In keeping with the Ministry of Human Resources’ (“Ministry”) policy to review and reform the employment landscape in Malaysia, the Ministry has been proposing several amendments to a number of employment related laws, namely: the Employment Act 1950, Trade Union Act 1959, and Industrial Relations Act 1967. In this article, we will focus on the recent proposed amendments to the Industrial Relations Act 1967 and highlight some key changes to the act. Note that the discussion here will be based on the amendments published by the Ministry as at 4.12.2018 and may not address any new changes that may be proposed subsequent to the date of this article.
Unfair Dismissal Claims
Currently, complaints of unfair dismissal will only reach the Industrial Court if the Minister decides to refer the representation to the Industrial Court.
Under the proposed amendment, the Minister’s discretion to refer complaints to the Industrial Court is removed. This task will now be undertaken by the Director General of Industrial Relations (“DGIR“) who is required to refer complaints of unfair dismissal to the Industrial Court in the event that parties are unable to reach a settlement. The removal of the Minister’s discretion may be due to criticisms that it has caused unnecessary delays as judicial review applications are often filed to challenge the Minister’s decision, resulting judicial time being spent to decide on whether the complaint should be heard by the Industrial Court and not on the merits of the case. However, there are also legitimate concerns that this amendment may encourage frivolous complaints being lodged (since they are guaranteed a referral to the Industrial Court), since the filtering mechanism of the Ministry is now removed.
Discrimination in employment
There are new provisions being proposed to be introduced to the IRA (a similar proposal is also made to the Employment Act 1950) which prohibits an employer from discriminating any employee on the grounds of gender, religion, race or disability with respect to the employment or the terms of employment or the conditions of work of any such employee. The exception to this is that if the distinction, exclusion or preference is based on the inherent requirements of a particular job, then the employer cannot be said to have discriminated against the employee.
In the event of a complaint of discrimination, the DGIR is empowered to take such steps or make such enquiries as he considers necessary or expedient to resolve the complaint. Where the complaint is not resolved the DGIR shall refer the complaint to the Industrial Court for hearing whereupon the court may make such award as may be deemed necessary or appropriate.
The proposed amendment will therefore expand the jurisdiction of the Industrial Court to hear complaints of employment related discrimination.
Non-compliance with award
The penalty (other than imprisonment term, which remains the same) for non-compliance with the Industrial Courts’ award under the proposed amendment has been increased to RM30,000.00. Currently, non-compliant parties are only given a fine that does not exceed RM2,000.00 which is considerably low and may not be an effective deterrent.
The proposed amendments to provisions relating to trade unions are, inter alia, as follows:
- The Minister will no longer decide whether a workman is employed in a managerial, executive, confidential or security capacity; this will be determined by the DGIR.
- The introduction of a new provision whereby, if there is more than one trade union that can represent them, employees will be given the right to vote by secret ballot
- Trade unions will be able to include, as part of their proposals for a collective agreement, certain matters which are expressly excluded under the current IRA, such as:
- 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 reorganisation;
- the dismissal and reinstatement of an employee by an employer.
Industrial Appeal Court
Under the proposed amendments, any party who is dissatisfied with the Industrial Court’s decision may have the right to appeal as an Industrial Appeal Court will be constituted to deal with appeal cases. However, the Ministry has yet to release any details relating to the Industrial Appeal Court, such as the jurisdiction (e.g. matters that can be appealed) and powers of the court.
No such appeals procedure exist under the current regime; any party who is dissatisfied with the court’s decision will have to challenge it by way of judicial review. The distinction between judicial review and an appeal process is crucial as judicial review generally only involves a consideration of the decision-making process and not so much the merits of the decision; an appeal process will allow the Industrial Appeal Court to review the merits of an Industrial Court award as a whole.
The proposed amendments have the potential to bring about substantive changes to the employment landscape, in particular the disputes regime.
For example, employees have the right to redress discriminatory practices by employers which was a right that was hitherto not available to employees working in the private sector, and any redresses can be dealt with by the Industrial Court with less delay as the Minister no longer has the discretion to decide whether to refer cases to the court.
However, such amendments, if adopted in its current form, may also bring about unintended consequences. For instance, the ease of filing a complaint at the Industrial Court may lead to frivolous claims being made which may result in backlogs and unfair cost implications to employers. The amendments do not seem to address this issue. Further, the issue of discrimination, which is by nature a considerably complex issue, may not be appropriately dealt with without further clarity in the law. In addition, the amendments do not address what sort of relief can be granted to an employee who claims they have been discriminated against.
The proposal to create an Industrial Appeal Court is novel and comes with certain benefits. Currently, challenges to an Industrial Court award must take the form of judicial review, which will be heard by the High Court that does not have a “specialist” division to deal with employment law issues. The creation of an Industrial Appeal Court is an opportunity to have specialist judges determine employment law issues. That being said, many judicial review cases are related to employment law and Industrial Court awards, and our administrative law landscape has benefited greatly from case law on those matters. The loss of judicial review for Industrial Court awards may therefore unintentionally affect the development of administrative law.
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 and 2018, 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, corporate advisory and family law. Have a question? Please contact us.