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.
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.” Foreign workers may join a trade union; however, the Immigration Department bars foreign workers from holding trade union offices, as is stipulated in the Trade Union Act. Contract workers may not 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.
There are two national labor organizations. The Malaysian Trade Unions 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 Congress of Unions of Employees in the Public and Civil Services is a federation of public employee unions registered under the Trade Union Act.
While the Ministry of Labor prohibits national unions within the country, there are three territorial federations of unions (Peninsula Malaysia, Sabah, and Sarawak) that are allowed to operate. 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 could not bargain on behalf of local unions. In companies designated as having “pioneer status,” including the electronics sector, workers are not permitted to affiliate with territorial union federations. Trade unions are permitted to affiliate with international trade union organizations, subject to the approval of the director general of trade unions (DGTU).
The law prohibits employers from interfering with, restraining, or coercing a worker in the exercise of the right to form trade unions or participation in lawful trade union activities, including in employment contracts. The law prohibits employer retribution against a worker for participating in the lawful activities of a trade union. The law requires reinstatement of workers fired for union activity.
Most private sector workers and, to a lesser extent, public sector workers, have the right to bargain collectively. The law restricts collective bargaining in “pioneer” industries. Some public sector workers had only a consultative role in collective bargaining that allowed them to express opinions on wages and working conditions but not to actually negotiate. The law imposes restrictions on the scope of subjects that may be collectively bargained. The law explicitly states that issues of transfer, promotion, appointments, dismissal, and reinstatement are internal management prerogatives; therefore, excluded from collective bargaining.
The process of collectively bargaining is complex and lengthy. First, the trade union submits a proposal for a collective agreement to the employer and 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 there is a deadlock in the negotiations, a trade dispute is deemed to exist and the union may notify the DGTU to take conciliation measures. If the parties are still unable to agree, the minister of human resources may refer the dispute to the Industrial Court for binding arbitration.
Although private sector strikes are legal, the right to strike is severely restricted. Strikes are prohibited in a range of industries categorized, according to an overly broad definition, as “essential.” The law denies unions and individuals the right to hold strikes protesting lack of recognition of their union. Strikes are illegal with regard to all collective agreement matters, or based on certain issues not covered by collective agreements, such as transfers, layoffs, and dismissals. The process for conducting a legal strike is unwieldy, and strikes or lockouts are prohibited while a dispute is before the Industrial Court. MTUC officials maintained that requirements imposed by authorities were so stringent that it was almost impossible to strike.
The DGTU enforces freedom of association provisions. Charges of discrimination against employees engaged in union organizing activities may be filed with the Ministry of Human Resources or the Industrial Court. In cases of wrongful termination, the law limits worker compensation to a maximum of two years from the time the employee was laid off. Provisions preventing management from taking reprisal actions against workers for union activity, however, were not effectively enforced. A labor group blamed delays of enforcement not on lack of resources or training but on an absence of understanding of the effect of delays on the workers involved and an accompanying lack of urgency.
The Industrial Relations Act requires 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, which is to then notify the minister of human resources of its 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 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 the DGTU stating that a union is not competent then the director general of industrial relations performs an additional competency check.
The government interferes to some degree with trade union activity. For example, the DGTU and, in some cases, the minister of human resources may 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. Workers’ organizations have no recourse to an independent body in the event that authorities refuse union registration.
The government prevented some trade unions from forming territorial federations. The textile sector is limited to state-based federations of unions in those states that have a textile industry. Trade unions in Sabah and Sarawak may not form a federation with Peninsular Malaysia-based unions, while the unions in East Malaysia can form a federation. According to the MTUC, none of the four regional electronics trade unions approved by the government in 2010 has been recognized by its respective companies. The fact that antiunion discrimination was not enforced and the inability of unions to provide more than limited protection for workers, particularly foreign workers, created a disincentive to unionize. In some instances, companies reportedly harassed leaders of unions seeking recognition. Some trade unions reported that the government detained or restricted the movement of some union members under laws that allow temporary detention without the recipient being charged with a crime and that some workers were not paid or were terminated because of union-related activity. 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.
The minister of human resources or the director general of industrial relations orders recognition of a union if at least 50 percent of the workers in the relevant establishment are members. Membership of 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 not eligible for union membership. MTUC officials expressed frustration about delays in the settlement of union recognition disputes. It was common for such applications to be refused or if approved, the decision challenged in court by the employer to delay recognition and consequently unions have gone unrecognized for one to several years.
The Ministry of Human Resources released 2012 statistics regarding trade union formation, showing the ministry recognized 39 new unions while 68 applications were not recognized, withdrawn, or deemed ineligible.
On August 19, the National Union of Transport Equipment and Allied Industries Workers (NUTEAIW) reported that Hicom Automotive Manufacturing Sdn Bhd and Isuzu Hicom Sdn Bhd terminated 18 workers for allegedly creating a perception that “the companies were involved in politics.” The union claimed that the workers were fired because they met with an opposition candidate after working hours in their district before the general elections to obtain commitments on worker’s rights. The workers met with the Industrial Relations Department and the company agreed to reinstate them. The workers discussed with the company possible compensation for the period during which they were unemployed.
According to the MTUC, the Immigration Department requested that foreign employees sign contracts with conditions including the following: The employee may not marry a citizen or participate in political or trade union activities; change his/her employment during the contract period; or organize, participate, or be involved in any kind of industrial action during the period of employment.
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 with these provisions, although not allowed to join unions, are counted as voting against a union in union elections to dilute the number of votes in favor of the establishment of a union.
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. The Employment Act of 1955, as amended, legally exempts the labor supplier from certain legal obligations of employers towards employees who are outsourced workers, including with regard to freedom of association and collective bargaining.
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 contract workers as self-employed, further limited their ability to organize.
There have been no industry-wide strikes since 1962, but several strikes took place during the year as a result of employers who refused to implement the new minimum wage requirement. About 2,600 Vietnamese textile factory workers staged a strike to protest their company’s failure to implement the new monthly minimum wage, while 1,000 workers from a furniture plant also went on a brief strike. The government subsequently postponed implementation of the minimum wage to 2014.