Trade Unions & Industrial Relations

Topic 9

Contents

Why do employees join unions? The development of trade unionism in

Malaysia. Characteristics of Malaysia’s trade unions Trade Union Act and Industrial Relations Act The Industrial Court Labor relations strategies Skills in managing labor relations process

Why Employees Unionize

Economic Needs Dissatisfaction with Management

Social/Status Concerns

Sees Union as their Savior

Trade Unionism in Malaysia Historically, unions in Malaysia were based on the activities of

immigrants working in the mining and plantation industries in the early 1900s• Major labor issues were those related to the welfare of the immigrant

labor force, condition of work, housing and health• The first Trade Union Law was passed in 1940

After the WW2, the General Labor Union (GLU), expanded its membership rapidly• The Communist infiltrated GLU• To curb the subversive elements, the government required that all TU

to be registered with the Registrar of TU In recent years, the government had been promoting industrial

harmony and peace to ensure that the economic development of the country was not hampered

Trade Unionism in Malaysia Today

Union membership and size of trade unions• Less than 10% of the Malaysian workers are unionized

(source: DTU, Malaysia, 2003)

• About 65% of the number of trade unions have less than 1,000 members

• It can be concluded that trade unionism in Malaysia is not very strong compared to other industrialized countries

• The services sector (46.55%) has the most members as well the highest number of trade unions followed by manufacturing (24.37%) and transport & communication sector (9.58%) • These three sectors account for almost 80% of number of

unions and memberships

Types of Trade Unions Classification of trade unions:

• In-house vs. nationwide unions• Public vs. private sector unions• Employers vs. employees unions• Federation of trade unions

• Only three: CUEPACS, CUTES, & Sarawak Wharf Labor Unions Federation

Other Labor-related organizations• Malaysian Employers Federation (MEF)• Malaysian Trade Union Congress (MTUC)• All are registered under Registrar of Societies

Two Major Laws Trade Union Act 1959

• Its main purpose is to provide a conducive and healthy development of trade union movement in Malaysia.

• It provides the definition and permissible objectives of trade union, criteria of membership and union officials, procedures for registering trade unions, and the powers of the Director General of Trade Union.

Industrial Relations Act 1967 • A legal framework for regulating the relationship between

employer and employees

• It cover the rights to form trade unions; recognition of trade unions by employers; collective bargaining; and resolution of trade disputes.

The Process of Forming a UnionInitial Organizational

Meeting

Initial Organizational Meeting

Register with DG of Trade Union

Register with DG of Trade Union

Claim Recognition from the Employer

Claim Recognition from the Employer

Contract NegotiationsContract Negotiations

Steps in the Organizing

Process

Steps in the Organizing

Process

Defining A Trade UnionTU Act 1959 defines a trade union as any association of employees or employers in Peninsular Malaysia, Sabah or Sarawak within any particular establishment, trade, occupations or industry, or within similar trades, occupations or industries whether temporary or permanent and having at least one of the objectives:

• regulate relations between workmen and employers, or between employers and employers for the purpose of promoting industrial relations,

• improving the working conditions or enhancing their economics and social status or increasing productivity;

• represent either workmen or employers in trade disputes;• conduct trade disputes;• organizing or financing of strikes or lockouts in any trade or

industry dispute

Trade Union Membership All bona fide workers have the legal right to join or not to join a

trade union Only workers belonging to similar occupation, trade, industry or

establishment can form and join a particular trade union Employees in the professional and managerial group cannot

join a trade union unless exempted by the Chief Secretary to the Government

Police, Prison Services, Armed Forces and public officers in a confidential or security capacity are not allowed to join unions at all

Managers, executives and staff in confidential or security positions cannot join unions whose membership is not in the same category

Registration of Trade Unions

A trade union must apply to the Director General of Trade Unions within one month of the date on which it was established

Unlawful associations are those:• That does not apply for registration within the

prescribed time

• Whose applications has been refused

• Whose registrations has been withdrawn, or canceled

• They shall cease to enjoy any rights, immunities or privileges of a registered trade union

Powers of The Director General of Trade Union

The DG of TU has the power to approve or reject an application for registration

DG of TU can reject an application if:• The trade union is likely to be used for unlawful

purposes, or purposes contrary with its objectives and rules

• The objectives of the trade union is unlawful

• The name of the union is identical to existing trade unions

• There already exist a trade union representing the particular trade or occupation or industry

Powers of The Director General of Trade Union, cont’d.

The DG of TU can also• extend the period to apply for registration from 1 month to

six months

• cancel or withdraw a registered TU’s Certificate of Registration

• If there two similar TU, cancel the Certificate of Registration of the union or unions other than the trade union which has the largest number of workmen

• suspend a branch of a trade union that contravened the provisions of the Act or the rules of the union concerned

• require the trade union to provide additional information if he thinks that it is necessary to evaluate the application

Industrial Relations Act 1967

Right to form trade union• Section 4(1) Part II of the IRA:

• “ . . . . . . no person shall interfere with, restrain, or coerce a workman or an employer in the exercise of his right to form and assist in the formation of and join a trade union and to participate in its lawful activities”

Industrial Relations Act 1967

Recognition of workmen’s trade union• A formal acknowledgement by an employer that a

particular trade union has the right to represent his employees

• Types of recognition• Limited – the union is entitled to make representation on

individual grievances and to negotiate on behalf of its members only

• General – the trade union is entitled to make representation, in addition to the above, general questions of terms and conditions of service on behalf of all workmen, whether or not they are members of the trade union

Industrial Relations Act 1967 The employer can either recognize the union

or refuse recognition Criteria used by employer to decide whether to

grant or not recognition• The competency of the union concerned to represent

the workmen or the class of workmen Criteria used to grant limited or general

recognition• The union represents majority of the workmen:

General recognition• The union represents a minority the workmen: Limited

recognition

Industrial Relations Act 1967

Procedure for recognition• The newly registered trade union makes a claim for

recognition in writing in the prescribed form

The employer must respond within 21 days to either:• Accord recognition

• Refuse recognition

• Delay recognition to check the status of members

Industrial Relations Act 1967

Collective Bargaining • a process whereby representatives from the

employee trade union meet with the employer or employer's trade union to negotiate and decide upon workers' wages and other terms and conditions of service with a view to signing a Collective Agreement

Industrial Relations Act 1967

Procedure for collective bargaining• Once the union is recognized by the employer, either

party can invite the other, at any time, to commence collective bargaining

• The invitee must respond within 14 days either accepting or rejecting it

• If no reply or rejected, then the inviter can file a complain with the DG of IR

• The DG of IR will take the necessary steps to conciliate, and if failed could result in trade dispute

Industrial Relations Act 1967 Non-bargainable subjects (managerial prerogatives) in

collective bargaining include:• Promotion

• Transfer

• Employment

• Termination

• Dismissal and reinstatement of employees

• The assignment or allocation of duties by the employer

The end result of collective bargaining is the Collective Agreement

Industrial Relations Act 1967 Collective Agreement

• an agreement in writing, concluded between an employer or employers' trade union on the one hand, and a workmen's union on the other, relating to the terms and conditions of employment and work of workmen, or concerning relations between the employer and employees

• Must also specify the terms and conditions of employment such as salary scales, bonus payment, overtime rates, retrenchment benefits, retirement benefits, holidays, leave benefits, medical benefits, mileage allowance, and many others

• Because it is signed by the parties and taken cognizance of by the Industrial Court, the CA is deemed to be an award and therefore binding on the parties to the agreement and all on all those who are employed

Industrial Relations Act 1967 Trade Disputes

• Any dispute between an employer and his workmen, not a dispute between the employer and the trade union

• Trade union only acts as an agent of its members, not as principal in the trade dispute

Causes of trade disputes• Unfair labor practices by the employer such as wrongful

dismissal, discrimination and so on which give rise to grievances, or a breach of or non-implementation of a CA or Court Award

• Deadlock in collective bargaining or differences of opinion on the terms and conditions of employment or interpretation of the Collective Agreement

Industrial Relations Act 1967 Types of industrial

actions in trade disputes• Boycott, sabotage, work-

to-rule, taking sick leave or emergency leaves at the same time, sacking, picketing, strike, lockout and many others

• However, the only form of industrial action recognized by the law is strike, lockout and picket

• Other actions may be construed as illegal actions

Dispute Resolution• Direct negotiation• Conciliation• Arbitration

The Industrial Court

Established by the Industrial Relations Act with the purpose of providing a peaceful and unbiased means of settling trade disputes between employers and employees through arbitration

The proceeding of the IC is similar to a court of law but more simplified

The Industrial Court Areas of jurisdiction

• Cases of trade disputes referred to it for arbitration by the Minister or at the request of both parties to a dispute after other means of dispute resolution have failed

• Unfair dismissal of non-unionized workmen when referred to by the Minister of Human Resources.

• Interpreting the approved Collective Agreement or awards by any party or the Minister.

• Hearing complaints over alleged contravention of trade union rights or non- compliance of awards or collective agreements.

• Requiring the parties involved to amend a collective agreement; and, if they refuse to do so, the IC has the authority to amend the agreement itself.

The Industrial Court Areas of jurisdiction

• Cases of trade disputes referred to it for arbitration by the Minister or at the request of both parties to a dispute after other means of dispute resolution have failed

• Unfair dismissal of non-unionized workmen when referred to by the Minister of Human Resources.

• Interpreting the approved Collective Agreement or awards by any party or the Minister.

• Hearing complaints over alleged contravention of trade union rights or non- compliance of awards or collective agreements.

• Requiring the parties involved to amend a collective agreement; and, if they refuse to do so, the IC has the authority to amend the agreement itself.

The Role Of The Manager In Labor Relations

Managers are at the front lines in dealing with employee or labor-management matters

When a union enters the picture, labor relations specialists are hired to resolve grievances, negotiate a labor contract, and to advise top management on labor relation strategy

Labor Relations Strategies

Strategic decision to accept or to avoid unions• The acceptance strategy takes collective bargaining

as an appropriate way of establishing work rules through an exclusive agent for the employees, i.e. the trade union

• The avoidance strategy believes that unions have a disruptive influence on employees• This may develop into an adversarial relation where

trust and respect between employees and employer may be undermined

• In this case, both parties may suffer

Labor Relations Strategies

Strategic decisions to accept or to avoid unions

Strategies to remain union free The acceptance strategy The avoidance strategy

• Union suppression

• Union substitution

The Impact of Unions on HRM

Challenges to management prerogatives: prerogatives are still subject to challenge by the union

Loss of supervisory authority: mainly in disciplining employees

Staffing: merit vs. seniority Employee development: purpose of

performance appraisal