Individual Case (CAS) - Discussion: 1999, Publication: 87th ILC session (1999)

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

A Government representative broke down the Committee's concerns regarding the Government of Malaysia's implementation of Convention No. 98 into three issues. First, section 15 of the Industrial Relations Act of 1967 relating to collective agreements for companies granted "pioneer status". Second, section 13 of the same Act concerning restrictions with regard to certain matters on collective bargaining. Third, the right of government employees to bargain collectively under section 15 of the same Act.

Regarding the first issue, the Government informed the Committee that the provision in question was in the process of being repealed. However, as the repeal process formed part of a general amendment to the Industrial Relations Act, the amendment to this section had inadvertently been delayed in order to accommodate amendments to various other provisions which were being incorporated. The Government was fully aware that the relevant provision had outlived its purpose and had taken appropriate measures to repeal it in the near future. The Government also undertook to forward a copy of this legislation to the Office as soon as it was enacted by Parliament.

In respect of the second issue, the Government took note of the Committee's comments that employment, promotion and termination should be matters for management's decision-making and form part of management's freedom to run the enterprise. The Government also took note of the Committee's view that transfer, dismissal and reinstatement should not be excluded from the scope of collective bargaining. In this regard, the Government reiterated its position that these three matters should not be predetermined in a collective agreement. In its view, if such issues were predetermined in a collective agreement, this would ultimately affect the rights of management to manage its business efficiently. However, while these issues were excluded from collective bargaining this did not grant unfettered rights to employers in this respect, as shown by the numerous relevant decisions issued by the Malaysian courts. Despite this restriction, issues related to those matters had been the subject of frequent negotiations, consultations and agreements between unions and management whenever the need arose, as the Malaysian labour laws did not prohibit such negotiations.

With reference to the third issue of the restriction of public services from collective bargaining, the Government reiterated that the Congress of Unions of Employees in the Public and Civil Services (CUEPACS) and the Public Services Department (PSD) had met on a regular basis through various joint councils. In their discussions, they deliberated and negotiated remuneration packages, terms and conditions of employment and the resolutions of anomalies. While macro-level issues such as salaries, pension increases and general allowances were raised through CUEPACS, which was the central body of the public services union, other issues, specific to certain services or agencies, were taken up by the individual trade unions with the agencies concerned, either through the departmental joint councils or directly with the PSD. Presently, there were about 300 trade unions in the public service representing employees from various services, categories and agencies. Once negotiations were concluded, circulars were issued to the relevant agencies for implementation of the agreements.

Due to the differing objectives between the public sector and the private sector, and the Government being a single employer of more than 850,000 employees, it was not possible to have collective bargaining and collective agreements with each of the trade unions. The Government had to take into account equity and uniformity of salaries and terms of conditions of employment for all its employees. At the same time, the Government had to bear in mind the economic situation, the financial possibilities and the services needed to be provided to all its citizens in determining remuneration and other benefits for its own employees. In Malaysia, the mechanisms for consultation and negotiation for government employees were not limited to CUEPACS and the PSD or the individual unions of the various agencies. Rather, unions had access to the highest authority, the Prime Minister. To date, the mechanisms available had provided sufficient avenues for discussions and negotiations on salaries and terms and conditions of employment for public employees and had been successful in ensuring the protection and enhancement of the interests and the welfare of public sector employees. As an example, in early 1997, five trade unions representing employees from five government agencies submitted proposals and claims for salary adjustments to the Government. Unfortunately, due to the economic decline which began in mid-1997, discussions on the proposals were temporarily set aside. However, serious discussions resumed six months ago between these five unions and the Government. Only a few days ago, the Prime Minister announced the Government's approval for, among other things, salary adjustments for the five agencies, which would benefit nearly 11,000 employees, especially those in the lower income groups. Prior to this, a new circular had also been issued, which provided a certain group of employees with a special duty allowance. CUEPACS had played an important role in assisting the five unions throughout these negotiations.

It had always been the policy of the Malaysian Government to ensure that equity prevailed among all citizens, especially on social and economic levels. Enhancement of quality of life of the people could only be realized through economic development. It was therefore essential that the laws, policies and practices provide a balance between worker protection and enterprise development to ensure stability, harmony and a conducive climate for development. She indicated that the Workers' delegate from Malaysia representing CUEPACS would be in a position to affirm the Government representative's statement.

The Employer members stated that this case had been examined previously in 1994 at the Conference Committee. The case was related to collective bargaining issues, particularly with regard to Article 4 of the Convention, which were of a more promotional character. In this respect, three questions had been raised by the Committee of Experts in its report. The first question concerned section 15 of the Industrial Relations Act (IRA) which had limited the scope of collective agreements for companies granted "pioneer status". The Employer members stated that the Government representative had already promised in 1994 that this provision of the Industrial Relations Act would be amended. However, there had been some delay in the legislative process, with the result that the Bill had only been submitted to Parliament for examination recently. In this regard, the Employer members thought that the Government should provide some information as to the content of the Bill already at this stage of the legislative process. Another issue concerned section 13(3)(c) of the IRA with regard to matters known as internal management prerogatives, such as promotion, transfer, employment, termination, dismissal and reinstatement. The Employer members recalled that there was agreement as to the State's right to determine matters which could not be subject to collective bargaining, since such matters would ultimately affect the rights of management to manage. Indeed, the Convention had not enumerated matters which were not subject to collective bargaining. Such detailed provisions would constitute a contradiction to the voluntary character of collective bargaining. The Employer members thought that provisions in this respect could only be accepted in a recommendation which was legally non-binding. In this respect, they mentioned that the recognition of internal management prerogatives would consequently lead to a recognition regarding a possible limitation of the right to strike. However, the Committee of Experts had never considered such limitations. In relation to certain restrictions on the right to bargain collectively for public servants other than those engaged in the administration of the State (section 52 of the IRA), the Employer members noted the indication of the Government representative to the effect that there existed committees which had participated on matters related to labour conditions, such as the determination of wages. In conclusion, the Government should be requested to provide precise information as to the collective bargaining which had taken place, the number of such co-determination committees as well as the number of agreements which had been concluded in this respect. This detailed information should be provided in written form as well as information concerning the amendment of section 15 of the IRA currently under consideration.

The Worker members considered this to be a serious case. Despite an ILO mission in 1993 and the Committee's discussion of this case in 1994, the situation remained unchanged. Despite the fact that the Government had had five years to fulfil its promise to repeal legislation limiting the scope of collective agreements for companies granted "pioneer status", the Committee was still empty-handed. Malaysia also had serious problems in regard to the application of Convention No. 87. While the Worker members recognized that the Committee was not now discussing Convention No. 87, they nevertheless drew its attention to the well-known overlap between Conventions Nos. 87 and 98. There was no point in giving workers the right to organize if they could not collectively bargain and no point in giving the right to bargain collectively if they did not have the right to organize. With regard to the three points raised by the Committee, the Worker members expressed their disappointment at the Government representative's statements. In 1994, the Government had indicated that it was taking action to amend section 15 of the Industrial Relations Act (IRA). The Worker members asked the Government to explain what had caused this amendment to remain at a standstill for the past five years. The Government representative was also asked to indicate the status of the proposed amendment and to indicate whether the Government intended to take steps to speed up this process. Disagreeing with the statement of the Employer members that issues such as promotion, employment and termination were matters for exclusive management decision-making, the Worker members stressed that the Committee of Experts had in fact stated that these issues could eventually be considered as internal management prerogatives. The Worker members emphasized that the other issues, namely transfer, dismissal and reinstatement should not be excluded from the scope of collective bargaining according to the Committee of Experts. The Worker members agreed that the legislation could be put in more general terms but noted that, if the Government intended to legislate specifically on this point, it should follow the Committee of Experts' recommendations on this point. He therefore requested the Government to indicate its intention in this regard. The Worker members noted the statement of the Government representative that, in practice, Malaysian employers did not have unfettered rights in regard to restricting collective bargaining. While this was reassuring, it was not relevant to the point made by the Committee of Experts. Simply put, the national legislation was not in conformity with the Convention and therefore must be amended. In relation to the Committee's comments on certain restrictions placed on the right to bargain collectively for public servants other than those engaged in the administration of the State, the Worker members noted the Government representative's statement that the National Joint Councils provided a sufficient avenue for collective bargaining. While the Worker members conceded that no complaints regarding this process had been received from the trade union side, they pointed out the distinction between law and practice and urged that the law be brought into conformity with the Convention. The Government representative was asked to respond to this point. Finally, the Worker members noted that the Government could not cite economic development constraints as an excuse not to conform its legislation with the Convention, which is a fundamental human rights Convention of the ILO without flexibility clauses, and urged the Government to take rapid action in this regard.

The Worker member of Malaysia wished to address the issue of the restrictions on collective bargaining in the public services in Malaysia referred to in paragraph 3 of the report of the Committee of Experts. As the Government had indicated in its report to the Committee of Experts, the Congress of Unions of Employees in the Public and Civil Services (CUEPACS), the officers of the National Joint Councils (NJC) and the Public Service Department (PSD) met on a regular basis to discuss issues affecting employees in the public service. Through these discussions, public sector unions did contribute to the deliberations on remuneration, terms and conditions of employment and the resolution of any problems related thereto. The Government had emphasized and guaranteed that the NJC provided a sufficient avenue for discussions and negotiations on salaries as well as terms and conditions of employment of public servants and that CUEPACS, as the national centre for public servants, played an important and responsible role in protecting the interests of public servants, including wage negotiations. With reference thereto, he stated that while he hoped that a system of collective bargaining could be implemented in the near future, the system of discussions and negotiations previously described would continue to remain applicable and was accepted by CUEPACS. CUEPACS and the Government of Malaysia agreed, in principle, based on the economic situation and improvements therein, that the salary scales would be revised every five years. The last revision for public servants in Malaysia was effective as of 1 January 1992 and was approved by the Government after meetings and discussions with CUEPACS. At the request of CUEPACS, certain adjustments thereto were made in 1995. Negotiations involving CUEPACS for a renewed revision of the salary scales would be initiated in a few months' time, following an agreement with the First Finance Minister of Malaysia on 18 March 1999. This system could be considered as forming part of a collective bargaining mechanism. CUEPACS, which represented some 800,000 civil servants in Malaysia, looked forward to further improvements in the negotiation system for public servants in Malaysia. During the General National Joint Council meeting on 24 April 1999, the Government had agreed in principle to set up an arbitration court for public servants to handle the system of services and other matters arising in public service.

The Employer member of Malaysia wished to address the so-called management prerogative referred to in paragraph 2 of the report by the Committee of Experts. He was pleased to note that the Committee of Experts had accepted that employers did have the freedom to manage and that this freedom also involved certain rights of management. He emphasized that this freedom to manage resulted in the creation of employment and jobs. In order to encourage and enhance such contribution from the employers, certain rights to manage must be retained by the employers and be outside the scope of collective agreement. Some of these rights had, in the case of Malaysia, been incorporated in section 13 of the Industrial Relations Act (IRA). These rights should be retained and the speaker's organization (Malaysian Employers Federation (MEF)) did not encourage the Government to make any amendments thereto. The IRA had functioned satisfactorily for more than 20 years, and in view of the tripartite environment in which it operated, there was no need to change the present situation. In any event, he noted, the employers' management rights could not be arbitrarily exercised. A significant case law emanating from the Industrial Court had fettered the exercise of these rights, and any complaints related to such exercise could be addressed to the Industrial Court. Furthermore, and to the extent that general dissatisfaction exists as regards these rights or the exercise thereof, such issues could be brought up by any party in the National Labour Advisory Council in Malaysia, a tripartite entity set up to discuss labour issues.

The Worker member of Pakistan noted that the Government had not fulfilled its 1994 undertaking to amend section 15 of the Industrial Relations Act. He urged the Government to expedite this process, as well as to amend sections 13(3) and 52 of the Act, in accordance with the recommendations of the Committee of Experts. He took note of the comments made by the Employer and Worker members of Malaysia in which they indicated their desire to improve the present system in the country. He requested the Government to provide the information requested by the Committee of Experts on the manner in which collective bargaining was encouraged and promoted in practice between public employers and public servants other than those engaged in the service of the State. While noting the Government's information that Malaysian legislation had been interpreted by the courts, he pointed out that individual workers were not always able to litigate their complaints. He reminded the Government that it remained under an obligation to bring its national legislation into conformity with the Convention and expressed the firm hope that it would do so in the near future.

Another Government representative of Malaysia thanked all the speakers for their comments. He recalled that it had always been the policy of the Government to review all labour laws to keep them in line with economic developments. He reiterated that there had been no delay to amend section 15 but explained that since 1994, other legal provisions had been amended and that it had been requested that all these amendments be presented together, which of course caused a delay. He also pointed out that the process of amending legislation included consultation with the social partners. He then explained that the 1997 economic downturn had changed certain priorities and that it had been necessary to protect workers' interests. Finally, he assured the Committee that his Government would submit the necessary legislative amendments as soon as they had been adopted by the Government.

The Worker member of Greece considered unacceptable the Government representative's excuse that, despite every effort having been undertaken by the Government to amend its legislation, difficulties remained in adopting new legislation, and that after five years no changes had been recorded, particularly since Malaysia was an economically developed country and had not suffered unduly from the Asian crisis.

The Worker members expressed their disappointment with the response of the Government. The Government had only responded to the first point and that response was the same answer given by the Government in 1992 and 1994. The Worker members urged the Committee to signal a sense of urgency to the Government so that it would expedite the amendment process. The Worker members pointed out that it would be disastrous for the ILO supervisory system if points repeatedly discussed were never acted upon. The Government should be required to respond to the issue raised by the Committee of Experts regarding the legislation regulating internal management prerogatives. Finally, the Government's response that the consultation system with regard to collective bargaining for civil servants was functioning adequately was insufficient.

The Employer members recalled their views expressed in the first intervention. The Conference Committee could not request the Government to eliminate restrictions imposed by section 13(3)(c) of the IRA relating to matters known as internal management prerogatives. Provisions were not necessarily required for matters which would be excluded from collective bargaining. This issue had to be regulated in consultation with the social partners. However, the method to determine matters for collective bargaining could differ from country to country. The Government therefore should only be requested to provide additional information on the subject. Moreover, there was agreement as to the necessity to amend section 15 of the IRA.

The Committee took note of the statements made by the Government representatives and of the discussion which took place thereafter. The Committee acknowledged the willingness of the Government to repeal section 15 of the Industrial Relations Act (IRA), 1967, which limited the scope of collective agreements for companies granted "pioneer status", but recalled that according to the Committee of Experts these "positive measures" had been announced by the Government since 1994. Similarly to the Committee of Experts, the Committee urged the Government to repeal section 15 and to amend section 13(3) of the IRA at an early date so as to ensure that workers' organizations and employers were encouraged to negotiate freely the terms and conditions of employment of the workers in accordance with Article 4 of the Convention. In addition, the Committee asked the Government to provide more information on how collective bargaining was encouraged and promoted in practice between public employers and organizations of employees in the public and civil services. The Committee trusted that the Government would supply a detailed report on concrete measures actually taken to comply with the requirements of the Convention on all the questions raised by the Committee of Experts.