1.

0 INTRODUCTION

The relationship between employer and employee is not covered by clear

labor laws in the past. This means that employers have unmanageable power
and are free to do something they want to work together. Employees are
oppressed and do not receive fair service. Workers are not like slaves in
which their fate and future lie entirely in the hands of employers.

The industrial revolution in Europe began to raise the working class in

demanding their rights and its influence spread to other countries around the
world. For example, British workers have been a strong group so they can
dominate the local political world and the Labor Party once once led the
leadership of the country.

Labor laws are introduced gradually. Labor and labor relations are
governed by labor laws, although they are still free to enter into contracts and
agree on certain terms. Every term of their service must not be against the
law. The law has guaranteed things like wages, hours, holidays and so on.

In Malaysia, relations between employers and employees are also

governed by labor laws. The development of labor laws in Malaysia began
when many Chinese and Indian laborers were brought to Malaya to work in
mines and rubber fields. The rapid growth and development of ore and rubber
plantations in Malaya has increased from time to time, and the number of
labor increases. Chinese and Indian labor are brought in by the British who
are miners or rubber miners through a particular agent.

In general, labor laws (Ordinances) enacted in the nineteenth and early

20th centuries most touch on immigration, working conditions for forced labor
infiltration, healthcare housing, and so on. In 1912, the Labor Department was
established in Straits Settlements and Federated Malay States. The Labor
Code was enacted for the Federated Malay States in 1912 and for the Straits
Settlements in 1920.

The term industrial relations refers to studying relationships between

employers and their employees in a working environment (Maimunah, 1999).
In addition, industrial relations are also defined as a study of relationships

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between employers, workers and trade unions within the scope of
employment (Malaysia Employment Law & Industrial Relations, 1996). This
definition coincides with what Yong (1996) says that industrial relations are
related to setting agreed systems and regulations within the working
environment. That means, in industrial relations, both employers and
employees have the same legal and equal rights to protect what they feel as
important for them to protect. In the context of this discussion, industrial
relations will lead to relationships between employers and trade unions.

In examining the extent to which industrial relations law and practice in

Malaysia is congruent with the International Labour Code, we should compare
the relevant international convention governing workers' rights with the
statutory provisions of our labour laws and their practice as interpreted by the
quasi-judicial and judicial authorities in Malaysia. In addition corresponding to
the international labour recommendations, which are non-obligatory, we
should also look into the provisions of our Code of Conduct for Industrial
Harmony and evaluate the extent to which they are reflected in industrial
relations practice in Malaysia. This obviously leads us to consider the degree
to which these code guidelines are taken into consideration in the awards of
the industrial court under section 30 (5A) of the Industrial Relations Act 1967.

In general, any industry relations system involves three parties ie

employers, employees and governments. Similarly, the system is practiced in
Malaysia. According to Maimunah (1999), the parties involved in industrial
relations are employers and their organizations, employees and their unions
and governments.

Here we will examine how the forces of globalization and labor laws affect
industrial relations within a chosen organization and ways to overcome the
barriers caused by the forces of globlization and labor laws within the
organization.

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2.0 THE ORGANIZATION

Any operating organization should have its own structure in order to

operate efficiently. For an organization, the organizational structure is a
hierarchy of people and its functions.

The organizational structure of an organization tells you the character of

an organization and the values it believes in. Therefore, when you do
business with an organization or getting into a new job in an organization, it is
always a great idea to get to know and understand their organizational
structure.

Depending on the organizational values and the nature of the business,

organizations tend to adopt one of the following structures for management
purposes.

Although the organization follows a particular structure, there can be

departments and teams following some other organizational structure in
exceptional cases.

Sometimes, some organizations may follow a combination of the following

organizational structures as well.

Yummy Food Sdn. Bhd. was opened in Kota Kinabalu in 1995. This is the
one of fast food restaurant in Kota Kinabalu and it’s grown into the largest
restaurant organization in Kota Kinabalu. This restaurant was one of
successful Bumiputera restaurant.

The mission is "We aim to be the leader in the Quick Service Restaurant
(QSR) industry by maximising Profits and through our Principles of QSC & V

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(Quality, Service, Cleanliness & Value) consistent with the needs of our
Customers, Employees and Community." The vision is “To be our customers'
favourite place and way to eat”.

Yummy Food Sdn. Bhd. mission is to be our customers' favourite place

and way to eat – with inspired people who delight each customer with
unmatched quality, service, cleanliness and value every time. The following
core values guide our actions as we strive to achieve our mission:

 We are committed to our people and to providing opportunity, reward and

recognition, as well-trained and motivated employees are key to our
success.

 We believe in the "three-legged stool" - collaboration with our owner/

operators, employees and suppliers working together - because each leg
of the stool must be strong for the system to succeed.

 We believe in operating our business with openness, honesty and

integrity, while holding ourselves to the highest possible ethical standards.

 We are committed to well-being and to encouraging balance by providing

choice in food and beverage offerings for our diverse customers.

 We believe in giving back to our communities in which we do business

and other causes that promote the health and well-being of children.

 We are committed to growing our business on behalf of our shareholders,

who provide the capital necessary for our company to grow and who
should realize an attractive return on their investments.

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3.0 GLOBALIZATION FORCES

Globalization is a global process that includes various dimensions such as

economic, political, cultural and ideological aspects (Mittelman 1996; Waters
1995). This process has taken place at a fast pace that has triggered a
revolutionary form that led to a change in the life of the world society and
society in this country in particular. According to Ishak Shari (2000),
globalization is an important concept that can help us understand the
transformation of the world community by attracting our attention to
fundamental changes covering economic, political, ideological and cultural
aspects and globalization is also a diverse or plural concept because of

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globalization has its own dimension in which it encompasses aspects of
economy, politics, culture, socialization and ideology.

Globalization covers a wide range of fields and is a multidimensional

phenomenon which includes economics, politics, culture, ideology, language
and the whole aspect of community life. Globalization is also a phenomenon
that goes hand in hand with today's world development. Anything that
happens either inside or outside the country, all the countries in the world will
have access to international issues. The explosion of information technology
is a major medium to the current globalization agenda. This has been
attributed to the diminished world scope of the present and is regarded as a
new era in human history which led to the erosion of borders. Globalization
from the perspective of 'internationalization' is seen by most scholars as
interdependent, while in terms of 'liberalization' it is said to refer to the
removal process of government barriers to movements between countries
with the aim of creating an open and borderless world economy.

3.1 Technological Development in Organization

The power of globalization will encourage technology transfer from

developed countries to developing countries like Malaysia. Through
globalization of modern technology and the transfer of expertise from
developed countries can develop the modern economy structure of
developing countries. In this economic transfer, employees in this
organization will be taught the method of technology handling through
advanced training and collaboration in the context of human resource
research and development (R & D). Exercises that involve workers in this
organization will eventually produce local people who can master foreign
expertise and advance their own organization and country. This can be
seen in HITEC technology in Malaysia, which relies on technology transfer
from Japan, design technology, quality control, communication technology
and other management expertise.

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3.2 Economic downturn

The power of globalization has also brought a negative impact on

developing countries such as Malaysia which has an impact on selected
organizations. Among the obvious effects of economic globalization are
the economic downturn. This economic catastrophe occurs when large
inflows of international capital into the Asia Pacific region or developing
countries will cause the regional financial system to become more volatile.
This is because money can move out just by crossing the boundaries of a
country by just pressing the computer alone. Therefore, with the sudden
withdrawal of foreign capital from a country, a country will become
bankrupt. As a result, industrial operations can cease and this will
increase unemployment and increase debt burden which will also affect
the organization's travel.

3.3 Spectacular Attack

The economic downturn is due to the fall in the value of currencies

and the stock market as a result of speculators' toys. When the value of
the currency falls, then investors' confidence is also lost as investors draw
capital to avoid losing themselves in the long run. An example is the Asian
financial crisis in 1997 which has opened the eyes of the world when
George Soros of the famous financial speculator has manipulated the
value of the Pound Sterling resulting in the fall of the Bank of England and
the black history which was difficult to forget by stock investors, Black
Wednessday in 1992. Impressions Of these, the backdrop of going
bankrupt and sustained depends on the developed countries to run its
economy. Therefore, the impact of the turmoil, it will force the involved
countries to impose tight monetary, raising interest rates and businesses
will be weak, domestic investment will decline and domestic demand will
be affected.

3.4 Economic Convergence

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 The opening of economic and market gates enabled economic
monopolies to occur in a country. This situation often applies to developed
countries on developing countries as well as to new industry-based
organizations. The emerging economic wealth will be exited by foreign
investors. Once developed countries are rushing out of the emerging
economies then they will also exploit local labor with low wage rates. Thus
the situation is called the colonization of the developed economies of the
developing countries.

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4.0 LABOUR LEGISLATION FORCES

4.1 Severance Pay at Different Tenure Durations

Severance pay is regulated by the “Employment (Termination and

Lay-off Benefits) Regulation of 1980”, which is based upon Section 60J of
the EA. To be qualified for the payment, the employee must have 12
months or more length of service (Section 3(1)). The amount varies
depending on length of service (Section 6(1)): (a) ten days’ wages for
every year of employment under a continuous contract of service with the
employer if he has been employed by that employer for a period of less
than two years; or (b) fifteen days’ wages for every year of employment
under a continuous contract of serviced with the employer if he has been
employed by that employer for two years or more but less than five years;
or (c) twenty days’ wages for every year of employment under a
continuous contract of service with the employer if he has been employed
by that employer for five year or more, and (d) pro-rata as respect an
incomplete year, calculated to the nearest month.. The amount is the
same in the cases of ordinary dismissal and dismissal because of
redundancy. Termination due to expiration of the employment contract
(i.e. fixed-term contracts) is also covered by the regulation. There are
some exceptions that exempt the employer from the payment of
severance pay such as termination due to mandatory retirement age,
voluntary quit, or dismissal because of a misconduct, after due inquiry.

4.2 Contract of Service

Everyone who works with someone, or any employer who takes

someone to work, has entered into a contract, whether they are aware or

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not. However, the further description of the service contract is not that
easy. Various terms, terms, tasks and responsibilities in the contractual
relationship between employer and employee make the service contract
so complex.

A contract entered into by two parties is covered by contract law. The

basis that constitutes a service contract is actually the principle and
principle of a regular contract. At the stage of formation there is no
difference between the contract of service and the general contract.

Service contracts have unique characteristics in which there is a duty

and responsibility from employers to employees and employees to
employers. Such duties and responsibilities exist either as implied by the
Common Law or provided by written law. The contractual relationship
between employer and employee exists from the agreement entered into
by both parties.

There is a special situation in this form contract due to the existence

of personal responsibility on the part of the employee to serve and abide
by his employer, and on behalf of the employer to pay for the services
rendered and to perform any responsibilities to his employees. In short, a
service contract is an agreement between an employer and an employee
whose rights and responsibilities are established and enforced by labor
laws. In general, there are six elements to form a contract that can be
enforced.

4.3 Wages

Wages are an important element in a service contract. Wage

payments are the result of the contractual relationship between the
employer and the employee. Wages paid by the employer to the
employee due to the relationship of the contract. Both employers and free
workers stipulate the amount of wages to be paid by the employer and
how the payment of wages is made. If there is a collective agreement
between employers or employers' unions and the trade unions in relation

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to any matter relating to wages, it is usually the employer and employee
will comply with the agreement.

The Employment Act does not set a minimum wage amount. It only
provides definitions, payment methods, deductions, trucks and wage
preferences only. The Employment Act only specifies the minimum
requirements that an employer has to adhere to. This means the employer
is free to set other terms in the service contract. Provided that such
conditions do not violate the provisions of the Act, and benefit the
employees.

Wages can be paid by employers to employees based on hours,

days, weekly or monthly. This is up to the agreement between the
employer and the employee. In addition, wages are also paid according to
the amount of work done by the piece-rate work. Wages paid to
employees because there is a contractual relationship of the employer.
This means that if the employer is unable to provide any job or task to be
performed by the employee, the employer remains liable to pay salaries to
its employees. All conditions stipulated in this act shall only apply to
employees covered by this Act (ie as they may apply). For workers who
are not covered by this act, the conditions in respect of wages is subject
to the terms of the agreement entered into with the employer.

4.4 Trade Unions

One of the main reasons employees joined the trade union was due to
dissatisfaction with management. Usually this dissatisfaction issue is due
to the unreasonable salary payment, no security at work, and also the
unhealthy management attitude towards the employee. Workers want a
paycheck that is commensurate with the work done. For example, if they
are doing a lot of work at a certain time, they want more rewards and suit
the burden of the task.

Safety at work is also very important for workers. For example, if they
work at a construction site, personal protective equipment should be

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 provided to prevent accidents and injuries during work. Certain
compensation should also be provided by the employer to them and their
families in the event of an undesirable accident at the workplace.

In addressing these two issues, if the attitude of management that

does not seem to respect workers will cause employees to feel
comfortable joining trade unions to complain about it. Employees want
them to be respected by management and want to feel they are important
in the organization.

5.0 SUGGESTIONS

5.1 Constraints Caused by Globalization Forced

Technology

Technology always is the important impact of the globalization, and

technological innovation also part of promoting and speeding up
globalization, it also used to recurrently influencing work settings.
Nowadays the technological advances occur rapidly and all around the
world, some of the industry has responded by forming joint ventures,
overseas research and development organization and etc. All the new
organization will speed up the world technological innovation and help
them own county develop to globalization and this interaction will
continue. To make sure the technological innovation keep going on and
without influence the working setting, our country try the best to
globalization it. Examples transfer of technology through licensing,

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creation of new business and also joint ventures. All these interactions
had been done to increased the number of subsidiaries of the
multinational corporations and have created new strategic alliances.

In the twentieth century, which machines have increasing rapidly and

replaced the skills of workers nowadays. In a production process in which
science and technology are central, knowledge and not skill defines the
process. Now most of the university employees spend few hours in a day
in front of the computer screens. They linked to their colleagues through
internet services to find out their needs.

Economy

After Malaysia’s independence, Malaysia has been one of the most

globalized developing countries. Globalization is one of the major factors
to Malaysia’s phenomenal economic development and growth. In addition,
Anwar lbrahim had said that globalization has done us a good service and
especially in the economic sector. In 1992, Malaysia had offered to reduce
the tariffs on 79% of imports ,however, non-tariffs has converted into
tariffs, mainly for import licenses involving approval permits(APs). With
this, Malaysia has benefited from increased manufactured exports and
consumer welfare has been improved. On the other hand, Malaysia’s
Gross Domestic Product (GDP) ratio has increased, the trade
liberalization decreasing, and indicating the increase in economic
liberalization year by year. In facts, the globalization has directly improving
the economics of Malaysia. Similarly like what Stiglitz said (2009), who
defined globalization as “closer integration of countries and people of the
world” and the growing importance of internationally active corporation
moving capital, goods, and technology across borders.

Economic liberalization has in indirectly made the economy

increasingly susceptible to external shocks, and undermined the
expansion of domestic industrial capacity and capability. Malaysia has
incurring trading losses from RM 809 million in 1961 to RM 53,691 million

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in 1997, this will led to a decrease in the export purchasing power, and
also will reduced the quantity of imports into Malaysia.

National Security

The impact of globalization on national’s security is complex.

Furthermore, it could be affecting the political and economic conditions
within the states. However, the impact of globalization is not necessarily
negative. Some of the participants have argued that some ways the forces
of globalization have brought about greater stability in the region.
Nevertheless, the impact on globalization on the national security
environment is not fully positive. Globalization may actually serve to
aggravate long-standing tensions. This is the challenges to the whole
world and many of these are represent long-term threats which have
traditionally fallen outside the realm of foreign policy in the organization.

5.2 Constraints Caused by Labour Legislations Forces

Wages
Malaysian workers endured a reduction in real wages during the
recent economic crisis. While inflation and the cost of living generally
increased, workers faced pay cuts and wage freezes. YAB rightly pointed
out during our meeting with your good self on August 6th 1998 that a
reduction of wages will result in a decrease in domestic demand and a
detriment to full economic recovery. We therefore call on the government
to pursue a wage policy that increases domestic demand and rewards
workers, especially those in the lower income group. This includes:
 Revising the salary of civil servants every 3 years, in line with the
private sector.
 Supporting a monthly wage scheme in the plantation sector.
 Calling on employers not to deny or delay collective bargaining
negotiations.

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  Implementing the Prime Minister’s pledge of introducing a
minimum wage of RM 1,200 for all workers in Malaysia.
While noting the recent pay revisions of five corporatized government
agencies that were outstanding since 1995, MTUC calls for the setting up
of a proper bipartite regulatory mechanism with the mandate to discuss
and decide on labour matters in the corporatized agencies. Proper
negotiating machinery must be set up to implement salary revision every
three years.

Social Security
The Economic crisis has clearly shown the need to correct, upgrade
and broaden the scope of the Malaysian social security system. There are
few areas of critical concern.
The social security system should be broadened to include security
against loss of employment. Workers who loss their employment due to
redundancy or company bankruptcy should be guaranteed retrenchment
benefits. Such a scheme would be comparable to Danaharta’s role in
relieving banks of NPLs. To this end, MTUC has proposed the National
Retrenchment Fund be implemented. We urge the government to hasten
the implementation of such a scheme.
The government should also introduce regulations on Voluntary
Separation Schemes introduced by the private sector as a response to
redundancy and restructuring. Some companies have forced employees
to accept voluntary redundancy by issuing notices that if such schemes
are not taken up, the company will be forced to introduce compulsory
retrenchment with lower benefits. Such "forced" separation schemes
should not be allowed.
In order to protect workers retirement savings held in the Employees’
Provident Fund, the government should amend the EPF Act to make the
institutions responsible to its members. This includes ensuring the
Investment Board is accountable to the Board of Directors, the Board of
Directors should be accountable to members and separating the position
of Executive Director from the Chairman of the Board. Through such

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measures, the EPF will operate with greater transparency and
accountability. In particular, the EPF should not be used to provide huge
loans to the private sector at below market rates, which in the long run will
negatively affect the returns to members. Government is urged to take
note of the significant improvement in the life expectancy age of average
Malaysians and rise the retirement age to 60 years for workers in the
public and private sector. This would also help eliminate our dependency
on foreign labour.

Union as a Relevant and Important Organization

Trade unions are going through a difficult phase worldwide. The

general consensus is that unions are in a crisis situation, with declining
membership and loss of power. Union opposition is growing and more and
more organizing efforts are falling short. The loss of political clout and a
weakened economic position have unions on the defensive in many
countries and this decline has occurred more rapidly in the United States
than in other countries (Misser, 2000). According to Eisenhauer (1998),
Rubeinstein (2001), and Budd (2005), a general explanation for the fall of
union membership are influenced by the economic, social, institutional,
and political factors specific to each country.

The 1980s onwards were generally viewed as an important period in

the evolution of trade unionism across most countries. Changing
conditions in world markets began to transform the organization of work.
New technology, recession, and a much greater level of uncertainty in the
global market had an impact upon the behavior of employees and
industrial relations systems. The compositional shift in the labor market
relationships, which has seen sharp falls among the traditional sectors of
highly unionized manual labor, has been a common feature in most
countries.

Besides these factors, the greater employment for non-manual

workforce, the reduction of personnel in large workplaces, the growth of
small firms, the increased participation of female workers, new attitudes

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towards solidarity and individualism on the part of workers, and the
influence of privatization have had general implications on the aggregate
pattern of unionization across countries. These environmental changes
have caused firms to reshape management strategies that emphasize on
core competences and knowledge work and to expand by contracting out
parts of their businesses through a wide network of corporate alliances
(Heckscher, 2001).

Unions are inherently different from commercial organizations in terms

of their historic development, the voluntary nature of their membership,
their sources of power, their objectives, and overall social and political
position (Warner, 1975). Consequently, this demands separate scrutiny
from that of commercial organizations. The study of unions as
organizations requires an awareness of the unique functions of these
organizations and the nature of member attachment to their union. There
has been much discussion as to the nature of union problems and how
they can be solved.

Basically, the union offers the promise of a number of benefits in order

to solicit the members’ commitment. Some of the benefits include
maximizing wages and employment of their members within the frame of
the wage or work contract of employment; establishing a joint rule-making
system which both protects their members from arbitrary management
actions and allows them to participate in decision making within the
organization for which they work; allowing them to express the social
cohesion, aspirations or political ideology oftheir membership, and etc.

Trade unions have long served an important and vital role in the
industry, acting as the vanguard to protect the worker’s rights and financial
livelihood, along with their health and safety (Waddington & Whitston,
1997; Salamon, 2000). However, due to the changing environmental
factors surrounding unions, these roles are changing to a broader
spectrum from time to time.

Bonus

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 A provision relating to the bonus is not specified in the contract of
employment. This is because the bonus is the right employer. Employers
have the right to include a provision on this matter, or otherwise. However,
many awards were given in relation to the bonus question. According to
the Oxford Dictionary, the bonus is defined as "a reward to employees
other than salary." In other words, not a duty upon employers to provide
bonuses to its employees, but it can be given as an incentive for services
rendered by employees. Most of the questions raised in the court was
whether the bonus must be provided or otherwise.

Type of bonus is contractual bonus is considered mandatory. This

means that this bonus has been specified in the contract of service as a
compulsory payment made by the employer, other than salary. Time and
manner of payment usually have been determined in the agreement. That
amount was also determined. It will still be paid whether the employer
derives profit or otherwise. The employer also can state that a change in
form and amount of the bonus should be changed from time to time. This
depends on the economic situation that is sometimes brilliant and
sometimes not very satisfactory.

The company also provides bonuses to its employees depending on

the profit earned by the company. If the company reaches a considerable
profit, then the bonus amount will be increased. Normally, bonuses are
awarded at the end of the year. The bonus payment, a bit of a drive and
can improve the spirit of the workers to work better. The bonus is also
able to guarantee the lives of workers as well as to meet the shortage of
labour income.

In my opinion, this bonus is very effective in improving the quality of

their performance in improving their productivity. This will help the
company improve a company's profit.

6.0 CONCLUSION

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 Industry and employee relations are an important area for every manager,
especially human resource managers. This is because the field is related to
the relationship between the employer and the worker in the workplace.
Therefore, to study it it requires understanding of the concept of industrial
relations. Industrial relations are particularly difficult as they involve
employees and trade unions represented by such workers. In this chapter the
discussion has touched on important aspects such as participation in trade
unions as well as a collective bargaining process by representatives from both
employers and workers.

In conclusion the act and the law provided for the purpose of protecting
the employees of the organization. Negara Malaysia have the deed and the
law of its own but based on much the same basis as the number of hours
worked, wages, holidays, maternity leave and other. Availability in hiring can
be done by creating a work for hire workers either orally or in writing. Service
contract may exist when an individual who is employed and paid a salary. The
existence of employer-employee relationship occurs when both parties have
complied with the terms and conditions agreed upon.

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