DYNAMICS OF EMPLOYEE RELATIONS

DINAMIKA HUBUNGAN PEKERJAMondy – Chapter 12

Maimunah Aminuddin – Chapter 10

Learning Objectives

After going through the chapter, students should be able to :1. Give the definition of industrial relations ;2. Explain the industrial relations system in Malaysia;3. Explain the meaning of trade union;4. Explain the meaning of collective bargaining; and5. Relate grievances and industrial disputes (pertikaian

perusahaan)

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Definition

• A system that encourage industrial harmony• It involves the regulation of relationship between

employers and workmen or employees and their trade unions and the prevention and settlement of trade disputes.

• Focus on 3 aspects:– Relationship between employers and trade unions– The framework provided by the employment law– Disciplinary procedures and termination of the employment

contract.

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Importance of IR

• One of the important aspects in human resource management

• To create a harmonious relationship between employers and employees

• To ensure that employees receive fair and just treatment and avoid conflicts in organizations

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Industrial Relations System in Malaysia (Sistem Perhubungan Industri di Malaysia)

• Made up of three parties/or the tripartite systems:– Employers and their associations– Employees and their unions– Government

• Industrial Relations Act 1967 – is used to regulate the relationship between employers and employees

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Industrial Selations System in Malaysia

• Code of Conduct for Industrial Harmony 1975 was introduced to maintain harmonious relationship between employers and employees– There are 47 issues covered regarding

employer and union responsibilities, collective bargaining, etc

– Generally, IR in Malaysia is controlled by the government.

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Definition of Trade Union (Kesatuan Sekerja)

A trade union is an independent association or combination of employees that acts as a voice to regulate relations between employees and employers for the purpose of improving good industrial relations, enhance economic and social status of both parties as well as finding solutions to raise productivity for the benefit of those involved.

Section 2, under Trade Union Act 1959- “ A Trade Union is any association or combination of workmen or employers...whose place of work is in West Malaysia, Sabah or Sarawak...”

a. Within any particular establishment, trade, occupations or industries; and

b. Whether temporary or permanent

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…continued• c. Having among its objectives one or more of the

following:– The regulation of relations between workmen and

employers for the purposes of promoting good irs between workmen and employers, improving the working conditions or enhancing their economic and social status, or increasing productivity;

– The regulation of relations between workmen and workmen, or between employers and employers;

– The representation of either workmen or employers in trade dispute;

– The conducting of....or dealing with trade union disputes and matters related thereto; or

– The promotion, organization or financing of strikes or lockouts in any trade or industry or the provision of pay or other benefits for its members during a strike or lockout.

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Trade Union (TU) – Kesatuan Sekerja

Trade union functions: Protecting TU members through collective

strength; Economic controller – represent employees on

issues such as salary and employment contract Support and help employees, providing services

such as advise,counselling,benefit and etc. Provide inputs to government on issues related

to employees

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Formation of Trade Union• Trade Union Act 1959 makes it compulsory

to register a trade union• Must have a minimum of 7 members• Forms to be filled and submitted to Jabatan

Hal Ehwal Kesatuan Sekerja (Trade Union Department):– Registration form (Form B)– Form must be submitted together with duty

stamps worth RM30.00– Book on Trade Union Manuals– Minutes on meeting on the formation of a trade

union

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Membership of Trade Union (Keahlian Kesatuan Sekerja)

According to Industrial Relations Act 1967 (Section 5); workers in Malaysia have the right to form and join Trade union – Freedom of Association

Prohibition on employers, The Act states that: No employer shall prevent a worker from joining a

union by putting a condition in his contract of employment;

No employer shall refuse to employ a worker on the grounds he is a TU member or officer;

No employer shall discriminate against a worker (for example in terms of promotion) on the grounds he is a TU member or officer; and

No worker shall be threatened with dismissal or dismissed if he proposes to join a TU, OR if he participates in union activities.

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Joining a Union• All workers over the age of 16 years have the right

to join an appropriate union- one which represents workers in their trade, occupation or industry (Peninsular Malaysia, Sabah or Sarawak)– Union members under 18 yrs of age are restricted in

their union activities (not entitled to vote on matters involving strike, dissolution of the union or ammendment of the rules in TU)

– Union members under 21 years of age are not eligible to be elected as officers of the union.Pekerja berumur kurang 16 tahun

– Specified group of workers are restricted from joining TU.

– These are members of the police force, armed forces and prison service.

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Why join Trade Union?

To have a voice.

To gain bargaining power and fight for more wages, more benefits and less work.

To ensure their employment rights are protected.

To show their solidarity with other workers.

To have an opportunity to socialise with other workers.

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Why join Trade Union?

• Leadership opportunity– Opportunity to demonstrate leadership abilities – There are organizations that incorporate union

leader’s position into their formal organizational structure (usually the lower level management)

• Peers’ Influence- Pressures from supervisor and co-workers to join

TU

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Types of TU in Malaysia

• Three types:– Public Sector Trade Union

Eg: National Union of the Teaching Profession; the Malayan Nurses Union;

– Private Sector Trade Union Eg: National Union of Bank Employees (NUBE)

– Employer Association Known as association not union Eg: The Malayan Agriculture Producer’s Association

(MAPA)

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Collective Bargaining(CB)-Rundingan Kolektif

• Bargaining process between employer and their employees regarding terms and conditions of service/employment

• Union will represent employees in CB• Union needs to be registered in order to get recognition

from employer before representing employees in CB• Four important issues usually bargained on:– Wage/benefit– Work hours– Employment terms and conditions– Grievances

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Collective Bargaining (Rundingan Kolektif)

Prerequisites to effective CB requires that :-1. Workers must have the right to form collective

associations :– workers have the right to form and join trade

unions and ensure that all its activities are legal i.e. within the limitations set by the law

2. Unions must have bargaining strength Be recognised by the employer (recognition

procedure) Has adequate financial strength; and Has members that are united.

The outcome of CB is known as collective agreement

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Collective Bargaining Process in Malaysia

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Employer and Employer Association or Workers and Trade Union invite the other for collective bargaining

If management accept, negotiation will begin at any time within 30 days from the date the union received the letter of acceptance from the management

Negotiation beginsReached agreement

Dispute resolution process

Signing of collective agreement .

Breached of agreement

The invitation must be done in writing

The management must reply in writing whether to accept or reject within 14 daysfrom the date of invitation

Fail to agree

Dispute

feIf management

refuse

Collective Bargaining Process

• Normally, once the employer has granted recognition to a trade union, it is understood that collective bargaining will follow.

• Even though the law allow both parties to initiate bargaining, in most cases, employers will wait for the union to invite them to begin negotiation.

• In the existence of trade disputes, both parties can report to the Department of Industrial Relations for conciliation and if both parties still fail to agree then the parties could seek for an arbitration by the Industrial Court.

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Collective Agreement (Perjanjian Kolektif)Is a written agreement between an employer and a

trade union relating to terms and conditions of employment.

In order for it to be a binding contract, the CA must:-be in writing and signed by the parties to itspecify their duration which shall not be less than

3 years (CB will be repeated every 3 years)be deposited to the Industrial court within 1

month of it being signed.

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Grievance (Kilanan)• An individual worker’s complaints towards an

employer is termed as “grievance” • An employee and his/her union have the right to make

complaints if they are not satisfied with their employer• Factors that lead to grievance:– Employer denied employee’s right to be promoted – Employer does not appreciate outstanding

achievement by employee– Employer exagerates small mistake done by

employee– Discriminate employee based on different religion,

culture and race

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Steps in Grievance Procedure in MalaysiaWorker raises grievance with immediate supervisor

(within 5 working days of the problem arising)

If supervisor does not settle the grievance to the satisfaction of the worker within 5 days, refer to the

Head of department

If Head of Department does not resolve the grievance within 5 days, the matter may be put to the CEO

If the CEO fails to settle the matter within 5 days, it may be referred to the Department of IR for

conciliation (this last step will only occur in a unionized environment).

Grievance (Kilanan) For a trade dispute to exist, the employee concerned

must be represented by their union to settle the grievance

Factors that enable union to represent employee in trade dispute:

Employee finds no other ways to settle grievance There exist conflicting opinion between employer

and union regarding terms and conditions of employment

The agreement results or the concerned laws are not implemented by employer

There exist conflicting opinions regarding terms in collective agreement or legal decision from Industrial Court

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Grievance (Kilanan) Factors that hinder union to represent employee in

trade dispute: Individual worker has a complaint concerning

alleged interference by an employer with his right to join or not to join a trade union The worker may complain to the Director-General of

Industrial Relations or refer to the Industrial court

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Industrial Action (Tindakan Industri) by Employees

• The only forms of employee industrial action recognised by the labour laws in Malaysia are:– Picketing– Strike

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Picketing (Piket) The most common form of industrial action taken by employee Done to communicate issues to the public and to embarrass

the employer Prominent display of banners and placards with derogatory

comments about their employer and management The Industrial Relations Act 1967 (Section 40) allows workers to

attend at, or near, their workplace during trade dispute for the purpose of peacefully giving info to the public and other workers

and to persuade other workers not to work if a strike has already been declared.

Only workers directly involved in the dispute can participate in the picket (although an officer or employee of the union can be present to ensure that the picketing is carried out according to the law)

Picketing must not intimidate anyone, and must be peaceful

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Strike (Mogok)

• Occurs when a group of workers refuse to work until their employer accepts their demands

• Involves stopping of work by a group of employees including any attempt to limit or slow down production on purpose

• Two types of strike:– Strike relating to collective bargaining– Strike that has no relation to collective

bargaining

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Strike (Mogok)

• Strike relating to collective bargaining– when employer is not willing to engage in

collective bargaining or there is no resolution in collective bargaining

• Strike that has no relation to collective bargaining– Due to factors such as terms and conditions of

employment, retrenchment, layoffs and promotion issues

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Strike (Mogok)• Strike Procedures:

– Secret ballot must be held by those eligible to strike, clearly stating the issues leading to the proposed strike

– The results of this ballot must be sent to the Director-General of Trade Union s by the union secretary within 14 days of taking the ballot

– Strike can only take place if two third of those entitled to vote agree to the action

– Strike can take place after waiting 7 days after the ballot results have been sent to the Director-General

– Secret ballot is only valid for 90 days, and if strike has not taken place within this period, a new ballot will be required if the union intends to continue with the strike action

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Employer Actions• Employer also has the right to engage in industrial

action as well• The most common industrial action taken by

employer is the lock-out• Employer refuses to allow the workers to work

until the dispute between them is settled• Alternatively, the employer can take steps to fight a

strike by keeping the firm operating ; either by placing managerial or non-union employees in the strikers’ job or by hiring replacement workers

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Methods in Trade Disputes Resolution/ Kaedah Penyelesaian Pertikaian Perusahaan

• Direct Negotiation (Rundingan secara langsung)

• Conciliation (Pendamaian)• Mediation (Perantaraan)• Arbitration (Penimbangtaraan)

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Methods in Trade Disputes Resolution

• Direct Negotiation– The ideal method for settling a dispute– Discussion between employer and the

union until a satisfactory compromise is reached

– Solutions arrived at by mutual decision between the two parties without the involvement of an outsider

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Methods inTrade Disputes Resolution Conciliation

Arriving at a settlement of a trade dispute with the help of a third, neutral party

Is carried out by officers of the Department of Industrial Relations

Industrial Relations officer will meet the parties, either separately or jointly

The officer can only advice both parties to reach an agreement and cannot force them to accept his /her proposal for an agreement.

Conciliation can be voluntarily requested by either of disputing parties or the Director-General of Industrial Relations may intervene “in the public interest”, requiring the parties to attend a conciliation meeting (is known as compulsory conciliation)

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Methods inTrade Disputes Resolution• Mediation– A rare method of settling a trade dispute– Similar to conciliation in that a neutral third

party is called in by the employer and the TU who are in the midst of a dispute to arrive to settlement

– The mediator is not from the government , but a person considered unbiased and impartial and is respected and trusted by both parties

– A politician or other local leader may intervene in a dispute

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Methods in Trade Disputes Resolution Arbitration

When disputing employer and union cannot find a solution by themselves or with the help of the Department of Industrial Relations, arbitration may be the only way to settle the dispute

An impartial/neutral third party is given the authority to settle the dispute by examining information given by both sides and making a judgment

Only the Industrial Court has the power to arbitrate labour disputes in Malaysia

Industrial Court awards are final and must be adhered by both employers and unions.

"award" means an award made by the Court in respect of any trade dispute or matter referred to it or any decision or order made by it under IRA 1967

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Disputes resolution procedure in Malaysia/Prosedur penyelesaian pertikaian perusahaan di

Malaysia.IR Acts 1967 has outlined the following steps that can beundertaken by either parties in resolving disputes :-

1. Direct negotiation This is the first step that has to be taken in settling a

dispute Only if this process fails then either parties can request

from the Department of IR for the process of2. Conciliation

this process can only be taken when all attempts to negotiate voluntarily between both parties have failed.

if this process also fails then either parties can seek through the Minister of HR for the process of

3. Arbitration which is carried out by the Industrial Court and is the final

process once this process is undergone both parties can no longer

try to reach an agreement on their own. Industrial Court’s decisions are final and both parties have

to comply to its ruling (awards).

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Conclusion

• IR involves trade union and employer• The relationship should be harmonious• All conflicts and trade disputes should be

resolved accordingly as prescribed in IR acts 1967

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