MALAYSIAN labour law is being reviewed. Why should we care? Because at stake could be the job security of thousands of workers who may not even know what’s in the offing. To date, the proposed government amendments have been classified “secret”, which in itself is problematic.
Still, those who have caught wind of the amendments are raising alarm bells for the nation’s workforce. Malaysian Trades Union Congress (MTUC) secretary general G Rajasekaran has already called the proposed changes to the country’s labour laws the “worst amendments in 40 years”. If the legal amendments are put into place, it could mean employers are able to fire workers at will, explains at least one unionist.
Will the amendments be a benefit or a bane to employees? And what exactly is the government trying to fix in the current employment guidelines through these amendments? Should workers be concerned?
Fired, then what?
Malaysian labour law is generally governed by three separate Acts: the Employment Act 1955, Industrial Relations Act 1967, and the Trade Unions Act 1959. The statutes set out wide guidelines on issues such as working hours, annual leave, dismissal and complaint mechanisms.
Labour lawyer Lim Heng Seng, formerly an Industrial Court chairperson, says there is currently a fairly good balance between employers’ prerogative to dismiss staff and employees’ security of tenure.
Although employers in Malaysia may fire their staff, Lim says they can only do so with just cause. “Anyone dismissed without just cause can file a complaint with the Industrial Relations Department and take it up for dispute resolution,” says Lim in a phone interview.
Lim says the Malaysian system strikes a good balance compared to other jurisdictions. “There is no security of tenure in countries like Singapore and US. In countries like France, employers are scared of being immediately hauled up if they fire anyone.”
Lim, however, says the Malaysian system has become cumbersome, tying up management time and causing long waits for employees to receive compensation or get reinstated after being fired.
“The complaint goes to the Industrial Relations Department; then conciliation is attempted. If that fails, the human resources minister has to refer the matter to the Industrial Court, where there’s further management time,” Lim explains.
Lim says the minister should not be involved in referring individual disputes to court. “Our system allows for individuals, not just trade unions, to bring claims. These individual disputes don’t involve affairs of state such as the possibility of strikes. So why should the minister be tied up in deciding whether each case goes for hearing?”
Lim says that conversely, the UK system places the entire evaluation and mediation system under the courts, hence simplifying the complaint procedure.
So given the system’s weaknesses, will the proposed labour law review address these administrative issues and make the process more efficient and fair to all parties involved?
Fire at will?
Electronic Industry Employees Union general secretary Bruno Pereira doesn’t think so. He says the proposed amendments forwarded by the Human Resources Ministry look more like an employer’s wish-list than a comprehensive review.
Rather than addressing systemic issues such as those highlighted by Lim, Pereira says the proposed legal amendments would make it easier for employers to fire workers at will.
“The Employment Act was passed to abolish bonded labour so workers would have security of tenure,” he says, explaining, for example, that companies cannot hire manual workers on a contractual basis.
The proposals, however, would change that position. It would “bring us backwards to a pre-1955 situation when workers were employed day-by-day and had no security,” Pereira says.
Pereira cites companies’ cleaning services as an example. “If the contract system is legalised [for manual workers], a company could employ a cleaning agency and fire all their existing cleaners. The cleaning agency would then employ cleaners on a contractual basis – they would be paid on a daily basis and can be fired at will.”
Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan, however, has welcomed the upcoming changes. He says employees would benefit from more flexible working hours if the changes are put in place.
He cites women working in the industrial and agricultural sectors as an example. “Some women have [family commitments] in the day, but the laws currently don’t allow them to work after 10pm without the labour director general’s permission. Some also prefer working permanently at night, but the labour department requires employers to rotate their shifts. So some have no choice but to leave employment,” he says.
“We also have to look at what developed countries are doing,” Shamsuddin says in a phone interview. “In the UK, an employee must have served two years before they can challenge a dismissal. Malaysia is not the first country to contemplate such provisions.”
Shamsuddin says Malaysia could lose investments if too many labour requirements are imposed. “Investors, whether foreign or local, would benchmark each country and invest accordingly … If investors feel the returns in Malaysia are low and there are many requirements to fulfill, they may choose to go elsewhere.”
Plug and play
Pereira points out that loose regulation would not give employers incentives to train staff. “The problem is, employers want plug-and-play employees,” he says. “They want workers who can immediately do the job without having to invest in training.”
Pereira says this attitude would result in employers resorting to firing and replacing workers who cannot immediately perform.
“If workers are employed on a contractual basis, that makes it even easier [to fire them],” says Pereira. “Furthermore, employers would save money on items such as medical expenses and annual leave.”
Pereira stresses that this would ultimately be detrimental. “Social responsibility for the unemployed has to be placed somewhere – either with the government or with employers. In many developed countries, the government takes on that role. So if companies have more freedom to fire employees, the government provides workers with unemployment benefits.
“In Malaysia, once someone is fired, there’s no government support,” says Pereira.
Attempts to reach the Human Resources Ministry to clarify the issue did not yield immediate response.
With such disparate views from both employers and employees, how should the government proceed in instituting meaningful and equitable reform?
Lim stresses that the incoherence within the system must be dealt with, and that consultations should be held with the various stakeholders. He recognises that employers may have valid concerns about the cost of dismissal disputes and compensation. But Lim says this shouldn’t result in arbitrary definitions of who would be entitled to file a complaint and claim compensation or reinstatement if one was unfairly fired.
He also notes that most employers are not unhappy with the current law. “Employers would agree they cannot fire without good reason. But the system for complaint must be efficacious and not tie people up for years.”
However, Pereira says the ministry has marked the proposed amendments “sulit”, thereby precluding any public discussion on the review. Because any legal amendment could affect thousands of workers, Pereira says they “should be subject to public consultation and not marked confidential”.
Still, the government’s move isn’t much of a surprise, especially since, as Pereira points out, unions are often consulted much later after the ministry has received extensive feedback from employer groups.
Employees are not unreasonably demanding, says Pereira. “It’s not that workers want a lot of rights. They just want to be able to live peacefully. To have job security, get medical treatment and feed their families.”
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