Once a collective agreement is signed between the employer and the trade union, section 16 of the Industrial Relations Act 1967 (“IRA 1967”) requires parties to jointly deposit such agreement with the Industrial Court for the purposes of cognizance.
However, does this requirement also apply to all other types of agreements between the employer and trade unions?
Recently, the High Court had to consider this issue in National Union of Bank Employees (NUBE) v Mahkamah Perusahaan Malaysia & Anor [2022] CLJU 1806.
Brief Facts
- HSBC Bank Malaysia Berhad (“Bank”) is a member of the Malayan Commerce Bank’s Association (“MCBA”). Over the years, MCBA on behalf of its members, entered into a series of collective agreements with the Union.
- On 24.6.2010, the Bank and the Union entered into a memorandum of agreement, which regulates the process regarding outsourcing and workforce restructuring initiatives that impact employees falling within the scope of the collective agreements (“MOA”).
- When the Bank invited voluntary separation scheme applications from its employees, the Union was of the view that the Bank’s actions breached the MOA and filed a complaint to the Industrial Court.
- The Industrial Court held that the MOA did not have any legal effect, as it was not deposited in the Industrial Court pursuant to section 16 of the IRA 1967. The Industrial Court also held that since the Union did not take any steps required by law to make the MOA binding, it can only mean that the Union did not intend for it to be binding.
- Aggrieved with the Industrial Court’s decision, the Union filed an application for judicial review at the High Court.
High Court’s Findings
The High Court held that since there was an existing collective agreement in place between the Bank and the Union, any subsequent agreement between parties would need to be deposited with the Industrial Court and accorded cognizance.
This also includes any agreement which purports to alter or vary the existing collective agreement to impose obligations on the parties.
Such agreements will be construed as a “collective agreement” for the purposes of section 16 of the IRA 1967 (reproduced below):-
“(1) A signed copy of the collective agreement shall be jointly deposited by the parties with the Registrar within one month from the date on which the agreement has been entered into and the Registrar shall thereupon bring it to the notice of the Court for its cognizance”.
The Union’s action of enforcing the MOA was an attempt to widen the scope of the consultation process provided for in the collective agreement. Therefore, the Industrial Court’s cognizance of the MOA was required. Non-compliance with this requirement cannot be regarded as a mere technicality.
Furthermore, if the Union had intended for the MOA to continue to apply, the Union would have sought to have included the said MOA into subsequent collective agreements. However, the Union did not do so.
Key Takeaways
This decision effectively means that any informal or side arrangements between the employer and union does not have any legal force, unless it is granted cognizance in accordance with the IRA 1967. This also highlights the necessity for businesses and unions alike to diligently comply with the applicable legal and procedural requirements in amending and varying the collective agreements.
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This article was written by Leow Ho Eng (Associate) from Donovan & Ho’s employment law practice.
Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations. Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation.
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