The employment landscape in Malaysia is undergoing a significant shift. Recent amendments to the Trade Unions Act 1959 (TUA) and the Industrial Relations Act 1967 (IRA) are set to impact both employers and employees. On 15th September 2024, the Minister, YB Steven Sim, announced that all pending sections under the IRA and the TUA amendments will come into force immediately. Here, we provide a simple breakdown of these changes.
TRADE UNIONS ACT 1959
1. Diversification of unions (‘Multiplicity’)
In the past, trade unions can only be established (or registered) under strict rules. With the new amendment, the TUA now allows multiple trade unions in any establishment, trade, occupation or industry to be registered.
With this restriction being lifted, employers can expect more trade unions and higher employee participation in union related activities as employees are now free to participate or be a member in any trade unions as they freely wish (even if it’s not specific to their industry).
2. DGTU can no longer refuse registration of trade unions
In the past, if a trade union, say for 1 industry is in existence, the DGTU will not grant an approval for the registration of a second one. However, since the law now allows for multiplicity of unions, the DGTU can no longer refuse a registration of a similar trade union, subject to certain exceptions contained in the Act. i.e. hostility, identical names, etc.
3. Extension of DGTU’s powers
The DGTU’s power has been extended to include a more significant investigative function, which shall include investigation for non-compliance, production of documentation and records for purposes of investigation and to seize any article or document if he has reasons to believe that there has been an offence committed under the TUA by the employer.
INDUSTRIAL RELATIONS ACT 1967
1. Powers of DGIR under s.9 In a claim for recognition, any disputes arising from the categorization of employees under the capacity of managerial, executive, confidential or security functions will now be dealt with by the DGIR instead of the Minister.
Point to note: In the past, whenever the categorisation of employees were disputed, the DGIR doesn’t have decision making powers and would merely recommend and persuade. With this change, any disputes would likely be sped up significantly. |
2. Balloting paper If you’ve been through a secret ballot, you’d probably wonder why the ballot paper indicates whether one is a member or otherwise. This will likely change in future as the terminology under s9(4A)(b) has been updated from ‘to indicate support’. It used to read ‘who are members of’.
Point to note: This would clarify the position that an employee can ‘indicate their support’ or vote for the union to be recognized even though they are not a paying member of the union. This has always been the position but somehow employees were always confused in the past due to the terminology on the ballot paper. |
3. Sole Bargaining
It is now possible for more than one trade union to co-exist within a company. In such an event, it must be noted that only one trade union will have the sole bargaining rights to form a collective agreement. In the event of a dispute, the following shall take place:
The trade unions and employees can decide which shall have sole bargaining rights; or
If no agreement is achieved, the DGIR can call for another secret ballot to determine the more favorable union for sole bargaining rights
Point to note: Most employers are confused with this point. Let’s use an example here. If your company is in the food manufacturing business, then, in the past, only the ‘right’ or ‘competent’ trade union can represent your employees. In this example, it will most likely be the Food Industry Employees’ Union (FIEU). This amendment provides employees with more options. Say for example, one employee decides to register a new union with the Trade Unions department. He decides to name it the National Union for Fast Food Employees. In the past, if your Company has recognized 1 trade union, there will be no room for a 2nd trade union to exist. However, with this change, the new trade union can exist and seek recognition with your Company. It appears at this stage that it will be a battle between the trade unions as to which union shall have sole bargaining rights. |
4. Prohibition
Once a trade union obtains sole bargaining rights (whether by agreement or by way of DGIR’s decision), no other trade union shall have sole bargaining rights for a period of three (3) years.
Point to note: This appears to be a control mechanism that has been put in place. For the first three (3) years, the ‘official’ trade union shall not be disputed, and they shall remain as the sole trade union with rights to bargain. Our reading of this suggests that current trade unions who have enjoyed sole bargaining rights even before the existence of this amendment should no longer enjoy the three (3) year privilege. It is also worth noting that the period here runs from the date ‘sole bargaining rights’ were obtained and does not refer to the conclusion of a collective agreement. This would further mean that sole bargaining rights can be challenged by other trade unions before the expiry of a collective agreement. |
5. Collective Bargaining Where a sole trade union has been accorded recognition, they may invite the employers for collective bargaining. If there is an existing collective agreement in place, an invitation for collective bargaining can only take place ninety (90) days before the expiry of the collective agreement.
Point to note: This is a fair point. In the event a trade union is changed, the new trade union will not be able to demand for collective bargaining immediately. |
Conclusion
The landscape of trade unionism in Malaysia is changing. While the abovementioned changes may not bring about an immediate cost impact to employers, we view this as a significant change with long-lasting considerations.
Our consultants are willing to spend some time to discuss strategies how the above might impact your business, and steps that you can undertake as an employer - whether you’re currently unionized or otherwise
NEED TO BE IN TOUCH WITH US? 1. Victor Gan | victor@ed3n.com.my 2. Alya Ariffin | alya@ed3n.com.my 3. Joel Choo | joel@ed3n.com.my |
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