Report in which the committee requests to be kept informed of development - Report No 360, June 2011

Case No 2717 (Malaysia) - Complaint date: 22-MAY-09 - Closed

Allegations: The complainant organization alleges that the British American Tobacco Company (BAT) re-classified existing posts within the company in order to prevent employees who were members of the British American Tobacco Employees Union (BATEU) from retaining their union membership. Following this re-designation exercise, a 2007 decision of the Director General of the Department of Trade Union Affairs and Industrial Relations (DGTU) ruled that the BATEU could represent only 15 employees out of the company’s total workforce of 1,000 rendering the union effectively unable to function

1. 845. The Committee last examined the substance of this case at its March 2010 meeting when it presented an interim report to the Governing Body [see 356th Report, paras 803–846, approved by the Governing Body at its 307th Session].
2. 846. The Government provided new information in a communication dated 20 October 2010.
3. 847. Malaysia has ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). It has not ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87).

A. Previous examination of the case

1. 848. In its previous examination of the case, the Committee made the following recommendations [see 356th Report, para. 846]:
   • (a) The Committee requests the Government to take the necessary measures to amend the Industrial Relations Act, 1967 so as to ensure that: (1) the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss; and (2) managerial and supervisory staff have the right to establish their own associations for the purpose of engaging in collective bargaining.
   • (b) The Committee requests the Government to take the necessary measures, including a review of the 14 December 2006 and 7 March 2007 decisions of the Ministry of Human Resources, to ensure that the exclusions from the BATEU’s union membership are limited to supervisory staff genuinely representing the interests of employers. The Committee requests to be kept informed of the progress made in this respect.
   • (c) The Committee, recalling its long-standing recommendations on legislative reform in Case No. 2301, urges the Government to take the necessary measures to amend sections 2(1) and 26(1) of TUA so as to ensure that all workers, without distinction whatsoever, enjoy the right to establish and join organizations of their own choosing, both at primary and other levels.
   • (d) Noting that the BATEU appealed the decisions of the Minister of Human Resources and the DGTU to the High Court over two years ago, the Committee firmly expects that its conclusions will be drawn to the High Court’s attention when it reviews these cases and that its rulings will be issued in the near future and will ensure the right of all workers to form and join the organization of their own choosing, including those workers in BAT Malaysia’s wholly owned subsidiaries. It requests the Government to keep it informed of developments in this regard and to transmit a copy of the judgements once they have been handed down.

B. The Government’s reply

1. 849. In a communication dated 20 October 2010, the Government transmitted a copy of the rulings issued by the High Court concerning the applications by the British American Tobacco Employees Union (BATEU) against the decision of the Minister of Human Resources on the capacity issue of a process specialist and against the decision of the Director General of the Department of Trade Union Affairs and Industrial Relations (DGTU) on BATEU’s incapacity to represent employees in the subsidiaries. It also provided its observations on the previous recommendations of the Committee.
2. 850. With regard to the Committee’s request to amend the Industrial Relations Act (IRA) so as to ensure that the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, the Government indicates that there is currently no legal definition for the managerial, executive, confidential and security capacity, and that it has started compiling inputs from the social partners in order to define the four categories of workmen as stated in subsection 9(1) of the Act.
3. 851. Concerning the Committee’s request for measures, including a review of the 14 December 2006 and 7 March 2007 decisions of the Ministry of Human Resources, to ensure that the exclusions from BATEU’s union membership are limited to supervisory staff genuinely representing the interests of employers, the Government states that there are no provisions under the IRA which allows it to review the decisions of the Minister or by the DGTU once they have been made. It indicates that a review could only be made by virtue of an application for judicial review before the High Court, and recalls that BATEU’s application has been dismissed and the latter has not lodged any appeal against the ruling.
4. 852. With regard to the judgment of the High Court concerning the applications from BATEU against the decisions of the Minister of Human Resources and the DGTU, in its ruling of 15 July 2010, the High Court rejected BATEU’s appeals against the decision of the DGTU that the trade union was no longer qualified to represent employees of the British American Tobacco Company (BAT)-owned subsidiaries, as the word “establishment” referred to one legal entity and did not cover subsidiaries.

C. The Committee’s conclusions

1. 853. The Committee recalls that the present case involves allegations that the BAT in Malaysia reclassified existing posts within the company in order to prevent employees who were members of the in-house trade union – namely BATEU – from retaining their membership. According to the complainant, out of 175 existing process technician posts, 31 were reclassified as process specialist ones; following the announcement of the posts, union members were allegedly harassed into applying for them and 109 process technician positions were subsequently made redundant. The complainant also stated that there were no significant differences between the duties and functions of the two.
2. 854. The Committee notes from the Government’s reply that there is currently no legal definition for the managerial, executive, confidential and security capacity, and that it has started compiling inputs from the social partners in order to define the categories of workmen as stated in subsection 9(1) of the IRA. The Committee, recalling once again that all measures should be taken so as to ensure that: (1) the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss; and (2) managerial and supervisory staff have the right to establish their own associations for the purpose of engaging in collective bargaining, expects the Government to inform it in the near future of concrete measures taken to amend the IRA in view of the above principles.
3. 855. Concerning its request for measures, including a review of the 14 December 2006 and 7 March 2007 decisions of the Ministry of Human Resources to ensure that the exclusions from BATEU’s union membership are limited to supervisory staff genuinely representing the interests of employers, the Committee notes the statement from the Government that there are no provisions under the IRA which allows it to review the decisions referred to by the Committee once they are made. It notes that, according to the Government, a review of the decisions can only be made by virtue of an application for judicial review before the High Court. While noting that BATEU’s applications on both issues had been dismissed, the Committee however observes that the rulings of the High Court were made on the basis of provisions of the IRA which are presently put in question. The Committee recalls that it previously queried whether the newly created process specialist position could be genuinely seen as meeting the criteria for managerial staff, particularly as the indications provided made no reference to the authority to appoint, dismiss or exercise disciplinary control over others. In these conditions, and pending the introduction of the legislative reform mentioned above which would clarify the different categories of workers falling under union representation, the Committee requests the Government to make every effort to consult with the company and the trade union concerned so as to determine the supervisory staff genuinely representing the interests of employers which could be excluded from BATEU’s union membership. The Committee requests the Government to keep it informed of the outcome of the consultations. In the meantime, the Committee expects that the trade union will be able to work and function freely.
4. 856. With regard to its long-standing recommendations on legislative reform (previously raised in Case No. 2301), the Committee had urged the Government to take the necessary measures to amend sections 2(1) and 26(1) of the Trade Union Act of 1959 (TUA), so as to ensure that all workers, without distinction whatsoever, enjoy the right to establish and join organizations of their own choosing, both at primary and other levels [see 333rd Report, paras 586–599 and 356th Report, paras 76–81]. The Committee notes from the information provided in October 2010 by the Government in Case No. 2301 that it has taken steps to amend the IRA and the TUA, and that it proposes to amend certain provisions in the relevant labour laws in order to make it easier and faster to establish trade unions and expedite claims for recognition, thus facilitating the process of collective bargaining. The Committee urges once again the Government to address without delay the issues raised. It expects the Government to inform it in the near future of concrete amendments to the TUA that ensure that all workers, without distinction whatsoever, enjoy the right to establish and join organizations of their own choosing, both at primary and other levels.
5. 857. The Committee recalls that it previously expressed its firm expectation that its conclusions would be drawn to the High Court’s attention when it reviewed the applications from BATEU against the decisions of the Minister of Human Resources and the DGTU and that the Court’s rulings would ensure the right of all workers to form and join the organization of their own choosing, including those workers in BAT Malaysia’s wholly owned subsidiaries. The Committee takes due note of the ruling of 15 July 2010 of the High Court rejecting BATEU’s appeals of the decision of the DGTU that the trade union was no longer qualified to represent employees of BAT-owned subsidiaries, concluding that the word “establishment” referred to one legal entity and did not cover subsidiaries. The Committee recalls that under Article 2 of Convention No. 87, workers have the right to establish organizations of their own choosing, including organizations grouping together workers from different workplaces and different cities [see Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 335]. The Committee expects that workers in BAT Malaysia’s wholly owned subsidiaries are able to exercise the right to form and join the organization of their own choosing, whether at primary level or by grouping together workers from different workplaces or cities.
6. 858. The Committee invites the Government to have recourse to the technical assistance of the ILO with regard to the legislative reforms under way, should it so desire.

The Committee's recommendations

1. 859. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee, recalling once again that all measures should be taken so as to ensure that: (1) the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss; and (2) managerial and supervisory staff have the right to establish their own associations for the purpose of engaging in collective bargaining, and expects the Government to inform it in the near future of concrete measures taken to amend the IRA in view of the above principles.
   • (b) The Committee requests the Government to make every effort to consult with the company and the trade union concerned so as to determine the supervisory staff genuinely representing the interests of employers which could be excluded from BATEU’s union membership, pending the introduction of the legislative reform which would clarify the different categories of workers falling under union representation. The Committee requests the Government to keep it informed of the outcome of such consultations. In the meantime, the Committee expects that the trade union will be able to work and function freely.
   • (c) The Committee expects the Government to inform it without delay of concrete amendments to the TUA that ensure that all workers, without distinction whatsoever, enjoy the right to establish and join organizations of their own choosing, both at primary and other levels.
   • (d) The Committee expects that workers in BAT Malaysia’s wholly owned subsidiaries are able to exercise the right to form and join the organization of their own choosing, whether at primary level or by grouping together workers from different workplaces or cities.
   • (e) The Committee invites the Government to have recourse to the technical assistance of the ILO with regard to the legislative reforms under way, should it so desire.