Chapter 8

INDUSTRIAL RELATIONS

After reading this chapter, you should be able to:

1. Understand industrial relation in Malaysia
2. Understand collective bargaining
3. Understand industrial action
4. Understand dispute solving procedures

ASSESSMENT SPESIFICATION TABLE:

CLO 2: Illustrate properly the procedures and processes in
managing human resource
PLO 1: Apply fundamentals principles of business and
soft skills in related business and other related fields to
be outstanding and successful in the future
LD 1: Knowledge (C3 – Application)

PowerPoint Presentation
Rohana Binti Mat
JP, PKB
 Understand Industrial Relation In Malaysia

 Systems that encourage industrial harmony

 It is for the regulation of relations between
employers and workmen or employees and their
trade union and the prevention and settlement of
trade disputes.
 Focus on 3 aspects:
– Relation between employer and union
– Employment law
– Discipline procedures and terminating service contract
 Tripartite employment relations system
– Government, unions and employers

 National Labor Advisory Council has

representatives from:
– Ministry of Human Resource (government)
– Responsible for matters related to employment
relations
 Malaysian Employers Federation (employers)
 Malaysian Trades Union congress (union)
The main objectives of industrial relations system are:

 To safeguard the interest of labor and management by securing the

highest level of mutual understanding and good-will among all those
sections in the industry which participate in the process of production.

 To avoid industrial conflict or strife and develop harmonious relations,

which are an essential factor in the productivity of workers and the
industrial progress of a country.

 To raise productivity to a higher level in an era of full employment by

lessening the tendency to high turnover and frequency absenteeism.
 To establish and promote the growth of an industrial democracy based
on labor partnership in the sharing of profits and of managerial
decisions, so that ban individuals personality may grow its full stature
for the benefit of the industry and of the country as well.

 To eliminate or minimize the number of strikes and lockouts by

providing reasonable wages, improved living and working conditions,
said fringe benefits.

 To improve the economic conditions of workers in the existing state of

industrial managements and political government.

 Socialization of industries by making the state itself a major employer

 Vesting of a proprietary interest of the workers in the industries in which

they are employed.
Relevant Act Related to IR in Malaysia

–Employment Act 1955

–Trades Union Act 1959
–Industrial Relations Act 1967
–Occupational Safety and Health Act 1994
–Employees’ Social Security Act
–Workmen’s Compensation Act
Trade Union
Types of Trade Union

 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)
Role of trade union

 Representation
Trade unions represent individual workers when they have a problem at work. If
an employee feels he is being unfairly treated, he can ask the union
representative to help sort out the difficulty with the manager or employer.
Unions also offer their members legal representation. Normally this is to help
people get financial compensation for work-related injuries or to assist people
who have to take their employer to court.

 Negotiation
Union representatives, discuss with management, the issues which affect people
working in an organization. Trade unions negotiate with the employers to find out
a solution to these differences. Pay, working hours, holidays and changes to
working practices are the sorts of issues that are negotiated. In many workplaces
there is a formal agreement between the union and the company which states
that the union has the right to negotiate with the employer. In these
organizations, unions are said to be recognized for collective bargaining purposes.
 Voice in decisions affecting workers

The economic security of employees is determined not only by the level

of wages and duration of their employment, but also by the
management’s personal policies which include selection of employees for
lay offs, retrenchment, promotion and transfer. These policies directly
affect workers. The evaluation criteria for such decisions may not be
fair. So, the intervention of unions in such decision making is a way
through which workers can have their say in the decision making to
safeguard their interests.
Role of Government
 The Ministry of Human Resource plays a major role in the Malaysian
industrial relation system

 It is responsible for preparing the legislation which establishes the rights

of employers and employees
– Industrial Relation Act 1967
– Trade Union Act 1959

 Also enforcement of labor standards, encouragement of save practices

at work and provision of training for the workforce

 Department of Industrial Relations and Department of Trade Union

actively help employers and employees who request assistance and
generally take steps to improve the relationship between them

 Actively involved in settling trade disputes to maintain a harmonious

relationship
 Collective Bargaining

 Definition
–Negotiation between employer and workers
–About terms of employment and working
conditions
–With objective of reaching an agreement
 Representation
–Employer - its management
–Workers - their union representative
Collective Bargaining Process

Ready to bargain – present the demands

Develop the bargaining strategy – info to nagotiate

Implement bargaining process – trades

off some demands to gain others

Signing of collective agreement

Negotiating Guidelines
1. Set clear objectives for every bargaining item and understand on what
ground the objectives are established.
2. Do not hurry
3. When in doubt, caucus with associates
4. Be well prepared with firm data supporting the position
5. Always strive to keep some flexibility. Don’t get out on a limb
6. Don’t just concern with what the other party says and does, find out
why?
7. Respect the importance of face saving for the other party
8. Constantly be elert to the real intentions of the other party with
respect not only to goalas but also to priorities
9. Be a good listerner
10. Build a reputation for being fair but firm
11. Learn to control your emotions. Use emotion as tools not obstacles
12. Be sure as each bargaining move its related to all other moves
13. Measure each move against objectives
14. Pay close attention to the wording of every clause renegotiated –
avoid be sources of grievances
15. Collective bargaining are part of compromise process. There is no
such thing as having all the pie
16. Consider the impact of present negotiations on those in future years
 Industrial Action

 The only forms of employee industrial

action recognised by the labour laws are:
– Picketing
– Strike

 Employer also has the right to engage in industrial

action
 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
Picket
 The most common form of industrial action taken by employee
 Done to comunicate 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 (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
Strike

 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
 2 types of strike:
– Strike relating to collective bargaining
– Strike that has no relation to collective bargaining
Strike

 Strike relating to collective bargaining

– when employer is not willing to provide
collective bargaining or no resolution during
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
Strike

 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
 Procedures in solving industrial disputes

 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
 Procedures in solving industrial disputes

 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
– 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)
 Procedures in solving industrial disputes

 Mediation
– 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
 Procedures in solving industrial disputes

 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
– Industrial could award need to be followed by
employer and union
 If you can’t explain it
Simply
You don’t understand it well
enough