SIGNIFICANT REFORMS YOU NEED TO KNOW.
Introduction
The years 2019 and 2020 were significant for Malaysian labour laws, where industry players, labour groups and employers took to consultation and review of the proposed amendments to the 3 key labour legislations in Malaysia.
This culminated, inter alia, into the passing of the Industrial Relations (Amendment) Act 2020 (“IRA 2020”) by Parliament that was thereafter gazetted on 24 February 2020. With the recent amendments, the Government of Malaysia has pushed ahead in creating a more robust industrial relations system and landscape in Malaysia.
The Minister of Human Resources in the exercise of his power under the IRA 2020 has finally announced that the amendments will come into partial effect on 1 January 2021.
Significant Amendments to the Industrial Relations Act 1967
In this article, we set out the key amendments to the Industrial Relations Act 1967 that has come into force, these include :
Expanded representation for conciliation meetings at the Industrial Relations Department.
Automatic referrals of unfair dismissal cases to the Industrial Court.
Appeal against Industrial Award to the High Court.
Powers of the Industrial Court to:
Continued conduct of proceedings notwithstanding the death of the workman;
Awarding compensation to the workman’s next-of-kin;
Hearing dismissal claims brought by employees of statutory bodies; and
Imposition of interest on the award made.
5. Restraint of illegal strikes, lock-out & picketing.
Expanded Representation at conciliation meetings at the Industrial Relations Department
The IRA 2020 has expanded the choice of representation in conciliation meetings for wrongful dismissal claims at the Industrial Relations Department for both employers and employees.
From a restricted choice of representation before the passing of the IRA 2020, the amendment now allows employers and employees to be represented by any person (so long as the said person is not an advocate and solicitor). Such representation shall be duly authorised in writing by the party being represented and is subject to the permission of the Director General of the Industrial Relations (DG).
It is worth noting that despite the expanded representation pool for both employers and employees, parties are nonetheless encumbered by the requirement to obtain the DG’s permission in so far as their choice of representatives in the conciliation meetings are concerned.
It is also worth noting that the said amendment has also included a provision enabling the next-of-kin of any employee with mental disability to apply to the High Court for an order to appoint a guardian ad-litem to represent such employee at the Industrial Court in such circumstances.
Automatic referrals of unfair dismissal cases to the Industrial Court
The amendment in question here is two-pronged.
Firstly, the Human Resources Minister’s power to refer representations on dismissal cases to the Industrial Court has been repealed and is now vested in the hands of the DG.
Such major shift then leads to the amendment to section 8(2) which allows cases that are not resolved through conciliation at the Department of Industrial Relations to be automatically referred to the Industrial Court without further filtering.
Under the existing provisions, the Minister has a discretion to filter out frivolous unfair dismissal complaints and only refer claims which are deemed fit for the Industrial Court's adjudication. That exercise of the Minister’s discretionary power has now been formally removed.
The absence of a filtering mechanism now begets concerns as the automatic referral of complaints would likely encourage the filing of frivolous and vexatious claims resulting in an unnecessary backlog of cases at the Industrial Court and heavier costs upon the employer in particular.
Appeal against Industrial Award to the High Court
One of the most significant amendments to the Industrial Relations Act 1967 is the express provision of appeal against the awards of the Industrial Court to the High Court.
Such amendment allowing for appeal against the Industrial Court Award marks a poignant paradigm shift in the employment jurisprudence in Malaysia.
Previously, an Industrial Court Award may be challenged by way of judicial review at the High Court pursuant to the Rules of Court 2012 (“ROC”). That has now change with effect from 1 January 2021 and the wide-reaching impact of the amendment remains to be seen.
Shorter duration to appeal
Previously, the aggrieved party had three (3) months to file an application for judicial review upon handing down of an award. The amendment has now shortened the application period to only fourteen (14) days from the date of the award for the aggrieved party to file its notice of appeal.
If such application is filed beyond the prescribed time limit, it thus necessitates an application for extension of time with cogent reasons justifying such delay. [1]
From a company’s point of view, they now have less time to consult and decide whether or not to incur further costs in order to challenge the award of the Industrial Court.
Where does appeal end?
Should the appeal against an Industrial Court Award be equated with an appeal from a subordinate court, this would mean that the Court of Appeal is the highest forum for the aggrieved party to challenge an Industrial Court Award.
This is a marked difference from judicial review applications prior to the amendment as it was not considered an appeal. Thus, an aggrieved party is provided the avenue to challenge the High Court’s decision to the Court of Appeal and then subsequently, apply for leave to appeal against the Court of Appeal’s decision.
In summary:
Before the amendment: Industrial Court -> High Court (judicial review) -> Court of Appeal (appeal) -> Federal Court (appeal).
After the amendment: Industrial Court -> High Court (appeal) -> Court of Appeal (appeal)
Powers of the Industrial Court
The amendments to the Industrial Relations Act 1967 further empower the Industrial Court with additional powers.
Continued conduct of proceedings notwithstanding the death of the employee
The amendment now allows the Industrial Court to continue to conduct unfair dismissal proceedings notwithstanding the death of the Claimant.
It now then raises questions of practicality and challenges posed to the Court in hearing such matters where evidence of the Claimant is concerned.
In the event of such death, it may result in an impediment to the Court to make decisions with the lack of evidence from the main witness, which is the Claimant himself.
Awarding compensation to the employee’s next-of-kin
In light of the above, a new subsection 30(6b) is introduced to allow the Industrial Court to award back wages or compensation in lieu of reinstatement or both to the next-of-kin of the deceased Claimant.
Hearing dismissal claims brought by employees of statutory bodies
The amendment has extended the scope of applicable employees entitled to bring a claim for unjust dismissal to also include employees of statutory bodies, which will be prescribed by the Minister in the Gazette. [2]
Imposition of interest on the award made
The IRA 2020 has empowered the Industrial Court to impose interest for awards relating to payment of money as a deterrent measure against the delay in compliance with the awards.
The inclusion of interest is up to the rate of 8% per annum or such lesser rate as the Court may direct on awards, calculated from the 31st day from the day of the making of the award, until the award is fully satisfied.
On application by either party and in the event there are special circumstances to do so, the Industrial Court has the discretion to determine the day from which the interest should run from. .
Harsher penalties
Under the amendment, contravention of the Act now carries increased risk of penalties against parties:
The penalty for a person who gives financial aid to illegal strikes and lock-outs has been increased from RM 500 to RM 5,000.
The penalty for non-compliance with an Industrial Court award or collective agreement has been increased from RM 2,000 to RM 50,000.
The general penalty for any contravention of the Industrial Relations Act 1967 and / or any summons, order or direction given or made under the Act has been increased from RM 5,000 to RM 50,000.
Restraint of illegal strikes, lock-out & picketing
An additional provision has been included to empower the Minister to stop a strike or lock-out in certain circumstances, namely, in the event the strike or lock-out lasts beyond a “certain time” or “extends beyond a certain scope”, thus endangering the life, personal safety or health of the whole or part of the population.
Note however that the provision makes no elaboration on the definition of “time” and “scope” – thus leaving much room for the discretionary exercise of the Minister’s power.
What are the provisions yet to come into force under IRA 2020?
There are several amendments accorded under IRA 2020 which have yet to come into effect and they are:
All provisions relating to sole bargaining right of trade unions.
List of Essential Services under the First Schedule of the Act.
Key Takeaways
The amendments to the Industrial Relations Act 1967 cast significant impact on all parties involved, employers in particular.
For instance, concerns now abound, that with the removal of the discretion in relation to the referral of unfair dismissal claims, this will likely result in a floodgate of cases at the Industrial Court on top of the existing backlog of cases pending hearing owing to the Covid-19 pandemic.
Secondly, the change of procedure to challenge an Industrial Court Award now confers appellate power for the Court to scrutinise the Award of the Industrial Court. The High Court now has wider jurisdiction and power in the exercise of its appellate power rather than that of a judicial review.
Prior to the amendment, any party who is dissatisfied with the court’s decision will have to challenge it by way of judicial review which is a proceeding that generally only involves a consideration of the decision-making process and not the merits of the decision.
[1] For judicial review, see O 53 r 3(7) of the Rules of Court 2012. For appeal from the Subordinate Court, see eg Cosway (M) Sdn Bhd & Anor v Gan Poh Im [2006] 1 MLJ 568: ‘With respect to the learned High Court judge, we do not think that the deletion of those words would deprive the court of its discretion to extend time, for such a discretion is expressly conferred by O 3 r 5(1) of the RHC which deals with extension or abridgment of time specified in the rules. On that premise, we hold that under the present provision of O 55 r 2(1) of the RHC, the court still has the discretion to extend the time prescribed therein’.
[2] At the time of writing this article, no such list has been gazetted as yet.
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