Chapter 14

The Dynamics of
Labor Relations

Source: Malaysian
Industrial Relations &
Employment Law by
Maimunah Aminuddin

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 Learning Outcomes
After studying this chapter, you should be able to discuss:

 The importance of IR
 The structures and functions of trade union
 The collective bargaining process
 The grievance management
 The settlement of trade disputes

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 Definition: Industrial Relations (IR)
Industrial Relations can be referred to the
relationship between workers and their
organization, managers and their organization
and government agencies concerned with the
workplace and employment issues.
Good labour relations involve providing
equitable and consistent treatment to all
employees for achieving individual, groups as
well as organizational objectives.

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IR Stresses on The Following Areas:
Work environment
Term and conditions of work
The employee and employers right
The way on how we make rules and terms in the
organization

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 Who Needs IR?
Workers – to know their rights under the labour
law
Trade Union Leaders – know how to play their
role effectively so that workers will be protected
from exploitation by a greedy employer.
Managers – who deal directly with the workforce
and must constantly try to upgrade their
understanding of IR which has direct link
between profitability and good IR.

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 Why Is IR Important?
Conflicts or disputes between employers and
workmen in an industry will not only affect the
two parties involved, but endangers the welfare
of the entire community and the economy of the
nation.
Conflicts can lead to serious problems such as
waste of resources (time, energy, money),
emotional stress and decline in productivity.

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 Who Needs IR?
Lawyers
Officers & Executives in HR-IR Department –
need in-depth knowledge so that can carry out
their job responsibilities when called upon to do
so.

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 Definition: Trade Union (TU)
 According to Section 2 of the Trade Union Act 1959, trade union
can be defined as any association or combination of workmen or
employers, being workmen or employers whose place of work is in
the states of Malaya (or Sabah or Sarawak) or employers employing
workmen in the states of Malaya (or Sabah or Sarawak):
 Within any particular trade, occupation or industry or within any similar
trades, occupation or industries: and
 Whether temporary or permanent, and
 Having among its objects one or more of the following objects:
 The regulator of relations between workmen and employers, or between employers and
employers.
 The representation of either workmen or employers in trade disputes.
 The conduct of or dealing with trade disputes and matters related, thereto
 The promotion, organization or financing of strikes or lock-outs in any trade or industry or
the provision of payer other benefits for its members during a strike or lock-out.

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 Objectives of TU
 To promote the industrial, social and intellectual interests
of its members
 To obtain and maintain for its member just and proper
rates of remuneration, security of employment and
reasonable hours and conditions of work
 To promote the material, social and educational welfare
of the members, and
 To promote legislation affecting the interests of the
members in particular or trade unionists in general.

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 Why Do Employees Join Unions?
To improve their economic situation
To ensure their rights are protected
For social reasons
To influence the decision making and policy
making by their employers
Pressure from present union members or
because union membership is in force

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 Total Number of Unions and The
Membership in Malaysia
Year Number of Unions Total membership
1995 504 706,253
2001 578 784,881
2008 659 805,565
2009 680 806,860
2010  690  803,289
2011 697 800,171
2012 690 889,718
2013 706 914,677
2014 735 930,512
2015 729 913,169
2018 751 930,734

Sources: Department of Trade Union Affairs Website

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 Who Can Join A Union?
 Under section 26, 27 and 27A of Trade Union Act 1959, the
following classes of persons are prohibited from being
members of a union:
 any person below the age of 16 years,
 any student of an educational institution established by or under any
written law, unless he is also employed as an employee and is over the
age of 18 years,
 any person employed in the establishment or industry or trade or
occupation in respect of which the union is registered, and
 Any public officer, unless exempted by Yang Di Pertuan Agong.
 However, certain group of government employees is not allowed to join
trade union at all:
 members of the armed forces, police force and any prison service,
 public officers prohibited under any law from forming or joining a union,
 public officers employed in a confidential or security capacity,
 public officers holding any post in the Management and Professional Group.

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 Membership of Union among
Selected Trade Union in 2014
NAME OF UNION MEMBERSHIP
National Union of the Teaching Profession 184,205
National Union of Plantation Workers 35,376
Malay Teachers Union, West Malaysia 38,215
Malayan Nurses Union 19,403
Sarawak Teachers Union 18,994
Tenaga National Employees Union 16,357
National Union of Bank Employees 14,189

Source: Maimunah Aminuddin. (2016). Malaysian industrial relations and employment

law. Kuala Lumpur: McGraw-Hill Book Co.
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 Definition: Collective Bargaining
(CB)
 Collective bargaining can be broadly defined as
a process of bargaining between employers
and their employees by which they settle
between themselves their disputes relating to
working hours, wages and other terms of
employment and conditions of work.
 The purpose of CB:
 As a method by which workers can peacefully improve
their terms and conditions of employment.

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 CB Process
 Either union/employer invites the other to begin bargaining (in
writing), the invitation is accompanied by a set of proposals,
demands for a collective agreement.
 The employer must reply within 14 days after receiving the
invitation.
 If employer agrees to begin the bargaining, the sessions must start
within 30 days.
 A series of negotiation meetings are held.
 Once agreement is reached, the collective agreement is signed and
sent to industrial court for approval.
 If employer refuses to begin negotiations after agreeing to do so or if
there is a deadlock, the DGIR can be called upon to conciliate.
 If there is still refusal to begin, a trade dispute is said to exist. The
Minister is empowered to invoke the machinery for compulsory
arbitration by referring the dispute to the industrial court for
settlement.
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 Definition: Collective Agreement
(CA)
CA is a written agreement between an employer
and a union setting out the terms and conditions
of employment , e.g., wages, working hours, and
benefits.
This agreement is in writing and signed by both
parties and deposited with the Industrial Court.
It becomes a binding document enforceable by
the court.

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 Definition: Managerial
Prerogative
 In the CB process, there are issues that employer refuses to
discuss/bargain. These issues are referred to as Managerial
Prerogatives.
 Managerial prerogatives refer to the right of management to take
and act upon decisions affecting the business or organization.
 The managerial prerogatives include:
 The promotion by an employer of any employee from a lower grade to a
higher grade.
 The transfer by an employer of an employee within the organization.
 The employment by an employer of any person
 The termination of an employee by an employer due to reasons of
redundancy or restructuring of the organization.
 The dismissal and reinstatement of an employee by an employer
 The assignment or allocation of duties and tasks by an employer to an
employee.

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 Definition: Grievance Management
 A grievance is any dissatisfaction or feeling of injustice
having connection with one’s employment situ­ation
which is brought to the attention of management.
 Grievance is a complaint that has been formally
presented to a management representative or to a union
official.
 Grievance Procedures
 Formal channels of communications used to resolve grievances.
 clearing up misunderstanding and preserving harmonious
relations
 Reasonable effort by both parties to dispose grievance at the
lowest possible level.

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 Example of Grievance Procedure in
a Unionized Company
 Step 1: Within 10 working days of a grievance arising, the employee concerned shall
raise the grievance with his immediate supervisor. He may be accompanied by union
representative.

 Step 2: If the matter is still not settle within a further 7 working days, following
representations made under Step 1, the union make formal representation to the
employer in writing. The employer shall without delay offer arrangements for a
meeting between the manager and union. Such a meeting shall be held within 7 days
of receipt of the union’s letter.

 Step 3: If the matter remains unsettled the grievance shall then be discussed
between the Manager and / or his representative and / or union official within 10 days.

 Step 4: If the matter still remains unsettled after the meeting or any further meetings
between the employer and union, the matter shall then be referred for settlement to
the Ministry of Human Resources under the provisions of the Industrial Relations Act,
1967.
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 Definition: Trade Dispute

Also known as industrial dispute.

Any dispute between an employer and his
workers which is connected with the
employment or non-employment or the terms of
employment or the condition of work of any such
worker.
For a trade dispute to exist, the employee(s)
must be represented by union except when an
employee has a complaint on his right to join
union.
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 Causes of Trade Disputes

 An individual who has a grievance, and is represented by

union and who exhausted the grievance procedure
without getting a satisfactory result;
 A difference of opinion between a union and an employer
as to the appropriate terms and conditions of service for
the workers;
 A difference of opinion as to the interpretation of a
collective agreement or Industrial Court award; or
 The non-implementation of an agreement or award.

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 Settlement of Trade Disputes
 Direct negotiation – voluntary negotiation without interference of
third party.
 Conciliation – voluntary involvement of IR Dept Officer to help both
parties to arrive at compromise acceptable to both parties via
recommendations and advice. Conciliation is a process in which the
Department of Industrial Relations in the Ministry of Human
Resources acts as a neutral mediator to help the parties to a dispute
find a settlement
 Mediation – third party that not from government. Unbiased,
respected, and trusted by both parties. For example politician or
local leader.
 Arbitration – authority to settle dispute by examining information
and make judgment (Industrial Court). Arbitration is a process of
settling worker-management disputes by having an impartial third
party (the Industrial Court) make a decision which is binding on both
parties.
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 Industrial Action
 When peaceful methods fail to settle dispute, union
may attempt to force a settlement by using or
threatening to use more aggressive methods i.e.
taking industrial action.
 Legal industrial actions by employees are picket and
strike.
 In rear occasions, other form of ‘creative’ industrial
actions may be taken by union. For example
wearing ‘sarong’ to work.
 Employer may also take industrial action against
employees i.e. lock-out
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 Picket
 Picket is a gathering of workers outside their workplace
with placards and banners expressing workers’
grievance and demands for people to see, thus
gathering public sympathy and support.
 The law allows picketing at or near the place but not in
the place.
 Picket must be:
 In peaceful (no intimidation, no obstruction of entrance or exit)
 Held during non-working hours
 Involve only workers in disputes

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 Strike
Strike is any stopping of work by group of
workers including any attempt to limit or slow
down production on purpose.
There are various forms of strike, e.g., go-slow,
work-to-rule, and ban on overtime work.
Illegal strikes:
 Sympathy strike: workers not involve in dispute decide
to go on strike.
 Political or general strike: strike aimed to the
government.
 Lightening / Wildcat strike: strike without any ballot.

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Purpose of strike:
To communicate issue to the public
To embarrass the employer
Pressure tactic to get employer to fulfill union’s
demand.

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 Lock Out
Lock-out is employer refuse to allow the workers
to work until the dispute between them is settled.
Normally declared in response to an illegal strike
by workers.
Another alternatively to fight strike is by keeping
company’s operation by placing managerial,
non-union employees, or hiring replacement
workers.

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 Conclusion
 In a unionized environment, an employer has to be
proactive and take positive steps in order to avoid trade
dispute.
 For example provide training for union leaders, involving
union in company making decision, train supervisors to
work with union representatives, and provide physical
facilities for union.
 In a non-unionized environment, an employer has to be
proactive and take positive steps in order to create a
harmony non-unionized environment by for example
paying high compensation, open-door policy, invest in
training and development, and create a climate of trust
and loyalty.
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