Individual Case (CAS) - Discussion: 1994, Publication: 81st ILC session (1994)

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

A Government representative stated that the Committee of Experts raised three main issues in its observation this year. He would confine his comments to these three issues, which related to (1) the scope of collective agreements for companies granted "pioneer enterprises" status; (2) internal management prerogatives; and (3) collective bargaining in the public service. Concerning the first issue, the Cabinet had approved the proposed repeal of section 15 of the Industrial Relations Act which limited the scope of collective agreements for so-called "pioneer enterprises", and appropriate action was currently being taken to repeal this Act. The repealing legislation would be transmitted to the ILO as soon as it was passed by Parliament. Regarding the issue of internal management prerogatives, the speaker pointed out that section 13 of the Industrial Relations Act did not confer any advantages on the employers nor did it cause any disadvantages to workers, as the matters covered by that provision were subject to negotiation, conciliation, arbitration and judicial decisions. These matters could be raised at any time as and when necessary as opposed to other matters covered by collective agreements that were negotiated at specific intervals. Finally, regarding the third issue, section 52 of the Industrial Relations Act referred to collective bargaining in the public service. Public sector employees, through their unions, had been holding regular consultations in respect of some aspects of their terms and conditions of employment, including remuneration. The Congress of Unions of Employees in the Public and Civil Services, the offices of the National Joint Councils and the Public Services Department met every month to discuss issues affecting employees in the public services. Through these discussions, the parties were working towards resolving problems by consensus. The National Labour Advisory Council, a tripartite advisory body, at its meeting in April 1994 had taken note of the need for adaptability to changes in the country's economy and the changing social requirements within the framework of an ongoing process. His Government had taken, and continued to take, positive measures to give effect to the Convention.

The Employers' members thanked the Government representative for his explanations, recalling that most of the questions raised by this case were already discussed by the Committee in 1992 and that a direct contacts mission was undertaken in Malaysia in 1993. The observation of the Committee of Experts dealt with three points. Concerning the limits to collective bargaining in so-called "pioneer enterprises", the Government representative confirmed that they would soon be lifted. He would communicate information on when the law would be modified. The exclusion from collective bargaining of issues relating to the power of management had been much discussed in the past by this Committee. The Government had indicated that even these issues could be negotiated and that there existed regulatory procedures for these types of conflicts. The question of the existence of a proper power of management had nevertheless been raised, and the Employers believed that, in certain areas, the final decision was theirs and could not be shared. But there was no need to attempt to exclude these areas from collective bargaining by law. Concerning restrictions to the right of collective bargaining in the public administration, the Government stated that they were in part compensated by the fact that joint councils of Government and worker representatives met several times per year. It was important to recall that it was voluntary collective bargaining that the Convention was asking for, through the appropriate measures given national conditions. Dialogue must be interpreted as a first step in this sense and it should lead to greater progress. Generally, the Government must be encouraged to progress by the proper avenues and report on all changes that take place.

The Workers' members thanked the Government representative for his explanations before this Committee. The points raised by the Committee of Experts were now sufficiently well known by this Committee so that there was no need to go into detail. It was nevertheless useful to recall that in 1992, this Committee had criticized legislation which allowed unacceptable interference in collective bargaining. The Committee of Experts pointed out this year that the Government was seriously envisaging the repeal of section 15 of the Industrial Relations Act, and the Government representative also indicated that decisions to this end had been taken. It was to be hoped that this was the first sign of a more positive attitude from the Government with regard to standards. It was regrettable that no progress had been made concerning two other issues. The Government representative, who invoked the need to take account of the requirements of economic development, was requested to refer to paragraph 21 of the General Report of the Committee of Experts which underlined that the respect of standards of fundamental human rights must be observed regardless of economic circumstances or fluctuations. This Committee should associate itself with the request of the Committee of Experts for further information. It was appropriate to insist that the Government inform the Office of the measures that it envisaged taking in order to protect workers against acts of interference and discrimination.

The Employers' member of Malaysia asserted that the exclusion by section 13(3) of the Industrial Relations Act of matters relating to an employee's promotion, transfer, termination, dismissal or allocation of duties (management prerogatives) was not in contravention of the Convention. He underlined that section 13(3) did not grant unfettered rights to employers, as demonstrated by numerous decisions of Malaysian courts on this matter. For example, an employer could refuse to promote an employee only for proper cause and any trade union was free under the law to raise questions as to what was or was not proper cause. Moreover, the employers' prerogative of transfer was not unlimited and the courts had ruled that there should be no unreasonableness or want of bona fide on the part of the employer. Termination by way of retrenchment could not be carried out arbitrarily and the "last in, first out" principle had to be applied. Unjust dismissal could entitle the worker to reinstatement. All the above proved that employers were not free to exercise their prerogatives in an unlimited fashion. Therefore, section 13(3) did not impose any limitations and therefore was in line with the Convention. He took exception to the Experts' view that section 13(3) constituted "limitations" to the Convention. He welcomed the Experts' view on the very same issue in paragraph 250 of their 1994 General Survey on freedom of association for holding "tripartite discussions, for the preparation on a voluntary basis of guidelines for collective bargaining", instead of doing away with section 13(3). Moreover, nothing in Convention No. 98 provided for an unfettered right for unions to bargain for their members. To provide that matters such as promotion or transfer or allocation of duties should be covered by a collective agreement would amount to asserting that it was not the management which was responsible for managing the enterprise, which would indeed be contrary to commonly accepted practice worldwide.

The Government member of Indonesia considered that the Government of Malaysia had taken significant steps and achieved progress in this case. First, the Malaysian Government had approved the proposed repeal of section 15 of the Industrial Relations Act which limited the scope of collective agreements for so-called "pioneer enterprises". Moreover, there had been periodical meetings of the tripartite partners in the public sector. It was only a matter of time before the role of the Congress of Unions of Employees in the Public Sector would progress significantly.

The Workers' member from Pakistan wished to draw the attention of the Government representative to the observation of the Committee of Experts in paragraph 2 relating to section 13, subsection 3, which limited the right of collective bargaining on questions of promotion, transfer, employment, termination, dismissal and reinstatement. He disagreed with what the Government representative had asserted, that these questions were not subject to collective bargaining and were instead dealt with by judicial decisions. He disagreed because in his view Article 1 of Convention No. 98 required that workers should enjoy protection against anti-union activities. With respect to collective bargaining rights of public servants not engaged in the administration of the State, the speaker said that the Convention expressly required they had the right to negotiate and the right to collective bargaining. He recalled that the Committee of Experts had emphasized in its General Survey that it was essential that these workers take full part in collective bargaining and should have access to all financial, budgetary and other data enabling them to assess the situation. It did not suffice to say like the Government representative did that there was always consensus in general on these questions. One had to provide for collective bargaining to resolve cases of differences between workers and employers that might eventually arise. He urged the Government to review its legislation in the light of the observation made by the Committee of Experts, and particularly to amend section 15 of the Industrial Relations Act.

The Workers' member from Japan noted the positive tone of the statement made by the Government representative but felt uneasy given the support given by the Employers' member from Malaysia and the Government member of Indonesia, a country which had a very similar outlook regarding the observation of the Committee of Experts. He joined the Workers' members in expressing the hope that real and concrete progress would be made and that the Committee of Experts would then be able to further examine the case.

The Government representative reiterated that positive steps were being taken to bring changes to Malaysian legislation. In so far as the repeal of section 15 of the Industrial Relations Act was concerned, this would be discussed by Parliament in December 1994. Regarding the other two provisions, the National Labour Advisory Council was considering the matter and it was hoped that this Committee would come up with a suggestion as to how the law was to be reviewed in the not so distant future.

The speaker added that although all developing countries considered investment and development needs to be high priority issues, this did not mean sacrificing the interests of labour. Labour played a very important role in the Government's efforts to meet development and investment targets and would continue to do so under the guidance of responsible union leaders. Three major trade union centrals in the country were participating in the National Labour Advisory Council and it was hoped that, through these tripartite discussions with the employers, concrete progress would be made in the near future.

The Workers' members noted that the Government representative was trying to demonstrate that section 13(3) did not raise any problems in practice. If that was the case, it was up to the Government to prove it by furnishing the information requested by the Committee of Experts.

The Committee took note of the statement made by the Government representative and the discussion which followed. The Committee emphasized the fact that, for several years, the Committee of Experts had been making comments on restrictions on the scope of collective bargaining which resulted from the law and restrictions on the rights of employees in the public service to bargain collectively. The Committee, like the Committee of Experts, noted the explanations provided by the Government according to which the provisions referring to collective bargaining in pioneer enterprises were being repealed. It also noted that, in the private sector, matters excluded under the law from collective bargaining were in practice the subject of negotiation. It finally noted that, in the public service, joint committees examined the problems of application of the remuneration machinery recently set up. The Committee expressed the firm hope that restrictions on the scope of collective bargaining contained in the law would be repealed in the near future in order to bring the law into conformity with practice in the private sector, and that the Government would make every effort to encourage and promote voluntary negotiation of working conditions and remuneration of employees in the public service covered by the Convention. The Committee requested the Government to submit a detailed report to the Committee of Experts to allow it to assess to what extent real progress had been made in law and in practice in these areas.