Observation (CEACR) - adopted 2022, published 111st ILC session (2023)

Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Malaysia (Ratification: 1961)

The Committee notes the observations of the National Union Bank Employees (NUBE) received on 1 September 2022 alleging the violation of trade union rights through the implementation of unilateral restructuring schemes, collective bargaining in bad faith, harassment of trade union members and denial of facilities by an enterprise in the banking sector, among other allegations. The Committee requests the Government to provide its comments in this respect.

The Committee also notes the observations of the International Trade Union Confederation (ITUC) received on 1 September 2022 concerning the issues examined by the Committee, and the Government’s replies thereon.

Follow-up to the conclusions of the Committee on the Application of Standards (International Labour Conference, 110th Session, May–June 2022)

The Committee notes the discussion which took place in June 2022 in the Conference Committee on the Application of Standards (the Conference Committee) concerning the application of the Convention by Malaysia. The Committee notes that the Conference Committee noted with interest the amendments to the Industrial Relations Act 1967 (IRA) and the Employment Act 1955 (Employment Act), in 2021 and 2022 respectively and the prevailing concern regarding ongoing challenges in relation to the exercise of the collective bargaining rights, trade union discrimination and interference. The Committee observes that the Conference Committee requested the Government to: (i) amend without delay national legislation, specifically the Employment Act, the Trade Unions Act 1959 (TUA), and the IRA, in consultation with the social partners, to bring these laws into conformity with the Convention; (ii) ensure that the procedure for trade union recognition is simplified and that effective protection against undue interference is adopted; (iii) ensure that migrant workers can fully participate in collective bargaining, including by enabling them to run for trade union office; (iv) enable collective bargaining machinery in the public sector to ensure that public sector workers may enjoy their right to collective bargaining; (v) ensure, in law and practice, adequate protection against anti-union discrimination, including through effective and expeditious access to courts, adequate compensation and the imposition of sufficiently dissuasive sanctions. The Conference Committee also requested the Government to: (i) submit a report to the Committee of Experts by 1 September 2022 with information on the application of the Convention in law and practice, in consultation with the social partners; and (ii) continue to avail itself of the technical assistance of the ILO.

Ongoing legislative reform. The Committee notes the Government’s statement that the Employment Act was amended in 2022, and that the TUA, under the process to be amended at the Parliament, has been discussed with the social partners in 12 sessions held in August 2022. The Committee welcomes the Government’s indication that it will continue working closely with the Office through the Labour Law and Industrial Relations Reform project, and the social partners, including the Malaysian Trades Union Congress (MTUC) and the Malaysian Employers Federation (MEF), to ensure adequate protection against anti-union discrimination. The Committee notes that the Government avails itself of the technical assistance of the ILO to facilitate the review of the Trade Union Act and to contribute to achieving its full conformity with the Convention. The Committee requests the Government to provide information on any developments in this regard.

Article 1 of the Convention. Adequate protection against anti-union discrimination. Effective remedies and sufficiently dissuasive sanctions. The Committee notes the Government’s confirmation that section 8 of the IRA provides for procedures for non-criminal acts, while section 59 is related to semi-criminal cases. The Committee notes the Government’s indication that remedies for anti-union discrimination under sections 8 and 20 of the IRA are awarded by the Industrial Court based on the facts and merits of each case, and acting on the basis of equity, good faith and the substantial merits of the case. The Committee notes the Government’s indication that victims of anti-union discrimination may file complaints to the Director-General of Industrial Relations to start an inquiry, conciliate or investigate the complaints. The Committee observes that it is in the discretion of the Director-General to refer or not the complaint to the Industrial Court, without the worker having the right to access the courts directly, and there is no information regarding on what basis the decision to dismiss a complaint without referring it would be made. The Committee notes that at the discussion held at the Conference Committee, the Government indicated that the reforms to the IRA aim to enhance the existing dispute resolution system, as well as to enable any disputes arising to be resolved effectively, and expedite the procedures involved. However, the Committee notes the Government’s indication regarding the duration and number of procedures on cases on anti-union discrimination that: (i) from January 2021 until April 2022, 35 cases were filed (section 8 of the IRA), and 31 have been resolved by the Industrial Relations Department with an average duration of the proceedings from three to six months; and ii) cases referred by the Director-General of Industrial relations to the Industrial Court should be resolved within 12 months. The Committee notes with concern the ITUC’s observations according to which the remedies applied in cases of anti-union discrimination are inadequate because they usually consist of compensation in lieu of reinstatement and processes can last over two years. The Committee notes with regret that the Government does not provide information on the actual number of cases and duration of the proceedings before the Industrial Court nor on the sanctions applied and measures of compensation awarded for anti-union discrimination acts. The Committee observes that the Committee on Freedom of Association also examined the issue of effective protection against acts of anti-union discrimination in its Case No. 3409 and referred the legislative aspect of this case to it (399th Report, June 2022, paragraphs 227 and 229). Recalling that effective protection against acts of anti-union discrimination requires rapid and impartial procedures and remedies, as well as sufficiently dissuasive sanctions, the Committee urges the Government to take the necessary measures to ensure that workers who are victims of anti-union discrimination have the right to directly lodge a complaint before the courts and that such proceedings are rapid and effective and to ensure an effective protection through reinstatement, adequate compensation, and the imposition of sufficiently dissuasive sanctions. The Committee also recalls its recommendation to consider the reversal of the burden of proof once a prima facie case is made. The Committee further requests the Government to provide detailed information on: (i) the number of complaints filed, the duration of the proceedings, the remedies, and the sanctions and measures of compensation effectively imposed for acts of anti-union discrimination in accordance with the IRA; and (ii) the criteria followed by the Director-General of Industrial Relations to determine the actions to take in the treatment of anti-union discrimination cases, including to refer or not the matter to the courts.

Articles 2 and 4. Trade union recognition for purposes of collective bargaining. Criteria and procedure for recognition. The Committee had observed that in case of an employer’s refusal to grant recognition to a union: (i) the Director-General shall ascertain the scope of membership of the trade union on the date of the claim, whether it is in accordance with the union’s constitution; and (ii) by way of secret ballot, the Director-General, shall ascertain the percentage of workers, in respect of whom recognition is being sought, who indicate support for the trade union making the claim. The Committee had requested the Government to provide detailed information on the steps taken to ensure safeguards against employer interference during the recognition process. The Committee notes with regret that no detailed information has been provided by the Government in this regard. It notes, however, the Government’s indication at the Conference Committee that to safeguard against employers’ interference, sections 4, 5 and 8 of the IRA, are applied. The Committee observes that the IRA entered into partial effect on January 2021 and understands from the Government’s statement that several provisions including section 12A (exclusive bargaining agent) of the IRA will only enter into force upon amendment of the TUA. The Committee notes the initial Government’s statement that the actual impact of the amendments on the secret balloting process for trade union recognition, has not been visible due to COVID-19 restrictions. The Committee further notes the Government’s reply to the ITUC observations regarding the simplification of processes for trade union recognition, indicating that: (i) Malaysia entered the endemic phase of COVID-19 on 1 April 2022, and since then the secret ballot process has been conducted as per the amendment to the IRA; (ii) as of October 2022, 78 secret ballot processes have been conducted (78 employers and 26,521 employees involved); and, (iii) from 1 January to 31 October 2022, 261 cases have been reported regarding recognition with an average duration from one to six months for resolution (for voluntary recognition processes duration of resolution is about one month. For other cases legal intervention extends the duration of the process). The Committee notes however that the information provided does not specify the number of recognitions that were granted to trade unions. Taking due note ofthe Government’s indication regarding the implementation of the recognition procedures, envisaged by the amended provisions in the IRA, and recalling that these processes should provide safeguards to prevent acts of employer interference, the Committee requests the Government to continue to provide detailed information on the application in practice of these measures, including the number of processes for trade union recognition, the duration of these processes, and the outcomes (number of recognitions granted). The Committee further requests the Government to provide detailed information on the steps taken to ensure that safeguards against employer interference are applied in the process of application of sections 4, 5 and 8 of the IRA, including the specific measures in practice and sanctions applied when these cases occur.

Exclusive bargaining agent. The Committee notes that: (i) where more than one trade union has been accorded recognition, the exclusive bargaining agent will be determined among themselves; (ii) if there is no agreement by the workers or group of workers, the exclusive bargaining agent, the employer or trade union of employers or any trade union concerned, may make an application in writing so that the exclusive bargaining agent is ascertained by the Director-General of Industrial Relations by way of a secret ballot through the highest number of votes (section 12A of the IRA); and (iii) section 12A of the IRA is yet to be enforced and is subject to the amendment of the TUA, which is still pending. The Committee notes that the Government reiterates that a simple majority is a minimum requirement that shall be maintained, which has been also agreed by the social partners. The Committee had observed however that the IRA does not make reference to the simple majority threshold indicated by the Government for the determination of the exclusive bargaining agent. The Committee expresses the firm hope that the provisions related to the recognition of the exclusive bargaining agent will enter into force without delay (section 12A of the Industrial Relations Act), following the entering into force of the Trade Union Act that is still undergoing the process of amendment. The Committee requests the Government to provide information on all the developments in this regard.

Rights of minority unions. The Committee notes with regretthat the Government does not provide information on the measures taken or envisaged, in light of the consultations with the social partners held as part of the reform of the TUA (which will provide for measures for application of section 9A), to ensure that, in situations, where no union is declared the exclusive bargaining agent, collective bargaining can still be exercised by the existing unions. The Committee is therefore bound to request once again the Government to specify the measures taken or envisaged, in light of the reforms of the Industrial Relations Act and the forthcoming amendments to the Trade Union Act,to ensure that, in situations where no union is declared the exclusive bargaining agent, all unions in the unit are able to negotiate, jointly or separately, at least on behalf of their own members.

Duration of recognition proceedings. The Committee notes the Government’s indication that the average duration of the recognition process is of four to nine months, and that the decision on recognition from the Director-General of Industrial Relations may be appealed for judicial review. In this respect, the Committee recalls that the average duration of the recognition procedure, must be “reasonable”, and that an average duration of nine months is excessively long (2012 General Survey on the fundamental Conventions, paragraph 232). The Committee urges the Government to take the necessary measures to ensure that the duration of the recognition process is reasonable, and to provide information on the measures adopted in this respect.

Migrant workers. The Committee welcomes the Government’s indication at the Conference Committee that: (i) foreign workers are eligible to become members of a trade union and are eligible to hold office upon approval of the Minister if it is in the interest of such union; (ii) the IRA does not impose restrictions on migrant workers to engage in collective bargaining; and (iii) as of 2022 a total of 27,964 foreign workers are members of 16 registered trade unions (increasing from 2,874 workers in 2019). The Committee takes note, however, of the Government’s reply to the ITUC’s observations that the referred Minister’s approval only acts as a security measure to make sure the election is transparent and fair. The Committee observes that this condition may hinder the right of trade unions to freely choose their representatives for collective bargaining purposes. It notes that the Committee on Freedom of Association also examined this issue and invited the Government to provide information on any legislative development in this regard to the Committee of Experts (Case No. 2637, 397th Report, March 2022, paragraph 32). The Committee therefore requests the Government to take, in consultation with the social partners, the necessary legislative measures to ensure that foreign workers are able to run for trade union office without prior authorization.The Committee further requests the Government to take the necessary measures to ensure the full utilization of collective bargaining by migrant workers and to provide information in this respect.

Scope of collective bargaining. The Committee notes the Government’s indication reiterating that: (i) section 13(3) (restrictions on “internal management prerogatives”– promotions, transfers, appointment of workers in case of vacancies, termination of services due to redundancy, dismissal, reinstatement and assignment or allocation of work) shall be retained to maintain industrial harmony and speed up the collective bargaining process; (ii) the provision is not compulsory as if both parties agree, they may negotiate on those subject matters; and (iii) trade unions can raise questions of a general character relating to transfers, termination of services due to redundancy, dismissal, reinstatement and assignment or allocation of work. The Committee notes with concerntheITUC’s observations indicating that while workers are allowed to raise general questions, the provisions also allow employers to dismiss those questions. The Committee observes that it remains unclear how questions of a general character relating to matters that are within the scope of legislative restrictions on collective bargaining can be raised in practice. The Committee further observes that the Committee on Freedom of Association also examined the issue of raising general questions and the scope of collective bargaining and referred the legislative aspect of the case to this Committee (Case No. 3401, 397th Report, March 2022, paragraphs 499 and 502). The Committee therefore requests the Government, once again, to indicate the practical implications of the amendment of section 13(3) of the Industrial Relations Act on the scope of collective bargaining, in particular to clarify the meaning of the new wording – questions of a general character and the way in which these questions are raised and dealt with in practice. The Committee requests the Government to provide information on the number of collective agreements that include “internal management prerogatives” as negotiated subjects. The Committee reiterates its invitation to the Government to consider lifting the broad legislative restrictions on the scope of collective bargaining, so as to promote the right to bargain freely between the parties, without any intervention by the Government.

Compulsory arbitration. The Committee had noted withinterest that the amendments to the IRA restrict compulsory arbitration to instances generally compatible with the Convention. However, it had also noted that the reference in section 26(2) to “any Government service” and “the service of any statutory authority”, as well as the reference to a number of Government services in point 8 of the First Schedule, may go beyond what can be considered as public servants engaged in the administration of the State. Furthermore, point 10 of the First Schedule, qualifies as essential services businesses and industries connected with the defence and security of the country, while they should be afforded the full guarantees of the Convention. The Committee notes the Government’s indication that the IRA amendments will be enforced after the TUA’s amendment is completed. The Committee trusts that the amendments will enter into force without delay, once the legislative process for the Trade Union Act amendments, noted above, is completed. The Committee requests the Government to provide information on the amendments and measures taken or envisaged, in consultation with the social partners, to: (i) further delimit the categories of Government services in section 26(2) and point 8 of the First Schedule, so as to ensure that compulsory arbitration may only be imposed on those public servants engaged in the administration of the State; and (ii) remove businesses and industries mentioned in point 10 of the First Schedule from its scope of application.

Restrictions on collective bargaining in the public sector. The Committee has for many years requested the Government to take the necessary measures to ensure for public servants not engaged in the administration of the State the right to bargain collectively over wages and remuneration and other working conditions and emphasized that simple consultations with unions of public servants not engaged in the administration of the State did not meet the requirements of Article 4 of the Convention. The Committee notes the ITUC’s observations indicating that public servants are only consulted and not integrated in processes of collective bargaining. The Committee notes the Government’s indication that: (i) to ensure the welfare of public servants and collective bargaining there is engagement between employers and employees in the public sector; (ii) the Public Service Department has provided a platform through the National Joint Council (NJC) (which is inclusive of all public servants) and the Departmental Joint Council (DJC) to ensure that the welfare of public servants is heard; (iii) the NJC, as a form of joint consultation, is required to convene once a year to discuss proposals and matters on remuneration and service principles, innovation and productivity initiatives, and other amendments proposed to existing policies; and (iv) the DJC meets three times a year, and provides a means for public servants to communicate with management and express their opinions and views. The Committee observes that: (i) the Government submits the Service Circular No. 6/2020 and Service Circular No. 7/2020 (in Malay), related to the functioning of the National Joint Council and the Departmental Joint Council; (ii) the Councils appear to have a consultative status as opposed to being used as a platform for collective negotiation on issues relating to terms and conditions of employment of public servants. The Committee notes with regret that the Government does not provide information on collective bargaining and agreements concluded in the public sector. The Committee, therefore, requests the Government to: (i) provide further information regarding how the different Councils ensure the right to collective bargaining, and not only consultation rights, in conformity with Article 4 of the Convention; and (ii) provide information on collective bargaining undertaken in the public sector, including the number of agreements concluded and the number of workers covered by those agreements.

Collective bargaining in practice. The Committee had requested the Government to provide statistical information in relation to collective bargaining in the country. The Committee observes with regret that the Government refers to statistical information that is not provided. The Committee also notes that the Government made reference, at the Conference Committee, to progressive efforts to enhance the procedure and process on the right to strike and collective bargaining with the social partners. The Committee observes that no specific measures are further indicated by the Government. The Committee also notes the concerns expressed by the ITUC as to the low percentage of workers covered by collective agreements (1 to 2 per cent) and the declining level of trade union density (6 per cent). The Committee notes with concern the very low coverage of collective bargaining, indicated by the ITUC,and observes that according to public statistics available in ILOSTAT as of 2018, the collective bargaining coverage rate in Malaysia was of 0.4 per cent. The Committee considers that this very low coverage could be related to the restrictive requirements in law and practice to engage in collective bargaining discussed above. The Committee therefore requests the Government to take the necessary action to remove all the legal and practical obstacles to collective bargaining addressed in this comment and to take concrete measures to promote the full development and utilization of collective bargaining. The Committee further requests the Government to provide updated statistical information on the number of collective agreements concluded and in force, the sectors concerned, and the number of workers covered by these agreements, as well as on any additional measures undertaken under the Convention.

The Committee is raising other matters in a request addressed directly to the Government.