The law 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 laws provide for the right to strike and to bargain collectively, but both are severely restricted by regulations and by sector.
The 1959 Trade Unions Act (TUA) 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 Industrial Relations Act (IRA) prohibits employers from taking retribution against a worker for participating in the lawful activities of a trade union.
Enforcement of freedom of association lay primarily with the director-general of trade unions (DGTU). For example, the DGTU and, in some cases, the minister of human resources can refuse to register or withdraw registration from some unions, without judicial oversight. When registration is refused, withdrawn, or canceled, a trade union is considered an unlawful association.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. In theory foreign workers can join a trade union; however, the Immigration Department bars foreign workers from holding trade union offices.
The IRA requires that an employer respond to a union’s request for recognition within 21 days of application. If an employer does not respond to the union application 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.
While national unions are proscribed within Malaysia, there are a number of territorial federations of unions (the three territories being Peninsular 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, however, 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 which have a textile industry. Trade unions were permitted to affiliate with international trade union organizations, subject to the approval of the DGTU.
There are two national labor organizations. The Malaysian Trade Union Congress (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 organizing union activities may be filed with the Ministry of Human Resources or the Industrial Court. The IRA 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 headed by qualified personnel from the Attorney General’s Chambers), but on a lack of understanding of the effect of delays on the workers involved and an accompanying lack of urgency.
Although private sector strikes are legal, the right to strike is severely restricted. The IRA 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 International Labor Organization (ILO) definitions. The IRA further denies the right of unions and individuals to hold strikes protesting the lack of recognition of their union.
Additionally, the process for conducting a legal strike is unwieldy. MTUC officials said that requirements imposed by the authorities were so stringent that it was almost impossible to strike. According to MTUC officials, there were no strikes during the year (and no major strikes since 1962).
Private sector workers and, to a lesser extent, public sector workers, have the 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, the government did not allow workers to affiliate with territorial union federations. In 2010 the government approved the formation of trade unions in the electronics sector, formerly a “pioneer” sector in which collective bargaining was restricted. The Electronics Industry Workers’ Union (EIWU) (Southern Region) is an example of an electronics trade union that was recognized under the new policy. On January 27, the union at ST Microelectronics voted to join EIWU.
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 has repeatedly, including during the year, asked the government to amend the IRA 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 has also called on the government to limit the amount of discretionary power allotted the DGTU and the minister, including when to intercede in bargaining.
The minister would commonly order recognition of a union if at least 50 percent of the workers in the relevant establishment were members. This threshold, however, was often difficult to achieve because of the numbers of contract workers and workers who were designated as being in management or official roles and who were 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 and unions to go unrecognized for one to four years.
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. For example, in May MTUC lodged a complaint on behalf of five Indian nationals based in part on nonpayment of 7-10 months’ wages. The Labor Office investigated and on November 4, charged the employer for trafficking. A hearing was scheduled for January 2012.
Many employment contracts for foreign workers contained provisions banning the worker from joining a trade union. NGOs reported that sometimes, 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. The president of the newly formed electronic workers union for Renesas Semiconductor was dismissed in April following his posting on a blog about his union recognition claim. Labor activists claimed that his only “crime” was being responsible for organizing workers.
The law has the practical effect of encouraging employers to hire contract workers who are then left without the ability to form a union because they are technically employed in a different industry (staffing) than that in which they are actually working (e.g., hospitality). One NGO reported that following its engagements with Sime Darby, the company agreed to switch to direct recruitment of full-time workers on at least two of its large plantations instead of using recruitment agencies. Similarly, observers noted that the government, by classifying more workers as self-employed, put further limits on their ability to organize.
On September 21, the National Union of Bank Employees (NUBE) accused Maybank, the country’s largest bank, of backing a new, in-house union in order to dodge a claim for bonuses. Maybank chief executive Datuk Seri Abdul Wahid Omar said that although 61 percent of Maybank employees in the clerical/non-clerical category were NUBE members, other employees decided to form the Maybank Non-Exectuive Union (Mayneu) on January 3. NUBE continued its dispute, initiated in 2009, with Maybank over bonuses and was seeking 80 months’ pay for its members.
In practice the fact that unions are only able to provide limited protection for workers, particularly foreign workers, created a disincentive to unionize. Some foreign workers reported to NGOs that workers who were successful in proving that their rights had been violated would at best be able to obtain their unpaid wages but no damages, costs, or interest. The employers suffered no additional penalty.