Industrial Relations & Labour Law – Comprehensive Exam Notes

Managerial Prerogatives (s.13(3) IRA)

  • Employer’s reserved rights NOT subject to collective bargaining unless abused.

  • Statutorily recognised managerial matters (non-bargainable):

    • Promotion from lower to higher grade.

    • Transfer within employer’s organisation.

    • Engagement of new employees when a vacancy arises.

    • Termination for redundancy or re-organisation & criteria for such termination.

    • Dismissal & reinstatement decisions.

    • Assignment/allocation of duties or specific tasks.

  • Courts consistently hold prerogative is not absolute – must be bona fide, non-victimising, non-discriminatory.

    • Pentex Sdn Bhd Award 320/1988: improper exercise may be struck down.

    • Mitasi Electric Award 217/1984: obligation to both pay wages and provide work.

Promotion, Upgrading & Acting Allowance

  • Distinction

    • Upgrading → concerns the post (expanded duties justify higher grade).

    • Promotion → concerns the person (employee merits higher grade).

  • Hotel Perdana case: promotion criteria = employer’s prerogative.

  • Industrial Court principles

    • Probationers doing same work as confirmed staff should enter salary scale immediately (Perak Timber Award 168/1982).

    • Unfair to make an employee act in a higher post without allowance.

    • On reversion (promotion not confirmed) employee must not lose previous benefits.

Transfer

  • Right to transfer = implied term unless expressly curtailed.

  • Limitations (Industrial Court):

    • No contractual term to the contrary.

    • Must be in employer’s business interest & bona fide.

    • No ulterior motive, harassment, victimisation.

    • No detrimental change in conditions of service.

  • Demotion masquerading as transfer is unlawful (Wong Chee Hong v Cathay Organisation).

  • Whether transfer is bona fide & non-detrimental = question of fact for court.

  • Common-law rule (Nokes v Doncaster Collieries [1940] AC 1014): contract of service can’t be assigned to a new employer without employee consent; hence secondment keeps original contract alive.

Termination & Statutory Notice (Employment Act 1955)

  • \textbf{S11} EA: Fixed-term/ piece-work contract ends when time or work completed.

  • \textbf{S12} EA: Either party may terminate by written notice; minimum periods (if no written provision):

    • 4 weeks if <2 years’ service.

    • 6 weeks if \ge 2 but <5 years.

    • 8 weeks if \ge 5 years.

  • \textbf{S13} EA: Contract may be ended without waiting for notice expiry by paying indemnity equal to wages for notice period.

  • \textbf{S15} EA: Instant termination permitted for wilful breach of an important term (e.g. absence >2 consecutive working days without leave & without reasonable excuse).

  • \textbf{S14} EA (Industrial Discipline): On misconduct, after due inquiry employer may

    • Dismiss without notice.

    • Downgrade.

    • Impose other punishment incl. suspension ≤2 weeks (paid ≥\tfrac12 wages during suspension).

Misconduct: Definition & Principles

  • No statutory definition; employer sets rules reasonably necessary for business efficiency.

  • Examples: absenteeism, lateness, fighting, theft, dishonesty, gambling, intoxication, safety breaches, negligence, breach of fidelity.

  • Plaat Rubber Award 30/1995: misconduct must relate to job duties; serious private crime undermining safety also suffices.

  • Holiday Inn Award 255/1990: dictionary sense – improper behaviour/ deliberate rule violation.

Burden & Standard of Proof

  • Employer must investigate & prove misconduct.

  • Balance of probabilities generally; beyond reasonable doubt if alleging criminal offence (Eastern Rubber; Rasa Sayang Hotel).

  • Some cases permit “honest & reasonable belief” standard (Advertising Marketing & Communication Award 140/1989).

Aspects

  • Single grave act may justify dismissal (Kartar & Sundar Singh Omnibus).

  • Similar misconduct history admissible only to rebut “mistake/ accident” defence (PA Netto case).

  • Past misconduct cumulatively aggravates penalty (MAS v Kader Zalman).

  • Subsequent discovered misconduct may retrospectively justify dismissal.

  • Criminal misconduct: employer must either lodge police report or hold inquiry (Bachitar Singh).

  • Employer need not await criminal court outcome; acquittal doesn’t compel reinstatement if company already acted after fair inquiry (Transport Workers Union v Lori Malaysia).

  • Private conduct actionable only if employer’s legitimate interest injured (Merlimau Pegoh; Sri Perak transport ‘khalwat’ case).

  • Provocation may mitigate (Sungei Chinoh Estate – punishment < dismissal).

  • Condonation = allowing work continuation → waives right to punish (United Traction).

  • Punishment must be proportionate (Goodyear; Chartered Bank – “reasonable employer” test).

Specific Categories

  • Absence / Lateness:

    • Habitual late-coming → valid ground (Hong Voon Holdings).

    • Leaving early viewed more seriously (Saudagar Berlian).

    • Statutory deeming of breach: S15(2), S60F(2) EA.

    • Burden on employee to show leave (Telekom Malaysia v Madurai Veeran).

  • Assault / Fighting – Penal Code s351 defines assault; fighting usually warrants dismissal (Penang Textile case).

  • Gambling/ intoxication – only misconduct if violates rule or law; evidence (e.g. medical) required (Sime Darby Security).

  • Negligence / Lack of due care – must prove breach of implied duty (Oriental Bank; Kelantan Bus – accident due mechanical fault, dismissal overturned).

  • Breach of fidelity – competing with employer = dismissible (Nam Lee Sdn Bhd).

Domestic Inquiry & Natural Justice

  • “Due inquiry” = proper domestic inquiry observing natural justice.

  • Absence of inquiry not fatal if employer proves case (Low Yat Realty), yet generally mandatory (Bank Bumiputra v George Thomas).

  • Not required where no misconduct alleged (Dapat Hotel) or termination for incompetence/breach of contract, but natural justice still applies (Peransang Recreation).

  • Rules:

    • Right to sufficient notice of charges & evidence.

    • Right to be heard & to cross-examine (audi alteram partem).

    • Impartial panel (nemo judex in causa sua).

    • Skypark International summarises elements.

Incompetence / Inefficiency

  • Not “misconduct” per se; domestic inquiry not mandatory (Malayan Commercial Banks; Wearne Brothers).

  • Nevertheless employee entitled to fair procedure:

    • Inform of poor performance.

    • Warn of possible termination.

    • Give reasonable time/opportunity to improve.

    • Courts examine whether company met basic fairness (Ginder Singh; Sun Mix Concrete – safety-critical roles justify prompt action).

Dismissal, Constructive & Unilateral Termination

  • Unilateral by employer (dismissal) or employee (resignation).

  • Dismissal must be with just cause & excuse; otherwise employee may file s.20 IRA representation within 60 days seeking reinstatement.

  • Wong Chee Hong v Cathay Org adopts both contract test (breach + intention not to be bound) & reasonable employer test for constructive dismissal.

  • Employer must prove offence, reasonableness & proper inquiry.

  • s.20 doesn’t bar civil damages; but employee cannot pursue benefits under s.20 simultaneously in another forum.

Remedies

  • Industrial Court may order:

    • Reinstatement + back-pay.

    • Compensation in lieu of reinstatement (guideline: 1 month per year of service + back-wages capped at 24 months or 108 months for non-probationers depending on rules).

Trade Unions (Trade Unions Act 1959 – TUA)

Definition & Objectives

  • Association of employers/employees within establishment/industry to regulate relations, improve conditions, represent in disputes, organise strikes/lockouts.

Registration (s.8, 10, 12, 15 TUA)

  • Apply within 1 month of formation; ≥7 signatories & ≥7 members.

  • Failure → unlawful union; forfeits rights; must dissolve.

  • DG may refuse/cancel registration if likely used for unlawful purposes.

Membership Restrictions

  • Non-citizens, persons <16, tertiary students (unless employed & >18), non-employees of the industry, certain public officers.

  • Only members >18 may vote in secret ballots (s.40).

Suspension & Cancellation (s.18, 15, 19)

  • Minister may suspend certificate; union loses rights & cannot operate.

  • Consequences: unlawful union, cannot engage in disputes, must dispose funds.

Recognition (s.9 IRA)

  • Union applies to employer; if refused DG intervenes; secret ballot may be ordered to test majority.

  • Recognised union gains right to represent members.

Collective Bargaining (s.13 IRA)

  • Written invitation with proposals (exclude s.13(3) matters = managerial prerogative list).

  • Reply within 14 days; bargaining starts within 30 days.

  • Failure → DG steps; if stalemate, dispute deemed & may be referred to Minister/Industrial Court.

Collective Agreement

  • Must be in writing; include terms, duration, modification/termination procedure; illegal if less favourable than written law.

  • Deposition with Registrar within 1 month; Industrial Court may take cognisance (s.16).

  • Upon cognisance (s.17) → binding on parties & all current/future workers; implied term of employment contracts.

Trade Disputes & Industrial Actions

Definitions (s.2 IRA)

  • Trade dispute: disagreement on employment, non-employment, terms or conditions.

  • Strike, Lockout, Picketing governed by Part IX IRA.

Strike

  • Concerted cessation/refusal to work.

  • Restrictions:

    • Essential services: notice to employer ≥42 days before, strike within 21 days of notice, not before stated date (s.43(1)).

    • Prohibited during Board of Inquiry, pending Industrial Court reference, on matters covered by cognised C.A. or s.13(3) items.

  • Illegal if contravenes s.43/44 or aim other than furtherance of trade dispute (s.45).

  • South-East Asia Fire Bricks case: lawful strike; absence ≠ breach due to notice.

Lockout

  • Employer’s closure/suspension/refusal to employ aiming to compel agreement.

  • Parallel notice & prohibition rules (s.43(2), 44).

Secret Ballot Requirement (s.25A TUA)

  • Union must secure ≥\tfrac{2}{3} membership approval; result valid 90 days; copy to DG within 7 days.

  • DG may invalidate ballot if strike contravenes law.

Picketing (s.40 IRA)

  • Lawful peaceful attendance to obtain/communicate information or persuade, without intimidation, obstruction or breach of peace.

  • Officers may be present to maintain order.

  • Contravention → offence (fine ≤1000, jail ≤1 year).

Penalties

  • Illegal strike/lockout: fine ≤1000, jail ≤1 year + 50 per continuing day (s.46).

Settlement Mechanisms

  • Investigation / Fact-Finding (Part VIII): Minister may appoint Committee/Board; reports laid before Dewan Rakyat.

  • Conciliation (Part V): Dispute reported to DG; DG or Minister may mediate; lawyers not permitted, union reps allowed.

  • Arbitration: Industrial Court (President + employer/employee panel). Has jurisdiction over all trade disputes, s.20 dismissal claims, interpretation/variation of collective agreements etc.

Retrenchment on Redundancy

  • Employer must prove genuineness & observe procedures.

  • Key principles (Cycle & Carriage; Radio & General Trading):

    1. Show surplus of labour → redundancy.

    2. Managerial right to reorganise for efficiency/economy.

    3. Must consider agreed procedures/collective agreement.

    4. Statutory duties: reasonable notice (s.12 EA); termination benefits (Reg 8 EA Termination & Lay-Off Benefits); pre-notification to Labour Dept (s.63 EA).

    5. LIFO (Last-In-First-Out) guideline unless sound reasons to depart (Eastern Smelting).

  • Retrenchment vs Termination on Closure distinguished (Hotel Jaya Puri case).

Occupational Safety & Social Security (OSHA & SOCSO)

  • OSHA objectives: ensure safety, health & welfare of workers; protect others from workplace risks; establish National Council; regulate related matters.

  • Council functions: propose legal reforms, enforcement progress, promote employer-employee cooperation, analyse accidents, oversee women's/disabled welfare, chemical control, rehabilitation plans etc.

SOCSO Accident Cases

  • Parameswary: Weekend stay at daughter’s house = temporary; Monday commute to designated company bus pick-up still within “course of employment”. High Court allowed claim.

  • Jusoh Abu Bakar: Weekend holiday home not a “residence” under s24(1); accident en route from weekend house not occupational; claim rejected.