CHAPTER 9

EMPLOYEE AND LABOR RELATIONS

INTRODUCTION TO THE CONCEPT OF EMPLOYEE AND
LABOR RELATIONS

Labor relations concept is similar to industrial relations concept

Labor relations refers to the relationship between an employer and his

employees pertaining to the employees’ employment or non-
employment, terms and conditions of work, grounds of termination of
employment, etc.

Each party has its rights and obligations; thus each party must be aware
of these rights and obligations in establishing a harmonious industrial
relationship.
LABOR / TRADE UNION
Trade union refers to an organization that represents employees’
interests to management on issues such as wages, work hours and
working conditions.

Section 2 of the Trade Unions Act (1959) provides the definition of a

trade union. Implications of this provision are:

1.Employer’s union must be separated from the employee’s union.

2.The membership of the trade union must be confined to geographical

location, i.e., Peninsular Malaysia, Sabah, OR Sarawak.

3.A trade union of a general nature is not allowed. The trade union must
be specified within a particular trade, occupation or industry.
The reasons why workers join trade unions:
1.Economic benefits – higher pay, improved medical benefits, bigger
pensions, longer annual leaves, and more rest breaks.

2.Social needs – enjoy being around others who have similar interests
and desires.

3.Leadership roles – employers often notice employees who are

leaders in the union.

4.Urge to do so / peer pressure.

Requirements for membership of trade unions in Malaysia:
1.Must be above 16 years old.

2.Employed in trade, occupation or industry of the union to which he

seeks membership.

3.Members who are below 18 years old do not have voting rights on
matters of:
a. Strikes and lock-outs
b. Imposition of levy
c. Dissolution of the trade union
d. Amendments of the rules of the trade union

4.Workers from the private sectors can only join unions formed by
workers from the same trades, occupations or industries where he works.

5.Workers from the public sectors can only join unions formed by workers
in the same occupation, department or ministry.
Employees who are not allowed to join trade unions in
Malaysia:
1.Police officers

2.Prison service officer

3.Armed forces

4.Those from confidential and security work

5.Employees in the professional and managerial group in the public

sector – unless get the permission fro the Chief Secretary to the
Government
Procedures for registering a trade union:
A trade union must be registered within 1 month from the date of
establishment.

Registration period can be extended at the discretion of the

Registrar of Trade Unions.

Consequences for not registering a trade union [Section 19, TUA]:

o Considered to be unlawful association

o Trade union or its members cannot get involve in any trade

dispute or promote, organize, or finance any strike or lock-out

o Dissolve and funds disposed of in accordance with the rules

o Involvement of members in any activities (except for the purpose

of dissolution, disposal of its funds, or appeal against the refusal
to register, withdraw or cancel) is not allowed
Procedures for registering a trade union:
1.A prescribed form must be signed by at least seven members of the
union & any of them can be officers.
 Names, occupations and addresses of those members making
the application.
 Name of the trade union and the address of its headquarters.
 Titles, names, ages and occupations of the officers of the trade
union.

2.Enclosed a printed copy of the rules of the trade union.

 Registrar also has the right to require other information regarding
the officers of the trade union.

3.Registrar, using his discretion, may refuse registration of a trade union

or may issue the union a certificate of registration.
 Reason for refusal: there is already another trade union with the
same name, objectives, etc.
Procedures for recognition of a trade union:
Registration alone does not mean that the trade union can function
effectively. Must get recognition by the other party!
 If not recognized, collective bargaining cannot commence.

The registered trade union must fill out a claim for recognition form and give
it to the employer.
 A copy of the union’s constitution must be given together with this claim.

Employer must reply within 21 days after receiving the claim. Responses
can be either one of the followings:
1.To give recognition
2.To refuse recognition with reasons given
3.Request the Director-General of Industrial Relations to verify on certain
particulars about the trade union.

If employer refuses to reply or to give recognition, the trade union can

report the matter to the DG.
If the employer refuses to recognize even after the instruction to
recognize has been given by the DG, the matter can be brought to the
Minister of Human Resources. MoHR decision is final and binding.
COLLECTIVE BARGAINING

Collective bargaining refers to negotiation between trade unions and

employer.

Collective bargaining is a mean of ensuring harmonious industrial

relations.
 Improvement in wages and other terms and conditions of work
 Protect employees right – check any abuse of power by employer
 Participate in decision making in areas of vital interests

Collective bargaining procedure for private sector is different from

collective bargaining procedure for public sector.
Collective bargaining procedure (Private Sector)

Invitation to commence CB
• By TU / Employer
• In writing + proposed CA

Party who receives the invitation

Accept
• Within 14 days
invitation
• Reply in writing – accept / refuse

Refuse invitation / No reply / CB

does not commence within 30 days

Written complaint to COLLECTIVE

DGIR BARGAINING

Trade dispute
Managerial prerogatives:
Managerial prerogatives refer to lists of subjects on which CB is not
possible if the employer refuses to bargain on these subjects:

1.Promotion of any employee

2.Transfer of any employee within the organization – but not to the

detriment of the employee’s terms of employment

3.Employment of any person when there is a vacancy

4.Termination of an employee due to redundancy or reorganization

5.Dismissal or reinstatement of an employee

6.Assignment or allocation of duties and tasks to an employee

Collective bargaining (Public Sector)
Several agencies are involved in public sector CB, including Salaries
Commissions and Salaries Committees; Public Service Department; The
National Joint Councils and the Departmental Joint Councils; and Public
Service Tribunal.

These agencies involve in discussions and exchanging of ideas. They DO

NOT negotiate.
 Wages and other terms of service are made unilaterally without
consulting with the trade unions.
CB is non-existent in the public sector

YDPA or State Authority will be the authority to allow any dispute to go to

arbitration by the Industrial Court
Collective agreement
A successful CB will result in collective agreement.

Collective agreement is an agreement in writing, concluded between

employer on one hand and the trade union on the other relating to the
terms and conditions of employment and the work of workmen.

Both parties will jointly deposit /send a CA to Registrar of the Industrial

Court within 30 days of the date on which agreement was entered.
 CA must be in writing & signed by both parties
 Include the agreed terms and conditions of employment
Authorized the CA by accepting or refusing to approve the agreement
 Amend the agreement

Once approved, CA is binding to:

 the parties of the agreement
 all employees who are employed by the employer in the organization
 all employees who are subsequently employed by the employer
 TRADE Definition: Any dispute between an employer
and trade union members.
DISPUTE

Typical of industrial actions:

1. Strike – the withdrawal of work by a group of employees.

2. Lock-out – an industrial action similar to strike taken by the employer

against the employees.

3. Picketing – industrial action by unionized workers who are either on,

or are trying to gather support for, a strike by assembling near the
entrance to the employer’s premises.
Methods for settling trade disputes:
Direct negotiation
The dispute parties come together (face-to-face) willingly to discuss their
disputes until a satisfactory compromise is reached.
 Solution: mutual decision without involving outside parties

Conciliation
The process of arriving at a settlement of a trade dispute with the help of a
third, neutral party.
 Third party is Department of Industrial Relations (i.e., officers)
 Conciliation may be requested voluntarily by the parties or DGIR
 DGIR requests are based on “in the public interest” policy
 Conduct separately or jointly
 Officers can only help the parties to compromise; cannot insist to accept
recommendations and advice
 Officers’ roles: identifies issues in a dispute & promotes a settlement
through recommendations and advice
Methods for settling trade disputes:
Mediation
The process of arriving at a settlement of a trade dispute with the help of a
third, neutral party.
 Third party is not from the government but an unbiased and impartial as
well as respected and trusted person

Arbitration
An impartial third party is given the authority to settle the dispute by
examining the information given by both sides and making a judgment.
 Power to arbitrate labor disputes: Industrial Court
INTERNAL EMPLOYEE RELATIONS

Grievance refers to an individual workman’s complaint concerning terms

and conditions of employment such as wages, working hours, or
conditions of employment against the employer.

How to handle grievance?

1.Create a conducive work environment that will not promote
dissatisfaction among employees
2.Talk with the employee about his grievance – be a good listener
3.Investigate and handle each case as though it may eventually result in
an arbitration hearing
4.Comply with procedure for handling the grievance
5.Visit the work area of grievance
6.Examine the grievance’s personnel record
7.Fully examine prior grievance record
8.Conduct grievance discussion privately
9.If employee is a union member, ensure the presence of his
representative
However, a HR executive should avoid the following actions:

1.Discuss the case with the employee representatives without the

presence of grievant

2.Make arrangements with individual employee that are inconsistent with

the legal provision

3.To bargain over items not covered by the contract

4.Trade a grievance settlement for a grievance withdrawal

5.Deny grievance on the premise that your “hands have been tied by
management”