The law, including related regulations and statutory instruments, allows for limited freedom of association and for some categories of workers to form and join trade unions, subject to a variety of legal and practical restrictions. The law provides for the right to strike and to bargain collectively, but both are severely restricted by regulations and by sector.
The law prohibits interfering with, restraining, or coercing a worker in the exercise of the right to form trade unions or participation in lawful trade union activities. Defense or police officials, or public-sector workers categorized as “confidential, managerial, and executive,” are prohibited from joining a union. Additionally, the act restricts a union to representing workers in a “particular establishment, trade, occupation, or industry or within any similar trades, occupations, or industries.” The law also prohibits employers from retribution against a worker for participating in the lawful activities of a trade union.
The director general of trade unions (DGTU) has primary responsibility for enforcement of freedom of association. The DGTU and sometimes the minister of human resources can refuse to register or withdraw registration from a union without judicial oversight in cases where the proper documents were not filed or when two different unions applied to do the same work. The DGTU has full discretion to determine whether workers are in “similar” trades, occupations, and industries in determining whether to register a union,. The Ministry of Human Resources additionally has full discretion, with the concurrence of the minister responsible for internal security and public order, to suspend trade union registration for up to six months for reasons s/he believes are prejudicial to security or public order. When registration is refused, withdrawn, or canceled, a trade union is considered an unlawful association. By law employers are prohibited from imposing conditions on union membership and activity in employment contracts.
Foreign workers can join a trade union; however, the Immigration Department bars foreign workers from holding trade union offices, as is stipulated in the Trade Union Act (TUA). According to the Malaysian Trade Union Congress (MTUC), the Immigration Department requests these following conditions to be incorporated into the contract: First, the employee shall not marry a citizen and shall not participate in any political activities or activities connected to trade unions. Second, the employee shall not change his or her employment during the contract period and shall not do any other business without the written permission of the employer. Third, if the employee is found creating social problems and or engaging in any illegal, subversive, or criminal activities then he or she will be immediately dismissed and will be repatriated at his or her expense. Finally, the employee shall not organize, participate, or be involved in any kind of industrial action during his or her term of employment.
The Industrial Relations Act requires that an employer respond to a union’s request for recognition within 21 days of application. If an employer does not respond within 21 days, the union must submit a written appeal to the DGTU within 14 days, who will then notify the minister of human resources of his findings. If the union fails to submit the appeal within the stipulated period or the minister decides that recognition is not to be accorded, the union is not recognized. Unions must also undergo a competency check by the Industrial Relations Department in order to be granted recognition. In the event the employer challenges the decision of DGTU stating that this is not a competent union then the director general of industrial relations (DGIR) performs an additional competency check. The International Labor Organization (ILO) has requested that the government indicate the requirements necessary to fulfill the competency check and the relevant applicable legislation.
While national unions are proscribed within the country, there are a number of territorial federations of unions (the three territories being Peninsula Malaysia, Sabah, and Sarawak). Trade unions were free to associate with these territorial federations, which must register separately as societies under the Societies Act and which exercised many of the responsibilities of national labor unions, although they cannot bargain on behalf of local unions. The government has prevented some trade unions, such as those in the electronics and textile sectors, from forming territorial federations. Instead of allowing a federation for all of Peninsular Malaysia, the electronics sector is limited to forming four regional federations of unions, while the textile sector is limited to state-based federations of unions, for those states that have a textile industry. National unions from the peninsula do not include local unions from Sabah and Sarawak, but the unions from these regions can form a federation. Trade unions are permitted to affiliate with international trade union organizations, subject to the approval of the DGTU.
There are two national labor organizations. The MTUC is a society of trade unions in both the private and government sectors and is registered under the Societies Act. As such, the MTUC does not have collective bargaining or industrial action rights but provides technical support for affiliated members. The other national organization is the Congress of Unions of Employees in the Public and Civil Services, a federation of public employee unions registered under the TUA.
Charges of discrimination against employees engaged in union organizing activities may be filed with the Ministry of Human Resources or the Industrial Court. The law limits worker compensation for wrongful termination to a maximum of two years from the time the employee was laid off. However, these and other provisions preventing management from taking reprisal actions against workers for union activity were not effectively enforced. A labor group blamed delays not on lack of resources or training (there are 27 relevant courts throughout the country, many of them headed by qualified personnel from the Attorney General’s Office) but on a lack of understanding of the effect of delays on the workers involved and an accompanying lack of urgency which led to a lack of enforcement.
Although private-sector strikes are legal, the right to strike is severely restricted. The law contains a list of “essential services” in which unions must give advance notice of any industrial action, including financial, transportation, utilities, communications, defense, security, and government sectors, and other industries designated by the minister of human resources as essential to the economy. The list includes sectors not normally deemed essential under ILO definitions. The permissible grounds for strike actions are extremely limited. The law denies unions and individuals the right to hold strikes protesting lack of recognition of their union. Strikes are illegal with regards to all collective agreement matters, or over certain issues not covered by collective agreements, such as transfers, layoffs, and dismissals. Hiring, firing and transfer are the prerogative of the employer and these three items may not be discussed or proposed for discussion by unions during collective bargaining. Additionally, the process for conducting a legal strike is unwieldy. In order to strike, the trade union and workers are required to organize a meeting outside of work, vote by secret ballot, and send the results of the ballot to the Ministry of Human Resources within 14 days. The workers cannot go on strike until the decision of the ministry is officially given to the union permitting them to strike. If workers strike without permission, it is considered an illegal action and participants are subject to termination without compensation. MTUC officials maintained that requirements imposed by the authorities were so stringent that it was almost impossible to strike. The minister has the right to refer the issue to the Industrial Court. Once it is referred to this court, no industrial action can be taken.
There have been no industry-wide strikes since 1962, but some small strikes took place during the year. From September 20-23, 600 Nepali migrant workers went on strike at Maxter Glove Manufacturing Company near Kuala Lumpur to protest the quality of food provided at the company cafeteria. In August Cambodian garment workers at Honsin Apparel Sdn Bhd in the state of Johor staged a three-day strike to signal their disapproval of a proposed accommodation agreement and to demand higher salaries. Representatives of the workers said they were paid just RM21 ($7) per day.
Private sector workers and, to a lesser extent, public sector workers, have the legal right to organize and bargain collectively, and collective bargaining was widespread in those sectors where labor was organized. In companies designated as having pioneer status, a status that precludes the company from paying taxes for 20 years, the government did not allow workers to affiliate with territorial union federations. For example, after banning national registration of an electronics union for two decades, the government in 2010 approved the formation of four regional electronics trade unions. The Electronics Industry Workers’ Union (Western Region), which covers the federal territory of Kuala Lumpur and the states of Selangor and Perak, is an example of an electronics trade union that was recognized under the new policy. According to the MTUC, however, to date, none of these four government-approved regional trade unions have been recognized by their respective companies. According to the MTUC, the companies can appeal the decision of the minister and this process could take three to five years with no union dues being collected until the court makes a final decision. In some instances, companies reportedly have harassed leaders of unions seeking recognition.
The process of collectively bargaining is complex and lengthy. To commence collective bargaining, the trade union submits a proposal for a collective agreement to the employer and invites the employer to begin collective bargaining. The employer has 14 days in which to reply; if the employer accepts the invitation, collective bargaining must begin within 30 days. If the employer refuses to negotiate or fails to reply, or if there is a deadlock in the negotiations, a trade dispute is deemed to exist and the union may notify the DGTU, who will take conciliation measures, including whatever steps she/he deems necessary or expedient. If the parties are still unable to agree, the minister of human resources may refer the dispute to the Industrial Court for binding arbitration. Strikes or lockouts are prohibited while a dispute is before the Industrial Court.
The ILO asked the government to amend the law to remove restrictions on the scope of subjects that can be collectively bargained. The law explicitly states that issues of transfer, promotion, appointments, dismissal, and reinstatement are internal management prerogatives; therefore, they are excluded from collective bargaining. The ILO also called on the government to limit the amount of discretionary power allotted the DGTU, DGIR, and the minister of human resources, including when to intercede in bargaining.
Generally, the minister of human resources or DGIR will order the recognition of a union if at least 50 percent of the workers in the relevant establishment are members. The DGIR may ask the assistance of the employer in verifying the membership and “competency” of the labor union for purposes of recognition. There is no law to compel the employer to give the names to the DGIR and according to the MTUC, it is a major weakness in the law. The 50 percent is often difficult to achieve because of the numbers of contract workers and workers designated as management or in official roles and who are therefore not eligible for union membership. MTUC officials continued to express frustration about delays in the settlement of union recognition disputes. In practice it was common for such applications to be refused or if approved, the decision challenged in court by the employer to delay the approval and consequently unions have gone unrecognized for one to several years if recognized at all. In September the Ministry of Human Resources released 2011 statistics regarding trade union formation. According to the statistics, in 2011 the ministry reviewed 200 applications for recognition of unions from various sectors. Of the 200, 49 were accorded recognition, 59 were rejected outright, not recognized by the Minister, not eligible, had withdrawn applications, or did not fulfill the requirements of the Trade Union Act, and 92 were still pending.
Government interference in union activities was rare; however, some trade unions reported that the government detained or restricted the movements of some union members under laws that allow temporary detention without the recipient being charged with a crime and that some foreign workers were not paid or were denied usual work because of their union activity. On February 7, members of the Malacca branch of the National Union of Bank Employees (NUBE) filed a police report on the January 31 dismissal by Maybank, the country’s largest bank, of the union’s Vice President Abdul Jamil Jalaludeen and Treasurer General Chen Ka Fatt. A NUBE representative said they had been fired for holding a banner outside a UN building in Geneva in 2011 in an attempt to raise awareness about a NUBE dispute with Maybank, and posting the picture on the union’s Web site. On February 15, 700 people including members of NUBE and other trade unions lodged a complaint with the MACC and staged a three-hour strike. NUBE alleged that Maybank’s 2011 move to establish a new in-house union (the Maybank Non-Executive Union, or Mayneu) was a “union-busting campaign” and constituted a violation of the constitution and the Trades Union Act.
On June 9, a session’s court acquitted the employers of five Indian nationals of trafficking offenses, citing lack of evidence and contradictions in witnesses’ statements. The case began in May 2011 when the MTUC lodged a complaint on behalf of the five based in part on nonpayment of several months’ wages.
Many employment contracts for foreign workers contained provisions banning the worker from joining a trade union. NGOs alleged that, in the absence of a formal union structure, the “ring leaders” or unofficial spokespersons for groups of foreign workers were singled out by their employers for unfair treatment, such as withholding work. According to the MTUC, foreign workers, although not allowed to join unions, are counted as voting in union elections to dilute the number of votes in favor of the establishment of a union (those who do not vote are counted as voting against a union).
In April an amendment to the Employment Act of 1955 was implemented that formalized the separation of the employee from the principal employer when labor is supplied through a labor supplier, labor recruiter, or outsourcing firm except in the agricultural and plantation sectors. This amendment legally exempts the labor supplier from certain legal obligations of employers towards their employees. Companies increasingly turned to contract labor as a way to avoid paying extensive employee benefits, resulting in a class of workers often referred to as “outsourced workers” who legally are not considered employees of the principal or owner of their workplace. These contract workers are left without the ability to form a union because they are technically employed in a different industry (for example, staffing) than that in which they are actually working (such as hospitality). They may not join in-house unions or regional/national unions, nor may they benefit from collective agreements. In addition to the increasing use of outsourced workers, a growing use of short-term employment contracts also contributed to the declining number of workers involved in trade unions. The short-term nature of contract workers’ employment is a disincentive to joining and participating actively in trade unions. Trade unions hold general meetings and elect leaders only once every three years, a period that is longer than many short-term employment contracts. Similarly, observers noted that the government, by classifying workers as self-employed, further limited their ability to organize.
A terminated worker legally ceases to be a member of his trade union. Labor activists complained that the loss of membership upon termination comes at a time when trade union support and assistance is most needed.
In practice the fact that unions were only able to provide limited protection for workers, particularly foreign workers, created a disincentive to unionize.