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We finally have clarity about the changes that the government plans to make to the Industrial Relations Act, as the Industrial Relations (Amendment) Bill 2019 was tabled in Parliament for first reading on 7 October 2019 and was passed by the Dewan Rakyat on 9 October 2019.

(NB: In our previous article in December 2018, we set out the key changes to the Industrial Relations Act 1967 that were proposed by the Minister of Human Resources (“Minister”). At the time of writing, the amendments were still in draft form as the government was still in consultation with various stakeholders.)

As the Industrial Relations (Amendment) Bill 2019 has been passed by Dewan Rakyat, we set out below the key changes proposed by the amending bill:

Representation during Conciliation Meetings for Unfair Dismissal Claims

The amendments seek to allow a workman who is under a mental disability to apply to the High Court for an order to appoint a “guardian ad litem” for the workman, for the purposes of representing the workman at the conciliation meeting.

Representation at the conciliation meeting is also widened; whereby the employer and employee can appoint “any other person except an advocate and solicitor” to represent them in the conciliation meeting, so long as such authorisation is in writing and approved by the Director General of Industrial Relations (“DGIR”).

Referral of Unfair Dismissal Claims to Court

The task to refer complaints of unfair dismissal to the Industrial Court in the event that parties are unable to reach a settlement will now be undertaken by the DGIR instead of the Minister of Human Resources (“Minister”).

Currently, the Minister has the discretion to refer representations to the Industrial Court if “he sees fit”, meaning there is a filtering mechanism whereby the Minister could refuse to refer claims which he thinks are frivolous or vexatious. Under the amendments, where the DGIR is satisfied that the matter cannot be settled, the DGIR “shall” refer the matter to the Industrial Court for an award. This means in the event parties cannot settle the matter before the Industrial Relations Department, the referral is automatic and does not involve the discretion of the DGIR.

Power of the Court

Additional powers are given to the Industrial Court, including (among other things):

  • Continue to conduct the proceedings notwithstanding the death of the workman who made the representations under subsection 20(1)
  • To award back wages or compensation in lieu of reinstatement or both in relation to a reference under subsection 20(3) in respect of a deceased workman, to his/her next-of-kin
  • To include interest up to the rate of 8% p.a. on awards, calculated from the 31st day from the day of the making of the award, until the award is fully satisfied. The Industrial Court has the discretion to determine any other day from which the interest should run, on application by either party and in the event there are special circumstances to do so.
Appeal against an award to the High Court

The amendments will allow any party who is dissatisfied with an award of the Court which may now appeal to the High Court within 14 days from the date of receipt of the award. The procedure for the appeal will follow the Rules of Court 2012 (rules applicable to civil courts) and will be treated as if it is an appeal from a Sessions Court to High Court (with such modifications as the circumstances may require).

Currently, any party who is dissatisfied with the court’s decision will have to challenge it by way of judicial review which is a proceeding that generally only involves a consideration of the decision-making process and not the merits of the decision.

Increased Penalties

The amendments increase the penalties for contravention of the Act. For example, the penalty for non-compliance with an Industrial Court award or collective agreement is increased from RM 2,000.00 to RM 50,000.00.

The penalty for a person who knowingly expends money in furtherance or support of an illegal strike or lockout, has been increased from RM 500.00 to RM 5,000.00.

A person who instigates an illegal strike or lockout shall on conviction be liable to imprisonment for a term not exceeding 5 years (previously, 1 year), and / or to a fine not exceeding RM 5,000.00 (previously RM 1,000.00).

Trade Unions

The changes relating to the provisions on trade union include the following:

  • The Minister will no longer decide whether a workman is employed in a managerial, executive, or security capacity; this will be determined by the DGIR
  • A new provision is inserted which provides that if there is more than one trade union that can represent employees, employees will be given the right to vote by secret ballot to determine their preference for the trade union that shall have the sole bargaining rights to represent them
  • During collective bargaining, trade unions will be able to raise questions of a general character relating to:

→ the promotion by an employer of any employee from a lower grade or category to a higher grade or category;

→ the transfer by an employer of an employee within the organisation of an employer’s profession, business, trade or work, provided that such transfer does not entail a change to the detriment of a workman in regard to his terms of employment;

→ the employment by an employer of any person that he may appoint in the event of a vacancy arising in his establishment;

→ termination of an employee due to redundancy or re-organisation;

→ the dismissal and reinstatement of an employee by an employer.

Trade disputes relating to refusal to commence collective bargaining or deadlock

Under the amendments, trade disputes which relate to a refusal to commence collective bargaining or a deadlock in collective bargaining can only be referred to the Court if parties have given their consent in writing, unless (among other things):

  • the trade dispute refers to essential services (as defined in the First Schedule);
  • the trade dispute relates to the first collective agreement;
  • the trade dispute would result in acute crisis if not resolved expeditiously; or
  • the parties to the trade dispute are not acting in good faith to resolve the trade dispute expeditiously.
Restraint of strikes and lock-outs

Additional power is given to the Minister to order a strike or lock-out to stop in the event that the strike or lock-out lasts beyond a certain time or extends beyond a certain scope, thus endangering the life, personal safety or health of the whole or part of the population.

Commentary

It is still too premature to comment on whether the amendments will result in positive development of the employment landscape.

For instance, it is unclear whether the transfer of the duty to refer complaints to the Industrial Court from the Minister to the DGIR will necessarily reduce backlog; under the amendments, the referral appears to be automatic (no discretion involved) which could potentially result in floodgates being opened as all unsettled complaints of unfair dismissal, regardless of merits, will end up in the Industrial Court.

Employers may be rightfully concerned that the amendments do nothing to prevent frivolous complaints from being filed, and whether the infrastructure of the Industrial Court can support an increased volume of cases without sacrificing expediency.  The Industrial Court currently does not have any summary procedure to quickly deal with frivolous cases, which means even a merit-less claim will have to be litigated through trial, driving up costs for all parties.

While the initial draft amendments had provisions to deal with complaints of employment discrimination, this has been completely removed from the current bill. It therefore becomes questionable how anti-discrimination provisions will be enforced; perhaps more clarity will be obtained once the amendments to the Employment Act (which are supposed to include the anti-discrimination provisions) are tabled.

***

This article was written by Donovan Cheah (Partner) and Adryenne Lim (Legal Executive). Donovan has been named as a recommended lawyer for Labour and Employment by the Legal 500 Asia Pacific 2017, 2018 and 2019, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work. 

Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory.  Have a question? Please contact us.

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