislature, there are Lists IIA and IIIA entitled `Supplement' for Sabah and Sarawak. These Lists confer more extensive power on the two states than those allocated to the peninsular states. This is understood to safeguard the special interests of Sabah and Sarawak. It was recognized that at the time of joining Malaysia that Sabah and Sarawak were politically immature, physically and economically underdeveloped, with a heterogeneous society at different stages of economic progress. It is not clear if the parties had agreed that such provisions were only temporary and would be removed once the states were developed. Special subjects for Sabah and Sarawak cover such matters as religion, immigration, land citizenship, the special position of the indigenous inhabitants, national language, the public service, the judiciary, financial arrangements and emergency powers. Both federal and state laws provide various laws and relations in the form of ordinances and ministerial regulations to local and municipal regulations. The hierarchy of laws and relations in Malaysia is presented in Figure 1.2. Some of the labour and employment laws have been received and practiced well before Independence through to 2003. This means that labour and employment laws and regulations have long been established. 2. 2.1 LABOUR FORCE STRUCTURE Introduction

According to the 2000 Census, the total population of Malaysia was 23.37 million compared to 18.38 million in 1991. The average population growth rate over the period from 1991 to 2000 is 2.6 percent. Out of 23.37 million, 39.3 percent or about 9.19 million people constitute the labour force (i.e., those aged between 15 and 64). Table 2.1 reveals some key data on the labour force in Malaysia between 1995 and 2000, such as population, labour force, labour force growth rate, employment and employment growth rate, and unemployment rate. Figure 2.1 shows the structure of the labour force in Malaysia in the year 2000. 2.2 Structure of Industrial Establishments

Despite the fact that Malaysia endured the Asian financial crisis and economic downturn in 1998, the annual economic growth rate during the period of 19962000 is still respectable at approximately 4.7 percent per annum (Malaysia, 2001). The manufacturing sector contributed the bulk of this with an average growth rate of 9.1 percent during the same period and constituted about 33.4 percent of the GDP in the year 2000. Since Independence in 1957, the rate of

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growth in manufacturing output has been rapid, with the share of manufacturing in total GDP rising from less than 10 percent in the early 1960s to 26 percent thirty years later. The manufacturing sector's share of Malaysia's gross commodity exports and the average annual growth rate of manufactured exports and share of employment have been rather impressive. All this has transformed Malaysia's economy from a largely agriculture-based economy towards manufacturing and export-oriented economy and thus largely dependent upon global market. Figure 1.2: Hierarchy of Laws and Regulations

Federal Legislature


Cabinet Ministerial Regulations and Announcements

State Legislature

State Executive Council, Regulations and Orders

Other Regulations and Ordinances

Local Statutes, Municipal and / or District Regulations and Rules

Table 2.1: Key Data on Labour Force in Malaysia, 1995-2000

Item Population (million) Labour force (thousand) Labour force growth (%) Employment (thousand) Employment growth (%) Unemployment rate (%) 1995 20.7 8,257 5.4 8,024 5.5 2.8 1996 21.2 8,641 4.6 8,417 4.9 2.6 Year 1997 21.7 9,038 4.6 8,805 4.6 2.6 1998 22.2 8,881 -1.7 8,563 -2.5 3.2 1999 22.7 9,010 1.5 8,741 1.7 3.0 2000 23.3 9,194 2.0 8,920 2.1 3.0

Source: Ministry of Finance, Annual Economic Report, various years

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Figure 2.1: Structure of the Labour Force in Malaysia, 2000 TOTAL POPULATION: 23.37 MILLION

Labour Force: 9.14 Million

Older than 15 but not in labour force: 0.274 million

Employed: 8.920 million

Unemployed: 0.709 million

Seasonal workers (unknown)

Agriculture: 16.285 million Non-Agriculture: 9.715 million

Looking for work: 0.7023 million Able to work but not looking: 0.01 million

Sources: Ministry of Finance, Economic Report 2001/2002 Ministry of Human Resources

Nonetheless, data on industrial establishments is patchy and does not adequately cover the four main economic sectors; agriculture, construction, manufacturing and services. As a result, we use only the principal statistics regarding manufacturing industries (and only in the manufacturing sector). As indicated in Table 2.2, the number of manufacturing establishments has increased slowly over the years from 1995 to 2000, that is, from 22,453 to 27,419 establishments, even though there was a small decline during 1998 and 1999. One of the main features is that `small establishment' here is defined as employing less than 10 full-time workers, and thus comprise the substantial proportion of all establishments; i.e., 44.67 percent in 1995 to 51.27 percent in 2000. Perhaps this is why the Malaysian government recognizes the strategic importance of small industry in national development and gives a high priority to the development of small industry in its national economic development strategy. Another interesting feature worth noting is that the recent Asian financial crisis may well correlate to statistics shown in Table 2.2, by which the percentage of small size establishments decreased slightly in 1998 and 1999 respectively (i.e., 45.21 and 44.97) as compared to 46.91 and 48.73 percent in 1996 and 2000 respectively. This means that the recent financial crisis affected smaller firms much more than large ones. Table 2.3 indicates that establishments in the manufacturing sector are categorized into 27 major industrial groups.

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Table 2.2: Number of Establishments and Employees in the Manufacturing Sector in Malaysia, 1995-2000

Year 1995 1996 1997 1998 1999 2000 TOTAL Establishment 22,453 23,462 22,799 21,593 22,037 27,419 Employee 1,389,545 1,448,834 1,429,746 1,391,026 1,327,924 2,125,871 Size of 1-9 employees (Percent) 44.67 46.91 46.93 45.21 44.97 48.73 Size of 10 and above employees (Percent) 55.33 53.09 53.07 54.79 55.03 51.27

Source: Department of Statistics, Annual Survey of Manufacturing Industries, various years

Various provisions in a number of labour laws and regulations apply to all firms not merely in the manufacturing sector, but also other sectors in the economy such as agriculture, hunting, and fishing; mining and quarrying; construction, manufacturing, wholesale, trading and retail, gas and water, restaurants and hotels, transport and storage; communications, finance and insurance, real estate and business services, social and personal services. Labour laws and regulations in Malaysia also stipulate that all sizes of firms or establishments including those employed in firms with less than five employees fall within the scope of protective labour regulations and legislation. This may be one of the reasons why Malaysia does not have a large `informal sector'. 2.3 Demographic Structure and Educational Attainment of the Working Population

The population of Malaysian citizens grew at a higher rate of 4.3 percent from 1996 to 2000. The median age of the population in 2000 was 23.3 indicating that Malaysia continues to have a young population (UN, 1999). The dependency ratio, which is the ratio of dependents to every 100 persons of working age, decreased from 62.7 percent in 1995 to 59.1 percent in 2000. The drop in the dependency ratio was due to the increase in the proportion of the working age population (those between 15 and 64), a reduction in the population below 15 years, and slower growth in the population aged 65 years and above. Non-citizens accounted for 7.6 percent of the population in the working age group (see Table 2.4). The rates of growth of the population in terms of ethnic composition of Malaysian citizens varied substantially. The Bumiputera population increased at an average annual rate of 3.2 percent because their fertility rate was higher at 3.62, accounting for 66.1 percent of the Malaysian population in 2000. The Chinese, with a fertility rate of 2.57, grew at an average annual rate of 1.4 percent, comprising 25.3 percent of the population, while the Indian community, with a fertility rate of 2.55, grew at 1.8 percent, and accounted for 7.4 percent of the total population.

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Table 2.3: Principal Statistics of Manufacturing Industries by Major Industrial Group, 2000

Industrial Group Food manufacturing Beverage industry Tobacco manufacturers Manufacture of textiles Manufacture of wearing apparel except footware Manufacture of leather and products of leather, leather substitutes and fur, except footware and apparel Manufacture of footwear except vulcanized or moulded rubber or plastic Manufacture of wood, wood and cork products, except furniture Manufacture of furniture and fixtures, except those primarily of metal Manufacture of paper and paper products Printing, publishing and allied industries Manufacture of industrial chemicals Manufacture of other chemical products Crude oil refineries Manufacture of rubber products Manufacture of plastic products, N.E.C. Manufacture of pottery, china and earthenware Manufacture of glass and glass products Manufacture of non-metallic mineral products Iron and steel basic industries Non-ferrous metal basic industries Manufacture of fabricated metal products, except machinery and equipment Manufacture of machinery except electrical Manufacture of electrical machinery, apparatus, appliances and supplies Manufacture of transport equipment Manufacture of professional and scientific and measuring and controlling equipment, N.E.C. Other manufacturing industries TOTAL % of Establishment 14.8 0.55 1.38 3.37 13.49 0.37 0.51 7.46 6.50 1.50 4.62 1.02 1.74 1.74 2.31 5.27 0.42 0.36 3.78 1.95 0.31 11.8 6.17 4.38 2.52 0.25 3.37 100.0 % of Employee 6.89 0.36 0.94 3.52 4.29 0.21 0.19 10.28 2.86 1.67 2.531 1.35 0.18 0.07 4.78 5.20 0.47 0.58 3.17 1.70 0.70 4.92 5.22 29.90 3.81 1.59 1.63 100.0

Source: Department of Statistics (2000).

The educational attainment of the employed population is revealed in Table 2.5. It is imperative to note that almost one-third of the employed persons have medium-high school education, while 20.2 percent have a university degree. Labour force participation rates between 1985 and 2000 are presented in the Table 2.6. The rate of labour participation has changed little over the years, ranging from 65.8 percent in 1985 to 66.7 percent in 1996. It did, however, decline to 64.3 percent in 1999.

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Table 2.4: Population Size and Age Structure, 1995-2005

Item Total Population Citizens Bumiputera Chinese Indian Others Non-Citizens Age Structure 0-14 15-64 65 and above Dependency Ratio (%) **Median Age (years) Million 20.68 19.68 12.47 5.22 1.49 0.50 1995 Percent 100.0 63.3 26.5 7.6 2.6 1.00 7.25 12.71 0.72 35.0 61.5 3.5 62.7 22.4 7.71 14.62 0.94 Million 23.37 22.04 14.56 5.58 1.63 0.27 2000 Percent 100.0 66.1 25.3 7.4 1.2 1.23 33.1 62.9 4.0 55.3 23.3 8.15 16.77 1.12 55.3 24.6 Million 26.04 24.66 16.59 6.04 1.78 0.25 2005 Percent 100.0 67.3 24.5 7.2 1.0 1.38 31.3 64.4 4.3

Notes: * Estimate based upon the Population Census 2000 ** UN figures. Sources: Malaysia (2001); UN (1999)

Table 2.5: Educational Attainment of the Employed Persons, 2000

Educational Level Primary or less Medium-High school or equivalent University Other TOTAL Percent 8.4 69.6 20.2 1.8 100.0 Source: Department of Statistics (2000a)

Educational attainment by ethnic group is shown in Table 2.7, and reveals that the majority of employees have received a secondary level of education (57.5 percent). Only 5.4 percent had no formal education as compared to 14.8 percent who received tertiary level of education. 2.4 Employment by Sector and Occupation of the Working Population

Employment by sector shows that the services sector accounted for 48.6 percent of total employment in 2000. The services sector recorded an average rate of 3.9 percent growth during 1995-2000. Employment in the manufacturing sector expanded at a rate of 4.8 percent during the same period, thus increasing its share of total employment from 25.3 percent in 1995 to 27.6 percent in 2000. The recent economic crisis severely affected the performance of the construction sector due to the large overhang, especially of office space, retail outlets and high-end residential premises. The sector's share of total employment was 8.1 percent in 2000, which declined from 9.0 percent in 1995 (see Table 2.8). Employment in the agricultural sector continued to contract at

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1.2 percent per annum during the 1995-2000 period. Its share of total employment was reduced to 15.2 percent in 2000 from 18.7 percent in 1995. Table 2.6: Labour Force Participation Rates, 1985-2000

Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Labor Force (Thousands) 6039.1 6222.2 6408.9 6658.0 6850.0 7042.0 7204.0 7370.0 7627.0 7834.0 8256.8 8641.4 9038.2 9006.5 9010.0* 9194.0* Labor Force Participation Rates (%) Total1 65.8 65.8 65.9 66.1 66.3 66.5 66.6 66.7 66.8 66.8 66.9 66.7 66.6 64.3 64.3 -Male2 87.4 87.5 86.9 85.8 85.8 85.6 85.7 85.7 87.0 87.1 86.8 86.6 86.9 86.7 83.4 -Female3 44.3 44.2 44.9 46.5 46.9 47.3 47.5 47.6 46.1 46.5 47.1 47.2 47.3 46.8 44.2 --

Notes: 1 Total number of people economically active as a percentage of total number in the working population of 15-64 years. 2 Total number of males economically active as a percentage of total number of males in the working age population. 3 Total number of females economically active as a percentage of total number of females in the working age population. *Estimates Source: Information quoted from Treasury Department, online at accessed 5 November 2002

Table 2.7: Percentage Distributions of Labour Force by Educational Attainment and Ethnic Group in Malaysia, 2000

Educational Attainment No Formal Education Primary Secondary Tertiary Total Ethnic Group Chinese India 2.5 22.2 58.6 16.6 100.0 3.7 23.7 60.4 12.2 100.0 Total 5.4 22.3 57.5 14.8 100.0

Malay 3.4 19.8 60.0 16.7 100.0

Other 16.6 36.7 40.9 5.8 100.0

Source: Department of Statistics (2000b)

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Employment by occupation indicated that there has been a shift towards occupations requiring high educational attainment and professional training in tandem with the strategic shift towards higher value-added activities from 1995 to 2000. Employment in all major occupational groups expanded with the demand for professional and technical as well as administrative and managerial categories registering the highest growth; that is, 5.2 percent accounting for 17.9 percent of total employment created during the period. Its share in the occupational group increased from 9.9 to 11.0 percent during the same period. However, the production and related workers category continued to form the largest group among the major occupational categories, even though it experienced a slight decline from 33.9 percent in 1995 to 32.8 percent in 2000. Other major occupational groups are shown in Table 2.9. Table 2.8: Employment by Sector 1990-2005 (%)

Sector Agriculture, forestry, livestock & fishing Mining and Quarrying Manufacturing Construction Electricity, gas & water Transport, storage & communications Wholesale, retail trade, hotels and restaurants Finance, Insurance, real estate & business services Government services Other services Total 1990 26.0 0.6 19.9 6.3 0.7 4.5 18.2 3.9 19.9** 100.0 1995 18.7 0.5 25.3 9.0 0.8 4.9 16.5 4.7 11.1 8.5 100.0 2000 15.2 0.4 27.6 8.1 0.8 5.0 17.1 5.5 10.6 9.7 100.0 2005 12.0 0.4 29.5 8.1 0.8 5.1 17.3 6.0 9.8 11.0 100.0

Note: * Estimate ** including government and other services Sources: Malaysia (2001); Department of Statistics (1998: Table 3.5)

3 3.1

LABOUR LAWS AND REGULATIONS Coverage and exclusions

The Employment Act 1955 (EA) defines the meaning of `employee' as: a. any person whose wages does not exceed RM1,500 per month under a contract of service with an employer; b. any person who irrespective of the wages earns in a month has entered into a contract of service with an employer and disengaged in manual labour, or engaged in the operation of mechanically propelled vehicles; c. one who supervises and oversees employees in manual labour; d. any person engaged in any capacity in any vessel registered in Malaysia with certain exception.

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Table 2.9: Employment by Major Occupational Group, 1990-2005 (%) Occupational group Professional, technical & related workers Administrative & managerial workers Clerical & related workers Sales workers Service workers Production & related workers, transport equipment operators & labourers Agricultural, animal husbandry & forestry workers, fishermen & hunters TOTAL

Note: * Estimate Sources: Malaysia (2001); Department of Statistics (1998: Table 3.9)

1990 7.8 2.2 9.8 11.3 11.4 31.3 26.2 100.0

1995 9.9 3.2 10.9 10.9 11.1 33.9 20.1 100.0

2000 11.0 4.2 11.1 11.0 11.8 32.8 18.1 100.0

2005 12.1 5.0 11.2 11.3 12.4 30.9 17.1 100.0

An amendment was made in 1998 to include employee earning between RM 1,500 and RM 5,000 per month. However, these persons are only covered in terms of wages, allowances or other cash benefits. Under s.2(b) of the EA, the Minister `may by order exempt or exclude, subject to such conditions as he may deem fit to impost, any person or class of persons from all or any of the provisions of this Act'. The EA also defines `employer' as `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 mentioned person, and the word `employ', with its grammatical variations and cognate expressions, shall be construed accordingly'. The EA regulations define a contract of service as an agreement whereby a person agrees to employ another as an employee and the employee agrees to serve his employer as an employee. A contract of service can be either oral or in writing, express, or implied. However there are certain contracts of service that must be in writing, including any contract of service for a specified period of time exceeding one month or for a specified piece of work where the time required for the completion of the work may exceed one month; and an apprenticeship contract entered into by a person with an employer who undertakes to employ the person and train him for a period which is not less than two years. In Malaysia, the labour laws and regulations comprise at least seven main elements. These include the Employment Act 1955, the Children and Young Persons (Employment Act) 1966, the Employees Social Security Act 1969, the Industrial Relations Act 1967, the Trade Union Act 1959, the Occupational

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Safety and Health Act 1994 and Workmen's Compensation Act 1952. The coverage of each of the mentioned Acts is presented in below. 3.1.1 The Employment Act 1955 (EA) The Employment Act 1955 is an important piece of labour legislation. Together with this act the regulations and orders made thereunder, it provides a comprehensive legal framework governing matters such as payment of wages, rest days, hours of work holidays, terminations, maternity protections, employment of foreign employees, and employer's duty to notify Labour Office when commencing business. Any terms and conditions which are found to be less favourable in the contract of service are void and of no effect, and would be substituted by the corresponding provisions in the Act. The Sabah Labour Ordinance 1949 and Sarawak Labour Ordinance 1952 plays a similar roles for these two states respectively, but the Employment Act currently applied in Peninsular Malaysia will be gradually extended to replace these two Ordinances. 3.1.2 The Children and Young Persons (Employment Act) 1966 The Children and Young Persons (Employment) Act 1966 (the Act) regulates the employment of children and young persons. The Act only covers any person below 14 years of ages and any person who is has not reached 16. 3.1.3 The Employees' Social Security Act 1969 The Employees' Social Security Act 1969 aims to provide protection for employees and their families against economic and social distress in situations where the employees sustain injury or death. Under some of the schemes of payment, it is unnecessary for the accident in questions to arise from the course of the work. The level of benefits entitled by a particular employee is dependent on his earning and contributions record. The Act generally covered all industries with one or more employees. All employees of such industries must be insured. 3.1.4 The Industrial Relations Act 1967 (IRA) The Industrial Relations Act 1967, applied to all states, is mainly concerned with the regulations of the relations between employers and workmen and their trade union, the preventions and settlement of any differences or disputes arising from their relationship and trade disputes and matters arising therefrom. The Act are covered almost all sectors in the economy. 3.1.5 The Trade Union Act 1959 (TUA) The constitution of Malaysia grants all citizens the right of association [Article 4(1)]. Workers and employers may constitute occupational organizations within the legal framework of the Trade Unions Act 1959, which applies to all states. The Act covers all employees or any person who is engaged for hire or reward on a fulltime or part-time basis. It also includes employers or any person or

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body of persons, whether corporate or non-corporate, who employs a workman, and includes the government and any statutory authority. Under this Act the Trade Unions is referred to any associations or combinations of workmen or employers. 3.1.6 The Occupational Safety and Health Act 1994 (OSHA) The objectives of the Occupational Safety and Health Act 1994 are as follow: a) To secure the safety, health and welfare of person at work; b) To protect persons (other than persons at work) at a place of work against hazards; c) To promote the occupational environment adaptable to the persons' physiological and physiological needs; d) To proved a means towards a system together with approved regulations and relevant laws and codes of practice towards maintaining and improving the standards of health and safety. The Act applies throughout Malaysia to the industries specified in the s.1(2-3) and First Schedule as follow: a) b) c) d) e) f) g) h) i) j) Manufacturing; Mining and quarrying; Constructions; Agriculture, forestry and fishing; Utilities (electricity, gas, water, sanitary service); Transport, storage and communication; Wholesales and retail trades; Hotels and restaurants; Finance; insurance; real estate and business services ; and Public services and statutory authorities.

3.1.7 The Workmen's Compensation Act 1952 Workmen's compensation is compensation for injury to an employee or worker arising out of and in the course of employment that is paid to the worker or dependants. This Act provides for the compensation payment to an injured employee or worker arising out of and in the course of employment or contracting occupational disease. The employer is required to purchase workmen's compensation insurance. From 1992, local workers have been covered under the Employees Social Security Act 1969, and foreign workers whose earnings are not more than MR 500 per month and all manual workers irrespective of their wage, are still covered under this Act and the Workmen's Compensation (Foreign Worker's Scheme) (Insurance) Order 1993.

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Obligations and rights of employers and employees

Obligation may be presented in two parts: obligations of employers and obligations of employees. 3.2.1 Obligations of employer and employee The obligations of employers, other than complying with labour legislation, also include two major responsibilities. The first is to ensure, so far as is practicable, the safety, health and welfare of their employees. Under such provision, employers must establish a safety and health committee at the place of work. As insecurity of employment and fear of the consequences of redundancy and retirement have a major influence on attitudes to work and good industrial relations, employers must comply with the requirements stipulated in the Codes of Conduct for Industrial Harmony and Areas for Co-operation and Agreed Industrial Relations Practice. The duty of every employee includes while at work to take reasonable care for the safety and health of himself and of other persons who may be affected by his acts or omissions at work; to co-operate with his employer or any other person in the discharge of any duty or requirement imposed on the employer or another person; to wear or use at all times any protective equipment or clothing provided by the employer for the purpose of preventing risks to his safety and health; and; to comply with any instruction or measure on occupational safety and health instituted by his employer or any other person. A person who contravenes these provisions shall be guilty of an offence and shall, on conviction, be liable to a fine or to imprisonment or to both. A person who intentionally, recklessly or negligently interferes with or misuses anything provided or done in the interests of safety, health and welfare shall also be guilty of an offence and shall, on conviction, be liable to a fine or to imprisonment or to both. 3.2.2 Rights of employer and employee As stated in the Industrial Relations Act, employers enjoy the right of managerial prerogatives which include promotion, transfer, employment (appointment), termination, dismissal and reinstatement, suspension, assignment or allocation of duties or specific tasks (s.5 (2) and s.13(3)). Under the Employment Act, an employer may terminate the services of an employee without notice if the employee has committed an act of misconduct inconsistent with the terms and conditions of his contract of service. Either party may terminate the contract of service without notice by paying the other party an indemnity equal to the amount of wages for the notice period or in proportion to the unexpired term of the notice. Employers who are governed by the contract of service may at any time give to the other party notice of intention to terminate such contract of service. Any employer may, after due inquiry, on the grounds of misconduct in consistent with the express or implied conditions of his service

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have the right to dismiss the employee without notice, downgrade the employee, impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks. The employers have a right to form, assist in the formation or join a trade union and participate in its lawful activities. Employees have many rights to protect them under the contract of service in each of the Act as follows: payment of wages; deductions of wages; trucks system; priority of wages; contractor and principals; employment of women; maternity leave; rest days; hours of works; annual leave; sick leave; ordinary and hourly rates of pays; terminations and lay-off benefits; employment of foreign workers; registers, return, and notice boards; inspections; complaints and inquiries. 3.2.3 Responsibility of an employer or employee union As employers and workers and trade unions representing them are jointly and severally responsible for good industrial relations, the primary condition is for both management and trade unions to accept, at the highest level, the same degree of responsibility for industrial relations as for other functions within their respective organisations. Good industrial relations need to be developed within the framework of efficiency of the establishment or undertaking, and, as such, a major objective of management must be to develop just and effective personnel and industrial relations policies which engender the confidence of all employees, subject to the purpose for which the establishment or undertaking was established and its social obligation to the nation. Trade unions should ensure that the policies and practices which they adopt are not only fair in relation to the function and purpose for which they have been formed but also take into consideration national interests. Where a trade union has been recognized, a. b. c. management should take the initiative in seeking to establish, jointly with the trade union concerned, effective procedures for negotiation, consultation and the settlement of grievances and disputes; management and the trade union should take all reasonable steps to ensure that both management's and union's personnel observe agreements reached and use agreed procedures; management should not discourage employees from joining the recognised union and from taking an active part in its legitimate activities.

3.2.4 Dismissal Procedures Dismissal procedures include normal termination under the EA, i.e. employers or employees who are governed by the contract of service may at any time give to the other party notice of intention to terminate such contract of service. The length of such notice must be same period for employer and employee and

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must be specified on the contract of service. If it is not specified, the minimum length for the notice shall be issued as four weeks, if the employee has been employed for less than two years' service; or six weeks' notice if he has been so employed for 2 years or more but less than 5 years on such date; or eight weeks notice if he has been so employed for 5 years or more on such date. Either party can choose to waive his right to notice by another party, and in special case such as misconduct, dismissal can be without notice after due inquiry. If without notice, and it is not accepted by either party, an indemnity should be paid to either party which is equal to the period of notice. As suggested by the Industrial Court, misconduct can fall into one or more of the following types: disrespect and insubordination, disobedience or refusal to obey, lateness and absence, sleeping on duty, failure or refusal to work, threat and assault, gambling and quarrelling, theft and dishonesty, cheating and misappropriation, fraud and misrepresentation, duty to serve loyalty and faithfully, and duty of care and negligence. As according to the Employment (Termination and Lay-off Benefits) Regulation 1980, an employee needs to be in continuous service for 12 months before he qualified for termination and lay-off benefits (if there are broken periods, then any one of such period must exceed 30 days). An employee is not entitled to termination / lay-off benefit, in the event that: a. b. c. d. e. f. He retires pursuant to the contract of service; He is dismissed on grounds of misconduct (after enquiry); He voluntarily terminates his contract (unless due to employer's wilful breach of contract or when employment id threatened by danger, violence or disease to the employee or his dependants; His contract is renewed or he is re-engaged by the same employer on terms and conditions which are not less favourable then the previous contract; He unreasonable refuses the offer of renewal/re-engagement; and He leaves service after receiving due notice of termination of contract without the employer's prior consent or without paying indemnity to the employer as required under s.13 of the Regulation.

An employee is deemed to have been laid off in the event that a) he is not provided with work for at least 12 normal working days within a period of four consecutive weeks (rest day, public holidays, sick, maternity and annual leave not to be taken into account); and b) he is not paid for that period. The quantum of lay-off benefits is as follows: a. b. c. One year but less than two years' service - 10 days' wages per years Two years or more but less than five years - 15 days' wages per years Five or more years' service - 20 days' wages per year.

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Pro-rata payments for an incomplete year will be offered, calculated to the nearest month. Any termination/lay-off benefits must be paid not later than seven days from the date the contract of service terminated, or the date on which the period of four consecutive weeks has been expired (in the case of lay-off). A written statement should be given to the employee, stating the amount and the manner the benefit have been calculated. The benefits due to a deceased employee shall be deposited with the Director-General of Labour who will administer the same. 3.2.5 Redundancy and Retrenchment In circumstances where redundancy is likely an employer should, in consultation with his employees' representatives or their trade union, as appropriate, and in consultation with the Ministry of Human Resources, take positive steps to minimise reductions of workforce by the adoption of appropriate measures such as: limitation on recruitment; restriction of overtime work; restriction of work on weekly day of rest; reduction in number of shifts or days worked a week; reduction in the number of hours of work; re-training and/ or transfer to other department/work. The company must approach the Industrial Court with concrete proof of redundancy and retrenchment, should there be any disagreement and dispute. The ultimate responsibility for deciding on the size of the workforce must rest with the employer, but, before any decision on reduction is taken, there should be consultation with the workers or their trade union representatives on the reduction. Data on retrenchment and awards relating to dismissal are shown in Tables 3.1, 3.2 and 3.3 below. 3.2.6 Discrimination According to the section 2 of the EA, the terms employee or workman refers to any person who enters into a contract of service, including both males and females. Both have the same rights under the Act and no discrimination between male and female employees lawful. Any person engaged under a contract of service is entitled the same rights and responsibilities under the Act that relates to them. 3.2.7 Wage structure The EA specifies the basic terms that constitute a base or the very minimum wage that every employer must provide. Employer and employee may negotiate on and be bound by terms or conditions not provided for by the Act, and if these terms are more favourable than the provisions of the Act, these must be included in the collective agreement or award in lieu. Basic wages and all other payment in cash is payable to the employee in respect of his contract of service, but does not include value of accommodations, or the supply of food, fuel, light, water, medical treatment amenity, or service, employer's contribution to pension

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fund, provident fund, superannuation scheme, retrenchment scheme, thrift scheme, or any other fund/scheme for the employee's welfare. Table 3.1: Retrenchments in Malaysia, 1998 ­ 2002

Year Month January February March April May June July August September October November December Total 1998 1,774 7,395 11,649 6,326 6,366 6,001 12,335 7,125 6,778 7,102 5,458 5,556 83,865 1999 3,237 2,855 5,362 4,311 3,547 2,446 2,278 1,328 4,084 2,808 1,518 3,583 37,357 2000 4,014 2,360 1,977 2,396 826 1,107 1,937 1,151 2,521 2,467 1,879 2,601 25,236 2001 1,086 1,411 2,982 4,450 3,049 3,122 3,947 3,962 5,828 2,786 3,318 2,175 38,116 2002 3,259 2,864 3,960 1,441 2,236 902 1,390 1,893 2,266


Notes: 1. Employers are only required to report to the Labour Department effective 1 February 1998 2. The total for year 2002 covers retrenchment from January to September 2002. Figure for the month of September is preliminary Sources: Labour Department Peninsular Malaysia, Labour Department Sabah and Labour Department Sarawak, Ministry of Human Resources, Malaysia

Table 3.2: Reasons for Retrenchment in Malaysia, January­October 2002

Reason Closure Sale of Company Relocation to Foreign Country Relocated Locally High Production Cost / Reduction in Production Cost Reduction in Demand of Product Shifting from Manual to Automation Recruitment Difficulties Unmarketable Sub-Standard Product Company Reorganisation Others Total No. of Employer 100 35 10 29 40 342 3 0 0 138 330 1,027 No. of Workers 3,913 983 317 451 1,018 8,934 12 0 0 1,661 4,424 21,713

Source: Labour Department Peninsular Malaysia, Labour Department Sabah and Labour Department Sarawak, Ministry of Human Resources, Malaysia

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Table 3.3: Analysis of Awards Relating to Dismissal Cases, 1995­2001

Reasons for Termination Constructive Misconduct Retrenchment Sub-total Others Total 1995 26 410 4 440 109 549 1996 19 366 50 435 162 597 1997 34 407 14 455 156 611 1998 58 403 17 478 186 664 1999 36 445 20 501 218 719 2000 20 479 21 520 520 2001 26 726 41 793 793

Source: Ministry of Human Resources online at accessed 5 November 2002.

The wage period can be any length but not longer than one month, and if not specified it will be one month. The payment of wages should not be no later than the 7th day after the last day of the wage period, but the Director-General of Labour may extend the time for a certain period of days if he is satisfied that payment within that time is not reasonably practically [EA, s.19]. An employer cannot impose any condition on the way the wage is to be spent and cannot sell intoxicating liquor as part of the contract, though the employer can provide additional benefits apart from the wage, except with approval that employers cannot operate shops to sell goods to employee in the workplaces [EA, s.30]. The EA also prohibits the advance of wages except to enable the employee to purchase a house, land, livestock, motorcar, motorcycle or bicycle or for any other purpose approved in writing by the Director-General of Labour, or specified by the Ministry of Human Resources in the Gazette [EA, s.22]. If the advance of wages is less than one month's wage, an employer cannot make any deduction or receive any payment from an employee. Deductions from wages can only be lawful under the following conditions: a) with the employee's written request for pay thrift to trade union or co-op or loan society on account of subscriptions, entrance fees, instalments on loans, interest or their dues4; b) deductions due to mistakes by employers; c) indemnity; d) recovery of advance payments; e) authorised by written law; f) Director-General's permission on superannuation scheme, provident fund, employee's welfare scheme, thrift scheme, insurance scheme, to third party on behalf of the employee, payment of interest on advance payment, payment to employers in respect of goods or shares of the employer's business, rent of accommodation and the cost of services, food and meals provided by employers. The EA does not mention the types of allowances, nor ex-gratia payment and bonus. The Industrial Court has dealt with the following types: overtime allowance, shift allowances, attendance allowances, acting allowance, call

The co-operative society must registered under the Co-operative Societies Act 1948, and the deduction / payment shall not exceed 50% of the employee's wage (this does not limited to indemnity payable), and with written permission, not more than 25% of their wage, for repaying housing loans. Southeast Asia Research Centre Working Paper Series, No. 40, 2003 23


allowance, hazard allowance, outstation allowance, transfer allowance, training allowance, housing allowance, food allowance, laundry allowance, cost of living allowance and special relief allowance. 3.2.8 Working Hours The EA specifies `Hours of work' as the time during which an employee is at the disposal of the employer and is not free to dispose of his own time and movements. `Normal hours of work' means the hours of work as agreed between an employer and an employee in the contract of service to be the usual hours of work per day. The normal hours of work should not exceed the limits specified in s. 60A(1). An employee shall not be normally required under his contract of service to work more than 5 consecutive hours without a period of rest of not less than 30 minutes; work for more than 8 hours per day and 48 hours per week. However, the Act also provides in certain circumstances that restrictions can be removed. Employers can require employees work longer hours in the case of shift work, work that must to be carried on continuously and which requires continual attendance, in cases of accidents at an employee's place of work, and work that is essential to the life of the community, defence or security of Malaysia. The Director-General of Labour can make enquires to determine whether such a request is justifiable. 3.2.9 Overtime Overtime means the number of hours of work carried out in excess of the normal hours of work. Overtime work can be performed at any time before or after the normal hours of work. The maximum number of overtime hours of work permitted in a day depends on the total number of hours of work performed as the normal hours of work on that day. And employee shall be paid at a rate not less than one and a half times the hourly rate of pay [EA, s.60A(3)(a)]. An employee shall not work overtime for more than 104 hours in any one month as provided in the Employment (Limitation of overtime work) Regulations 1980. 3.2.10 Holidays Rest Days As defined in the EA, a rest day of one whole day in each week to be determined by the employer must be provided in which the employee cannot be compelled to work, except in shift work and in the circumstances outlined in EA [s.60A(a) to (f)]. The employee cannot work on a voluntary basis on a rest day. If he works on a rest day, normally the employee can receive twice the normal remuneration. The entitlement to rest days does not apply during the period a worker is on maternity leave, sick leave or temporarily disabled under the Workmen's Compensation Act or the Employees Social Security Act [EA, s.59(1)].

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24 Public Holidays The employee is entitled to paid holidays at his ordinary rate of pay on 10 gazetted public holidays, four of which should be: the National Day; the Birthday of the Yang di-Pertuan Agong; the Birthday of the Ruler/Government of the state or Federal Territory Day; and Workers Day [EA, s.60(D)]. Employees can choose to work on paid holidays, in which case the employer must pay, in addition to holiday pay, two-days wages at the ordinary rate for monthly, weekly, and daily hourly rate; or twice the ordinary piece-work rate. For overtime work during paid holidays, an employee should receive three times the hourly rate of pay [EA, s.60(D)(3)]. Annual Leave The EA provides that employees have 8 days annual leave for every 12 months of continuous service with the same employer. The number will be increased to 12 days from 2 to 5 years of services and 16 days after 5 years or more [EA, s.60(E)]. The employee must take the leave not later than 12 months after the end of every 12 months of continuous services or they will be forfeited, except under special agreement with the employer. Annual leave can be replaced by payment from employers before the expiration of a contract. Sick Leave An employee's entitlement with respect of sick leave with pay is as follows: where hospitalisation is not necessary, an employee with less than two years service is entitled to 14 days, but this may increase to 22 days after five years of working for the same employer. An employee is entitled to 60 days of sick leave if hospitalisation is necessary [EA, s.60(F)].. Maternity Leave and Benefits Maternity benefits are regulated by the EA, which is for a period of not less than 60 consecutive days in respect to each confinement, and which can commence anytime between the 30 days preceding the employee's confinement and the day following the confinement. However, employees required to take leave from 14 days preceding confinement can do so only under medical advice. Maternity allowances will be paid at the ordinary rate of pay, or at the rate prescribed by the Minister of Human Resources, whichever is the greater. However, no allowance will be payable if she has 5 or more surviving natural children irrespective of age, and 7 days of any maternity allowances is forfeited if the employee refuses to attend free medical treatment provided by her employer if this is certified by a doctor. To be eligible, the employee must work for 4 months or 90 days in the preceding 9 months for the same employer. The employee also needs to inform the employer, either orally or in writing, 60 days before her confinement to get the allowances [EA, ss.37 & 40].

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25 Trade Union Leave As provided in the IRA, officers of recognized trade unions may apply to their employer for leave for official duties, and if the period applied is reasonably required for the purposes stated, the employer shall grant the application for leave. However, there will be no pay if the officer is not to represent the members of his trade union in relation to industrial matters concerning his employer. The employer cannot dismiss, injure, alter his position, or threaten to do so, for carrying out this duty and on leave [IRA, ss.6 & 59]. 3.3 Special Conditions

3.3.1 Children and Young Persons There are variations for hiring children in different parts of Malaysia. In Sabah, children under the age of 14 are prohibited to work in construction, manufacturing, transportation, mining sector or other places such as restaurants, coffee shops, bars, hotels or offices. In Sarawak, those aged under 16 cannot be employed in underground work at any time. In Peninsular Malaysia, under the Children and Young Persons (Employment) Act 1966, children under the age of 14 years are only allow to work between 7 am to 8 pm and for 3 consecutive hours without a period of rest which shall be at least 30 minutes. Moreover, they are not allowed to work for more than 6 hours a day. If the children are attending school, the total working and schooling hours shall not be more than 7 hours a day. Children can only be engaged in light activities in family business or other jobs authorized by the government. Those between the age of 14 and 16 can only work between 7 am and 8 pm. They are not allowed to work for 4 consecutive hours without a period of rest which shall be at least 30 minutes, and work for more than 7 hours. If the person is attending school, the total working and schooling hours shall not be more than 8 hours a day and children are not allowed to commence work with less than 12 rest hours a day. As required by law, children can only engage in light activities which are reasonably believed to be in accordance to their abilities, be a domestic servant or maid, work in an appropriate industry, and in any capacity in any vessel under the guardians of their parents. 3.3.2 Women The types of work that women are prohibited from doing under the EA are listed in ss. 34 to 36. Female employees are not to be employed in any underground, industrial or agriculture settings (unless exempted by the Director-General for Labour) between 10 pm to 5 am, nor commence work without having had a rest after working for 11 consecutive hours.

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The Employees' Social Security Act has provided the protection and benefit for disablement. Temporary disablement means a condition resulting from an employment injury, which requires medical treatment and causes an employee temporarily incapable of doing the work was doing. Temporary disablement benefit will be paid when an employee is injured and is certified as unfit to work for four days or more, the employee shall be entitled to a temporary disablement benefit paid to him directly by the local SOCSO office. But if medical leave is limited to three days or less, the worker receives medical benefits only. Currently, the daily rate of temporary disablement benefit payment is 80 percent of an employee's daily wage, subject to a minimum of RM 9. Permanent disablement includes disablement of a permanent nature, which reduces the earning capacity of an employee, in respect of employment that he was able to undertake. Disablement of a permanent nature means it prevents an employee from undertaking all work he was capable performing. Every injury specified in Part I of the Second Schedule, or from any combination of injuries in Part II of the Act where the aggregate percentage of the loss of earning capacity specified is 100 percent or more is deemed to result in permanent total disablement. 3.3.4 Foreign workers As stated in the EA, a foreign worker generally is defined as an employee who is a non-citizen, but under this part it excludes a foreign employee who is a permanent resident of Malaysia. Duty has been imposed on employers who employ foreign workers. Employers shall furnish all relevant particulars of foreign workers to the Director-General within 14 days of employment; and employers shall furnish returns of particulars of foreign workers in such a manner and at such interval as directed by the Director-General. If an employer needs to reduce his workforce due to redundancy, he shall not terminate the service of local employees unless he has first terminated the service of all foreign employees in a capacity similar to that of the local employee. 4 4.1 COLLECTIVE EMPLOYMENT PROVISIONS Trade Union Act 1959 and Industrial Relations Act 1967

The Trade Union Act (TUA) regulates the trade unions and union federations. The original Trade Union Ordinance came into force in 1959 which, after consultation between the government, employers and trade unions, to replace the Trade Unions Enactment 1940. The Ordinance was extended to Sabah and Sarawak in 1965, revised and renamed to Trade Unions Act in 1981. The Act defines trade unions and requires their registration, governs composition and membership, and describes rights and responsibilities.

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Part II of the Industrial Relations Act (IRA) recognises the right for employers and employees to form, join, and participate in trade unions. It also lay down the corresponding responsibilities, and the procedures for tackling claims for `unfair labour practice'. Part II of IRA also regulates employee unions for collective bargaining, and employers' recognition of employee unions. Union and legal status are discussed in the following sub-elements, including union formation, recognition of a trade union, membership and coverage, role and function, collective agreement and employers organizations. The TUA defines a trade union as `any association or combination of workmen or employers ... whose place of work is in West Malaysia, Sabah or Sarawak', which a) within any particular trade, occupation or industry or similar trade, occupations or industries and b) whether temporary or permanent and c) having among its objects one or more of the following: i. The regulation of relations between workmen and employers and improving the working conditions or enhancing their economic and social status or increasing productivity. ii. The representation of either workers or employers in a trade dispute iii. The conducting of ... trade disputes iv. The organization or financing of strikes or lockouts or the provision of pay or other benefits during a strike or lockout' [TUA, s.2]. 4.2 Union Formation

In 2001, some 780,000 Malaysian workers belonged to a union. While this is not a large proportion of the workforce (roughly 10 percent), the influence of unions goes beyond their membership. Workers in most sectors of the economy have been organised into unions. Organisations have not been confined to production workers but include those in supervisory and management level jobs, white-collar workers and many executives. There are three main reasons that explain why workers form and join trade unions. They are to improve their economic situations; to ensure their rights are protected; and for social reasons. Before a brief description of the contemporary trade union movement today is provided, it should be noted that when analysing figures provided by the Ministry of Labour on trade unions, it is important to determine whether the statistics include both employers' associations and workers' unions or only the latter. Registration of a union is necessary under TUA. This means that every trade union must apply for registration within a period of one month from the date it is established. A minimum of seven persons must sign a prescribed application form accompanied by the required fee and the printed rules of the union duly signed by the seven and a statement of the following particulars for registration namely:

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a. b. c.

The names, occupations and address of the members making the application; The name of the trade union and the address of its head office; and The titles, names, ages, addresses and occupations of the officers of the trade union, and such other information regarding such officers as the Director-General may in any particular case require to be furnished.

The Director-General of Trade Unions may refuse to register a trade union in respect of a particular establishment, trades, occupation or industry if he is satisfied that there is in existence a trade union representing the workmen in that particular establishment or trade, occupation or industry and it is not in the interest of the workmen concerned that there be another trade union in respect thereof. However, by law, there is no limit on the number of trade unions within one trade, occupation or industry, and this contributes to the multiplicity of trade unions and to the fragmentation of the trade union movement. The DirectorGeneral can also reject the application if he believes the union may be used for unlawful purposes. If the application is accepted, the Director-General shall issue to the trade union a certificate of registration in the prescribed form and that certificate, unless proved to have been cancelled or withdrawn, shall be conclusive evidence for all purposes that the trade union has been duly registered under this Act [TUA, ss.12, 13 & 15]. If the applicant wants to appeal against the Director-General's decision, he can appeal to Ministry of Human Resources and whose decision will be final and conclusive. The TUA prohibits an organization falling within the definition of a `trade union' to be registered as `society' or `company', unless such organisation is established only for `the regulation of relations between employers and employers or between employees and employees' to be registered as a society [s.67]. Cancellation of registration may occur based on the following: registration was obtained by mistake or fraud; any one of the union's objects/rules is unlawful; the union is used for unlawful or political purposes; and the union has contravened any provision of the TUA or any regulations made thereunder, or of any of its rules. The Minister of Human Resources can suspend a trade union with concurrence of the Home Minister for a period of up to six months, if they are of the opinion that the union is being used for unlawful purposes, i.e., against the interests of the security or public order in Malaysia. Such order is final and cannot be appealed in any court. The total number of trade unions by sector is shown in Table 4.3. It reveals that the total number of trade unions in Malaysia, up to May 2002, is 597. Total membership in trade unions stands at 811,051 persons. Trade union and membership are mainly drawn from the private sector.

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Table 4.1: Number of Employees' Trade Unions and Membership Registered with the Department of Trade Union Affairs, 1965-2001

Year 1965 1970 1975 1980 1985 1995 1996 1997 1998 1999 2000 2001 Number of Unions 286 237 252 369 369 504 516 526 532 537 563 578 Total 706,253 728,246 734,685 739,636 725,322 734,037 784,881

Sources: Aminudin (1990); Department of Trade Union Affairs

Table 4.2: Number of Employee Trade Unions and Membership by Gender 1992 ­ 2001

Year 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Number of Unions 479 496 501 504 516 526 532 537 563 578 Membership Total 680,007 693,581 699,373 706,253 728,246 734,685 739,636 725,322 734,037 784,881 Male 463,697 (68.2%) 450,828 (65.0%) 450,047 (64.3%) 450,307 (63.8%) 465,098 (63.9%) 466,549 (63.5) 468,143(63.3) 461,938 (63.7) 472,065 (60.1) Female 216310(31.8) 242,753 (35.0%) 249,326 (35.7%) 255,946 (36.2%) 263,148 (36.1%) 268,136 (36.5) 271,493 (36.7) 263,384 (36.4) 312,816 (39.9)

Source: Department of Trade Union Affairs, online at accessed 5 November 2002.

It is important to note that the strength and power of the trade union movement cannot be solely judged by the number of registered unions. The size of their membership and financial status are also very significant factors. As unions are basically dependent on members' subscription fees to finance their activities, the size of membership is the key to union strength, while their level of activity trying to improve the financial status of its members also counts. Those who are active will find it easier to attract new recruits. The ten biggest unions in 1990 by membership are shown in Table 4.4.

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Table 4.3: Total Number of Trade Union by Sectors, 2001 and January-May 2002

Number No. Indicator 1980 173 140 78 391 302877 203628 72761 579266 392 290032 220693 95412 606137 1985 181 131 80 401 292134 217305 97055 606494 1986 189 132 80 2001 364 131 83 14 592 432,867 284,008 68,006 550 785,431 Jan - May 2002 372 130 81 14 597 447,902 294,839 67,761 549 811,051

Trade Unions (a) Private 1 (b) Government (c) Statutory Bodies / Local Authorities (d) Employer (Total) Trade Union Membership (a) Private (b) Government 2 (c) Statutory Bodies / Local Authorities (d) Employer (Total)

Source: Aminudin (1990), Ministry of Human Resources


Recognition of Trade Unions

Claims for recognition should, as far as possible, be settled voluntarily between the parties. Where there is doubt whether the union concerned is the proper union under the law to represent the employees or about its representative position the services of the Ministry of Human Resources should be sought to resolve the matter without delay. Where a trade union has not secured recognition from the employer for negotiating rights, the employer should nevertheless be prepared to consider receiving representations from the union on behalf of its members about grievances or other matters, which can be settled on an individual basis. Where a trade union has secured recognition the employer and the union should establish effective procedures for negotiation. To enhance the smooth and efficient functioning of such procedures the employer should make available to the union, where possible, reasonable facilities to enable the union to keep in touch with its members and to represent them effectively. Senior management personnel should also maintain regular contacts with officials of the trade union. Similarly, the principal officials of the trade union should also keep in touch with members of the senior management of the undertaking or establishment. Contact should not be left until trouble occurs. Management should ensure that there is a close rapport and a continuing dialogue with the trade union and its officials. Meanwhile, trade union claims for recognition have increased over the years. Table 4.5 reveals that the number of claim by economic sector has increased from 108 in 1998 to 184 cases in 2000. All sectors of the economy have increased in terms of numbers, particularly in the manufacturing sector from 33 cases in 1998 to 105 cases in 2000.

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Table 4.4: Ten Biggest Unions and their Membership, 1990

Rank 1 2 3 4 5 6 7 8 9 10 Name of Unions National Union of Plantation Workers Kesatuan Perkhidmatan Perguruan Kebangsaan (National Union of Teacher Services Peninsular Malaysia) Kesatuan Kebangsaan Pekerja-Pekerja Penguasa-Penguasa Tempatan (National Union of Local Officer Workers) (Peninsular Malaysia) Kesatuan Kebangsaan Pekerja-Pekerja Telekom (National Union of Telekom Workers (Peninsular Malaysia) National Union of Commercial Workers Kesatuan Guru-Guru Malayu Malaysia Barat (Union of Malay Teachers of West Malaysia) National Union of Bank Employees Kesatuan Pekerja-Pekerja Pengangkutan Semenanjung Malaysia (Union of Transport Workers of Peninsular Malaysia National Electricity Board Employees Union Kesatuan Kebangsaan Guru-Guru Lepasan Maktab Semenanjung Malaysia (National Union of Former College Teachers of Peninsular Malaysia Membership 100,052 28,546 18,025 15,531 14,571 14,217 12,922 10,884 9,884 8,537

Source: Aminudin (1990)

Table 4.5: Trade Unions Claim for Recognition by Sector, 1998-2000

Sector Agriculture, Forestry, Livestock and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade and Restaurants and Hotels Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Community, Social and Personal Services Others Total No of Cases 1999 2 0 83 4 4 17 22 14 0 0 146

1998 7 1 33 1 2 9 16 27 12 0 108

2000 9 0 105 3 2 9 18 27 11 0 184

Source: Industrial Relations Department online at accessed 4 November 2002

The process for claiming recognition of a trade union is shown in Figure 4.1. An employee trade union has to be recognised by the employer before it can negotiate for a collective agreement. To obtain recognition, the trade union has to serve a claim for recognition upon the employer in a prescribed form (Form A - Industrial Relations Regulations, 1980). The employer is required to respond within 21 days. If the employer refuses to grant voluntary recognition, the union

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can lodge a complaint to the Director-General of Industrial Relations. The duty of the department is to process the claim in accordance with the laws, either upon a complaint received from the union or upon an application made by the employer. This process includes requesting the Director-General of Trade Unions to ascertain the eligibility of the union to represent the workers concerned and/or conduct a membership check. The employer would be advised to accord recognition to the union if the result reveals that the union is eligible and/or has secured a majority in its representation, failing which the Minister of Human Resources will order recognition be granted. When a claim is pending, the employers cannot declare a lockout against the employees or discharge them (except on disciplinary grounds) and similarly, employees cannot go on strike before a decision is made. If recognition is granted, no other union can claim to represent the same employees in a period of 3 years unless the union ceases to exist. If the application is rejected by the Director-General of Trade Unions or the Minister, it cannot make another claim again within 6 months. These powers enjoyed by the Director-General of Trade Unions and Minister formerly belonged to the Industrial Court but were allocated to them following amendments to the IRA in 1971. Negotiation of collective agreements should be as simple as possible and, with this in mind, the employer and the union should establish agreed upon procedures, which may or may not be formal. It is desirable that respective employers' associations and trade unions negotiate certain matters at the industry level, including: those conditions of employment which can be effectively applied throughout the industry uniformly; general guidelines for the negotiation of matters which cannot be decided satisfactorily at industry level; a procedure for settling disputes, either for the industry as a whole or as a model for adoption at the level of the undertaking or establishment. 4.4 Membership Coverage

As specified in TUA [s.26], the following categories of people cannot join or be accepted as members of trade unions: a. b. c. d. Person below age of 16; Student of an educational institution established by or under a written law, unless he is bona fide employed as an employee and is over 18 years of age; Any person not engaged or employed in the establishment or trade or occupation or industry in respect of which the trade union is registered; and Any public officer (a person in the permanent or temporary employment of any government at federal, state or local levels in Malaysia.

However, the Yang di-Pertuan Agong may exempt any public officers from such prohibition, except if he is a member of the armed force, police force, prison

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service, in confidential or security capacity; or holding managerial and professional posts (unless excluded by Chief Secretary to the federal government). An employee of the government, statutory authority, or financially autonomous local authority can only join or be accepted as a member by a trade union whose membership is confined exclusively to employees of that particular department or authority. The power of interpretation over who is engaged in a confidential or security-related capacity is decided by the Chief Secretary of the federal government. The Minister responsible for public services may, from time to time, by notification in the Gazette, amend the definition of `Managerial and Professional Group' [TUA, s.27]. Therefore, the unions may represent the employers or employees in respective establishments, trades, occupations or industries. In the public sector, there are unions representing the managerial, executive, and confidential or security (MECS) and non-MECS employees. Trade union members below 18 years of age cannot vote on matters relating to strikes or lock-outs, the imposition of a levy, dissolution of trade union/ federation, and amendments of rules which will result in increasing members' liability to contribute decreasing benefits to which members are entitled. 4.5.1 Role and Function of Union Rights of workmen and employers under the IRA include the following: workmen have a right to form, assist in the formation or join a trade union and participate in its lawful activities. The union can represent its members in disputes as long as they are employees. Employers also have similar rights. The trade union of workmen and trade union of employers shall not interfere with the internal affair of each other; no employer shall interfere, restrain or coerce in the exercise of such right (this include threats, dismissal, discrimination, or refusal to employ or promote etc). However, in the case `Kesatuan Perkerja-perkerja Perusahaan Alat-alat Pengangkutan dan Sekutu dan Kilang Pembinaan Kereta-kereta Sdn Bhd' (award 54 of 1980), the Industrial Court issued a timely warning to employee union officers (and their members) as follows:

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Figure 4.1: Claims for Recognition of Trade Unions


Sends claim in Form A


Recognition Not Accorded (Informs Union the grounds) Section 9 (3)(b)

Employer (within 21 days)

Recognition Accorded Section 9(3)(a)

UNION (Voluntary Recognition)

Employer applies in writing to ascertain union membership and inform union. S(9 (3)( c)

Union report in writing Section 9(4)(b)


Refer issue of union eligibility (if arises) Section 9(4B)(b) Decision EMPLOYER Union (Recognition not accorded) Not eligible Result (Eligibility issue) Requests membership check Regulations 4(1) ( c) Eligible Outcome Conveys result of membership check to employer/union Union (Recognition not accorded)

Minister to order nonrecognition)


No Majority



UNION (Recognition Accorded)

Majority employer refuse to accord recognition


Notify the Minister Section 9 (4C)

HON.MINISTER Minister orders recognition Section 9 (5)



Source: Industrial Relations Department Online: 4 November 2002

Employer Deemed Accorded

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An employee who holds office in a trade union must not lose sight of the fact that he is an employee first and a union official second. He cannot take advantage of his position in the union and forget that he is an employee. He must realise that he is first and foremost an employee, and owes a duty to his employer to comply with any lawful direction, and to remain subject to the system of conduct governing the employer-employee relationship that must be observed in order to promote orderly conduct within the undertaking. This reflects the underlying industrial relations and the principle in handling possible disputes between employer and employee. As mentioned in the National Labour Policy prepared by the Ministry of Human Resources in 1991, the primary objective is to create a harmonious industrial relations climate, in which workers are treated as members of the organization. They must take pride in their work, participate actively in productivity improvement schemes, and ensure the well-being of the organisation is preserved. Trade unions should promote positive work and productivity attitudes among workers. 4.6 Collective Agreements

One of the major functions of trade unions is collective bargaining, i.e., negotiating with a view to the conclusion of a collective agreement. The prerequisite for the commencement of collective bargaining is the trade union of workmen must have been accorded recognition by an employer (or a trade union of employers before collective bargaining can commence). Upon recognition, the trade union of workmen may invite the employer to commence negotiation; or the employer (or the trade union of employers) may invite the trade union of workmen to commence negotiation. Collective agreements shall set out the terms of the agreement, and where appropriate, name the parties; specify the period it will be in force (not less than three years); prescribe the procedure for its modification and termination; and prescribe the procedure for the adjustment for any question relating to the implementation or interpretation of the agreement. Notwithstanding the above, no trade union of workmen may include in its proposal for a collective agreement a proposal in relation to any of the following matters: the promotion of employees; the transfer of employees 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; the termination of the services of a workman by reason of redundancy or by reason of the reorganisation of employer's profession, business, trade or work or the criteria for such termination; the dismissal and reinstatement of a workman; the assignment or allocation of duties or specific task to a workman that are consistent or compatible with the terms of his employment.

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Within one month from the date of signing of the agreement, the collective agreement should be jointly deposited with the Industrial Court for cognizance, and it becomes an award of the court. Any term or condition of employment, contained in a collective agreement, which is less favourable than or in contravention of the provisions of any written law applicable to workmen covered by the said collective agreement, shall be void and of no effect to that extent and provisions of such written law shall be substitute therefore. The restrictions on collective agreements in certain new undertakings include no collective agreement to which this section applies shall contain provisions with regard to terms and conditions of service that are more favourable to workmen than those contained in Part XII of the EA, unless the provisions are approved by the Minister after considering any representations in that regard made by an employer and a trade union representing his workmen, and provided that the Minister may amend or modify the provisions before approving them. This applies to collective agreements made between an employer and a trade union representing his workmen in respect of, or in relation to: 1. A pioneer company, which has been granted pioneer status under section 6 of the Promotion of Investment Act 1986. 2. Any other industry in respect of which the Minister may by notification in the Gazette declare that this section shall be applied. A collective agreement which has been taken cognizance of by the Industrial Court shall be deemed to be an award and shall be binding on the parties to the agreement including in any case where a party is a trade union of employers, all members of the trade union to whom the agreement relates and their successor, assignees and transferees; and all workmen who are employed or subsequently employed in the undertaking or part of the undertaking to which the agreement relates. The collective agreement shall be an implied term of the contract between the workmen and employers bound by the agreement that the rates of wages to be paid and the conditions of employment to be observed under the contract shall be in accordance with the agreement unless varied by a subsequent agreement or a decision of the court. Table 4.7 reveals the collective agreements by sectors between union and employers. It shows that the total number has increased from 284 in 1998 to 324 in 2000. However, the total number of workers covered has decreased from 142,371 in 1998 to 66,150 in 2000. In general, the manufacturing sector recorded the highest with more than half of the total number of collective agreement cases and workers covered during the same period. Meanwhile, collective agreements deposited and given cognizance by the court is shown in Table 4.8. We can see that from 1995 to 2001, collective agreement given cognizance totalled to 324 and 373 cases respectively in 200 and 2001 as compared to the collective agreements deposited totalled 377 and 342 respectively. The number of agreements withdrawn is almost negligible; while collective agreements carried forward pending settlement accounted for 20 in

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2000 and increased to 73 in 2001. As indicated in Table 4.9, collective agreements enforced by the court have increased from 1861 cases to 2071 in 1995 and 2001 respectively. This has resulted in an increase in the number of workers covered from 722,830 to 827,759 persons. Table 4.6: Number of Collective Agreement Workers Involved and Percentage Wage Increase by Sector, 1992-1995

1992 1993 1994 1995 1996 No Wage Wage Wage No Wage Wage No. of No of No. of No of No. of No. of No of No. of of Inc. Inc. Inc. of Inc. Inc. Workers CA Workers CA Workers Workers CA Workers CA (%) (%) (%) CA (%) (%) 12 4 191 46 6,515 1,784 51,042 3,404 8 7 11 8 15 3 199 44 27,916 2,439 54,940 6,727 5 5 11 10 15 196 53 1,481 53,468 162 20,452 10,080 10 9 11 14 216 1 95 91,863 58,656 1,237 15,116 15 28 10 12 32 6 210 9 42 12,990 1,342 47,674 29,713 4,866 15 9 11 5 13

Sector Agriculture,/ Estate Mining and Quarrying Manufacturing Construction Electricity, Gas, Water Commerce Transport, Storage and Communication Service Others Total

40 34 7 334

14,277 32,177 614 109,813

8 10 6

31 39 1 332

3,633 10,001 2 105,658

8 9 5

31 46 6 348

3,093 214,77 25,51 112,764

15 9 9

35 38 5

32,399 8,458 232

12 11 7

55 38 6 398

9,918 6,364 466 113,333

10 9 9

404 207,961

Note: 1. Wage Increase is based upon companies that respond 2. CA ­ Collective Agreement Source: Industrial Relations Department, online at, accessed 5 November 2002.

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Table 4.7: Collective Agreements by Sector, 1998 ­ 2000


Agriculture, Foresty, Livestock and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade and Restaurants and Hotels Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Community, Social and Personal Services Others Total

No of Cases 1998 1999 2000

11 4 146 0 1 23 37 52 10 0 284 30 6 134 8 2 30 31 17 10 0 268 14 5 215 0 2 35 24 16 13 0 324

Workers Covered 1998

6,665 160 37,175 0 152 4,240 42,389 50,419 1,171





% of Wage Increase 1998 1999 2000

13 11 8 0 10 8 8 14 11 0 12 6 7 5 8 5 10 7 8 0 11 9 8 0 13 8 8 7 8 0 -

524 402 27,596 49,439 31,116 0 88 0 3,452 4,989 10,054 956 3,101 5,772 3,249 1,670

0 0 0 142,371 133,096 66,150

Source: Industrial Relations Department online at accessed 3 November 2002

Table 4.8: Collective Agreement Deposited and Given Cognisance by Court, 1995 - 2001

Subject Total of Collective Agreement Carried Forward Pending Settlement Total of Collective Agreement Deposited Total of Collective Agreement Given Cognizance Total of Collective Agreement Withdrawn 1995 76 425 404 0 1996 97 352 398 1 1997 47 400 412 0 1998 32 274 284 0 1999 22 267 268 1 2000 20 377 324 0 2001 73 342 373 0

Source: Industrial Court, online at accessed 4 November 2002

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Table 4.9: Total of Collective Agreement Enforced by Court, 1995 ­ 2001

Year 1995 1996 1997 1998 1999 2000 2001 Total of Collective Agreement 1861 1927 1956 1980 2005 2033 2071 Total of Workers Covered 722,830 732,830 786,622 797,371 802,546 810,408 827,759 Source: Industrial Court, online at accessed 4 November 2002

4.6.1 Trade Union Federation 4.6.2 Employer Organisations Workers have the right to join trade unions and so do employers. Employers have equal right to form unions, which are mostly known as associations. Employers' unions are a response to the large and powerful national trade unions. The main objectives of the unions are to promote and protect the interest of the members to negotiate and deal with employee trade unions, and to represent their members in any trade dispute between an individual member and the employees' union. The rules on forming and joining a trade union are the same for both unions of employees as well as employers. Any group of employers wishing to form a union must apply to the Director-General of Trade Unions, and the members must be drawn from the same trade industry or occupation. In 1986, there were 19 employers' unions, 13 of which were in Peninsular Malaysia. Of the 13, only seven were national in that they covered the whole of Peninsular Malaysia. These are: 1. The Malayan Agriculture Producers' Association (MAPA) - Plantation industry 2. The Malayan Mining Employers Association (MMEA) - Mining Industry 3. Commercial Employers' Association of Peninsular Malaysia-Commercial Industry 4. Malaysian Commercial Bank Association (MCBA) - Banking Industry 5. State of Malaya Insurance Association (SOMIA) - Insurance Industry 6. Motor Vehicle Assemblers Association, West Malaysia (MVAA) - Motor Vehicles Assembling Industry 7. Electrical Industry Employers Association-Electrical Industry 4.6.3 Malaysian Employers' Federation In April 1959, at the Selangor Club, Kuala Lumpur, sixty-six employers representing the entire spectrum of Malayan business met to inaugurate the

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formation of the Federation of Malaya Industrial & Commercial Employers' Consultative Association. The Association was established with 73 founder members and one affiliate member, the Pan Malayan Road Transport Operator' Association. The first Chairman was Mr. R.J.E. Price of the Malayan Tobacco Company. Y.B. Tan Sri Dato' S.O.K. Ubaidulla was elected Vice Chairman and became Chairman in 1963. Subsequently, when the Association changed its name to the Malayan Employer Consultative Association (MECA), Y.B. Tan Sri Dato' Ubaidulla was elected as President until December 1982. In recognition of his long association, and untiring and dedicated service to the Association, he has been made the Honorary Life President. The Malayan Council of Employers' Organisation (MCEO) was formed in May 1962 comprising its three constituent partners (Malayan Employers' Consultative Association (MECA), Malayan Agriculture Producers Association and Malayan Mining Employers Association (MMEA)) Subsequently in December 31, 1977, MCEO was dissolved and MECA was transformed into the new apex employer organizations called the Malaysian Employer Federation (MEF). MEF is the central organisation representing private sector employers in Malaysia and is recognised nationally and internationally. The objectives of the Federation are: a. b. c. d. To promote and safeguard the rights and interests of employers; To provide a forum for consultation and discussion among members on matters of common interest; To seek for the adoption of sound principles and practices of personnel and industrial relations through information , advice , training and other activities; Working towards achieving a harmonious industrial environment where employers, workers and government can work together in order to bring about continued economic development

MEF membership is open to all private sector employers and MEF represent employers at various National Councils and Boards, and participation in these organisations ensure that employers' interests are represented at various important national organizations, including: a. b. c. d. e. f. g. h. Social Security Organisation National Labour Advisory Council Employees Provident Fund National Productivity Corporation National Vocational Training Council National Institute of Occupational Safety and Health National Council for Occupational Safety and Health Wages Councils for the Hotel & Catering Industry, for Shop Assistants & for Cinema Workers

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Regular dialogue with these institutions helps to ensure that the problems and challenges of human resource management are resolved within an environment of industrial harmony. Industrial relations experts of MEF give advice and guidance to members on all aspects of labour laws and industrial relations matters such as clarification on the provisions of the labour laws (i.e., the EA and IRA), disciplinary matters, terms and conditions of employment, retrenchment, recognition of trade union and change of ownership, including how to deal with proposals for collective agreement submitted by the union and how to prepare counter-proposals and assist in negotiating the collective agreements; and representation at Court. MEF also offers quality and professional training courses in the area of industrial relations such as labour laws, discipline and collective bargaining, and occupational safety and health. MEF is registered with the Human Resources Development Council (HRDC) as the training provider. Other than that MEF also provides members with information regarding Human Resources matters through its monthly newsletter. Members are also updated on the latest trends in compensation packages and critical Human Resources issues through regular circulars. 4.7.2 Employee Organisations

In 1992, there were four union federations in Malaysia: These include: Congress of Unions of Employees in the Public and Civil Services (CUEPACS); Congress of Teachers Unions in the Education Services (CTUES); Federation of Textile and Garment Industry Employees Unions (FTGIEU); and Sarawak Wharf Employees Unions Federation (SWEUF). The Malaysian Trades Union Congress (MTUC) and Malaysia Labour Organisation (MLO) are registered under the Societies Act 1966, and are panMalaysian in scope. The MTUC (and CUEPACS) and MLO are recognised as national trade unions by the federal government. However, both organisations are registered under the Societies Act, and therefore they cannot participate in any wage negotiations or assist in any industrial action. MLO, established in 1989, was supported by the government, and sought recognition as an alternative national trade union centre. However, it was dissolved in 1996 due to limited achievement in attracting membership (Sing, 2002: 30-31). 4.6.4 Advisory Council There are several major advisory councils established to provide opinion to the administration. Among them the National Labour Advisory Council is the most important in regard to formulating labour policy, e.g., National Labour Policy. The Council was established in 1986 to provide opinion and advice to the Minister of Human Resources. It comprises appointed members, with one-third from employers (MEF), one-third from the employees (MTUC/MLO), and the rest from the government. It produces the Code of Conduct for Industrial Harmony in the Areas for Co-operation and Agreed Industrial Relations

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Practices. These are not legally enforceable documents, but are moral commitments, which are accorded a semi-legal status to the IRA because the Act declares that the Industrial Court may consider these in its deliberation. Malaysia also has a Wages Council, which was established under s.3 of Wage Council Act 1947. The purpose of this Council is to regulate the minimum remuneration and conditions of employment of certain categories of workers, which at present, include four areas: Wages Regulation (Catering and Hotel) Order 1967 Wages Regulation (Shop Assistants) Order 1970 Wages Regulation (Cinema Workers) Order 1972 Wages Regulation (Penang Stevedores and Cargo Handlers) Order 1967. 5 5.1 CONFLICT, DISPUTE AND SETTLEMENT Individual Disputes and Grievance Procedures

As defined by the IRA, disputes mean those between an employer and any number of staff, which concerns employment or the non-employment or the terms of employment or the conditions of work [s.2]. Effective procedure should exist for a worker to seek redress for his grievance. Such procedure shall be established in consultation with the worker's representatives or trade union, as appropriate. The aim of the procedure should be to settle the grievance as near as possible to the point of origin and should, therefore, operate as follows: a. b. the employee should first discuss the grievance with his immediate superior, accompanied if he so wishes by his union representatives; and if he fails to get satisfaction, he should make use of the agreed appeals procedure

The appeals procedure should be in writing, be made known to each employee, and be as simple and rapid as possible. The procedure should conform with time limits for each stage, set out a procedure for appeal at more than one level wherever practicable, and require a recording of the outcome of each stage of the procedure for reference to the next stage and where possible this should be in the form of an agreed statement in writing. The procedure should also give the worker the right to be represented by his representative trade union official. Ayadurai (1992: Table 5.1) has summarised the means by which industrial disputes in Malaysia are settled.

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Table 5.1: Industrial Dispute Settlement in Malaysia

Method Negotiation Fact finding Conciliation Arbitration Industrial Action Administrative action or Executive action Agencies involved Parties to the dispute Board of inquiry or Committee of Investigation Department of Industrial Relations Industrial Court Parties to the dispute Department of Industrial Relations or Minister of Human Resources Types of disputes Industrial disputes Trade disputes Trade disputes Trade disputes Trade disputes Industrial disputes Purposes Prevention or settlement Prevention or settlement Prevention or settlement Prevention or settlement Settlement Settlement


Strikes and Lockouts

Strikes refer to the cessation of work by a body of workmen acting in combination, or a concerted refusal or a refusal under a common understanding of a number of workmen to continue to work or to accept employment, and includes any act or omission by a body of workmen acting in combination or under a common understanding, which is intended to or does result in any limitation, restriction, reduction or cessation of or dilatoriness in the performance or execution of the whole or any part of the duties connected with their employment. A lock-out refers to the closing of a place of employment; or the suspension of work; or the refusal by an employer to continue to employ any number of workmen employed by him, in furtherance of a trade dispute, done with a view to compelling those workmen to accept terms or conditions of or affecting employment [IRA, s.3]. There are restrictions on strikes and lock-outs in `essential service.' 5 No workmen in any essential service shall go on strike without giving to the employer notice of strikes, within forty-two days before striking; within twentyone days of giving such notice; or before the expiry of the date of strike specified in any such noticed aforesaid. No employer carrying on any essential service shall lock-out any of his workmen without giving him notice of lock-out, within forty-two days before locking outs; within twenty-one days of giving such notice; or before the expiry of then date of lock-out specified in any such notice as aforesaid [IRA, s.43].

Essential services, as defined by the IRA, include many trades and industries, such as the banking service, electricity services, fire services; postal services, prison services; production, refining, storage, supply and distribution of fuel and lubricants; public health services, radio communication; telegraph, telephone and telecommunication services; transport services by land, water or air; water services; any services provided by the Departments of government ­ chemistry, customs and excise, immigration, marine, meteorology, business, services and industries related to the maintenance and functioning of the armed forces and the police force, and the security of Malaysia; industries declared by the Minister by notification in the Gazette as Industries essential to the economy of Malaysia. Southeast Asia Research Centre Working Paper Series, No. 40, 2003 44


There are laws on illegal strikes and lock-outs. A strike or lock-out shall be deemed to be illegal if it is declared or commenced or continued in contravention of section 43 or section 44 of IRA or any of provision of any other written law, or it has other object than the furtherance of a trade dispute: a. b. Between the workmen on strikes and their employer; or Between the employer who declared the lock out and his workmen.

A lock-out declared in consequence of an illegal strikes or lock-out declared in consequence of an illegal lock-out shall not to be deemed to be illegal [IRA, s.45]. Section 44 of IRA also prohibits a strike or a lockout: a. b. c. during the pendency of the proceedings of a Board of Inquiry appointed by the Minister and seven days after the conclusion of such proceedings; or after a trade dispute or matter involving such workman and such employer has been referred to the Industrial Court, and the parties concerned have been notified of such reference; or after the Yang di-Pertuan Agong or state authority, in a case relating to any government or statutory authority service, has withheld consent to the reference of the dispute to the Industrial Court, and the parties have been notified thereof; or in respect of any of the matters covered by a collective agreement taken cognizance of by the Industrial Court or by an award.


The TUA also prohibits strikes or lockouts if the employee or employer union does not obtain members' consent by a valid secret ballot of at least two-thirds of the total number of members who are entitled to vote. Strikes or lockouts are also illegal if this is held before the expiry of 7 days after submitting the ballot result to Director-General of Trade Unions [TUA, s.25]. There are a number of penalties regarding illegal strikes and lock-outs, instigation, and penalty for giving financial aid to illegal strikes and lock-outs [IRA, ss.46-48]. Table 5.3 shows strikes by sector according to cases and number of workers involved in 1998 to 2000. The statistics show that the number of strikes is relatively low. The manufacturing sector comprises the highest number at six and seven times respectively in 1999 and 2000. Other sectors had none, except in the agriculture sector.

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Table 5.2: Incidence of Strikes, 1980-1986

Duration of strikes 1-3 Days 4-7 Days 8-14 days 15 and over Total No. of Strikes 1982 1983 18 6 2 26 15 5 3 1 24

1980 9 7 10 2 28

1981 18 5 1 24

1984 9 7 1 17

1985 11 9 1 1 22

1986 15 6 2 23

Source: Aminuddin (1990)

Table 5.3: Strikes by Sector, 1998 -2000

Sector 1998 Agriculture, Forestry, Livestock and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade and Restaurants and Hotels Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Community, Social and Personal Services Others Total 3 1 4 0 2 0 2 0 0 0 12 No. of Cases 1999 2000 5 0 6 0 0 0 0 0 0 0 11 2 0 7 0 1 0 1 0 0 0 11 Workers Involved 1998 1999 2000 435 37 482 0 700 0 124 0 0 0 1,778 1,283 0 2,169 0 0 0 0 0 0 0 3,452 104 0 2,551 0 64 0 250 0 0 0 2,969

Source: Industrial Relations Department online at accessed 5 November 2002


Collective Dispute Resolution

According to the IRA and its related rules and regulations, a procedure for settling collective dispute should be in writing and agreed between the employer and the trade union concerned, which define the appropriate levels for raising and settling different types of issues; and prescribe time limits within which issues should normally be settled or else taken to the next stage of the procedure. The procedure should incorporate the following: workers' representatives should raise the issue in dispute with employer at the level directly concerned; failing settlement it should be referred to a higher level within the establishment. If still unresolved, the issue will be referred to the employers' association and the trade union concerned and dealt with in accordance with the industry-wide dispute handling procedure agreed between

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them. And if still unresolved, it should be referred to the Ministry of Human Resources for conciliation or arbitration. Where a trade dispute exists or is apprehended, that dispute, if not otherwise resolved, may be reported to the Director-General of Industrial Relations by an employer who is party to the dispute, or a trade union of employers representing him in the dispute, or a trade union of workmen which is a party to the dispute. The Director-General shall consider any dispute reported to him under IRA [s.18(1)] and take such steps as may be necessary or expedient for promoting an expeditious settlement thereof. Where a trade dispute exists or is apprehended, which in his opinion is not likely to be settled by negotiation between the parties, the Director General may refer the dispute for settlement to any appropriate machinery which already exists by virtue of an agreement between or applicable to the parties to the dispute. When Director-General is satisfied that there is no likelihood of the trade dispute being settled, he shall notify the Minister accordingly. The Minister may conciliate in any trade dispute. 6 The Minister may, if that dispute is not otherwise resolved, refer the dispute to the Industrial Court on the joint request in writing to the Minister by the trade union of workmen and the employer or a trade union of employers. The Minister may of his own motion or upon receiving the notification of the Director-General under IRA [s.18(5)] refer any trade dispute to the Court if he is satisfied that it is expedient to do so. If the case of a trade dispute involves Government service or the service of any statutory authority, reference shall not be made except with the consent of the Yang diPertuan Agong or state authority as the case may require. Table 5.4 shows trade disputes by sector from 1998 to 2000. The total number of cases in 2000 is 436, much lower that the 496 in 1999. Most cases of trade disputes were in the manufacturing sector, comprising 206 and 186 cases in 1999 and 2000 respectively. The number of workers involved is 46,414 and 35,847 respectively. Between 1990 and 2000, trade disputes per thousand workers decreased, as did the overall incidence of trade disputes. The number of man-days lost due to industrial action declined from 30,200 in 1990 to 600 in 2000. The government's explanation is that this is due to the improvement of labour conditions, employment and effective efforts at promoting industrial harmony and conciliation (Economic Planning Unit, 2002: 21-23).

Notwithstanding the provision of this part, the Minster may any time, if he considers it necessary or expedient, take such steps as may be necessary to conciliate in any trade dispute. Southeast Asia Research Centre Working Paper Series, No. 40, 2003 47


Table 5.4: Trade Disputes by Sector, 1998-2000

Sector 1998 Agriculture, Forestry, Livestock and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade and Restaurants and Hotels Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Community, Social and Personal Services Others Total 67 11 216 0 2 20 101 14 11 0 442 No. of Cases 1999 2000 73 12 206 3 5 38 133 11 15 0 496 54 6 186 4 7 39 102 19 19 0 436 Workers Involved 1998 1999 2000 8,732 942 49,146 0 42 3,605 25,336 1,427 4,300 0 93,530 7,556 450 46,414 49 163 4,368 26,950 866 3,462 0 90,278 2,696 369 35,847 166 420 6,305 8,143 1,467 2,079 0 57,492

Source: Industrial Relations Department online at accessed 5 November 2002



According to the IRA, intimidation refers to causing in the mind of a person a reasonable apprehension of injury to him or to any members of his family or to any of his dependants, or of violence or damage to any person or property. The Act has defined the concrete behaviour of intimidation as: a. b. c. d. e. uses violence to intimidate another person or any member of his household, or injures his property; persistently follows such other person about from place to place; hides any tools, clothes, or other property owned or used by such other person, or deprives him of or hinders him in the use thereof; watches or besets the house or other place where such other person resides, or works, or carries on business, or happens to be, or the approach to such house or place; or follows such other person with two or more person in a disorderly manner in or through any street or road.

Any person found guilty of an offence shall, on conviction, be liable to imprisonment for a term not exceeding one year, or to a fine not exceeding one thousand ringgit or to both [IRA, s.39]. 5.5 Picketing

Without prejudice under IRA section 39, it shall be unlawful for one or more persons acting on his or their behalf or on behalf of a trade union or of an

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employer in furtherance of a trade dispute to attend at or near any place, provided that it shall not be unlawful for one or more workmen to attend at or near the place where the workmen works and where a trade dispute involving such workman exist only for the purpose of peacefully; obtaining or communicating information; or persuading or inducing any workman to work or abstain from working and subject to such attendance being not in such numbers or otherwise in such manner as to be calculate; to intimidate any person; to obstruct the approach thereto or egress therefrom; or to lead to a breach of the peace [IRA, s.40]. Picketing is commonly the first attempt at industrial action taken by workers. Picketing is often held at lunch-time and before or after working hours. If, however, a strike has been declared, picketing will be held throughout the day by striking workers. In April 1988, it was reported that some 2,000 workers of Syarikat Telekom Malaysia (STM) picketed in front of their headquarters during their lunch break and after office hours to support their demand for payment of a bonus (Star, 26 April 1988). In the same month, some 84,000 workers in statutory bodies picketed at their respective place of work to press for a salary revision. In August of the same year, Malacca textile workers picketed because their management was delaying negotiations related to the company's first collective agreement. Picketing becomes more important as a pressure tactic in a union's attempt to get an employer to give in to the workers demands. Table 5.5 reveals the number of picket cases. Out of 22 picket cases in 2000, half of them occurred in the manufacturing sector. 5.6 Exclusion of Pupils

No pupils as defined in the Education Act 1961 other than a lawful member of a trade union, shall act in contemplation or furtherance of a trade dispute; instigate or incite any other person to take part in or continue or to support by money or otherwise or to do any other act contemplation or furtherance of any strikes or lock-out; or take part in or be a member of any meeting or assembly of more than five persons called for the purpose of instigating or inciting any person to take part in or continue or to support by money or otherwise or to do any other act in contemplation or furtherance of any strike or lock-out. Pupils who have been expelled from a school by the governors or managers thereof in pursuance of a notice given under the IRA section 38 shall not thereafter enter the premise of the school; or become a pupil of any other school without the permission of the Minister of Education. 5.7 Industrial Court

The Industrial Court was established in 1940 under the Industrial Court of Inquiry Rules but it did not function due to Japanese Occupation. During the Emergency period trade union activities were carried out illegally and many union leaders were influenced by communists. In 1948, the Industrial Court Ordinance was introduced to pave the way towards the establishment of a systematic arbitration system. The Industrial Court at that time was a voluntary

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arbitration body that heard disputes on an ad hoc basis. Between 1948 and 1964, only 4 disputes were heard. Table 5.5: Picket by Sector, 1998 ­ 2000

Sector 1998 Agriculture, Forestry, Livestock and Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade and Restaurants and Hotels Transport, Storage and Communication Finance, Insurance, Real Estate and Business Services Community, Social and Personal Services Others Total 0 0 10 0 0 3 0 1 0 0 14 No. of Cases 1999 2000 2 1 12 0 0 3 1 2 0 0 21 0 1 11 0 0 6 0 0 4 0 22 Workers Involved 1998 1999 2000 0 0 2,192 0 0 340 0 90 0 0 2,622 388 50 2,193 0 0 384 19 109 0 0 3,143 0 30 1,255 0 0 611 0 0 735 0 2,631

Source: Industrial Relations Department online at accessed 5 November 2002

The voluntary arbitration system was amended with the introduction of new regulations. In 1967, the IRA was enacted whereby the compulsory arbitration concept was introduced. Any industrial disputes not settled through conciliation would be referred to the Industrial Court for arbitration. The present Industrial Court is instituted under the IRA. The objectives of the Court are to set up principles and guidelines for labour law in the private sector through decisions and awards handed down by the court that will set precedents in the practice of labour law and industrial relations. The Industrial Court has two functions; i.e., to hear and hand down decisions or awards in industrial disputes referred to it by the Minister or directly by the disputed parties; and to register and grant cognizance to the collective agreements that have been deposited by the employer and employee trade unions. It issues decisions or awards arising from industrial disputes speedily and economically and gives cognizance to collective agreements deposited with it, so that such collective agreements are enforceable under the law, thus ensuring that workers enjoy the privileges and benefits provided under such agreements so that a harmonious industrial environment can be created and maintained in line with the national industrialisation and investment policy. Collective agreements involve the second main activity of the Court. The power of the court includes: to order any parties to be joined, substituted or struck off; to summon any parties or person; to record statement of oath or affirmation and

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to direct the production of books, letters, documents as documentary evidence; to hear and make decision in a case even without the submission of the written statement of case or statement of reply, or to hear the case ex-parte after notices or summons have been served on parties in a dispute; to handle proceedings or any part thereof in private; to request for assistance from expert to give expert opinion during proceedings; and to direct and do all such things as are necessary for the expeditious of settlement of a case. The types of cases dealt by the Industrial Court include: a. b. c. d. e. f. dismissal of workman under section 20 of the Industrial Relations Act, which have been referred to the Industrial Court by the Minister; trade disputes between an employer and a trade union of workman, which has been referred to the Court by the Minister; application by any parties bound by any Award or Collective Agreement for the interpretation or variation by the court of terms of the awards or collective agreement; application by any parties bound by any award to refer to the High Court on any question of law; complaints on Non Compliance of any terms of award or collective agreement; cases of victimisation in connection with trade union activities.

The Court comprises of a President or Chairman and two panels, representing employers and employees, which are appointed by the government after consultation with relevant organisations. However, with the consent of both parties, a vacancy or absence of any panel member will be accepted. The President or Chairman should have relevant experience as advocates or legal officers in government services. The IRA requires the Court to act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal form. In making an award, the Court should have regard to public interest, the financial implication and the effect of the award on the economy of the country and the industry concerned [IRA, s.30]. An award has to be made within 30 days from referral, and in specified exceptions, a retrospective award and prospective awards are allowed. Awards of the Court shall be final and conclusive, and shall not be challenged, appealed against, reviewed, or called into question in any court. However, the High Court can exercise a supervisory jurisdiction over the Industrial Court, and if a question of law arose in the course of proceedings, the Industrial Court may refer that question to the High Court as if the reference were an appeal to the High Court against an award of the Industrial Court and may, consequently, confirm, vary, substitute or quash the award. The decision of High Court, in that scenario, will be final and conclusive [IRA, s.33]. Table 5.6 shows the number of cases reported to Industrial Court from 1995 to 2001. In general, the number of cases carried forward, referred, given award and pending are on the increase over the years. For example, the total cases carried forward increased from 648 in 1995 to 1,749 cases hand or given award

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from 535 to 1,056 for the same period. Table 5.7 reflects awards relating to nondismissal cases. Out of 170 cases in 2001 for instance, non-compliance of collective agreement forms the largest; i.e., 60 cases while collective agreement comprises 40 cases. Table 5.6: No. of Cases Reported to Industrial Court, 1995 ­ 2001

Subject Total Cases Carried Forward Total Cases Referred Total Cases Heard/Given Award Total Cases Pending 1995 648 535 466 717 1996 717 548 610 655 1997 655 692 616 731 1998 731 905 664 972 1999 972 1088 707 1353 2000 1353 1100 704 1749 2001 1749 1056 963 1842

Source: Industrial Relations Department online at accessed 5 November 2002

Table 5.7 Analysis of Awards Relating to Non-Dismissal Cases, 1995 ­ 2001

Subject Non-Compliance Of Award Non-Compliance Of Collective Agreement Interpretation Of Award / Collective Agreement Variation Of Award Collective Agreement Ammendment To Collective Agreement (By Court Order) Collective Agreement (Terms And Conditions) Questions Of Law Victimisation Total 1995 41 14 12 3 0 30 9 109 1996 67 16 10 1 57 10 1 162 1997 60 30 5 2 49 9 1 156 1998 69 42 28 12 26 5 4 186 1999 85 80 6 6 1 26 12 2 218 2000 70 54 7 5 42 6 184 2001 52 60 8 1 2 40 7 170

Source: Industrial Relations Department online at accessed 5 November 2002

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Table 5.8: Non-Compliance of Labour Law, Peninsular Malaysia, 2000 ­ August 2002

Indicators 2000 Employee Complaints Against Employers Non-compliance of labour laws Non-compliance of government policies Unfair labour practices Hearing of Claims in Industrial Court Claim against employer Claim against employee Prosecution Against Employers at Magistrate Court Employer prosecuted Employer found guilty 11,157 136 178 7,462 780 28 22 2001 15,295 120 414 7,903 856 12 11 Jan ­ Aug 2002 6,637 63 58 10,498 1,158 3 2

Source: Ministry of Human Resources, online at &, accessed 4 December 2002

Table 5.9: Complaints against Employers, Sarawak, 2000 ­ Aug 2002

Indicators Wage claims Over-time payments Wage in-lieu of notice Fixed holiday wages Wage deduction that contravene the laws Others 2000 293 21 188 0 15 117 2001 364 8 128 0 10 61 Jan ­ Aug 2002 469 18 168 16 9 21

Source: Ministry of Human Resources, online at &, accessed 4 December 2002

Table 5.10: Complaints against Employers, Sabah, 2000 ­ Aug 2002

Indicators Employee Complaints Against Employer Received Settled Claims for Employee Compensation Received Settled 2000 1,152 1,117 684 534 2001 1,190 1,131 646 455 Jan ­ Aug 2002 628 578 387 272

Source: Ministry of Human Resources, online at &, accessed 4 December 2002

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6 6.1


The National Safety and Health Advisory Council offers advice to the government on national policy on occupational safety and health, to prevent industrial injuries and health impairment. The Council shall consist of not less than twelve and not more than fifteen members who shall be appointed by the Minister. Three persons from them shall be from organisations representing employers. Three or more persons shall be from Ministries or Departments whose responsibility is related to occupational safety and health; and three or more persons, of whom at least one shall be a woman, shall be from organisations or professional bodies the activities of whose members are related to occupational and safety and health and who, in the opinion of the Minister, are able to contribute to the work of the Council. The National Institute of Occupational Safety and Health, established in 1992 by the government, is the centre for training, consultancy, information dissemination and research in occupational safety and health in Malaysia. The labour inspectorate and its duties lie under the Department of Occupational Safety and Health. The safety and health officer shall be employed exclusively for the purpose of ensuring observance at the place of work of the provisions of the Occupational Safety and Health Act (OSHA) 1994 and any regulation made thereunder and the promotion of safe conduct at the place of work. The safety and health officer shall possess such qualifications or have received such training as the Minister may, by notification in the gazette from time to time prescribe. It shall be the duties of safety and health officers to advise the employer or any person in charge of a place of work on the measures to be taken in the interest of the safety and health of the purpose employed in the place of work. Other duties of the inspectorate include: to inspect the place of work to determine whether any machine, plant, equipment, substance, appliance or process or any descriptions of manual labour used in the place of work, is of such nature liable to cause bodily injury to any person working in the place of work; to investigate any accident, near miss accident, dangerous occurrence, occupational poisoning or occupational disease that has occurred in the place of work; to assist the employer or the safety and health committee, if any, pursuant to regulation 11 of the Occupational Health and Safety Regulations 1996 in organising or implementing a occupational safety and health programme at the place of work; to become secretary to the safety and health committee in any inspection of the place of work for the purpose of checking the effectiveness and efficacy of any measures taken in compliance with the act or any regulations made under the act; to collect, analyse and maintain statistics on any accident, dangerous occurrence, occupational poisoning and occupational disease which have occurred at the place of work; to assist any officer I carrying out his duty under the act or any regulations made under the act; and to carry out any other instruction made by the employer or any person

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in charge of the place of work on any matter pertaining to safety and health of the place of work. 6.2 Rights of the inspectorate

The National Council for Occupational Safety and Health among others gives power to the inspectorate to carry out the tasks it believes are necessary or incidental to carrying out of the objects of the OSHA. The Council may, and when requested by the Minister to do so shall, carry out investigations and make reports and recommendations to him with regard to any matter relating to the objects of this Act and, in particular, but without prejudice to the generality of the foregoing provisions. An occupational safety and health officer in this OSHA Part XII referred to as the `officer' may for the purpose of carrying out the objects of this act or any regulation made thereunder, at any reasonable time and upon the production of this certificate of authorisation enter, inspect and examine any place of work other than a place used solely for residential purpose, provided that may enter the residential place with consent of the owner or if he has reasonable cause to believe that a contravention of this act or any regulation made thereunder has or is likely to be committed. In order to implement the power above an officer may: a) Make examination and investigation of any plant, substance, article or other thing whatsoever as may be necessary to ascertain whether or not this act or any regulation made there under has been complied with; b) Direct that the place of work or any part thereof, or anything therein, shall be left undisturbed, whether generally or in particular respects, for so long as is reasonably necessary for the purpose of any examination or investigation under paragraph (a); c) Take such measurements and photographs and make such recording as he considers necessary for the purpose of any examination or investigation under paragraph (a); d) Take samples of any article or substance found in the place of work which he has power to enter, and of the atmosphere in or in the vicinity of the place of work; e) Require any person employed in a place of work in which any of the disease named in the Third Schedule of the Factories and Machinery Act 1967 or in any disease named in any regulations or order made by Minister under this Act has occurred or is likely to occur, to be medically examined by a medical officer or a registered medical practitioner. Where the officer is of the opinion that the plant or substance has caused or is likely to cause a danger to safety and health, he may: a) Cause it to be dismantled or subjected to any process or test at any convenient place and at such reasonable time as he may appoint, but not so as to damage or destroy it;

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b) Take possession of it and detain it for so long as is necessary for all or any of the following purpose: i. To examine it and do to it anything which he has power to do; ii. To ensure that it is not tempered with before his examination of it is completed; iii. To ensure that it is available for use as evidence in any proceedings fro an offence under any of the provisions of this act or regulations made thereunder. Where an officer is medical officer he may: a) Carry out such medical examination as may be necessary for the purpose of his duties under this act or regulation made thereunder; and b) Exercise such other powers as may be necessary or as are conferred under section 39(2) or (3) of OSHA. An officer may, in the exercise of his powers under section 40 (entry into premises with search warrant and power of seizure) or under section 41 (entry premises without search warrant and power of seizure), if it is necessary to do so: a) Break open any outer or inner door of a place of work or residential place and enter thereinto; b) Forcibly enter the place and every part thereof; c) Remover the force any obstruction to entry, search, seizure and removal as he is empowered to effect; and d) Detain every person found in the place until the place has been search [OSHA, s.42]. Under section 45 of OSHA, an officer making an investigation under section 39 and 44 may examine orally any person who appears to him to be acquainted with the facts and circumstances of the case. Moreover, under the Factories and Machinery Act 1967, there are several powers vested in the DOSH to make factory and machinery inspections. The powers of an inspector are as follows [s.7]: 1. An inspector shall, for carrying the purposes of this Act into effect, have powers to do all or any of the following: a. to enter, inspect and examine, by day or by night any factory, and every part thereof when he has reasonable cause to believe that any work or process is being carried on therein, and to enter, inspect and examine by day, any place which he has reasonable cause to believe to be a factory and any part of any building of which a factory forms part and in which he has reasonable cause to believe that explosive or highly inflammable materials are stored or used and to exercise such powers as may be necessary

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b. c. d. e. f. g.

to inspect and examine any machinery, plant, appliance or fitting therein: to require the production of factory records, certificates, notices and documents kept in pursuance of this Act and to inspect, examine and copy any of them; to make such examination and enquiry as may be necessary to ascertain whether the provisions of this Act are complied with, so far as regards a factory or any persons employed therein; to require any person whom he finds in a factory to give such information as it is in his power to give as to who is the owner of the factory; in the case of an Inspector who is a registered medical practitioner, to carry out such medical examination as may be necessary for the purpose of his duties under this Act; to take samples of any material whether solid, liquid, gaseous or vaporous being discharged in or from a factory; and to render inoperative in accordance with this Act, any machinery which does not comply with this Act, by affixing a seal or by any other means which he may deem best suited to the purpose.

2. On being required by an Inspector, the occupier of every factory shall furnish the means necessary for entry, inspection, examination, inquiry, the taking of samples, or otherwise for the exercise of his powers under this Act in relation to that factory. 3. An inspector seeking to enter any premises under the powers conferred upon him by subsection (1) shall produce on demand, an official identification card in such form as may be prescribed, and no person shall be obliged to admit to his premises any person purporting to be an Inspector except on production of such an identification card. Under section 33 of the Act, the inspector shall make a preliminary investigation of the accident or dangerous occurrence or industrial disease reported. The report will be forward to the Chief Inspector. If there has been any loss of life or any person fatally injured, the report will be forwarded to the nearest Magistrate who will determine whether an enquiry should be held. The enquiry will be overseen by a Senior Inspector. Upon conclusion, the report and findings will be forward to the Chief Inspector. If the Chief Inspector is of the opinion that criminal proceedings ought to be instituted against any person, he shall forward the case to the Deputy Public Prosecutor of all the evidence, findings and report. The Senior Inspector may appoint one or more persons of engineering, medical or other appropriate special skill to assist as assessors in any enquiry. For the purpose of holding enquiries under this Act, the Chief Inspector and a Senior Inspector shall have the power to administer oaths and affirmations and shall be vested with the powers of a First Class Magistrate for compelling the attendance of witnesses, production of documents, maintaining order and otherwise duly conducting the said enquiries, and all persons summoned to attend any such enquiries shall be legally bound so to attend.

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Occupational health and safety issues

Every employer shall establish a safety and health committee at the place of work in accordance with this section if; there are forty or more persons employed at the place of work; or the Director-General of Occupational Safety and Health directs the establishment of such a committee at the place of work. Where it appears to the Minister that in any of the industries or class or description of industries: a) Cases of illness have occurred which he has reason to believe may be due to the nature of the process or other conditions of work; b) By reason of changes in any process or in the substances used in any process or, by reason of the introduction of any new process or new substance for use in process, there may be risk of injury to the health of persons employed in the process; c) Person below the age of sixteen years are or are about to be employed in work which may be cause risk of injury to their health; or d) There may be risk of injury to the health of person employed in any of the occupations specified in the Third Schedule of OSHA or from any substance or material brought to the industries to be used or handled therein or from any change in the conditions in the industries. He may make regulations requiring such reasonable arrangement as may be specified in the regulations to examination, not including medical treatment of a preventive character, of the person or any class of person employed in the industries or class of description of industries. Regulation made under section 28 of OSHA may require the medical surveillance to be carried out by persons registered with the Director-General, and may prescribe the qualifications and other conditions which are to be satisfied in order to be registered fro the purpose of this section. A person who designs, manufactures, imports or supplies any plant for use at work must ensure, as far as is practicable, that the plant is so designed and constructed as to be safe and without risks to health when properly used. They must also carry out the necessary testing and examination for the above purpose; and take necessary steps to ensure that there will be adequate information about the use of the plant and about the conditions necessary to ensure that it will be safe and without risk to health when put to that use. A person who formulates, manufactures, imports or supplies any substance for use at work must ensure, so far as it is practicable, that the substance is safe and without risks to health when properly used; carry out the necessary testing and examination for the above purpose; and take the necessary steps to ensure that there will be adequate information about the use of the plant and about the conditions necessary to ensure that it will be safe and without risk to health when put to that use.

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Table 6.1 reveals the number of registered employees and employers by states and number of accidents reported. There are a total of 415,523 employers registered with OSHA covering 8.87 million workers. Up to 2000, a total of 95,006 accidents were reported to have occurred. Table 6.2 indicates statistics of accident compensation and inspections from 1997 to March 2002. It shows a total of 85,229 accidents at work registered by OSHA in 2001, other than 17,170 accidents while travelling and 176 cases of death. Meanwhile the total number of various compensation benefits has increased from 188,706 to 223,068 in 1997 and 2001 respectively. The type of benefit also varies from disablement benefits, dependents benefit, and pension scheme to survival scheme. The statistics also show that visits carried out by OSHA also increased over the year from 49,472 visits in 1997 to 69,826 visits in 2001. However, the actual inspections fluctuated in number from 53,537 inspections in 1997 to 32,793 in 2001. Table 6.1: No. of Registered Employers and Employees registered with SOCSO and Accidents Reported, 2000

Area Perak Johor Kedah Kelantan Melaka N. Sembilan Pahang Perlis P.Pinang Butterworth Selangor Terengganu Kuala Lumpur Labuan Sabah Sarawak Total Employers 41,930 56,254 19,979 9,869 13,777 14,677 16,837 2,580 18,215 15,285 63,286 9,780 77,507 1,255 25,851 29,696 415,523 Employees 736,100 1,185,653 488,509 131,377 289,899 317,326 332,967 49,499 519,905 430,775 1,552,120 152,102 1,750,245 10,339 410,732 530,095 8,877,304 Accidents 15,010 15,353 7,301 1,104 3,039 3,711 3,514 447 2,898 6,366 17,408 1,088 4,735 50 1,826 11,206 95,006

Source: Social Security Organization (SOCSO), online at, accessed 5 November 2002

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Table 6.2: Accidents, Compensations and Inspections, 1997 ­ March 2002

Registrations 1997 Accidents Registered Accidents 86,589 Traveling 13,503 Death 1,473 Compensation Temporary Disablement Benefit 78,315 Permanent Disablement Benefit 19,374 Dependent's Benefit 20,137 Invalidity Pension Scheme 11,686 Survivors' Scheme 59,194 Total 188,706 Inspections Visit 49,472 Inspections 50,537 1998 85,338 16,759 1,273 67,168 21,130 23,200 13,316 67,034 191,848 43,807 34,609 1999 92,074 18,309 984 69,491 17,264 25,149 15,724 75,189 202,817 48,131 27,939 2000 95,006 19,620 991 76,004 20,009 25,900 18,324 82,113 222,350 57,722 31,040 2001 85,229 17,170 974 67,289 18,930 27,485 21,083 88,281 223,068 69,826 32,793 Mar 2002 16,337 4,038 176 12,841 21,514 27,661 21,700 88,677 150,879 9,657 12,705

Source: Social Security Organization (SOCSO), online at, accessed 5 November 2002

Table 6.3: Total Accident from 1997 to June 2, 2002

Accident Report Total of accident reported Total of death Total of accident inspections 1997 3233 243 1241 1998 2546 131 1193 1999 2578 133 1331 2000 2292 90 1171 2001 3172 146 1123 Jan ­ June, 2002 1561 12 591

Source: Department of Occupational Safety and Health, online at, accessed 5 November 2002



Labour regulation and state regulations on labour are comprehensive. Labour laws and regulations were made available even during the colonial period and British labour laws formed the basis of labour laws and regulation in Malaysia. The presence and implementation of labour laws and issues in Malaysia become relevant since its independence and the then Ministry of Labour established right on the Independence Day, 31 August 1957. This Ministry now has since been renamed the Ministry of Human Resources. It does not merely oversee all labour laws and issues, but is also burdened with some major responsibilities such as: enforcement of labour standards as stated in all relevant laws and regulations; promoting skill training and development labour force; ensuring the safety and health of employees; registering trade union and union federations and supervising their activities; fostering good trade unions

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and union federations and to supervise their activities; fostering good employeremployee relations; and to generate employment opportunities for citizens. Moreover, Malaysian labour laws and legislation are comprehensive enough to accommodate good relationships between the parties involved, especially employee-employer linkages. The act and legislation are implemented so as to promote harmonious employee-employer relations. This is done through a number of mechanisms involving stakeholders at numerous levels. More succinctly, the labour law mechanism uses both procedures, i.e., legal as well as codes of conduct to regulate employer ­ employee relations. The procedure of union formation, recognition of trade unions, collective agreements and collective bargaining, for example, are made available through proper laws in order to protect worker. Employer organisations and their advisory councils, on the other hand, are made available, for instance, to protect employers' rights and interests. This reflects that the interests of both parties are integrated into laws in a manner conducive to harmonious cooperation. Parasuraman (2001) observes that a relatively stable system of industrial relations prevailed in the 1980s and 1990s, and he argues that this is perhaps a residue of colonial rule, which contributed to the paternal attitude of the Malaydominated government toward the predominantly Malay industrial and rubber plantation labour force. Todd and Peetz (2001:1369) also suggest that the British colonial government had set a precedent for direct state intervention in industrial relations and organised labour movement; and this policy was important to attract investment and to provide modestly-priced and disciplined labour. The Ministry of Human Resources oversees and updates a comprehensive set of labour laws and legislation in Malaysia. Early laws entered the Act in 1947 and 1949, such as Wage Council Act 1947 and Sabah Labour Ordinance 1949, but there have been recent additions as well, such as the Workers' Minimum Standards of Housing and Amenities Act 1990, Occupational Safety and Health Regulations 1995, and Occupational Safety and Health (Use and Standards of Exposure of Chemical Hazardous to Health) 2000. Labour laws and regulations have also been amended over the years to meet labour demands, employer's requirements, and the ministry's policies and strategies. All these efforts reflect that labour laws and regulations in Malaysia are sensitive to the needs and changing expectations of the three main parties: labour, employers and government. On the basis of this observation, it is pertinent to note that Malaysia's labour laws and regulations are indeed comparable to other countries in Asia, if not better. It is also imperative to note that labour in Malaysia enjoys relatively better protection. Nevertheless, Malaysian labour law and regulatory structures are not free from criticism. The major criticism concerns the control it exerts over the trade union movement. The Malaysian government exerts tight control over trade union movement. The state has the power, for example, to regulate trade union formation, prevent the formation of nation-wide unions, and prevent strikes

Southeast Asia Research Centre Working Paper Series, No. 40, 2003


through various regulations. This power helps explain the fragmented union movement. Moreover, the law prohibits trade union movements aligning themselves with political parties. For example, the trade union ordinance prohibits office bearers or employees of political parties from holding office in trade union and trade union funds cannot be used for political purposes.7 The wide scope of the management prerogative clause has actually curtailed collective bargaining. As summarized by Todd and Peetz, industrial relations in Malaysia `has been characterized by extensive state control guaranteeing a high level of managerial prerogatives within the workplace, minimal overt conflict and very little bargaining power for labour' (2001:1365). Parasuraman argues that the state has used repression and regulations to control the labour movement (2001). He contends that major legislation such as the TUA, IRA and the EA, has favoured employers over unions. He cites the case of the state's violation of the law in the electronic industry in 1980s, when it prevented employees in that industry from forming their own national unions. The government's opinion in not allowing the national union of electrical workers to organise electronics workers was on the grounds that they were not workers in similar industries. When the MTUC tried to form a national union of electronic workers, it was refused registration. Such policy was relaxed by the government in 1988, but reversed after vigorous protests from employers (ICFTU, 2000: 119). Anantaraman (2002) argues that this illustrates how government policy has been to appease investors by preventing this powerful union from establishing a foothold in the electronic industry. Instead, the state only allowed in-house unions, which were under the control of employers. In a similar manner, the government was also reluctant to accept unions across the food and drink sectors or rail and road transport industries. Although the Malaysian trade union enjoys a higher union density in comparison to Thailand and Indonesia, it is still weak because of the limitations imposed on it to form unions. The unionisation rate has been kept at 10 percent, compared to the more than 20 percent rate in South Korea. While national industry bargaining is still strong in the private sector, especially on plantations, enterprise level bargaining has become predominant since the 1980s. In fact, the largest unions do not belong to the manufacturing industry where the multinationals are involved. Only 10 unions out of 517 have more than 10,000 workers (Anantaraman, 2002; Parasuraman, 2001). Anantaraman (2002) suggests that the Director-General of Trade Unions enjoys ample discretionary power to deregister trade unions [TUA, s.12(2)]. For example, if he is satisfied that a new union would serve the interests of the workers, he can accept the registration of a new one to substitute the old trade union. Anantaraman argues that this power enables the Director-General to hold the threat of deregistration without actually deregistering them. Moreover,

Nevertheless, the MTUC has established a Political Action Committee suggesting that the trade union movement cannot be totally separated from politics.


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Malaysia's Internal Security Act also enables the government to suspend a trade union for a period of six months in the interest of public order or security in Malaysia. He observes that these provisions are a contravention of ILO Convention 87 on freedom of association.8 While in the implementation of the labour regulations, there are reports and criticisms on the gap between `theory' and `practice'. For example, a report prepared by Mosses and Xavier (1997) on female labour observed that most employers received favourable rulings from the authority when they filed applications for exemption to permit women to work overnight. A press release by the MTUC in August 1999 suggested that `it takes about 12 to 24 months for a dispute to reach the Industrial Court and it takes another 12 to 24 months for the court to hear and hand down this award'. The MTUC argued that: Meanwhile, the number of Chairman at the Industrial Court has come down from 9 to 7. Several cases scheduled for hearing in May, June, July have been put of to year 2000. With the tremendous increase in the number of industrial disputes, unless urgent steps are taken to fill the vacant posts, a huge backlog will be created. Again, poor workers who depend on the Industrial disputes settlement machinery, are made to suffer9. Another press statement by the MTUC, dated April 27, 2002, claimed that more than 4,000 cases, mainly from dismissed workers, are pending at the Selangor and Federal Territory's Department of Industrial Relations. The press release included figures to show the inability of the authorities to meet expectations. For example, in 2001, the Department of Industrial Relations received a total of 2,688 reports and another 1,065 in January to 27 April 2002. It was found that some cases reported in 1999 have been deferred for decision. In the Federal Territory's office, 16 permanent officers are required to handle approximately 3,000 cases each year. The MTUC organised a picket in October 2000, and the Ministry of Human Resources agreed to hire five more retired officers on a contract basis from January 2002 to reduce the burden. To alleviate the situation, the MTUC has proposed to set up another office to handle cases from Selangor only, and separate from Federal Territory.10 Concerning the claim for union recognition, the MTUC, in a press release dated 2 August 2000, called for a revamp of dispute settlement procedures to speed up the backlog pending at the Department of Industrial Relations. It claimed that up to late July 2002, complaints received from MTUC affiliates showed that at least 52 claims for union recognition were pending at the Department for over 10 months. Some of the cases have been pending for as long as 20 months,

Noted that Malaysian government has not ratified ILO Convention 87. Malaysian Trade Union Congress, online at, accessed 5 November 2002. 10 Malaysia Trade Union Congress, online at, accessed 5 November 2002.



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while the IRA has stated that simple and basic union recognition claims should be made within 21 days.11 While Malaysia hopes to achieve the status of developed country by the year 2020, as laid down in the government's `Vision 2020', its economic strategies shifted to higher value-added sectors, and more capital-intensive industrialisation. Academics have suggested that part of this trend is the emergence of a `new industrial relations' policy that is characterised by greater employee participation in decision-making, multi-skilled employees working in a semi-autonomous teams, and co-operative labour relations (Todd & Peetz, 2001:1365-1366). However, as observed by Todd and Peetz, industrial relations in this early phase, in terms of control and decision making within the workplace, remains unchanged.


Malaysian Trade Union Congress, online at, accessed 5 November 2002.

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Appendix 1: Selected List of Labour Laws and Regulations in Malaysia

1. Human Resources Development Act 1992 (Act 491) (a) Human Resources Development (Regulation of Employers) Regulations 1992 2. Private Employment Agencies Act 1981 (Act 246) (a) Private Employment Agencies Regulation 1981 3. Employees Social Security Act 1969 (Act 4) (a) Employee's Social Security (Social Security Appellate Board Procedure) Regulation 1967 (b) Employee's Social Security (Periodical Payments to Dependants) Regulations 1984 (c) Employee's Social Security (Minimum Daily Rate of Benefit) Regulations 1984 (d) Employee's Social Security (Amount of Funeral Benefit Regulations 1984 (e) Employee's Social Security Rules 1971 (f) Social Security Organisation (Promotion Board) Rules 1988 (g) Employee's Social Security (Maximum Monthly Amount of Constant-Attendance Allowance) Regulation 1992 (h) Employee's Social Security (Conduct and Discipline) Rules 1994 4. Industrial Relations Act 1967 (Act 177) & (Act A 718) 5. Trade Unions Act 1959 (Act 262) (a) Trade Union Regulations 1959 6. Employment Act 1955 (Act 265) (a) Employment (Procedure ­ Reciprocal Provisions) Regulations 1957 (b) Employment (Employment of Women) Female Conductors Regulations 1958 (c) Employment (Employment of Women Shift Workers) Regulations 1970 (d) Employment (Limitation of Powers of Officers) Regulation 1993 (e) Employment (Termination and Lay-off Benefits) Regulations 1980 (f) Employment (Limitation of Overtime Work) Regulations 1980 7. Worker's Minimum Standards of Housing and Amenities Act 1990 (Act 446) (a) Workers' Minimum Standards of Housing and Amenities Regulations 1990 (b) Workers' Minimum Standards of Housing and Amenities (Nurseries) Regulations 1990 (c) Workers' Minimum Standards of Housing and Amenities (Summons) Regulations 1991 8. Workmen's Compensation Act 1952 (Act 273) (a) Workmen's Compensation (Maximum Amounts for Fees and Costs) Regulation (Revised 1983) (b) Workmen's Compensation (Security for Insurance) Regulations 1959 (Revised 1983) (c) Workmen's Compensation Regulation 1953 (Revised 1983) 9. Wages Councils Act 1947 (Act 195) (a) Catering and Hotel Wages Council Order 1965 (b) Wages Council (Cinemas) Order 1967 (c) Wages Councils (Meeting and Procedure) Regulations 1967 (d) Wages Councils (Conditions of Office) Regulations 1967 (e) Wages Councils (Notices and Orders) Regulations 1967 (f) Wages Council (Shops) Order 1967 (g) Wages Regulation (Catering and Hotel) Order 1967 (h) Wages Regulations (Shop Assistants) Order 1970 (i) Wages Regulations (Cinema Workers) Order 1972 10. Weekly Holidays Act 1950 (Revised 1979)

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11. Children and Young Persons (Employment) Act 1966 (Act 350) 12. Employment Information Act 1953 (Act 159) 13. Employment (Restriction) Act 1968 (Act 353) (a) Restriction (Amendment) Order 1984 (b) Restriction (Exemption) Order 1983 (Exemption) Order 1992 14. Port Workers (Regulation of Employment) Act 1965 (Revised) 1989 Act 419 (a) Port Workers (Regulation of Employment) Order, 1965 15. Occupational Safety and Health Act 1994 (Act 514) (a) Occupational Safety and Health (Control of Industrial Major Accident Hazards) Regulation 1996 (b) Occupational Safety and Health (Employers' Safety and Health Policy Statements (Exemption)) Regulations 1995 (c) Occupational Safety and Health (Safety and Health Committee) Regulations 1996 (d) Occupational Safety (Classification, Packaging and Labeling of Hazardous Chemicals) Regulations 1997 (e) Occupational Safety and Health (Safety and Health Officer) Regulations 1997 (f) Occupational Safety and Health (Use and Standard of Exposure of Chemicals Hazardous To Health) Regulations 2000 16. Factories and Machinery Act 1967 (Act 139) (a) Factories and Machinery (Certificates of Competency-Examinations) (b) Factories and Machinery (Electric Passenger and Goods Lift) Regulations, 1970 (c) Factories and Machinery (Fencing of Machinery and Safety) Regulations, 1970 (d) Factories and Machinery (Notification of Fitness and Inspections) Regulations, 1970 (e) Factories and Machinery (Person-In-Charge) Regulations, 1970 (f) Factories and Machinery (Safety, Health and Welfare) Regulations, 1970 (g) Factories and Machinery (Steam Boiler and Unfired Pressure Vessel) Regulations, 1970 (h) Factories and Machinery (Administration) Regulations, 1970 (i) Factories and Machinery (Compounding of Offences) Rules, 1978 (j) Factories and Machinery (Compoundable Offences) Regulations, 1978 (k) Factories and Machinery (Lead) Regulations, 1984 (l) Factories and Machinery (Asbestos) Regulations, 1984 (m) Factories and Machinery (building Operations And Works Of Engineering Construction)(Safety) Regulations, 1986 (n) Factories and Machinery (Noise Exposure) Regulations, 1989 (o) Factories and Machinery (Mineral Dust) Regulations, 1989 17. Petroleum (Safety Measure) Act, 1984 (Act 302) (a) Petroleum (Safety Measures) Act, 1984 (Transportation Of Petroleum By Pipelines), Regulations, 1985 18. South Indian Labour Fund Ordinance 1958 19. Labour Ordinance 1949 (Sabah Cap. 67) (a) Labour Rules (G.N. 353 OF 1936) (b) Labour Recruiting Rules (G.N. 430 of 1940) (c) Labour (Public Contracts) Rules (G.N.S. 53 of 1951) (d) Labour (Maternity Benefit) Rules 1954 (G.N.S. 14 of 1954) (e) Labour (Domestic Service) Rules 1957 (G.N.S. 143 of 1957) (f) Labour (Register of Workers) Rules, 1959 (G.N.S. 81 of 1959) (g) Labour (Depot Fees) Rules 1960 (G.N.S. 119 of 1960) (h) Malaysian Migration Fund Board 1996

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20. Sarawak Labour Ordinance 1952 (Sarawak Cap. 76) (a) The Labour (Application of Section 60 of the Ordinance) Notification (G.N.S. 40 of 1956) (b) The Labour (Prohibition of Employment of Children) Notification. (G.N. 933 of 1953) (c) The Labour (Public Holidays) (Amendment) Rules 1973

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Appendix 2: ILO Conventions Ratified by Malaysia as at September 2002

Convention C7 Minimum Age (Sea) Convention, 1920 C11 Right of Association (Agriculture) Convention, 1921 C12 Workmen's Compensation (Agriculture) Convention, 1921 C14 Weekly Rest (Industry) Convention, 1921 C15 Minimum Age (Trimmers and Stokers) Convention, 1921 C16 Medical Examination of Young Persons (Sea) Convention, 1921 C17 Workmen's Compensation (Accidents) Convention, 1925 C19 Equality of Treatment (Accident Compensation) Convention, 1925 C29 Forced Labour Convention, 1930 Place Malaysia (Sarawak) Malaysia (Peninsular) Malaysia (Peninsular) Malaysia (Sarawak) Malaysia (Sabah) and Malaysia (Sarawak) Malaysia (Sabah) and (Sarawak) Malaysia (Peninsular) Malaysia (Peninsular) Malaysia Ratification date March 3, 1964 Jan 11, 1960 Ratified by Malaysia (Sarawak) on March 3, 1964 June 5, 1961 Ratified by Malaysia (Sarawak) on March 3, 1964 March 3, 1964 Status denounced




March 3, 1964


March 3, 1964


Nov 11, 1957


Nov 11, 1957 Ratified by Malaysia (Sarawak) on ratified March 3, 1964 Nov 11, 19:57 Nov 11, 19:57 Nov 11, 19:57 ratified ratified ratified

C45 Underground Work (Women) Malaysia Convention, 1935 (Peninsular) C50 Recruiting of Indigenous Workers Convention, 1936 C64 Contracts of Employment (Indigenous Workers) Convention, 1939 C65 Penal Sanctions (Indigenous Workers) Convention, 1939 C81 Labour Inspection Convention, 1947 C86 Contracts of Employment (Indigenous Workers) Convention, 1947 C88 Employment Service Convention, 1948 Malaysia


Nov 11, 19:57


Malaysia Malaysia Malaysia (Sabah) and (Sarawak) Malaysia

Nov 11, 19:57 July 1, 1963

ratified ratified

March 3, 1964


June 6, 1974


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C94 Labour Clauses (Public Contracts) Convention, 1949 C95 Protection of Wages Convention, 1949 C97 Migration for Employment Convention (Revised), 1949 C98 Right to Organise and Collective Bargaining Convention, 1949 C105 Abolition of Forced Labour Convention, 1957 C119 Guarding of Machinery Convention, 1963 C123 Minimum Age (Underground Work) Convention, 1965 C100 Equal Remuneration Convention, 1951 C138 Minimum Age Convention, 1973 C182 Worst Forms of Child Labour Convention, 1999 C144 Tripartite Consultation (International Labour Standards) Convention, 1976

Malaysia (Sabah) and (Sarawak) Malaysia Malaysia (Sabah) Malaysia

March 3, 1964


Nov 17, 1961 March 3, 1964

ratified ratified

June 5, 1961

ratified denounced

Malaysia Malaysia

Oct 13, 1958 June 6, 1974



June 6, 1974


Malaysia Malaysia Malaysia

Sept 9, 1997 Sept 9, 1997 Nov 10, 2000

ratified ratified ratified


June 14, 2002


Source: Adapted from Malaysian Trade Union Congress, online at, accessed 5 November 2002.

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REFERENCES Aminuddin, Marilyn (1990), Malaysian Industrial Relations, Singapore: McGrawHill. Anantaranman, V. (2002) Malaysian Industrial Relations System: Its Congruence with the International Labor Code, online, accessed 19 November 2002. Asna. Nor W.W. (1999), Political and economic accommodation in Peninsular Malaysia, in Ghosh B.N and Salleh M.S (eds) Political Economy of Development in Malaysia, Kuala Lumpur: Utusan Publications. Ayadurai, Dunston (1992) Industrial Relations in Malaysia: Law & Practice. Singapore: Butterworths Asia. Department of Statistics (1998), Labour Force Survey Report ­ Malaysia 1997, Kuala Lumpur: Department of Statistics. Department of Statistics (2000a), Populations and Housing of Malaysia 2000, Kuala Lumpur: Department of Statistics. Department of Statistics (2000b), Labour Force Survey Report - Malaysia 2000, Kuala Lumpur: Department of Statistics. Department of Statistic, Annual Survey of Manufacturing Industries, Kuala Lumpur: Department of Statistics, various years. Economic Planning Unit (2002) Malaysian Quality of Life 2002. Kuala Lumpur: Economic Planning Unit. ICFTU (2000) Annual Survey of Violations of Trade Union Rights, 2000, online, accessed 4 December 2002. Malaysia (2001), Eight Malaysia Plan 2001-2005, Kuala Lumpur Percetakan Nasiaonal Malaysia Berhad. Malaysian Employers Federation (2000) Annual Report - 2000, Kuala Lumpur: Percetakan Nasional Malaysia Berhad Malaysia Employers Federation (1999), Malaysian Employers Federation 40th Anniversary - 1999, Kuala Lumpur: Percetakan Nasional Malaysia Berhad. Mosses, Ganambal & Xavier, Irene (1997) Women Workers in Malaysia: A Country Report, paper presented in CAW Regional Conference, November, 1997 in Nepal. Online at

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70, accessed 19 November 2002. Ministry of Finance, Annual Economic Report, Kuala Lumpur: Ministry of Finance. various years. Parasuraman, Balakrishnan (2001), Industrial Relations in Asia Pacific in Comparative Perspective, paper presented in the 6th European IIRA Congress, Oslo, Norway, 25-29 June, 2001. Rajkumar, K. (2001), Malaysian Labour Laws - Made Simple, Kelana Jaya, Selangor: Pelanduk Publications. Sing, M. (2002) Civil Society in Southeast Asia: Cases of Singapore and Malaysia. In Chan, R.K.H., Leung, K.K. & Ngan, R.M.H. Development in Southeast Asia: review and prospects. Aldershot: Ashagte, pp. 17-35. Todd, Patricia & Peetz, David (2001) Malaysian Industrial Relations at Century's Turn: Vision 2020 or a Spectre of the Past? In International Journal of Human Resource Management, Vol.12 No.8, pp.1365-1382. United Nation (1999), World Population Prospects; 1998 Revision, Vol.1:UN:New York. Wu, Ann M. (2002), The Malaysian Legal System, Petaling Jaya: Longman. Internet websites: Department of Occupational Safety and Health: Department of Industrial Relations, Ministry of Human Resources: Department of Trade Union Affairs, Ministry of Human Resources: Industrial Court: Malaysian Trade Union Congress: Ministry of Human Resources: and Social Security Organization:

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