Definitive Report - Report No 177, June 1978

Case No 879 (Malaysia) - Complaint date: 03-JUN-77 - Closed

1. 88. The complaint of the International Metalworkers' Federation (IMF) was contained in a letter dated 3 June 1977. The IMF supplied additional information in a letter dated 29 June 1977. The Government provided its observations in a communication dated 11 October 1977. Allegations similar to those made by the IMF were contained in a communication, dated 9 January 1978, addressed to the ILO by the Malaysian Trades Union Congress.
2. 89. Malaysia has not ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87); it has ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. Allegations of the complainants

1. 90. According to the IMF, in accordance with the regulations imposed by the competent authorities, metalworkers in Malaysia have been forced over more than ten years to set up various separate unions and affiliate them individually to the IMF. Thus, the IMF at present has six affiliates in Malaysia: the Metal Industry Employees' Union (MIEU, 6,000 members), the National Union of Industrial, Mineral Smelting Workers (800 members), the Electrical Industry Workers' Union (EIWU, 4,000 members), the Machinery Manufacturing Employees' Union (MMEU, 500 members), the Transport Equipment and Allied Industries Employees' Union (500 members) and the Union of Malayawata Steel Workers (1,000 members); a seventh union, the United Motor Works Employees' Union (500 members), has just applied for affiliation it was obvious, continued the complainants, that the enforced division of a total membership of 13,000 among seven unions was not in the interests of the workers. The IMF Malaysian Council, formed by the affiliated unions to overcome some of the most negative effects of the artificial split, could not replace a single, unified organisation. The present fragmentation, stated the complainants, was not the result of the free choice of the metalworkers but of arbitrary government decisions which were in contradiction with the principles of the ILO.
2. 91. The IMF added that the United Motor Works Employees' Union had expressly stated in its application letter that its members were not permitted to join any of the existing metalworkers' unions and were thus compelled by the registrar of trade unions to establish a separate union.
3. 92. In the same way, the Electrical Industry Workers' Union (EIWU) had been restricted to organising workers engaged in the manufacture of electrical home appliances. Since the 30,000 workers engaged in the manufacture of electronic components, semiconductors, calculators, etc., had no anion of their own, the EIWU had applied several times unsuccessfully to the minister of Labour for permission to unionise the electronics workers; its request to alter the union's name and membership scope for this purpose had been rejected by the minister who had not even replied to two letters from the IMF in support of its affiliate. The authorities had expressed the view that the EIWU catered for a different category of workers whose mode of working was also different, and had ignored the substantial number of signatures collected from electronics workers attesting to their wish to join the EIWU.
4. 93. The Metal Industry Employees' Union (MIEU) had also, according to the complainants, faced serious problems ever since its inception in 1963; every year the Registrar of Trade Unions had ruled that the MIEU should remove some of its members, and every year the employers had used the Registrar's unfavourable ruling against the union to victimise and dismiss active union organisers. The MIEU had appealed to the Labour Ministry to over-rule the Registrar's decisions in respect of members employed by five firms (Malayan Cables Ltd.; Federal Cables, Wires and Metal Mgs. Ltd.; Selangor Pewter Co.; Penang Pewter Co.; Newey Pvt. Ltd.). In the case of Newey Pvt. Ltd., the Registrar informed the MIEU (by a letter dated 16 March 1977) that it had no right to organise the workers of this firm (an Indian-Malaysian joint venture manufacturing safety pins, hooks, hair clips and pins of many types); the Registrar, although agreeing that these products were made of metal, had ruled that since these products were used for dressmaking, the firm in question belonged to the haberdashery industry. According to the IMF, it did not make sense to define an industry on the basis of the ultimate use of its product. Furthermore, this decision would call for the formation of another new union for the haberdashery industry only, which, due to the restricted potential membership (not more than 300 persons), would be unable to survive and bargain effectively. Again, the ruling was made in open contradiction to the free choice of the workers concerned, a majority of whom had expressed the wish to join the MIEU.
5. 94. Another of the unions mentioned above, the Machinery Manufacturing Employees' Union (MMEU), had submitted a claim for recognition on 27 January 1926 to the Kwong Lee Yoon Foundry Sendirian Berhad, Ipoh, after having organised 59 per cent of the workforce; another union present in the company for ten years (the National Union of Employees in the Engineering Industry) represented for its part 37 per cent of the workforce. The membership check conducted by the Registrar of Trade Unions had confirmed these figures, and the company and the other union were advised by the Ministry of Labour not to enter into any collective agreement until the issue of recognition was resolved. However, three months later, the firm and the other union renewed their agreement in the presence of the authorities. To a protest action (described by the complainants as "picketing"), the company retaliated by locking out all the workers and dismissing 184 belonging to the MMEU. To be reinstated the workers had to accept very humiliating conditions.
6. 95. It was evident, concluded the IMF, that the competent authorities in Malaysia had constantly followed a policy of artificial splitting up of the country's metalworkers' unions, enforcing forms of organisation contrary to the will and free choice of the workers, thus providing unfair advantages to employers and weakening the workers' bargaining power.
7. 96. In its communication of 9 January 1978 the Malaysian Trades Union Congress stated that the cases cited by the IMF had been the subject of considerable discussion between the MTUC and the Government, but that, in spite of their intervention and request that the unions should be allowed to include within their membership those categories that were excluded, the Government had refused to change its decision.

B. Reply of the Government

1. 97. In its letter of 11 October 1977, the Government began by stating that it encouraged the growth and development of healthy trade unions that were responsible not only to their membership but also the community of which they were an integral part. To this end the Government formulated policies and laws which actually assisted in the formation of trade unions and the development of collective bargaining, as evidenced by the increase in the number of trade unions and their membership. The laws governing trade unionism, continued the Government, contributed to the national policies for the eradication of poverty, the rectification of economic imbalances and the restructuring of society and they helped to deal effectively with the threat to national security. It added that trade unions generally enjoyed freedom of association, but such freedom should not over-ride other national considerations. Within this framework trade unions were free to develop and ensure the orderly growth of a disciplined and responsible trade union movement that could play a positive role in a developing country like Malaysia.
2. 98. The Government pointed out that the law relating to the registration of trade unions prescribed that they must confine their membership to a particular trade, occupation or industry or to similar trades, occupations or industries. According to the Government, this did not restrict workers from joining any union of their own choosing so long as that union represents workers in similar industries; the grouping of workers in this way was in the interests of the workers themselves in the sense that they had community of interests and that it would no doubt facilitate recognition by employers and collective bargaining.
3. 99. However, continued the Government, the problem was more related to the interpretation of the term "similar", that is, the question of deciding whether workers in a particular establishment were "similar" to those represented by a particular union. The Registrar of Trade Unions, who was the deciding authority in this case, exercised the greatest care to ensure that workers were grouped in the right union according to their industries. Under the law, provision was made for appeals to the Minister of Labour against the decision of the Registrar, and in some cases unions had even taken up the issue with a court of law. According to the Government this served to indicate the degree of flexibility of the Registrar's decisions, and it could not be assumed that the metalworkers' unions had been subjected to a policy of artificial splitting up. The classification of industries in Malaysia might not concur exactly with that in other countries, and the Registrar of Trade Unions, in determining the similarity of industries, relied heavily on the manner in which these industries were locally classified. As a result, continued the Government, the workers of the seven unions referred to in the complaint as being generally for metalworkers were not regarded in Malaysia as being similar within the meaning of the Trade Unions Ordinance of 1959. Each of these unions had its own separate scope of action and this set-up had so far served their respective members effectively.
4. 100. As concerns the Electrical Industry Workers' Union (EIWU), continued the Government, the Registrar of Trade Unions had decided that this union was not eligible to organise the electronics workers because of the absence of similarity between the two industries. On the other hand, the electronics workers were free - and had been encouraged - to form their own union. The EIWU had taken up the issue in the courts, and the case had been heard in both the High Court and the Federal Court of Malaysia.
5. 101. The allegations relating to the Metal Industry Employees' Union (MIEU), continued the Government, also raised the issue of similarity of industries. Where a union recruited new members without regard for similarity, it was natural that the employers should refuse to accord recognition to the union concerned, and the Registrar of Trade Unions would be required to give a decision on the eligibility of the union to organise such workers. Where his decision went against the union, the members concerned would have no choice but to leave the union. This was regrettable, but it could have been avoided if the union had inquired from the Registrar before recruiting these workers. This was the case, added the Government, with most of the companies referred to in the complaint. As for Newey Pvt. Ltd., this company was at that moment the subject of an appeal filed with the Minister of Labour. The Government continued that it was not its intention to cause unnecessary hardship to the workers, particularly in the enforcement of the Trade Unions Ordinance of 1959. The right of workers and employers to establish unions of their own choosing - including a federation - on the basis of similar industries, and to affiliate with national and international bodies, was provided for in the Ordinance. The fact that trade union membership was increasing over the years was sufficient proof, according to the Government, of the freedom and protection given to the workers in Malaysia.
6. 102. As regards the recognition of the machinery manufacturing Employees' Union (MMEU) by the Kwong Lee Yoon Foundry Sdn. Bhd, the issue was complicated by the presence of another union (the National Union of Employees in the Engineering Industry), which had been recognised by the company as the bargaining agency for more than ten years. While the recognition issue was still pending, members of the MMEU had gone on strike on 12 November 1976. This strike had been illegal within the context of the Industrial Relations Act of 1967 as well as the Trade Unions Ordinance of 1959 (the Government pointed out that it had actually been a strike and not merely a protest action of picketing). The striking employees had been dismissed by the company and were later reinstated on condition that they sign a letter of apology. The fact that the Registrar took no action against the striking employees demonstrated the goodwill of the ministry of Labour, which was always desirous of settling issues amicably it was not true, according to the Government, that the rival union connived with the company; it, too, resorted to strike action when its negotiations with the management for a new collective agreement reached deadlock. The strike lasted from 15 to 25 November 1976 and resulted in the signing of a new collective agreement providing for wage increases and bonuses to which members of the MMEU were also entitled. In the opinion of the Government, the MMEU should learn to be more patient so that the present calm atmosphere in the company might continue. This would allow the authorities to arrive at a solution which would be fair to the members of both unions.
7. 103. The real cause of the difficulties in this company, continued the Government, was inter-union rivalry. The authorities, therefore, had to be careful to avoid taking a course of action which might have been construed as supporting one union or the other. Its role was of an adviser and mentor. The solution to the dispute lay essentially with the two unions. The employer chose to recognise the union which had established a cordial and harmonious employer-employee relationship with the company in the past.

C. Conclusions of the Committee

1. 104. This case is concerned mainly with the obstacles encountered by various trade unions in Malaysia affiliated (or applying to be affiliated) to the IMF in their attempts to combine into a single metalworkers' organisation.
2. 105. In this connection, it should be pointed out in the first place that the Trade Unions Ordinance of 1959 limits the right to associate within the same trade union to the workers within any particular trade, occupation or industry or within any similar trades, occupations or industries (see sections 2 and 9). It is for the Registrar of Trade Unions' to decide (subject to a right of appeal to the Minister of Labour, and thereafter to the High Court (sections 17 and 18)) what is to be understood by "similar" trades, occupations or industries. The Registrar is also empowered to cancel the registration of a trade union, inter alia, if it has contravened any provision of the Ordinance.
3. 106. In the same way, as concerns the forming of federations of trade unions, the Ordinance provides, in particular, that the members of trade unions wishing to federate must likewise be employed in similar trades, occupations or industries (section 72). The new organisation must submit an application for registration upon which the Registrar must act observing the provisions applicable to trade unions (sections 73 and 75). Furthermore, no trade union registered under the Ordinance may form with any other trade union (whether registered under the Ordinance or not) a joint consultative or other body except with the prior permission in writing of the Registrar and subject to such conditions as he may impose (Act No. 81 of 1965, as amended, section 5).
4. 107. It appears from the information available in this case that the word "similar" as used in the Trade Unions Ordinance seems to be interpreted in a restrictive sense and that workers in comparable or allied trades, occupations or industries may not belong to the same trade union or federation of trade unions; the IMF has accordingly been obliged to agree to the affiliation of several national unions of metalworkers. The Committee recalls that the right of workers to establish and join organisations of their own choosing is one of the basic tenets of freedom of association. Admittedly, the prohibiting of workers employed in different industries from establishing a single union or joining the same organisation may be purely a matter of form, especially if these first-degree organisations are free to establish and join federations and Confederations. However, this cannot be so in the present case, where restrictive provisions exist also in respect of higher-degree organisations, thus preventing workers from establishing federations of their own choosing and constituting an obstacle to the establishment of strong and effective organisations better able to defend their occupational interests.
5. 108. As an extension of the right of workers and employers to establish organisations of their own choosing, Convention No. 87, has proclaimed, in Article 5, the right of such organisations to form federations and Confederations in full freedom. This equally essential provision is based, as was indicated during the preparatory work in the instrument, on the recognition of the fact that the solidarity of interests which unites workers or employers is not limited to one undertaking, nor to one trade or industry, but should be extensible to the whole country.
6. 109. The Committee notes that the difficulties encountered in Malaysia in this connection are not of recent origin and that attention has already been drawn to them during a survey of the trade union situation in the Federation of Malaya carried out by the ILO in 1961.2 The Committee considers that it would be highly desirable for the Government to take steps to ensure that the provisions on the establishment of first-degree trade unions are interpreted in a less restrictive manner by the administrative authorities and to consider the amendment of the legislative provisions on the forming of higher-degree organisations so as to prevent a fragmentation of the trade union movement which is contrary to the wishes of the workers and inconsistent with their right to establish organisations of their own choosing.
7. 110. A second aspect of the IMF's complaint concerns the efforts of a trade union (the MMEU) representing 59 per cent of the employees of an undertaking to secure recognition by the employer concerned who negotiates with a less representative rival union.
8. 111. The recognition by an employer of the main unions represented in his undertaking or of the most representative of these unions is the very basis for any procedure for collective bargaining on conditions of employment at the level of the establishment. The Committee has accordingly already insisted in another case that the competent authorities should take appropriate conciliatory measures with a view to obtaining such recognition by the employer concerned. In particular, if there is a change in the relative strength of unions competing for a preferential right or the power to represent workers exclusively for collective bargaining purposes, the Committee has added that it is desirable that there should be the possibility of a review of the factual bases on which that right or power was granted. In the absence of such a possibility, a majority of the workers concerned might be represented by a union which, for an unduly long period, could be prevented - either in fact or in law - from performing its functions and from fully furthering and defending the interests of its members.
9. 112. In the present case, the viewpoints of the complainant and of the Government differ appreciably; the latter claims, however, that it acted on this occasion as an adviser and mentor, taking care not to appear to favour one of the rival unions. In the light of the considerations set forth in the preceding paragraph, the Committee considers that the competent authorities, in their attempts at conciliation, should endeavour to persuade the employers to recognise in any event the union assessed on an objective basis as being the most representative of their employees. This would enable the problem of trade union representativity to be resolved in an equitable manner.

The Committee's recommendations

1. 113. In these circumstances, and with regard to the case as a whole, the Committee recommends the Governing Body
   • (a) to draw the Government's attention to the considerations and principles set forth in paragraphs 107 and 108 with regard to the freedom of workers to choose for themselves the structure of their trade union organisations;
   • (b) to suggest, in consequence, that the Government take steps to ensure that the provisions on the establishment of first-degree trade unions are interpreted in a less restrictive manner by the administrative authorities, and consider the amendment of the legislative provisions on the forming of higher-degree trade union organisations;
   • (c) to draw the attention of the Government also to the principles set forth in paragraph 111 with regard to the recognition for collective bargaining purposes of the most representative trade union in a given undertaking.