BMG 311/05:

EMPLOYMENT LAW
& INDUSTRIAL
RELATIONS

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 WELCOME
TO
TUTORIAL 3
 UNIT 3
TRADE UNIONS AND
COLLECTIVE
BARGAINING

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 LEARNING OBJECTIVES
By the end of Unit 3, you should be able to:
1.Describe the definition, objectives, structure and functions
of trade union.
2.Describe the collective bargaining process as illustrated in
the Industrial Relations Act 1967.
3.Evaluate collective agreement and its impacts.
4.Explain what wages are, the various wage systems and
how wages are fixed

HRD Ver-1, 2015 All Rights Reserved

 Trade Unionism in
Malaysia
Article 10 of the Federal Constitution grants all citizen the right
to form associations. Thus, as far as employees and employers
are concerned they can form trade unions. The Trade Unions
Act 1959 (TUA) outlines clearly what is a trade union, its
formation, structure and functioning. Any organisation that
wants to function as a trade union, ought to register as a trade
union under the TUA. The Industrial Relations Act 1967 (IRA)
has stipulated rights of employees and employers to form, join
and participate in its legal activities.

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Trade Unionism in Malaysia
Trade Unions Act 1959 is an act that
governs the formations, registration,
and activities of trade unions
 Trade Unions
The act defines a trade union as “ any association or
combination of workmen or employers, being
workmen or employers whose place of work is in
West Malaysia, Sabah or Sarawak, as the case
may be, or employers employing workmen in West
Malaysia, Sabah or Sarawak, as the case may be:

a) Within any particular trade, occupation or industry

or within any similar trade occupations or
industries; and
b) Whether temporary or permanent
Trade Unions (cont’d)
c) Having among its objects one or more of the
following objects:
i) The regulation of relations between workmen and
employers, or between workmen and workmen, or
between employers and employers;
ii) The representation of either workmen or employers
in trade disputes;
iii) The conducting of, or dealing with, trade disputes
and matters related thereto; or
iv) The promotion or organisation or financing of strikes
or lockout in any particular trade or industry or the
provision of pay or other benefits for its members
during a strike or lock out.”
 Trade Unions (cont’d)
• Based on the definitions, there is no
necessity for any union to have the word
“union” as part of its name and some
unions especially employers union are
called associations.

• Employers unions must be separate

from employees unions and there can
be no union representing both
employers and employees.
 Trade Unions (cont’d)
• Unions must be for particular trades,
occupations, or industries and no general
unions can be formed. This ensures
homogeneous in membership.

• Whether a particular trade, occupation,

or industry is similar is dealt with in the
Section 2(2) of the Act which states
”similar” means “similar in the opinion of
the Registrar”.
 Trade Unions (cont’d)
• The Act also separates West Malaysia from
Sabah and Sarawak so that there cannot be
a trade union whose membership is open to
all Malaysians.

• A trade union in West Malaysia cannot have

members working in Sabah or Sarawak and
similarly unions in Sabah or Sarawak
cannot have members from any other
states in Malaysia.
 Trade Unions (cont’d)
Trade Unions Act weaken trade union
movement. Less than 15% of employees in
Malaysia belong to unions and there are
currently only 360 employee union. This is
due to variety of choices given to employees
and also the hostility of employers to unions.
 Why the Unions in
Malaysia are WEAK????

Good or Bad ?????

Why Do Employees Join Unions?

1. Dissatisfaction with management

2. Security needs
3. Social needs
4. Esteem needs
5. Opportunity for leadership
6. Peer pressure
 Registration of Trade Union
1. For a trade union to be established in Malaysia,
it must by law apply for registration within one
month. The application must be signed by at
least 7 members.
2. Registrar of Trade Unions has the discretion to
refuse the application for registration if he thinks
that there is already in existence a trade union
in respect of the particular trade, occupation or
industry, and that it is not the interest of the
workmen concerned that there be another trade
union of a similar character.
 The Right to Form and Join Union
IRA 1967 Section 5 states:
a) No employer shall prevent a worker from joining a
union by putting a condition in his contract of
employment
b) No employer shall refuse to employ a worker on the
grounds he is a trade union member
c) No employer shall discriminate against a worker on the
grounds he is a trade union member or officer, and
d) No worker shall be threatened with dismissal or
dismissed if he proposes to join union or if he
participates in union activities
 The Right Not to Join Union
1. The workers also have the right not to
join a trade union. Workers may not be
forced to join a union (IRA 1967 –
Section 7)
 Who Can Join Union?
1. “Workman” , any person who is employed
by an employer under a contract of
employment
2. Certain groups of workman are not
allowed to join union. These are
employees in the Police, Prison, Armed
Forces and those who are in confidential
or security work.
Trade Unions

1. Are unions good or bad?

2. What are the arguments

for and against unions?

3. Why are so many

employers anti-union? I am the BOSS
Creating a Non Union Environment

1. Paying higher wages and give better

benefits than the rest in the industry
2. Participate management, involve
employees in all levels of decision making
3. Human resource development
4. Build trust, empower and develop employee
loyalty
5. Theory Y management – employees as
“asset”
 Collective Bargaining
IRA 1967 defines collective bargaining as
negotiating with a view to conclusion of a collective
agreement.

Collective agreement is an agreement in writing

concluded between an employer or a trade union of
employers on one hand, and a trade union of
workmen on the other relating to the terms and
conditions of employment and work of workmen or
concerning relations between such parties
 Collective Bargaining
For effective collective bargaining, the union

1. Must be recognized by the employer

2. Must have financial strength
3. Members must have solidarity

Registration gives the union the legal right to exist

but recognition means employer accepts the
union as the rightful representative of his
workers
 Management Prerogatives
Section 13(3) of IRA 1967 states no trade union of
workmen may include for proposal for collective
agreement the following matters:-
a) The promotion by an employer of any workman from a
lower grade or category to a higher grade or category;
b) The transfer by an employer of a workman within the
organization of employer’s profession, business, trade
or work, provide that such transfer does not entail a
change to the detriment of a workman in regard to his
terms of employment;
Management Prerogatives (cont’d)
c) Employment by an employer of any person that he
may appoint in the event of a vacancy arising in his
establishment
d) The termination by an employer of services of a
workman by reason of redundancy or by reason of
reorganization of an employer’s profession, business,
trade or work or the criteria for such termination
e) The dismissal and reinstatement of a workman by an
employer
f) The assignment or allocation by an employer of duties
or specific tasks to a workman that are consistent or
compatible with terms of his employment
 COLLECTIVE AGREEMENT

Collective agreement is a document that contains the

terms and conditions of employment of a group of
workmen at a workplace. It covers all workers
irrespective whether they are members or not. The
Industrial Relations Acts 1967 sets the durations of a
collective agreement which should not be less than
three years.

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 COLLECTIVE AGREEMENT
Section 2(1) IRA defines a collective agreement as an
agreement in writing concluded between an employer or a
trade union of employers on the one hand and a trade union
of workmen on the other relating to the terms and
conditions of employment and work of workmen or
concerning relations between such parties. The collective
agreement is an agreement that regulates the terms and
conditions of employees in their workplace, their duties and
the duties of the employer in organizations. It is usually the
result of a process of collective bargaining between an
employer (or a number of employers) and a trade union
representing workers.

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 Wages: System and Fixation
The term wages is defined in S. 2(1) Employment Act 1955 (EA). The
provision reads as follows - wages means basic wages and all other
payments in cash payable to an employee for work done in respect of
his contract of service but does not include

(a) the value of any house accommodation or the supply of any food,
fuel, light or water or medical attendance, or of any approved amenity
or approved service;
(b) any contribution paid by the employer on his own account to any
pension fund, provident fund, retrenchment, termination, lay-off or
retirement scheme, thrift scheme or any other fund or scheme
established for the benefit or welfare of the employee;

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 Wages: System and
Fixation (Cont’d)
(c) any travelling allowance or the value of any
travelling concession;
(d) any sum payable to the employee to defray special
expenses entailed on him by the nature of his
employment;
(e) any gratuity payable on discharge or retirement; or
(f) any annual bonus or any part of any annual bonus;
 
It should be noted that the EA does not use the term
salary except the term wages and pay.

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 Minimum Wages Order 2012
The Minimum Wages Order 2012 (Amended in 2016)
gazetted in accordance with S. 23(1) National Wages
Consultative Council Act 2011 sets the minimum wages as
follows:

RM 1000 per month for Peninsular Malaysia (from RM 900)

RM 920 per month for Sarawak, Sabah and the Federal
Territory of Labuan (from RM800)
 
The National Wages Consultative Council Act 2011 defines
minimum wages as the basic wages to be or as
determined under a minimum wages order.

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Minimum Wages
Order 2012

What are the arguments

for and against minimum
wage in Malaysia?
TMA 2
THANK YOU &
SEE YOU AT
TUTORIAL 4