Bbhi4103 Bi PDF

OUM Business School
BBHI4103
Industrial Relations
Copyright © Open University Malaysia (OUM)

BBHI4103
INDUSTRIAL
RELATIONS
Dr Fadzli Shah Abd Aziz
Dr Zulkiflee Daud
Dr Norazuwa Mat
Wan Shakizah Wan Mohd Noor
Daratul Ambia Che Mit

Project Directors: Prof Dato’ Dr Mansor Fadzil
Prof Dr Wardah Mohamad
Open University Malaysia
Module Writers: Dr Fadzli Shah Abd Aziz

Dr Zulkiflee Daud
Dr Norazuwa Mat
Wan Shakizah Wan Mohd Noor
Daratul Ambia Che Mit
Universiti Utara Malaysia
Moderator: Prof Dr Raduan Che Rose

Universiti Putra Malaysia
Developed by: Centre for Instructional Design and Technology

Open University Malaysia
First Edition, November 2007

Second Edition, April 2016 (rs)
Copyright © Open University Malaysia (OUM), April 2016, BBHI4103

All rights reserved. No part of this work may be reproduced in any form or by any means without
the written permission of the President, Open University Malaysia (OUM).

Table of Contents
Course Guide ixăxiii
Topic 1 Perspectives in Industrial Relations 1

1.1 Definition and Importance of Industrial Relations 2
1.2 Factors Influencing Industrial Relations 3
1.3 Three-party System (Tripartite) in the Industrial
Relations System in Malaysia 5
1.4 Roles of the Government, Employers and Trade Unions
in Industrial Relations 6
1.4.1 Roles of the Trade Union 6
1.4.2 Roles of that Employer 7
1.4.3 Roles of the Government 8
1.5 The Legal Framework of Industrial Relations in
Malaysia 11
Summary 13
Key Terms 14
Topic 2 Perspectives and Approaches in Industrial Relations 15

2.1 Perspectives in Industrial Relations 16
2.1.1 Unitary Perspective (Paternalism) 16
2.1.2 Pluralistic Perspective (Conflict of Interest) 17
2.1.3 Marxist (Radical) Perspective 18
2.2 Industrial Relations Approach 19
2.2.1 The Input-output Approach 19
2.2.2 Industrial Relations System Approach 21
2.2.3 Social Action Approach 22
2.2.4 Labour Management Process Approach 22
2.2.5 Human Resources Management Approach 23
2.3 Industrial Relations Approach at Present 24
2.3.1 Labour Market Approach 24
2.3.2 Comparison Approach 26
Summary 27
Key Terms 28

iv  TABLE OF CONTENTS
Topic 3 Concepts and Values in Industrial Relations 29

3.1 Concepts of Fairness and Equality 30
3.2 Concepts of Power and Authority 32
3.2.1 Power 33
3.2.2 Authority 35
3.3 Concepts of Individualism and Collectivism 37
3.4 Concepts of Rights and Responsibilities 39
3.5 Concepts of Integrity and Trust 41
Summary 42
Key Terms 43
Topic 4 Context in Industrial Relations 44

4.1 Main Elements in the Context of Industrial Relations 45
4.1.1 Industrial Relations System 45
4.1.2 Other Segments in Social Activity 45
4.1.3 Time 45
4.2 Economic, Social and Political Environments 47
4.2.1 Economic Environment 47
4.2.2 Social Environment 47
4.2.3 Political Environment 48
Summary 50
Key Terms 50
Topic 5 Employees and Trade Unions 51

5.1 Definition of a Trade Union 52
5.1.1 Development of Trade Unions 54
5.1.2 Functions of a Trade Union 58
5.2 Definition of Structure and Congress in Trade Unions 61
5.3 Types of Trade Unions 62
5.3.1 Trade Unions in the Public Sector 62
5.3.2 Trade Unions in the Private Sector 63
5.3.3 Employers Union 64
5.4 Classifications of Trade Unions in Malaysia 65
5.5 Trade Union Congress 66
5.5.1 Congress of the Union of Employees of the
Public and Civil Services (CUEPACS) 66
5.5.2 Malaysian Trade Union Congress (MTUC) 66
5.5.3 Malaysian Employers Federation (MEF) 67
Summary 69
Key Terms 69

TABLE OF CONTENTS  v
Topic 6 Employer and Employers Union 70

6.1 Right of Formation of Employers Union 71
6.2 Employers Associations under the Trade Unions Act
1959 71
6.3 Employers Associations Under the Societies Act 1966 73
6.4 Functions of Employers Associations 74
Summary 76
Key Terms 76
Topic 7 The Government and Its Agencies 77

7.1 The Roles of the Government 78
7.1.1 Legislator (Parliament) 78
7.1.2 Administrator and Conciliator (Ministry of
Human Resources) 79
7.1.3 Employer in the Public Services Sector 84
7.2 Government Involvement and Strategy 84
Summary 85
Key Terms 86
Topic 8 Collective Bargaining 87

8.1 Definition 87
8.1.1 The Right to Form a Union 88
8.1.2 Bargaining Strength 88
8.2 The Collective Bargaining Process 89
8.2.1 Preparation for Negotiation 90
8.2.2 Building a Negotiation Strategy 90
8.2.3 Controlling a Negotiation 91
8.2.4 Collective Agreement 94
8.3 Contents of Collective Bargaining 96
8.3.1 Substantive Terms and Conditions of Employment 97
8.3.2 Rules of Procedure 97
8.3.3 Working Structure 97
Summary 98
Key Terms 98
Topic 9 Employee Involvement and Participation 99

9.1 Definition of Worker Involvement and Participation 100
9.2 Forms of Involvement and Participation 100
9.3 Employee Involvement and Participation in an
Organisation 103
9.3.1 Empowerment 104
9.3.2 Teamwork 105

vi  TABLE OF CONTENTS
9.4 Views of the Management and the Trade Union 106

Summary 107
Key Terms 107
Topic 10 Industrial Actions 108

10.1 Trade Dispute 108
10.2 Industrial Actions 112
10.2.1 Industrial Actions by Employees 112
10.2.2 Industrial Actions by Employer 117
10.3 Functions of Industrial Action 119
Summary 119
Key Terms 119
Topic 11 Methods of Resolving Disputes and Grievances 120

11.1 Methods of Resolving Disputes 122
11.1.1 Negotiation 122
11.1.2 Conciliation 124
11.1.3 Arbitration 126
11.1.4 Mediation 128
11.2 Grievances and Disputes 129
11.2.1 Definition 129
11.2.2 Grievances and Disputes Processes 132
11.2.3 Method of Handling Grievances and Disputes 135
Summary 137
Key Terms 138
Topic 12 Disciplinary Procedures and Actions 139

12.1 Formal Disciplinary Actions Processes 140
12.1.1 Purpose of Formal Disciplinary Action Process 142
12.1.2 Types of Misconduct 143
12.1.3 Disciplinary Action for Unsatisfactory Work
Performance 144
12.2 Legal Framework 147
12.3 Method of Handling Disciplinary Problems and
Dismissal of Employees 148
Summary 152
Key Terms 153

COURSE GUIDE

COURSE GUIDE  ix
COURSE GUIDE DESCRIPTION

You must read this Course Guide carefully from the beginning to the end. It tells
you briefly what the course is about and how you can work your way through
the course material. It also suggests the amount of time you are likely to spend in
order to complete the course successfully. Please keep on referring to the Course
Guide as you go through the course material as it will help you to clarify
important study components or points that you might miss or overlook.
INTRODUCTION
BBHI4103 Industrial Relations is one of the courses offered by OUM Business
School at Open University Malaysia (OUM). This course is worth 3 credit hours
and should be covered over 8 to 15 weeks.
COURSE AUDIENCE
This is an elective course for students undergoing Bachelor of Human Resource
Management.
As an open and distance learner, you should be able to learn independently and
optimise the learning modes and environment available to you. Before you begin
this course, please confirm the course material, the course requirements and how
the course is conducted.
STUDY SCHEDULE
It is a standard OUM practice that learners accumulate 40 study hours for every
credit hour. As such, for a three-credit hour course, you are expected to spend
120 study hours. Table 1 gives an estimation of how the 120 study hours could be
accumulated.

x  COURSE GUIDE
Table 1: Estimation of Time Accumulation of Study Hours
Study
Study Activities
Hours
Briefly go through the course content and participate in initial discussion 3
Study the module 60
Attend 3 to 5 tutorial sessions 10
Online participation 12
Revision 15
Assignment(s), Test(s) and Examination(s) 20
TOTAL STUDY HOURS ACCUMULATED 120
COURSE OUTCOMES
By the end of this course, you should be able to:
1. Explain the concept, theory, approach and values in industrial relations;
2. Discuss the roles of the employees, trade unions, employers and the
government in the industrial relations system;
3. Evaluate trade disputes and actions;
4. Examine the legal framework which is the reference in the industrial

relations system; and
5. Review the development of industrial relations in Malaysia.
COURSE SYNOPSIS
This course is divided into 12 topics. The synopsis for each topic is presented as
follows:
Topic 1 begins with a discussion on industrial relations and the factors that
influence it. This includes the roles of trade unions, employers and government.
Topic 2 introduces the Unitary, Pluralistic and Marxist perspectives. It also

identifies the approaches used in industrial relations and the problems of
comparing the approaches in industrial relations at the present time.

COURSE GUIDE  xi
Topic 3 discusses the concepts and values in industrial relations. For instance, it
explains the concepts of fairness and equality, the concepts of power and
authority, the concepts of individualism and collectivism, the concepts of rights
and responsibilities and the concepts of integrity and trust between workers and
employers in industrial relations.
Topic 4 discusses the main elements in the context of industrial relations. It

identifies the three elements which influence industrial relations. They are the
social, economy and political contexts.
Topic 5 examines employees and the trade unions.
Topic 6 describes the employer and employers union. It also explains the
differences between the trade unions and the employers association.
Topic 7 describes the roles and functions of the government and its agencies. This
includes the roles of the government and the Ministry of Human Resources.
Topic 8 discusses collective bargaining in industrial relations.
Topic 9 examines employees involvement and participation. It explains the forms

of employeeÊs participation and describes the views of the management and
union regarding employee involvement and participation.
Topic 10 deals with industrial actions. This includes trade disputes and industrial
actions.
Topic 11 explains the methods of resolving trade disputes and grievances.
Topic 12 describes disciplinary procedures and actions.
TEXT ARRANGEMENT GUIDE

Before you go through this module, it is important that you note the text
arrangement. Understanding the text arrangement will help you to organise your
study of this course in a more objective and effective way. Generally, the text
arrangement for each topic is as follows:
Learning Outcomes: This section refers to what you should achieve after you
have completely covered a topic. As you go through each topic, you should
frequently refer to these learning outcomes. By doing this, you can continuously
gauge your understanding of the topic.

xii  COURSE GUIDE
Self-Check: This component of the module is inserted at strategic locations

throughout the module. It may be inserted after one sub-section or a few sub-
sections. It usually comes in the form of a question. When you come across this
component, try to reflect on what you have already learnt thus far. By attempting
to answer the question, you should be able to gauge how well you have
understood the sub-section(s). Most of the time, the answers to the questions can
be found directly from the module itself.
Activity: Like Self-Check, the Activity component is also placed at various

locations or junctures throughout the module. This component may require you to
solve questions, explore short case studies, or conduct an observation or research.
It may even require you to evaluate a given scenario. When you come across an
Activity, you should try to reflect on what you have gathered from the module and
apply it to real situations. You should, at the same time, engage yourself in higher
order thinking where you might be required to analyse, synthesise and evaluate
instead of only having to recall and define.
Summary: You will find this component at the end of each topic. This component
helps you to recap the whole topic. By going through the summary, you should
be able to gauge your knowledge retention level. Should you find points in the
summary that you do not fully understand, it would be a good idea for you to
revisit the details in the module.
Key Terms: This component can be found at the end of each topic. You should go
through this component to remind yourself of important terms or jargon used
throughout the module. Should you find terms here that you are not able to
explain, you should look for the terms in the module.
References: The References section is where a list of relevant and useful

textbooks, journals, articles, electronic contents or sources can be found. The list
can appear in a few locations such as in the Course Guide (at the References
section), at the end of every topic or at the back of the module. You are
encouraged to read or refer to the suggested sources to obtain the additional
information needed and to enhance your overall understanding of the course.
PRIOR KNOWLEDGE
Learners of this course are required to pass BBPB2103 Human Resource
Management course.

COURSE GUIDE  xiii
ASSESSMENT METHOD
Please refer to myINSPIRE.
REFERENCES
DÊCruz, M. N. (2000). A comprehensive guide to current Malaysian laws. Kuala
Lumpur, Malaysia: Leeds Publications.
Deery, S., Plowman, D., & Walsh, J. (2001). Industrial relations: A contemporary
analysis. Australia: The McGraw-Hill Companies.
Fossum, J. (2001). Labor relations: Development, structure process (8th ed.).

Singapore: Irwin McGraw-Hill.
Maimunah Aminuddin. (1999). Malaysian industrial relations and employment

law (3rd ed.). Kuala Lumpur, Malaysia: McGraw-Hill.
Salamon, M. (2001). Industrial relations: Theory and practice (4th ed.). London,
London: Prentice Hall.
Wu, M. A. (1985). The industrial relations law of Malaysia. Kuala Lumpur,

Malaysia: Heinemann Educational Books (Asia).
TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

LIBRARY
The TSDAS Digital Library has a wide range of print and online resources for
the use of its learners. This comprehensive digital library, which is accessible
through the OUM portal, provides access to more than 30 online databases
comprising e-journals, e-theses, e-books and more. Examples of databases
available are EBSCOhost, ProQuest, SpringerLink, Books247, InfoSci Books,
Emerald Management Plus and Ebrary Electronic Books. As an OUM learner,
you are encouraged to make full use of the resources available through this
library.

xiv  COURSE GUIDE

Topic  Perspectives in
1 Industrial
Relations
LEARNING OUTCOMES
By the end of this topic, you should be able to:
1. Discuss the definition and importance of industrial relations;
2. Explain the factors which influence the industrial relations
environment; and
3. Review the industrial relations system in Malaysia.
 INTRODUCTION
In this introductory topic, we will discuss and identify the definition and
importance of industrial relations, the factors which influence the industrial
relations environment, the acts which are related to industrial relations and the
roles played by the parties involved in industrial relations. This topic also
discusses the industrial system practised in Malaysia, including the legal
framework which influences the industrial relations environment.

2  TOPIC 1 PERSPECTIVES IN INDUSTRIAL RELATIONS
1.1 DEFINITION AND IMPORTANCE OF

INDUSTRIAL RELATIONS
Before we discuss the importance of industrial relations, it is best for us to know
the meaning of industrial relations.
According to Salamon, (2001), industrial relations is „a set of phenomena,

operating both within and outside the workplace, concerned with
determining and regulating the employment relationship.‰ Maimunah
Aminuddin (1999) says that industrial relations refers to the management of
the welfare of employees by employers via internal communication.
Industrial relations emphasises three important aspects, namely:
(a) Relationships between employers and trade unions (workers);
(b) Labour law; and
(c) Disciplinary procedures and termination of contract of employment.
In other words, industrial relation is the relationship between the employee, the
employer and the union in the context of employment, based on the legal and
procedural systems laid down.
The relationship between the employee and the employer is actually derived
from the negotiations and collective agreement similar to the contents in the
contract of service. According to Kamal Halili Hassan (1994), a contract of service
has unique characteristics underlining the duties and responsibilities of the
employer towards the employee, and the employee towards the employer. The
said duties and responsibilities exist, whether interwoven in the common law or
provided by the written law. In short, the contract of service is an agreement
between the employer and the employee containing the terms and conditions of
employment. In other words, the rights and responsibilities of both parties exist
and are enforced by law, especially laws that are related to employment.
Apart from the contract of service, the legal system also forms a relationship
between the employer and the employee. The legal system here refers to the
written acts that are relevant to employment, for example:

TOPIC 1 PERSPECTIVES IN INDUSTRIAL RELATIONS  3
(a) The Employment Act 1955;
(b) The Trade Unions Act 1959; and
(c) The Industrial Relations Act 1967.
This legal system outlines the various procedures and guidelines for all parties
involved in industrial relations. We will discuss the acts related to industrial
relations in Malaysia at the end of this topic.
Understanding the importance of industrial relations is critical for all managers

in order to form, encourage and create a harmonious relationship with the
employees, which will then improve the performance and productivity of the
employees and also the organisation. Employees will be motivated when they
feel that they are being acknowledged and their rights are being honoured by the
management.
SELF-CHECK 1.1
1. What is the definition of industrial relations?
2. What are the aspects emphasised in industrial relations?
1.2 FACTORS INFLUENCING INDUSTRIAL

RELATIONS
Matters such as strikes, picketing and industrial actions by trade unions and
representation by employers union are among the subjects that needs attention
from human resource managers. These matters are influenced by external factors
such as politics, economics and social pressures as well as internal factors such as
culture, resources and changes in the organisation.
Refer to the environmental relationships in industrial relations as depicted in

Figure 1.1. This figure shows a part of the internal factors in environmental
relationships such as organisational goals, management systems and policies, the
working environment as well as external factors such as technology, economic
changes, legal framework, education level, industrial harmony and social
responsibility.

Figure 1.1: Environmental factors which influence industrial relations

Source: Yong (1996)
Now let us look at two examples, as to how these factors can influence industrial
relations.
Example 1
Rapid and continual technological progress forces an organisation to make
certain changes to raise its competitiveness. The organisation must strive to meet
the increasing demand for skilled and experienced employees to achieve fixed
organisational goals. At the same time, the organisation must ensure that the
needs and welfare of the workers are always met in order to establish a
harmonious working environment.
Example 2
Another example of these influencing factors can be seen during the economic
depression around 1998, where the critical situation needed a closer
understanding and cooperation between the employees/trade unions and the
management (employer) in tackling the problems faced. Several matters in the
collective agreement were not implemented, for example wage increment, bonus
payment, etc. Some of the organisations affected were forced to take drastic
cost-cutting measures such as wage reduction, overtime reduction and job
termination. The government has taken the initiative in this issue by monitoring

the methods used in a job termination process by an organisation with the

intention of safeguarding the employeeÊs welfare at that time.
ACTIVITY 1.1
List the factors which influence the relationship between you and your
employer in your workplace and the effects that these factors have on
the industrial relations in your organisation.
1.3 THREE-PARTY SYSTEM (TRIPARTITE) IN

THE INDUSTRIAL RELATIONS SYSTEM IN
MALAYSIA
From the previous discussions, we can identify the parties involved in industrial
relations in Malaysia. The three parties mentioned are the employees/trade
unions, the employer and the government. The workers are normally
represented by the unions. For example, the National Union of Plantation
Workers (NUPW) represents the employees in the plantation sector only. The
union will act as a representative of the workers in negotiations with the
employer on issues which involve the workers and their terms of employment.
The involvement and relationships of the three parties are classified in Table 1.1.
Table 1.1: Classification of Involvement and Relationships of the Workers, Employer and
the Government
Classification Explanation
Unilateral (One  Power to make decisions which are related to the worker lies
party) solely on the employer or the organisation.
 The employee and the government are not involved in the
decision-making process.
Bilateral (Two  The employee through the union is given the right to negotiate
parties) and make decisions on matters related to working conditions,
together with the employer.
Tripartite (Three  All the three parties, that is; the employees, the employer and the
parties) government are involved in the negotiation and discussion on
matters related to work.

The government will create, and from time to time, revise the legal framework.
The government will also set up the machinery to settle trade disputes if the
employee and the employer fail to resolve the disputes at the organisational
level. The lowest level in settling a dispute is through direct negotiations between
the employer and the employee/union. If this process fails, the Ministry of
Human Resources will set up a conciliation service to assist the parties involved
in reaching a settlement. If this conciliation process also fails, the dispute will be
referred to the industrial court for arbitration. We will be exposed to more details
regarding the conciliation processes in the coming topics.
1.4 ROLES OF THE GOVERNMENT,

EMPLOYERS AND TRADE UNIONS IN
In this subtopic, we will discuss briefly on the roles played by the government,
employers and unions in creating industrial harmony.
1.4.1 Roles of the Trade Union

The employees are usually represented by the trade unions. In general, a trade
union can be defined as:
A group formed by the employees with the intention of collectively improving

the terms and conditions of employment or of raising their status in society.
According to Section 2 of the Trade Unions Act (1959), trade unions are
any organisation or association of employees or employers, whether in
Peninsular Malaysia, Sabah or Sarawak.
This act states the purposes of the formation of a trade union, that is:
(a) The regulation of relations between employees and employers, for the
purposes of promoting good industrial relations between employees and
employers, improving working conditions or employees or enhancing their
economic and social status, or increasing productivity;
(b) The representation of either employees or employers in trade disputes; and

(c) The promotion or organisation or financing of strikes or lock-outs in any

trade or industry or the provision of pay or other benefits for its members
during a strike or lock-out.
A trade unionÊs representation of workers is based on the industry they work for.
For example, the National Union of Bank Employees only represents their non-
officer workers in the finance industry. An employersÊ union is also known as an
employersÊ association. For example, the Malaysian Agricultural Producers
Association (MAPA) is a union for the producers of agricultural products.
In countries like Japan and Korea, the approach to the movement of trade unions
is more towards a concept of cooperation, whereby the unions assist the
employers in increasing production efficiency, so as to achieve good
performance. This approach enables the employees to receive higher wages and a
better working environment.
1.4.2 Roles of the Employer

Before this, we have briefly discussed the trade unions and the activities they
perform. This subtopic will deal with the second party in the three-party system
(tripartite) in industrial relations; namely the employer.
The employer is the party that provides jobs. The employer can be an individual,
a company, or any organisation or an association which gives jobs to the workers.
Just like the trade unions that protect the importance of workers collectively,
likewise, the employers also have their own organisation. However, an
employersÊ association is not only for the purpose of representing the employer
in trade disputes, but it also discusses important matters or issues that are of
common interest.
The managementÊs main objective in industrial relations is to support its

strategies so as to strengthen the effectiveness of the organisation and to improve
its performance. Section 13(3) of the Industrial Relations Act 1967 outlines the
absolute rights of management in making decision.
Section 5(1) of the Industrial Relations Act 1967 states the following:
„No employer or trade union of employers, and no person action on behalf of an

employer or such trade union shall:
(a) Impose any condition in a contract of employment seeking to restrain the

right of a person who is a party to the contract to join a trade union, or to
continue his membership in a trade union;

(b) Refuse to employ any person on the ground that he is or is not a member or
an officer of a trade union;
(c) Discriminate against any person in regard to employment, promotion, any

condition of employment or working conditions on the ground that he is or
is not a member or officer of a trade union;
(d) Dismiss or threaten to dismiss a workman, injure or threaten to injure him

in his employment or alter or threaten to alter his position to his prejudice
by reason that the workman is or proposes to become, or seeks to persuade
any other person to become, a member or officer of a trade union; or
participates in the promotion, formation or activities of a trade union; or
(e) Induce a person to refrain from becoming or to cease to be a member or

officer of a trade union by conferring or offering to confer any advantage on
or by procuring or offering to procure any advantage for any person.‰
At the present moment, the concept of management by agreement is absorbed

by the employer, whereby in this concept the management is only effective in
managing the organisationÊs operations. This is done through the sharing of
power, authority and decision making through the process of drawing up rules
collectively with the employees and the government.
1.4.3 Roles of the Government

The government plays three important roles, namely as:
(a) Legislator (through the parliament);
(b) Administrator (through the Ministry of Human Resources); and
(c) Participant (the government is the biggest employer in the public sector).
The Ministry of Human Resources is responsible for administering and

monitoring the industrial relations system in Malaysia. The MinistryÊs mission is
to develop a workforce that can compete in a harmonious and socially fair
industrial environment.

To accomplish this mission, the Ministry is responsible for:
(a) Ensuring that the Human Resources Policies drafted are of quality and can
be implemented practically;
(b) Ensuring that the relationships between the departments/agencies under

the Ministry, employers and workers are strong and harmonious at all
times;
(c) Ensuring that support services like the requirements of posts, finance and
the equipment for management and administration are sufficient, in
working condition and available for use at all times;
(d) Ensuring the development of computerised application systems is

complete, up to date and has efficient technical assistance;
(e) Having a reference library which is complete, up to date and provides a

friendly service at all times;
(f) Guaranteeing that the publication of brochures, such as regarding

manpower are always accurate, up to date and follow the schedule that has
been set; and
(g) Ensuring that every query and complaint is dealt with within 24 hours of
reporting.
The MinistryÊs objectives are to:
(a) Protect the welfare of the employees which includes their security, health
and rights;
(b) Encourage good relationships between the employers and the employees;
and
(c) Assist in using national manpower to its maximum level through planning
a workforce that is efficient and effective.

To see the Ministry of Human Resources Organisation Chart, please refer to

Figure 1.2.
Figure 1.2: Organisational structure of the Ministry of Human Resources

ACTIVITY 1.2
1. Visit this website: http://www.mohr.gov.my

This is the official website of the Ministry of Human Resources. In
this website, you will be able to visit other official websites under
this organisation and read the latest news about this ministry.
Get as much information as you can regarding the roles of
government in industrial relationships.
2. Is the concept of management by agreement used by your

management in your organisation? If so, list down the advantages of
this practice.
1.5 THE LEGAL FRAMEWORK OF INDUSTRIAL

RELATIONS IN MALAYSIA
The basic reason that labour laws exist is to form an industrial environment that
is harmonious and that balances the interests between the employees and
employers.
The principles that cover the relationships between the employer and worker in
Malaysia are derived from three main sources, that is:
(a) Common law;
(b) Written law; and
(c) Decisions of the industrial court and the civil court.
If a law is passed by the legal body in Malaysia, it will block the use of common
law in legal affairs. However, this situation will depend on whether the
legislation is complete or otherwise. If it is complete, then common law will not
be used (Kamal Khalili Hassan, 1994).

The main labour acts in Malaysia are the Employment Act 1955, the Trade
Unions Act 1959, the Industrial Relations Act 1967 and the Occupational Safety
and Health Act 1994. An explanation of these labour acts are as follows:
(a) The Employment Act 1955

The Employment Act 1955 was enforced on 1 June 1957 and is only adopted
by the private sector in West Malaysia. This act is important in fulfilling the
requirements of the changes in the manpower and economic environment
in Malaysia. This act provides an overall basic legal framework that covers
issues such as payment of wages, holidays, working hours, annual leave,
job termination and maternity leave. This act also covers workers with a
salary of less than RM1,500 and the group of workers included in Schedule
1 of this Act.
The terms and conditions of employment must follow the Employment Act.
Any additions to the terms and conditions must be obtained from collective
negotiations between the employer and the workers. Additions to the terms
and conditions will then be entered in the collective agreement.
A collective agreement is a written agreement between the employer

and the union regarding service policies or the relationship between the
two parties.
As such, the collective agreement is a contract to streamline the relationship

between the employer and its employees for a stipulated time.
(b) The Trade Unions Act 1959

The Trade Unions Act 1959 is related to the permission and legal limit given
to the employees and the employer to form an organisation related to work.
This act consists of matters such as registration of a union, rights and
liability of the union and its members.
(c) The Industrial Relations Act 1967

The Industrial Relations Act 1967 explains the legislation between the
employer and the union. It contains:
(i) Rules pertaining to the relationship between the employer and the
union;
(ii) Procedures for settling disputes that occur in industrial relations; and
(iii) Work disputes and issues which arise from the matter.

This act was drawn up in 1967 as Act No. 35, 1967; revised in 1976 and
published as Act 177.
(d) The Occupational Safety and Health Act 1994

The purpose of this act is to provide the rules for ensuring the safety, health
and welfare of the employees, and to cover other people from risks related
to the activities of the workers. This act was published on 25 February 1994
and is known as Act 514. This act is used by all industries throughout
Malaysia, except for the shipping and military industry.
SELF-CHECK 1.2
1. In brief, state the roles of the government in industrial relations.
2. State three purposes for the formation of a trade union according

to the Trade Unions Act 1959.
 Industrial relations is a set of phenomena, operating both within and outside

the workplace, and is concerned with determining and regulating the
employment relationship (Salamon, 2001).
 Industrial relations also refer to the management of the welfare of employees

by employers via internal communication (Maimunah Aminuddin, 1999).
 Three important aspects are emphasised in industrial relations, namely the

relationships between employers and trade unions (workers), labour law and
the disciplinary procedures and termination of contract of employment.
 The factors influencing industrial relations include internal factors such as

organisational goals, management systems and policies and the working
environment; and external factors such as technology, economic changes,
legal framework, education level, industrial harmony and social
responsibility.
 Employees are usually represented by trade unions.
 A trade union can be defined as a group formed by the employees with the
intention of collectively improving the terms and conditions of employment
or of raising their status in society.

 The role of a trade union is to regulate the relations between employees and
employers. This is to promote good industrial relations between employees
and employers to enhance employeesÊ working conditions, economic and
social status and to increase productivity. Other roles of a trade union are to
represent either employees or employers in trade disputes and to promote,
organise and finance strikes or lock-outs in any trade or industry or to
provide pay or other benefits for its members during a strike or lock-out.
 The basic reason that labour laws exist is to form an industrial environment
that is harmonious and balances the interests between the employees and
employers.
Administrator Participant
Civil court The Employment Act 1955
Common law The Industrial Relations Act 1967
Employee/Workman The Occupational Safety and Healthy
Act 1994
Employer
The Trade Unions Act 1959
Government
Three-party system (Tripartite)
Industrial court
Trade union
Industrial relations
Written law
Legal framework
Legislator

Topic  Perspectives
2 and Approaches
in Industrial
Relations
LEARNING OUTCOMES
1. Describe the Unitary, Pluralistic and Marxist perspectives;
2. Identify the approaches used in industrial relations; and
3. Assess the importance and problems of comparing approaches in
industrial relations at the present time.
 INTRODUCTION
In Topic 1, we discussed the definition of industrial relations and the factors
influencing industrial relations. We also discussed the parties involved in the
industrial relations system and its environment in Malaysia.
In Topic 2, we will look at various perspectives and approaches which are used
by the organisation in forming harmonious industrial relations.

16  TOPIC 2 PERSPECTIVES AND APPROACHES IN INDUSTRIAL RELATIONS
2.1 PERSPECTIVES IN INDUSTRIAL RELATIONS

Different elements that exist in an organisation can bring in different perspectives
and assumptions regarding the organisation. As such, industrial relations can be
seen from various angles. It can be seen from the political, sociological, economic,
legal, psychological or organisational angle. Take for example the issue regarding
payment of wages. Normally, the employer will try its best to pay the minimum
wage because a higher wage will increase the organisationÊs overhead cost, thus
affecting the companyÊs profit. The employees on the other hand, have different
opinions regarding this matter. The employees will try their best to ask for
increase in wages to substantiate their livelihood. This difference of opinion will
result in the parties involved using different approaches whenever they are faced
with such issues and problems.
There is not one single approach that can describe industrial relations
completely. However, every approach can help clarify industrial relations. This is
because the industrial relations system is not influenced by any policy or
fundamental. The industrial relations system is an elective system.
Elective means that the parties involve in industrial relations have the right to
select an approach they feel is suitable for creating a harmonious working
environment.
The important thing in industrial relations is: any conflict that exists must be
resolved so as to produce a harmonious industrial relations environment.
According to Salamon (2001), generally we are able to see an organisation

through three different perspectives, that is, Unitary, Pluralistic and Marxist.
Every single perspective has different approaches to resolving conflicts or
disputes at the workplace.
2.1.1 Unitary Perspective (Paternalism)
In the unitary perspective (paternalism), the organisation assumes that the

employees and the employer have similar goals, objectives and values. The
organisational structure has a single authority form, which means that there is
only one authority.

TOPIC 2 PERSPECTIVES AND APPROACHES IN INDUSTRIAL RELATIONS  17
In this perspective, the absolute right of the management is accepted by all and is
considered as rational. This is to say that the employer is considered to have
valid powers in matters related to management style, and in making
organisational decisions. The power used by the employer to resolve conflicts is
more autocratic and is known as coercion.
The management does not recognise the importance of the union because it
considers the union as a challenge to the employer. The union is not recognised
in this perspective because:
(a) The union challenges the managementÊs authority; and
(b) Competition will occur between the management and the union with
regards to loyalty and commitment of the employees.
As such, the management does not recognise conflicts at work or in other words,
conflicts are considered irrational.
In brief, the main importance of this perspective is the stability and harmony in
the relationship between the employer and the workers without any interference
from other parties, especially the unions.
2.1.2 Pluralistic Perspective (Conflict of Interest)

This perspective is opposed to the Unitary Perspective.
In the pluralistic perspective (conflict of interest), the employer and the

employees have conflicting goals and objectives. This difference in goals and
objectives can result in conflict at work.
The employer recognises that conflicts are always caused by the organisational
structure, management style, working environment and compensation system.
Apart from these reasons, other outside influences can also cause conflict at
work, for example, economic influences. Conflicts are resolved through two
methods:
(a) The employer need not use their power to close the organisation but
instead must discuss with the union; and
(b) The social and political institutions must assist the employer in explaining
any changes occurring in the organisationÊs environment.

It can be said that collective negotiation is only a temporary solution. The

important thing is that the employer and the employees must strive to maintain
harmonious industrial relations.
In this perspective, the employer recognises that there are conflicts. Therefore,
the employer will also recognise the union in bringing up any work-related
problems for discussions. Collective negotiation is the main method or main
channel that the employer and the union can use for discussion besides finding a
solution to the existing problems.
2.1.3 Marxist (Radical) Perspective
The Marxist (radical) perspective looks at the relationship that exists between
the employer and the employees in the organisation from the social, political
and economic points of view. This perspective emphasises the importance of
social changes for ensuring the progress and development of the organisation.
Changes will occur when conflict exists between groups in the organisation.
Conflicts occur in the organisation when the sharing of power, economy and
resources are imbalanced. As an example, if there is an imbalance in wage
distribution in the organisation, the union will take action to look after the
interests of the employees who are affected by the injustice perpetuated by the
employer.
In the Marxist perspective, the union in industrial relations is seen as a political

movement for the development of the working class. This is because the unionÊs
goal is to achieve changes in the economic and social system. As such, this
perspective says that industrial relations are a combination of politics and
economics, controlled by law to safeguard the importance and status of the
employer.
Overall, the Marxist perspective explains that:
(a) Group conflicts are agents for change. Without conflict, the organisation
will not change;
(b) Group conflicts occur whenever there is an inequality in the economic

distribution in the society;
(c) The social conditions in a society and a political institution exist because of
the economic imbalance and pressure from the dominant group; and
(d) Social and political conflicts results from the conflicts occurring in society.
ACTIVITY 2.1
In your workplace, which perspective in industrial relations is used to
overcome a conflict that exists between the management and the
employee?
2.2 INDUSTRIAL RELATIONS APPROACH

Every perspective regarding the organisation will bring about a different
approach in assessing and resolving issues related to industrial relations.
The industrial relations approach produces results, as it sees the situation from
the different perspectives discussed earlier. There are two main approaches:
(a) The Input-output Approach in the Industrial Relations System

This approach is the product of the pluralistic perspective. In this approach,
the employers and the workers are only part of a group which has interests.
As such, the organisation must manage the requirements of the employers
and the workers separately; and
(b) The Approaches of Social Action, Labour Control Process and Human
Resources Management
These three approaches are products of the unitary and Marxist
perspectives. These approaches stress on the work activities of the
employees.
2.2.1 The Input-output Approach

This approach stresses on the process of changing conflict into rules. Industrial
relations are a product of the existence of conflicts. Without conflicts, rules will
be simple and automatically enforced. Conflicts that exist are either obvious or
otherwise. Indirect conflicts in the organisation occur at a micro stage, for
example management style, control of management, and the use of authority and
power by the management; or at the macro stage, which is the national level, for
example, differences of values in society.

To identify whether a conflict exists in an organisation, the indications as follows

may be used:
(a) If a conflict that occurs involves an individual employee, his/her

motivational level will become low, the absenteeism rate will rise and work
will slow down;
(b) If the conflict is collective or in other words involves a certain group of

employees, they will forward their objections through a grievance process;
and
(c) If the conflict involves the whole company, industrial action such as
picketing and strikes will take place.
Conflicts can be resolved through a functionary method or through collective

negotiation. Through the functionary method, unilateral decisions will be made
by the management. On the other hand, through collective negotiations, the
management and the employees or union will negotiate to find a solution to the
conflict.
In the input-output approach, rules are considered as output in industrial

relations. There are four bases for rules as shown in Table 2.1:
Table 2.1: Bases for Rules in the Input-output Approach
Basis of Rules Explanation

Authorship Rules are set along the unilateral method (by the employer) or
bilateral method (negotiations between the employer and the union)
or tripartite method (government involvement).
Substantive Substantive rule gives more precedence to the rights and
Rule responsibilities of the management and employees in deciding wages
and work.
External Rules External rules are negotiations which are agreed upon at the national
level, duly accepted and used by all organisations.
Formality Level Explains the formality level of certain rules, informal rules include
unwritten rules (for example, organisational culture), while formal
rules include written rules such as policies, terms of service and
collective agreement.
Even though the level of complexity of an organisation in industrial relations can

be seen from the input-output model approach, its weaknesses can also be seen
from the absence of a framework which shows the influence of changes to the
industrial relations environment. This approach does not depict the parties
involved in industrial relations.

Figure 2.1 illustrates the input-output model approach.
Figure 2.1: Input-output model approach
2.2.2 Industrial Relations System Approach

This system is better known as the Dunlop system. In his book Industrial
Relations System published in 1958, Dunlop puts forward a very simple model of
industrial relations. This model looks at four aspects as illustrated in Figure 2.2.
Figure 2.2: The Dunlop system approach
The following are the descriptions of the four aspects of the Dunlop system:
(a) Actors
These are parties involved in the industrial relations systems. These parties
are the employers, the employees or unions and the government.
(b) Context
Context is the environment which influences industrial relations. This
includes social, political and technological influences.
(c) Ideology
Ideology is a common set of beliefs in a group of actors. Therefore, an
organisation needs to integrate ideologies to achieve commitment and
stability in the organisation.
(d) Rules
A framework of rules is drawn up through a certain process, for example
collective negotiations, conciliations and arbitration. Rules are proposed in

various forms such as internal rules, collective agreement and legislations.

Rules portray the relationships between the parties involved.
However, this model is criticised because it emphasises more towards the roles
played by the actors, as compared to the individual who is the actor. This model
does not take into consideration behavioural variables such as motivation and
perception.
In addition, this model does not explain as to whether the context is part of the
system, or an external constraint. However, Wood (1975) explains that if the
context is related to the market, for example economy and technology, then it is
an external constraint. If the context is related to the power of the organisation,
for example culture and values, then it is part of the system.
2.2.3 Social Action Approach

This approach stresses on how an individual can influence the social structure. It
explains that the parties involved in industrial relations has the freedom to act
and the ability to influence the environment, which in their opinion is right or
must be changed.
This approach is about making strategic decisions. This system opposes the
Dunlop System approach, where the Dunlop system says that the environment
can influence the actors. But in the social action approach, the actors have the
ability to influence the social system. The actors will make decisions based on
their experience at the workplace.
2.2.4 Labour Management Process Approach

This approach is based on the Marxist perspective. Labour management process
is an activity in which employees convert raw materials using machinery and
other materials into a product. This approach is suitable for the manufacturing
sector because it is profit-oriented.
According to this approach, the organisation will introduce certain systems,

policies, processes and procedures to manage their workforce. These elements act
as tools to control the actions and behaviour of the employees in their effort to
ensure that the end product achieves a certain level. Through this approach, the
employer will use its power and rights to manage and control its existing
workforce to ensure that the production process runs smoothly.

This approach also states that the social relationships of the employees who
produce important products to be a labour capitalist process when their abilities
are fully used to make the products.
The basic industrial relations in this perspective puts more emphasis on

management exploitation by breaking up jobs and tasks into fixed components or
processes and then ordering the employees to handle one of the components.
Subsequently, this will produce employees who become experts in a certain field.
Criticisms towards the labour management process are:
(a) This approach does not take into account any opposition from the
employees; and
(b) This approach does not take into consideration other mechanisms which
influences management control towards the employees.
2.2.5 Human Resources Management Approach

This approach is based on the unitary perspective which places importance on
stability and harmony in the relationships between employees and management.
This approach is guided by the objective to form a workforce with more potential
through the utilisation of an optimum workforce. It combines two elements:
(a) Psychology of the organisation ă for example leadership style,

organisational culture, commitment, method of selecting employees and job
structure; and
(b) Strategic management.
The approach is focused more towards the concept of individualism and direct
manager and employeeÊs relationship. Negotiations with the union is avoided or
minimised. Policies and work procedures are formed and enforced so as to
influence the employeeÊs attitude by applying psychological pressure and
disciplinary action.

SELF-CHECK 2.1
1. Describe the following industrial relations approaches:
(a) Input-output approach;
(b) Dunlop system approach;
(c) Labour management process approach; and
(d) Human resources management approach.
2. Explain the four bases for rules.
3. State the criticisms of the labour management process approach.
2.3 INDUSTRIAL RELATIONS APPROACH AT

PRESENT
Development in industrial relations at the present moment focuses on two types
of approaches that are:
(a) Labour market approach; and
(b) Comparison approach.
Both contexts take into consideration the changes in the contexts of economics
and the governmentÊs role.
2.3.1 Labour Market Approach

This approach looks at the method of how jobs are allocated to the employees. It
involves two elements:
(a) Wage level and wage allocation; and
(b) Job level, structure and allocation.

The labour market environment has seen changes in the industrial nations due
to:
(a) The increase in female workers;
(b) Increase in unemployment as a result of economic slowdown and changes

in technology;
(c) Changes in job structures, from a manufacturing sector to a service sector,

from manual to non-manual and from work not based on skills to work
based on skills;
(d) Employers and employees being more focused on work and less on career
development; and
(e) Changes in the strategy of the government that involves itself in controlling
the labour market with the intention of developing the economy.
The economic approach in the labour market stresses on the role of wages as
the determining factor on the supply and demand of labour. There are three
assumptions in the economics of the labour market:
(a) Wage expectation is a utility function. This means that the total supply of
labour derives from the wage level offered in the labour market;
(b) The organisational approach to wage level derives from the maximisation
of profit and marginal value of labour; and
(c) The supply and demand of labour takes place through a wage mechanism
that finds a point of balance where the employees work for the wages they
want.
Besides the determination and allocation of wages, the labour market approach
also looks at the allocation of jobs among groups of employees. This approach
says that the employees who are involved in complex and difficult jobs will
become experts in their respective fields. This approach indicates that every job
has its own value.

2.3.2 Comparison Approach

This approach looks at the usage of the industrial relations systems by
international companies and their ability to form a labour standard. This
approach will examine and analyse the industrial relations systems among
countries. For example, by analysing the differences in relationship among the
actors, processes and the industrial relations environment.
There are two reasons why we must examine the industrial relations systems of
other nations, namely:
(a) To compare the similarities and differences in the industrial relations

systems. This comparison is an important basic step in drawing up policy
changes in the industrial relations system. What is important here is that
every comparison has the same basic environment, such as culture,
industry and legislation. The purpose for this comparison is to achieve
operational and economic success of the organisation; and
(b) This comparison method can be used to change the political, environmental
and economic system in industrial relations.
However, there are constraints in making international comparisons. They are

stated as follows:
(a) Function and Terminology

There are different labour terms in other countries which convey the same
meaning. Terms and conditions of employment refers to collective
agreement in the United Kingdom, job contract in the United States and
Industrial Award in Australia.
(b) National Practice and Institution

Many of the processes for comparing industrial relations systems only
comprise of a macro analysis of a process, system and legal framework.
This does not reflect in detail the actual practice of an organisation.
(c) Differences among Nations and among the Races of a Nation

There are differences in the implementation of the industrial relations
system between two organisations even though they are the same industrial
relations system. For example, the differences in the industrial relations
systems between the government and the private sector.
Factors that cause these differences are the market environment, the
technology used and the organisational culture.

SELF-CHECK 2.2
1. Identify the approaches which are being used in industrial

relations at present.
2. Explain why we need to make comparisons in the international

industrial relations systems.
3. Describe the constraints faced in the process of comparing

industrial relations systems.
 Differences in the objectives of the employer and employees can result in

organisational conflict.
 Therefore, the management must take the proper perspective in dealing with
the conflict that arises.
 Three perspectives in the organisation have been discussed in this topic,

namely, the unitary, pluralistic and the Marxist perspectives.
 Each perspective has its own approach.
 The unitary perspective looks at the employer and the employees as having
similar goals or objectives. As such, the existence of a conflict is regarded as
irrational and the formation of a union is seen as unnecessary.
 The pluralistic perspective says each party in the organisation has different
goals and interests. These differences will cause conflicts. As this perspective
allows the existence of conflicts, therefore the formation of a trade union is
deemed important to safeguard the welfare of the employees. Collective
negotiation is a channel to resolve differences.
 Finally, in the Marxist perspective, the relationship that occurs between the
employer and the employees is seen from the social, political and economic
view.
 The industrial relations environment becomes increasingly complex and

dynamic and at the same time influences the relationships between the
employer and the employees.

 Parties involved in industrial relations must be aware of the values and

perspectives for each approach. This means that the employer and the
employees must be able to identify issues, problems and solutions in dealing
with changes in the organisational environment.
 Industrial relations do not only depend on the organisational processes but

must also be ready to face economic, political and social changes.
 The development of industrial relations at present cannot refuse to face the

globalisation of business.
Comparison approach Marxist perspective

Elective Pluralistic perspective
Human resources management approach Social action approach
Industrial relations system approach The input-output approach
Labour management process approach Unitary perspective
Labour market approach

Topic  Concepts and
3 Values in
Industrial
Relations
LEARNING OUTCOMES
1. Explain the importance of the concepts of fairness and equality in
industrial relations;
2. Describe the connection between the concepts of power and
authority in industrial relations;
3. Compare the concepts of individualism and collectivism in
industrial relations;
4. Identify the concepts of rights and responsibilities in industrial
relations; and
5. Discuss the concepts of integrity and trust between workers and
employer.
 INTRODUCTION
Harmonious industrial relations can bring prosperity and success to an
organisation. To achieve and perpetuate this situation, the organisation requires
tolerance and cooperation from all parties involved. Conflicts in industrial
relations can arise if the parties involved have different perceptions regarding
basic concepts and values that are important in industrial relations.

30  TOPIC 3 CONCEPTS AND VALUES IN INDUSTRIAL RELATIONS
Industrial relations is not an objective science. Debates in industrial relations

must be based on moral terminologies. This topic will discuss concepts such as:
(a) Fairness and equality;
(b) Power and authority;
(c) Individualism and collectivism;
(d) Rights and responsibilities; and
(e) Integrity and trust in the context of the relationships between the
employees, the union and the employer.
In this topic, all concepts will be explained technically. At the same time the
students must look at the concepts in a subjective manner, based on values or
value judgement. This is because there is no criterion in industrial relations
which can be universally accepted. Different individuals and groups will have
contrasting perceptions about good or bad and right or wrong.
3.1 CONCEPTS OF FAIRNESS AND EQUALITY

Even though the concepts of fairness and equality are frequently used in
managing industrial relations, the use of these concepts is clearly seen in the
formation of a job structure, wage system and managing the conduct of the
workers. Some people say that there is no exact kind of fairness. As such, the
formation of a legal framework and rules based on fairness agreed upon by
society is deemed important.
Brown (1979) explains that this concept of fairness must be accepted and used in
order to create a rational situation. What is important here is that the employer
and the employees must be committed in practising the concept of fairness in
facing changes in the industrial relations environment.
This concept is also related to the concept of equality. In this perspective,

whatever that brings inequality will bring unfairness. However, fairness need not
necessarily portray equality. The students would be able to easily understand the
perspectives by looking at these examples:
(a) Every year, the management will announce the giving of bonuses to all
employees who have given their energy to achieve the profits set by the
company. The bonus is given to all employees based on a same rate, for
example, two monthsÊ salary. Just imagine if a group of employees is given
a bonus based on half monthÊs salary. Here, there is inequality in the

TOPIC 3 CONCEPTS AND VALUES IN INDUSTRIAL RELATIONS  31
distribution of the bonuses. Therefore, employees who received only half of

their monthly salary will feel they have been treated unfairly by the
management.
(b) Generally in any organisation, the hierarchy of employees is determined

by their qualifications and responsibilities. Employees with higher
qualifications will be assigned bigger responsibilities in comparison
to workers with lower academic qualifications. For example, in the
organisational structure, the status of an officer is higher than that of a clerk
because the qualification and responsibilities of the officer is bigger in
comparison to the clerk. In the event that the officer and the clerk are
receiving the same amount of monthly salary, in order to form a concept of
equality, obviously the officer will feel that the allocation of salary is unfair.
In this second example, it can be said that equality does not necessarily
portray fairness.
Equality is just one of the values or variables used to look at the existence of
fairness in an industrial relations system. The existence of inequality in
society cannot be avoided because of the differences in the quality of life of
individuals in a society. Inequality is considered fair in a capitalist society
where the dominant values are individual success and individual
competitiveness with other individuals in order to achieve success. This
situation can lead to inequality. However, in a capitalist society, inequality
that results from competition is considered fair.
This view differs from the Marxist perspective which places the importance
of equality on the rights, interests and opportunities available in society.
The Marxist perspective explains that if there is inequality at the macro
level, for example, in economic distribution, it will influence fairness at the
micro level.
In the pluralistic perspective, fairness can be accepted if society says that a

certain situation is fair.
Fairness is seen as an important factor in determining the working of an

industrial relations system. This concept is implemented in three situations,
as follows:
(i) Fairness is used in balancing the distribution of resources between

two groups. However, it is difficult to establish fairness in the
distribution of resources if other factors are taken into consideration.
For example, the quality of the resources distributed. But fairness can
be said to exist if society accepts a certain distribution as being fair;

(ii) In a wider context, fairness can be seen from a situation as to whether

a certain distribution of resources is in line with other distribution of
resources. This means that in a similar or a different situation, the
resources must be distributed equally without taking into account the
relative importance of a certain situation. A distribution will be
considered fair if a society says that it is fair to them and to other
societies; and
(iii) Fairness must also be seen in distribution that is not in financial form,
for example, service and consideration towards different groups of
society.
The concept of fairness is not streamlined. This means that when the
environment and situation change, the opinion of the society towards
fairness will also change. For example, in a normal situation, if the
management does not raise the annual salary of the workers, the
management is seen to be unfair. However, in an economic downturn
situation, the freezing of the annual salary by the employer is seen as
fair considering that the company cannot achieve the set profit.
In short, if one group receives a raise in income after an industrial

action, the group will assume that the raise is a result of the said
industrial action. A second group will feel that it is fair for them to
receive the same level of income as the first group by taking the same
industrial action.
ACTIVITY 3.1
Is your employer fair to all workers in your organisation? How do you

explain whether your employer is fair or unfair to the workers?
3.2 CONCEPTS OF POWER AND AUTHORITY

The concepts of power and authority are important factors in industrial relations,
especially to matters relevant to the collective aspect. For example, workers often
make assessments on:
(a) The level of power of the trade union in its relationship with the employer
and the government;
(b) The level of authority the trade union has in controlling its members; and
(c) The level of authority the management has in the organisation.

In practice, there are two concepts that are mutually related to each other,
namely:
(a) Authority achieved through power; and
(b) Power achieved through authority.
3.2.1 Power
There is no one universal definition that can explain power. However, power can
be defined from various aspects:
(a) Power is the ability to control certain things. Individual or group

domination is important in order to demonstrate the power of the
individual or group. For example, the management seems to have power
because of its ability to order their employees to achieve the mission and
objective of the organisation; and
(b) Power means the ability to influence and make changes as a result of action
by a certain group or individual.
Hyman (1975) defines power as the ability of the individual or group to

control their physical and social environment and the ability to influence the
decision which has or has not been made. Koontz & O’Donnell (1974) said
that power will lead to coercion.
In the negotiation process between the employer and union, two kinds of power
are used, namely:
(a) Strategic power ă with this power the employer or the union has all the
elements to influence other parties; and
(b) Tactical advantage ă according to the ability to use tactics to influence other
parties.
Industrial relations involve the relationship of power and authority. In the

relationship between the employer and the employees, power is a resource for
obtaining collective decisions.

There are five sources of power which can influence industrial relations.
(a) Reward
Power is obtained when one party can control or influence the achievements
or interests that are desired by other parties.
For example the employer has a fixed standard of performance for each
worker through his or her job description. The management must control
the performance level of the workers to ensure it remains at the level
required. As such, the management has the power to control the workersÊ
job activities.
(b) Coercion
Power that exists when one party has the ability to take action against or
inflict punishment on another party.
For example, the management has prepared a set of disciplinary procedures

to ensure that the behaviour of the employees do not go against any of the
set rules. If an employee breaks a rule, then he or she will be punished. This
shows that the management holds a substantial amount of power.
(c) Valid
Power obtained by appointment from a legal point of view. For example, if
you are appointed as the manager in the human resource department, you
have the power to determine the human resources policies of the company.
(d) Reference
Power obtained by an individual who can use his personal ideas or status
to change the decisions or opinions of another. For example, if you are a
human resource manager of your company, whatever problems that exist
regarding the employee will be referred to you and you have the power to
make decisions because you are well-versed in the practices of human
resource management.
(e) Expert
Power obtained when an individual has a certain knowledge or experience.
For example, an expert in his field has the power to give his opinion to the
point that he can influence another party to change the decision that has
been taken.

Power is always used for:
(i) Controlling of resources;
(ii) Controlling information in the process of decision making;
(iii) The organisational structure, rules and legislation; and
(iv) Controlling competitors and the market network.
Power can exist and be used only if there is acceptance of the principles of
power. This means that:
(i) The awareness of fairness in the use of power between the employer
and the employees will easily bring about an agreement between
them;
(ii) The awareness that unfairness in the use of power will make
negotiations difficult; and
(iii) The awareness that unfairness in the use of great power will easily
bring about an agreement. However, there will be bias in the
agreement. For example, if the employees know that the employer
threatens to terminate them for not accepting a certain rule, they will
agree to follow the rule, but they may resort to something unexpected
such as sabotage.
There are two dimensions in the use of power and authority that is internal
dimension and external dimension. The management will use internal power and
authority on the employees to achieve the companyÊs objective. Without power
and authority, the process of controlling the employees will be difficult. The
external dimension of power and authority is seen when other elements outside
the company put pressure on the employer regarding the decision made. An
example of external power and authority are the national trade unions.
3.2.2 Authority
Authority is defined as the use of power. It is a right that is created for using
consideration to form, carry out and achieve the organisationÊs objectives.
Authority can also be defined as a right to direct a person to do something.

As authority is the use of power, we must also look at the rules and legislations
pertaining to authority. It can be seen in the process of socialisation, where on the
social level, the employee will follow an order because it comes from the head.
The head is an individual who controls the action of the employees and this
control is based on the rules and legislation that have been laid down.
This socialisation process has created the absolute rights of the management to
control the actions of the employees and the achievement of the objective of the
companyÊs production level. Refer to Section 13(3) of the Industrial Relations Act
1967 for matters that are listed as the absolute rights of the management. The
absolute rights of the management are activities of the employer which cannot be
questioned by the workers more so if the activities are done in good faith (bona
fide). According to Torrington & Chapman (1983), when an employee faces the
absolute rights of the management, the employee will lower his relative
autonomy.
Authority and power have three implications on industrial relations:
(a) The Use of Power is Seen as Unacceptable while the Use of Authority is
Acceptable
This can be seen when power is used for guaranteeing the peaceful living
conditions of the whole of society. For example, the trade unions must
ensure that the demands of their members are not detrimental to society.
Here, the use of power by the trade union is not acceptable to the members
because the union does not fulfil the memberÊs demands. However the
authority of the trade union is acceptable to society as a whole because it
ensures the demands of the members are not detrimental to society.
(b) There is Conflict of Loyalty of the Workers to their Jobs and as Members of
the Trade Union
When a worker signs a contract of employment, they are ready to be a
worker and must abide by all the set terms and conditions. When a worker
becomes a member of a union, he is ready to abide by all the decisions that
are made and agreed upon at the union level. If there is a dispute between
the union and the employer which leads to an industrial action, such as a
strike, the employee will have a conflict of interest as to whether to support
the union strike or be loyal to the employer by not joining in the strike.
(c) Rights of the Workers are in Line with the Use of Power and Authority or
its Control
The employees have the right to demand that the employer prepares
a safe workplace via collective negotiation. In collective negotiation, the
managementÊs use of power and authority depends on the agreement of the
employees.
ACTIVITY 3.2
With your own words, describe power and authority. Give examples in
the context of your working environment.
3.3 CONCEPTS OF INDIVIDUALISM AND

COLLECTIVISM
At present, the industrial or employeesÊ community is considered important. In
the working environment, employees collectively cannot be regarded as a factor
in production. They must be seen as an individual from the aspects of aspiration,
behaviour and ability to contribute towards the success of the organisation. This
matter contradicts the concept of collectivism. However what is important in
industrial relations is that we must look at how far freedom is given to the
employee as an individual and what are the requirements of the system of
collectivism.
On the whole, the relationship of the employer and the employee is via
individualism, and the relationship of the employer and the trade union is via
collectivism. As such, the balance of individualism and collectivism is not seen
up to the level of freedom or pressure on the employees. The level of
individualism is seen up to:
(a) The responsibilities of the employees;
(b) The parties which make enforcements; and
(c) The parties which protect the employees.
It is important to identify the terms of collectivism and individualism, which are

used in the aspect of industrial relations as follows:
(a) The employer is free to deal with the employee as he sees fit without the
need of a third party such as a trade union;
(b) Each employee is dealt with separately as he/she is given a salary based on
his/her ability and performance;
(c) Employees are treated fairly if they do the same jobs. Salaries are based on
the same terms and conditions of employment without consideration of
their employeesÊ ability and performance; and

(d) Employees assume that economic and social factors are personal matters
and do not depend on the group. But at the same time, the employees
assume that they are mutually dependent on one another and their needs
are obtained from collective action.
Individualism also refers to the freedom of the employees to make

decisions regarding their employment.
In a democratic society, individual freedom is an important basis. However,

there is no total freedom in society. The society accepts freedom if the actions of
an individual do not have a negative impact on the freedom of other individuals.
In the aspect of work, if an individual gets a job, he must accept the objectives,
rules and decisions of the management. As such the employee is not free to act
on his own. If the worker cannot accept the decisions of the management, he can
choose to continue with the organisation or leave.
It is important to identify the existence of collective bases in industrial relations

because it involves the needs of the employer and the employees.
(a) For the Employer

Generally, the employer will create various jobs that have to be integrated
so as to achieve operational effectiveness. The management will choose
employees suitable for the jobs created. The collective operation of the
organisation is definitely the responsibility of the employer.
(b) For the Employees

At work, the employees will work in groups subject to the control, and the
terms and conditions will be laid down.
Collective activity as seen in industrial relations places emphasis on voluntarism.

The employee is free to manage his own group, identify the condition of the
relationships among the employees and set group rules without interference
from the employer.
In collectivism, both parties, that is the employer and the trade union is
responsible for controlling the actions of the employees from opposing the
authority of the collective system. Thus, a collective agreement is formed.

SELF-CHECK 3.1
1. Explain five sources of power.
2. List four purposes for an individual to use power.
3. Describe in brief the difference between power and authority.
3.4 CONCEPTS OF RIGHTS AND

RESPONSIBILITIES
In general, a right is defined as:
A valid demand from a legal, traditional or cultural point of view.
A right has two concepts:
(a) A concept that has a positive approach is where a right is made into a basis
of culture and is accepted by everyone in society. An example is the right to
speak.
However, the freedom of speech is not absolute. For example, it is

prohibited to voice out false statements or statements that can cause racial
discord; and
(b) A concept that has a negative approach is when a right is seen as an

advantage not given to society or an advantage of being exempted from
responsibilities and duties, for example, immunity. It must be stressed that
immunity given to a person is not wrong, but the outcome from the use of
immunity can make the action of the individual seem wrong.
In Britain, workers have the right to strike and those who go on strike have
immunity from prosecution for any damage that occurs as a result of the strike.
In industrial relations, the issue that is always being spoken about is the absolute
right of the management.

The absolute right of the management is the managementÊs exclusive right

to make decisions. A decision made in this context is known as a unilateral
decision.
Responsibility is defined as duty, obligation or control of something. This

definition brings in two approaches:
(a) Responsibility Brings Constraints to the Freedom of the Individual

For example, the Human Resource Manager is not allowed to issue cheques
for training expenses because the issuing of cheques is the responsibility of
the Financial Department.
(b) Giving Freedom to Workers to Make Decisions

For example, the Human Resource Manager has the right to determine the
workers who need training based on the analysis of their training needs.
Responsibility arises from the following:
(a) The Perception of the Worker

For example, a worker may feel that he is responsible for ensuring that his
workplace is clean and organised.
(b) Instruction from the Top

For example, a worker is responsible for performing a duty delegated to
him efficiently and effectively.
Rights and responsibilities in social relations are not solely determined by one
role only (unilateral). They are also determined through the interaction of roles.
The interaction of rights and responsibilities shows the social value and trust of
an individual in a relationship with other individuals, their level of freedom and
what is needed by the individuals through that interaction.
There are four issues regarding the relationship between rights and
responsibilities, normally:
(a) Must a Right Involve Responsibility?

For example, when an employee is given the right to go on strike, is the
worker responsible for the strike even though the strike has a negative
effect to society as a whole?
This view is based on the belief that a right can be cast aside if the result of
an action of exercising the right is unacceptable to society.

(b) Does the Existence of a Right Make Another Party Responsible for Ensuring
that the Right is Used Effectively?
An employee is given the right to negotiate with the employer and it is the
responsibility of the union to demand the right of the worker. Therefore,
the employee is not afraid to negotiate and if the negotiation leads to a
deadlock the employee is not afraid to proceed with industrial actions.
(c) Can Responsibility be Given to a Party who has the Right to Perform the
Function of Control?
The management is responsible for the survival of the organisation.
Therefore, the management has the right to determine the strategies for
managing the organisation.
(d) Are Rights and Responsibilities Used to Evaluate Certain Perceptions and
Trust?
The trade union has the right and responsibility to represent the employees
during collective negotiation with the management. The unionÊs objectives
and constitution must reflect the opinions of the members as a whole.
SELF-CHECK 3.2
1. Give the definition of responsibility and the two effects of this

definition.
2. What is meant by absolute rights of the management? State three

absolute rights of the management that are contained in Section
13(3) of the Industrial Relations Act 1967.
3.5 CONCEPTS OF INTEGRITY AND TRUST
Integrity is defined as the behaviour of an individual based on trust and

values of the individual.
Integrity can be seen from the words and behaviour of an individual based on a
consistent set of values. Problems will occur if there are differences in trust and
values among individuals. If the values and trustworthiness of an individual
now contradict with what had been promised previously, society will not trust
that individual. What is important in industrial relations is that the integrity of
the employee or the organisation must be consistent.
Trust normally exists among individuals as compared to among organisations or

groups of individuals. In an organisation, trust exists among the employees, for
example between the managing director and the manager, such as follows:
(a) High trust in an organisation occurs when the employer and the workers
are ready to accept opinions as a basis for good relationship between them;
(b) Low trust exists when there is formal control in the relationship between
employer and employees; and
(c) Interpersonal trust exists when employee feels confident and can trust one
another.
In order to build trust, an individual must not destroy the status of other
individuals and their relationship with a third party. They must also uphold the
promises which were agreed upon, and honour the roles and objectives of other
individuals.
SELF-CHECK 3.3
How would you evaluate the integrity of an individual?
 Harmonious industrial relations will result in a comfortable working

environment. To achieve and maintain this situation, an organisation must
have tolerance and cooperation from all parties involved.
 Conflicts in relationships can exist if the parties involved have different

perceptions regarding various important aspects in industrial relations.
 We have already seen that in order to practise fairness and equality, we must
evaluate various factors that are involved in the situation.
 We have also seen that fairness and equality are not necessarily on the same
level. This is because of the differences that exist between one worker and
another.
 Fairness will be shown if the evaluation and distribution of resources is

consistent.

 In industrial relations, power plays an important role in determining the

party that will be successful in a negotiation.
 Authority refers to rights given to an individual to validly use their powers.
 The concepts of individualism and collectivism are focused more towards

actions which can be taken by a worker or group of workers, for example the
trade union and in its role in industrial relations. This means that the
employees can choose to act alone or be represented by the union in
demanding their rights from the employer.
 A right can be seen from two approaches, that is, the right of freedom which
is given to an employee, and the special right which is given to one party and
not to another.
 Responsibility is the compulsory requirement for an employee or employer to

carry out the duties entrusted to them efficiently and effectively.
 The concept of integrity refers to the behaviour of an individual based on the

values and trust held by the individual.
 Trust will appear among individuals if their set of values and trust are
accepted by all.
Authority Power
Coercion Power and authority
Collectivism Reference
Control Reward
Expert Rights and responsibilities
Fairness and equality Valid
Individualism Values
Integrity and trust

Topic  Context in
4 Industrial
Relations
LEARNING OUTCOMES
1. Identify three elements which influence industrial relations; and
2. Examine the influence of economic, social and political
environments on industrial relations.
 INTRODUCTION
The industrial community is complex and dynamic in its variety of groups,
activities and institutions and their behaviour and assumptions. Therefore, the
social phenomenon of employees such as industrial relations must be seen from a
wider perspective and context.
The industrial relations environment is formed from the influences of elements

from the environment, whether external or internal. For example:
(a) The determination of wage structure is influenced by the ability of the

employer to pay the wages, the labour market, and expectation of the
society as a whole in the distribution of the countryÊs wealth, and the
governmentÊs economic policy.
(b) The increase in the number of female workers is influenced by the changes
in social patterns, the increase in the educational level of women, changes
in the economy and the changes in legislation related to gender
discrimination at work.

TOPIC 4 CONTEXT IN INDUSTRIAL RELATIONS  45
4.1 MAIN ELEMENTS IN THE CONTEXT OF

There are three important elements in the industrial relations context, which will
be discussed:
(a) Industrial relations system;

(b) Other segments in social activities; and
(c) Time.
4.1.1 Industrial Relations System

The roles, relationships, institutions, processes and activities which can influence
industrial relations exist at every level, from the working group, the
organisational level as a whole, to the national level.
The pattern of relationship in the industrial relations system is either horizontal
(relationship between organisations) or vertical (work level relationship).
Therefore, the industrial relations system from the points of view of behaviour
and activity exists all the time. These form the industrial relations climate.
4.1.2 Other Segments in Social Activity

Industrial relations is one segment in the structure and activity of society. It is
influenced by other segments such as the economic, social and political segments.
Changes in these segments can influence the industrial relations system and the
parties involved in industrial relations. This is because the parties in industrial
relations are also part of the society.
4.1.3 Time
Time plays an important role. The present may be influenced by past incidents or
assumed incidents in the future. For example, conflicts faced by the organisation
now may have started from a past incident and any decision made by the
employer in resolving the conflict. This can influence the workersÊ objective.
At the organisationÊs internal level, time is divided into two:
(a) An existing problem and its solution will become a problem in the future;
and

46  TOPIC 4 CONTEXT IN INDUSTRIAL RELATIONS
(b) The behaviour, objectives and relationships that exist between the parties
involved are the result of their past experiences.
At the macro level, industrial relations is influenced by the changes and the
development of society with regard to economic, social and political
development (see Figure 4.1). It also includes the changes in the parties involved
in industrial relations themselves.
The relationship between the employer and the workers is influenced by the
internal and external environments.
Figure 4.1: Context in industrial relations

Source: Salamon (2001)

4.2 ECONOMIC, SOCIAL AND POLITICAL

ENVIRONMENTS
Do you know that economic, social and political environments play a crucial role
in the development of industrial relations? Each of these environments will be
discussed detail in the subtopic for your further understanding.
4.2.1 Economic Environment

The economic development has influenced the increase in the manufacturing
sector and the total number of workers in this sector. This phenomenon has also
influenced other sectors such as the agriculture and service sectors.
The economic environment has also an influence on the industrial relations

environment. For example, this can clearly be seen around 1997 when there was
an economic depression. At that time, many factories took drastic actions to cut
cost, one of these being job termination. At that same time, numerous financial
institutions took steps to initiate the process of merger. This, in a small way, has
adversely affected the jobs or terms of employment of the workers.
The governmentÊs role in handling economic downturns is seen as important.

Among others, the government needs to lower its expenditure by privatising
certain agencies. Corporate tax rate can also be lowered in order to assist the
financial flow of companies. This can re-stimulate the nationÊs economy and
hence lower unemployment rate.
In the economic environment, the government must keep unemployment rate at

a low level and manage the main industries so as to benefit the economy and
society as a whole without focusing on the profit of one party only.
4.2.2 Social Environment

In the British society, the economic and political aspects of an industrialised
capitalist democracy are based on the principles of the freedom of an individual
to think, speak and join unions. In this society, economic activity is based on
social values. Therefore, the principle of a worker working and accepting duties
from another person has become a social segment in modern society.

After the Second World War, restructuring was done, not only to develop the
economy but also for social purposes. This has created the modern welfare state,
whereby the strengths in society can help to compensate the weaknesses in
society and the government must be responsible for providing education, health
and other social services systems.
Unemployment is not solely caused by the economy (either upturn or downturn)

or the changes in the work structure, but is also due to the changes in human
resources. Changes in the pattern of the supply of workforce are caused by these
factors:
(a) Increase in female workers;
(b) Demographic factor; and
(c) Increase in part-time and temporary employees.
These factors have changed the industrial relations environment. For example,
the recruitment strategy and development of the movement of the trade unions
especially, have improved the terms and conditions of employment of workers,
especially for women.
The development of non-manual work is the result of the development of the

service sector whether government or private, and also the development of
technical, professional, administration and management skills. The restructuring
process of work is also the result of the development of information technology
which has changed the ways of working, whether manual of non-manual. The
development of the working environment has changed the industrial relations
environment.
4.2.3 Political Environment

The political environment is complex and difficult to handle. This is because the
political environment has an effect on other environments, such as, the economic
and social environments. The political environment also influences the industrial
relations environment.
Politics has a very wide definition:
(a) The power and authority which is used by an organisation for the decision-
making process. This involves the parties and actions of the parties who are
part of this process; and
(b) Politics also refers to the social system of the government.

Therefore, the political environment has two levels:
(a) Internal environment of the organisation which influences the decision-

making process that is part of the industrial relations system of the
organisation; and
(b) External environment ă political activities, rules and laws of the

government.
A political environment exists when society manages an institution in order to

voice out their opinions and to strive to achieve their goals and aspirations. It not
only involves political parties, government bodies, parliament and local powers,
but also informal pressure groups that influence the decision-making process of
the social system.
However, government ideology is an important element in determining the

direction, policy and action in the process of making decisions.
Political differences from the aspects of policy and action are the result of
differences in opinions regarding various matters occurring in a society. In the
19th and 20th century, changes in ideology were clearly seen, especially in the
19th century when the liberalist or laissez-faire ideology dominated the
formation of society. The liberalist ideology looks towards capitalism. In this
ideology, economy is based more on the concept of individualism, that is,
economic division and social welfare are on the same level and individuals are
free to decide their own future. In order to have power, individuals will group
together.
Differences in political ideology can cause political issues. Political issues arise
when there are differences in opinions related to:
(a) The governmentÊs responsibility in controlling the rate of unemployment;
(b) The balance between the government and private sectors;
(c) The powers given to trade unions regarding issues in the industries;
(d) Legislations and their amendments and also the roles of the authorities
regarding industrial actions such as pickets and strikes; and
(e) Government policies that influence society.

SELF-CHECK 4.1
1. Explain briefly three important elements in the context of

industrial relations.
2. How does the element of time influence the industrial relations

environment?
3. Describe how the following environments influence decision

making in industrial relations:
(a) Economic environment;
(b) Social environment; and
(c) Political environment.
 There are three important elements in the context of industrial relations, that
is, the industrial relations system, other segments in social activities and time.
 A context is a situation or factor which influences the decision and action of

the parties involved in industrial relations.
 It involves external and internal environments of the organisation such as

technological development, economic development, political activities and
also the distribution of resources such as human resources and the financial
resources of the organisation.
Economic environment Social environment

Industrial relations context Time
Political environment

Topic  Employees and
5 Trade Unions
LEARNING OUTCOMES
1. Describe the meaning of „trade union‰ according to the Trade
Unions Act 1959;
2. Discuss the development of the trade union movement in Malaysia
from early 20th century until now;
3. Evaluate the functions of the trade unions in the West and in
Malaysia;
4. Examine the meaning of „structure‰ and „congress‰ in the context
of trade unions;
5. Differentiate between the types of trade unions in Malaysia;
6. Explain the classifications of trade unions practised in Malaysia; and
7. Review the movement of the trade union affiliates such as
CUEPACS, MTUC and MEF.
 INTRODUCTION
Trade unions are organisations which represent employees in their struggle and
take care of the interests of their members. The history of trade unions started
among the workers in the West. The effect of the Industrial Revolution in the
18th century in Europe and in the 19th century in the US, witnessed the economic
transitions in the West from an agricultural-based economy to a manufacturing-
based economy. Employees in the manufacturing industries are divided into two
parties, the management and the employees with each having their own work
objectives. The management desires business profits through the optimum use of
workers, whereas the employees want rewards and treatment which in their

52  TOPIC 5 EMPLOYEES AND TRADE UNIONS
opinion fairly compensate their efforts. Eventually in times of conflict between

employer and employee, the employee will realise as an individual he or she has
difficulty in getting the attention of the management or the employer. On the
other hand, the voice of the trade union is louder and it has the strength of a
group of voices representing numerous employees.
It is very clear that the development of trade unions in most countries including
Malaysia is patterned by history and local needs even though trade unions had
its beginnings in the West. Actually, the framework of industrial relations in
Malaysia is inherited from the British Colonial Government.
5.1 DEFINITION OF A TRADE UNION

Now let us look at the definition of a trade union according to the Trade Unions
Act 1959 in Malaysia. In Section 2 this Act defines a trade union as:
„Any association of combination of workmen or employers, being workmen

whose place of work is in West Malaysia, Sabah or Sarawak as the case may
be, or employers employing workmen in West Malaysia, Sabah or Sarawak, as
the case may be:
(a) Within any particular establishment trade, occupation or industry or

within any similar trades, occupations or industries; and whether
temporary or permanent; and having among its objects one or more of
the following objects:
(i) The regulation of relations between workmen and employers, for

the purposes of promoting good industrial relations between
workmen and employers, improving the working conditions or
workmen or enhancing their economic and social status, or
increasing productivity;
(ii) The representation of either workmen or employers in trade

disputes;
(iii) The conducting of, or dealing with, trade disputes and matters
related thereto; or
(iv) The promotion or organisation or financing of strikes or lock-outs

in any trade or industry or the provision of pay or other benefits
for its members during a strike or lock-out.‰

TOPIC 5 EMPLOYEES AND TRADE UNIONS  53
DÊCruz (2000) gives a brief definition of a trade union as:
„Any association or combination of workmen or employers who are workmen

in an organisation in Peninsular Malaysia, Sabah or Sarawak.‰
Maimunah Aminuddin (1990) says that the definition of a union as written in the
Trade Unions Act 1959 has the following effects:
(a) Trade Unions in Malaysia need not necessarily be called unions. There are
also trade unions that called themselves „associations‰;
(b) The two parties, namely, the employer and the employees have the right to
form or be a member of a union as long the unions are separated from each
other but at the same time fulfilling the conditions stated above, that is, the
members must be in the same job, business or industry for any one union;
(c) Union membership is limited according to geographical location. For

example, in Malaysia workers or employers in Peninsular Malaysia must
become members of a union whose membership is especially for those in
the Peninsula, whereas those in Sabah can only become union members in
Sabah and likewise in Sarawak. Examples of unions limited by
geographical location are the National Trade Union of Peninsular Malaysia
and the Trade Union of Sabah;
(d) Unions in a general form cannot exist. In fact, union members must be
uniform, that is, of the same type; where they work in the same job,
business or industry; and they also have the same priorities and interest. If
there is uncertainty or doubt related to a type of work, business or industry,
a determination will be made by the Director of the Trade Union; and
(e) Any organisation or a group of workers having one or more objectives that
are written in the Trade Unions Act 1959 can be considered a union and
with that, must comply with the required legislations of trade unions.
SELF-CHECK 5.1
List the effects of the definition of trade unions as found in the Trade
Unions Act 1959.

ACTIVITY 5.1
Based on the definition of trade unions, are trade unions suitable for all
types of businesses regardless of the size of the organisation or
industry? Look at your own organisation; will the presence of a union
be helpful or problematic?
5.1.1 Development of Trade Unions

In continuing this topic, we will discuss two matters, that is, the history of
Malaysia and the trade unions today.
(a) The History of Trade Unions in Malaysia

The formation of trade unions or a movement with the characteristics of a
trade union had its beginning in Malaysia before its Independence on 31
August 1957 when it was still under the rule of the British Colonial
Government. Let us briefly look at the chronology of events that led to the
formation of unions and the legislations that are grouped together in
Malaysia as shown in Table 5.1.
Since 1946, the government had taken two important steps in ensuring
additional activities of the unions (Maimunah Aminuddin, 1999):
(i) The Trade Unions Advisory Department was formed with the
appointment of a Registrar of Trade Unions; and
(ii) A Union Enactment consisting of three important provisos which are

as follows:
 All unions must be registered;
 A federation of trade unions can only be formed by the trade

unions in the same industry; and
 Union officers must consist of those who have been working for at
least three years in the industry that they represent.
Later, in March 1947, the government passed a legislation making it

compulsory for all trade unions to be registered. The existing unions were
urged to limit their membership according to the same jobs, trade or
industry. However, in 1949, a meeting comprising of several trade unions
were held and from the outcome of the meeting, the Malayan Trade Union
Congress, now known as Malaysia Trade Union Congress or MTUC, was
formed.
Table 5.1: The History of Trade Unions in Malaysia
Period Event
Early 20th The influx of foreign workers to the Federation of Malaya to fulfil the
century manpower requirements of the booming rubber and tin ore industries. In
general, the workers for the rubber industries were brought in from India,
and workers from China were brought in for the tin mining industry.
1920s The formation of various unions to look after the welfare of the workers
and the emergence of the Malayan Communist Party (MCP) that planned
to develop the labour union movement by encouraging the formation of
unions of unskilled workers.
1930s MCP succeeded in instigating the new unions to launch a campaign of
strikes that have the elements of aggression and militancy. Around 1939,
there were about 40 unions that have the characteristics of trade unions
although they were not called as such as there was no legislation to control
their activities.
1940 Following the pressure from the employers who were worried about the
aggressive activities of the unions, the British government enacted the
Trade Unions Ordinance 1940. This was among the early legislations
concerning the workers.
However, this was legislated just as World War II began and the country
was in chaos. Thus, it was only enforced after the country experienced the
situation of low wage payments, insufficiency of the supply of rice and the
high prices of commodities. This situation stimulated the development of
the activities of the workers through the unions. The Trade Union
Ordinance 1940 was an inheritance for the union movement after the War.
1945 till MCP, which was allowed to operate legally by the British government,
1948 operated several types of general labour unions (GLU) under the
patronage of the Pan Malaysian General Labour Union (PMGLU).
To handle the development, the British government formed the Trade
Unions Advisory Department to be responsible for preparing a network of
trade unions that is democratic and committed and that complies with the
conditions of the Trade Unions Ordinance 1940. At the same time, the
employersÊ association for the mining and plantation industries were also
formed, for example, the Malayan Mining EmployersÊ Association and the
Malayan Planting Industry EmployersÊ Association. These were among
the earliest employersÊ unions formed in Malaya. The governmentÊs policy
on trade unions was based on the principle of complete separation of the
struggle of the trade union from that of politics.
With the beginning of a new era, the GLUs under the sponsorship of the
communist which were formed based on various trades or industries were
replaced by trade unions which were recognised by the government. These
trade unions operated on the basis of the same type of work or industry.

Finally, in 1959, the government at that time passed the Trade Unions Act
which constitutes the Act for administrating the trade unions movement in
the country. This Act was amended twice, in 1989 and 1991.
SELF-CHECK 5.2
Can you explain the influence of the Malayan Communist Party on the
trade unions movement in Malaysia in the 1930s?
(b) Trade Unions In Malaysia Today

Workers in Malaysia today, has various rights, among them are the rights
to:
(i) To form or assist in the establishment of a trade union;
(ii) Join an existing union; and
(iii) Be involved in the activities of the union.
However, these are not absolute rights because it relies on the provisions of
the Industrial Relations Act 1967 and the Trade Unions Act 1959. Any
activity which is classified as aggressive according to the provisions of both
Acts by the union will result in the union being deregistered by the
Registrar of Trade Unions. As displayed in Table 5.2, there has been an
overall large increase in the number of unions and members especially in
the private sector. Nevertheless, there is a decrease in the number of
employersÊ union.
Table 5.2: Number of Unions and Members in Malaysia

1965 1980 1994 1998 2001
Category
No. Member No. Member No. Member No. Member No. Member
Trade
Unions: n.a. n.a. 173 302877 281 384867 314 403928 364 432867
Private
Government n.a. n.a. 140 203628 133 225897 128 262498 131 284008
Statutory
n.a n.a. 78 72761 87 88609 90 73210 83 68006
Bodies
EmployersÊ
n.a. n.a. n.a. n.a. 16 616 12 468 14 550
Unions
Total 586 n.a. 391 579266 517 699989 544 740104 592 785431
Source: Department of Trade Union Affairs (2001)

The latest development in the number of unions can be seen in the previous
table. Tables 5.3 to 5.5 show the latest statistics on the number of membership
and trade unions, by sector and industry in Malaysia.
ACTIVITY 5.2
Why is there a decrease in the number of unions and members of the
employersÊ unions based on the statistics from the Department of Trade
Union Affairs? Explain in your own words.
Table 5.3: Number of Membership and Trade Unions in Malaysia, Year 2002ăJuly 2009
Year Trade Union Membership

2002 581 807,260
2003 609 789,163
2004 611 783,108
2005 621 761,160
2006 631 801,585
2007 642 803,212
2008 659 805,565
July 2009 667 805,801
Sources: Department of Trade Union Affairs (2009)
Table 5.4: Number of Trade Union by Sector in Malaysia, Year 2002ăJuly 2009
Sector 2002 2003 2004 2005 2006 2008 July 2009

Private 373 380 380 390 396 421 427
Government 128 127 130 127 130 132 134
Statutory Body 80 88 87 91 92 92 92
and Local
Authority
Employer 14 14 14 13 13 14 14
TOTAL 595 609 611 621 631 659 667

Table 5.5: Number of Trade Union by Industry in Malaysia, Year 2002ăJuly 2009
Industry 2002 2003 2004 2005 2006 2007 2008 July 2009
Agriculture, 48 55 54 54 55 55 58 58
forestry and fishery
Mining and quarry 2 2 1 1 1 1 1 1
Production 149 145 144 146 150 154 159 159
Electricity, gas and 28 39 39 39 39 40 40 40
water
Construction 11 11 11 11 11 11 11 11
Commerce 12 18 18 18 19 21 24 29
Transportation and 53 58 61 61 61 62 63 64
telecommunication
Services 278 281 283 291 295 298 303 305
Total 581 609 611 621 631 642 659 667
You can visit the official website of the Ministry of Human Resources Malaysia,
at http://wwwmohr.gov.my/index.php/en/ for more information. Look at the
latest data and information regarding trade unions via the website of the
Department of Trade Union Affairs.
5.1.2 Functions of a Trade Union

Before we discuss the functions of trade unions, let us take a look at the
important objectives of a trade union. According to DÊCruz (2000), they are:
(a) To protect the interests of its members;
(b) To build the relationships between the employees and the employer;
(c) To handle the collective bargaining with the employer in obtaining a

collective agreement;
(d) To represent the employees in trade disputes with the employer regarding
disciplinary affairs;
(e) To represent the employees in the industrial court, labour court and so on;
and
(f) To organise social, recreational and cultural activities among the members.

Therefore, the fate and welfare of the workers will be protected because the
voice of a group will be more effective and clear compared to the voice of an
individual.
Certainly, the objectives, procedures, policies and actions of a union are formed
based on the perception of its leader regarding the actual functions of trade
unions. However they may differ in the perception of the members of the union.
Nevertheless the basic purpose of forming a trade union is to look after the
interests of its members. If we refer to Salamon (2001), the functions of an
organisation are defined as the roles or duties which must be performed and the
methods used to carry them out. However, they are still influenced by the
characteristics of the organisation itself.
Salamon (2001) furthermore divided the functions of the trade unions into six as
follows:
(a) The Workers Symbol of „Power‰

The functions of the union is to safeguard the interests of its members and
support and assist its individual members to gather their strength as a
group to „oppose‰ or „object to‰ the employer if there is a disagreement
and to become a group that can put pressure in society.
(b) The Controller of the Economy

The function of the union is also to maximise the wages and work of the
members in their contract of employment or agreement regarding wages
and work.
(c) The Controller of Work

The union has laid down a system to set rules collectively which can protect
its members from managerial actions that are baseless and also permit the
members to take part in the process of decision making in any organisation
they are working for.
(d) The Mover of Social Changes

The function of the union is also to exhibit a level of friendliness in social
relations, aspirations and political ideology of its members and to be
industrious in forming a society which can portray the opinions held by its
members.
(e) Service Provider for Members

The union also prepares various facilities or services for the members. This
can be seen in the financial assistance and advisory services given related to
the rights of the members as workers.

(f) Channel Provider for Self-achievement

The union gives and shows the way or mechanism, for the individual to
develop his or her ability beyond the working boundary of its members and
also to take part in the decision-making process.
Maimunah Aminuddin (1999) discussed three main reasons that encourage

employees to join a union:
(a) To Improve Their Economic Situation

Employees become members of a union because they fear that their
demand for their rights will be less entertained if they were to take action
individually. Therefore, they are confident that the voice of the union is
more forceful, firm and effective (collective negotiation) in improving the
conditions of service, especially in affairs related to their wages and
benefits.
(b) Ensuring the Rights of the Members are Protected

The rights of the employees are not only limited to materialistic matters. It
also involves questions on safety, job security, work comfort, self-esteem
and so on. Therefore, with their participations in the union the employees
feel confident that their rights and welfare are protected.
(c) Social Reasons

It is not denying that social needs are important in the lifestyle of an
individual. This is one of the main reasons which encourage an employee
to become a member of a union. This culture is the reason why union
members in the organisation can display the importance of social motives
to the employees.
ACTIVITY 5.3
To strengthen your understanding further, discuss why most employers

do not like trade unions considering the present environmental
situation. Take a look at your own organisation. Does the management
accept or gladly accept the presence of a union? Why?

SELF-CHECK 5.3
1. Why is the membership size of the union more important than the
number of unions?
2. State four purposes of trade unions according to the Trade Unions

Act 1959.
3. Explain six functions of a trade union according to Salamon

(2000).
5.2 DEFINITION OF STRUCTURE AND

CONGRESS IN TRADE UNIONS
Now let us take a look at the definition of “structure” and “congress” in trade
unions. The Dewan Bahasa dan Pustaka defines “structure” as:
“Any organised administration, formed by a trade union to allow them to

carry out their activities smoothly as well as to achieve their set objectives.”
As we all know from past topics, that even though a trade union represents its
workers in an industry or in the same work, nevertheless, in general the union is
still less solid especially if they have a small number of members. To strengthen
any union, it must be the practice of unions in any country to unite under a main
combined organisation of affiliates.
Whereas the definition of “congress” is:
„A main body that combines the trade unions from various fields according to
sectors.”

This congress of unions is divided into two groups, and they are the public sector
and the private sector. This is seen in Malaysia. The unions from the public sector
are affiliated to the Congress of Unions of Employees in the Public and Civil
Sectors (CUEPACS) and the unions from the private sector are affiliated to the
Malaysia Trade Union Congress (MTUC).
SELF-CHECK 5.4
Explain the rationale for unions to be affiliated to a main body known

as a “congress‰.
ACTIVITY 5.4
Is the union in your organisation a member of any congress of unions?

If not, please think of the reason why it is not a member.
5.3 TYPES OF TRADE UNIONS

Let us take a further look at some types of unions in Malaysia. Basically, trade
unions in Malaysia are divided into three categories, as follows:
(a) Trade unions in the public sector;
(b) Trade unions in the private sector; and
(c) EmployersÊ union.
These three trade unions will be discussed in depth after this.
5.3.1 Trade Unions in the Public Sector

The public sector comprises the government sector, government bodies and local
authorities. There were about 210 trade unions in this sector in 1986. The number
increased further to 218 in 1998. The largest union, that is, the National Union
of the Teaching Profession (NUTP) is affiliated to the public trade union in
Malaysia. There are unions which has small memberships in Malaysia, such as
the Ministry of Human Resources Association in the public sector trade unions.

The Trade Unions Act 1959 has a proviso that employees in the public sector can
only form and be a member of a union in a ministry, department or a same
occupation. The formation of a union in the public sector also refers to the union
exemptions according to the Public Officers Directive 1971.
The proviso is to ensure that discussions carried out with the employers have a
proper basis. This is because the size of the public sector is large and the
problems faced by the employees generally pertain only to a particular ministry
or department. Perhaps the only similarity in the ministries and the departments
of the public sector is the salary system. Any issue on salary that arises will be
referred to and discussed at national level through the Congress of the Union of
Employees of the Public and Civil Services (CUEPACS).
5.3.2 Trade Unions in the Private Sector

A union in the private sector at the national level or at the regional level is also
known as an enterprise union. A national union in the private sector will try to
represent all the employees in the same industry, business and occupation. A big
union at the national level need not necessarily have a large membership.
Actually, it depends on the membersÊ and officersÊ ability to gain the confidence
of potential members to join the union. Certainly it cannot be denied that the big
unions have a more organised structure with local branches and committees. For
this we can refer to the National Union of Bank Employees (NUBE) which has
branches in all the states in Malaysia. It must be remembered that unions at the
national level do not cover the whole of Malaysia because it is limited to
Peninsular Malaysia or Sabah or Sarawak only as delineated in the provisos of
the law.
We have mentioned the technical term „internal trade union‰ earlier. Internal
trade unions are trade unions whose members work under the same employer.
An internal trade union is formed with the permission of and only after being
recognised by the employer. The members can be from various occupations in
the organisation. Nevertheless, it has been the policy of the government to
encourage the formation and the development of such unions even though the
validity of their registration can be questioned.
The question regarding internal unions plays an important role, even if it is

infrequent, and it has become a question mark. This is because they are always
being controlled indirectly by the employer who provides financial aid, physical
facilities and so on. Furthermore, there is a possibility of an employerÊs
representative involved in managing the union.

However, there are parties which oppose in-house unions. They say that the
close relationship of the in-house union with the employer will make it difficult
for the union to fight more meaningfully for its members.
Nevertheless, the Malaysian EmployersÊ Federation (MEF) strictly opposes the

formation of an in-house union if there is already a union at the national level.
The employers are more interested in supporting the in-house union concept
which they feel can be controlled by them. The leaders in internal unions are
more flexible in the collective negotiation process. The in-house unions can
become more effective just like the Dunlop WorkersÊ Union which has obtained
better conditions of service in fighting for the union membersÊ welfare rights as
compared to workers in Goodyear who are represented by the national union.
5.3.3 Employers Union

In Malaysia, the employer also has rights just like the workers to form a union
which is known as an association. Many employersÊ unions are formed as a
reaction to the national trade unions which have a stronger, louder and more
powerful voice. The main objective is to upgrade and protect its members in
negotiating and dealing with the workersÊ trade unions and representing its
members in any disputes between the members of the employersÊ union and the
workersÊ trade unions.
The rules for forming and joining a trade union are the same for both the
workersÊ union and the employersÊ union. Therefore, if any group of employers
wants to form a union they must make an application to the Director General of
Trade Unions and its members must be from the same industry. Examples of
national level employersÊ unions are the Malayan Producers Association (MAPA)
in the agricultural sector and the Mining Employers Association (MEA) in the
mining sector.
ACTIVITY 5.5
You can visit the official website of the Ministry of Human Resources,
Malaysia, at http://www.mohr.gov.my for further information on
EmployerÊs Union. Discuss in your tutorial class.

SELF-CHECK 5.5
1. Explain the guidelines that have to be followed in the formation of

a union for workers in the public sector.
2. In brief, explain the effect of the formation of an internal union to
the pattern of the unionÊs membership.
5.4 CLASSIFICATIONS OF TRADE UNIONS IN

MALAYSIA
In Malaysia, the trade union movement is controlled by the government and the
classification of the union is determined by the legislation especially the Trade
Unions Act 1959. In general, the traditional classification of trade unions is
divided into three categories:
(a) Occupational Trade Union;
(b) Industrial Trade Union; and
(c) General Trade Union.
We know that the classification of unions is based on various principles

of arrangement, which among them originate from the three traditional
classifications as stated above. Many unions in the United Kingdom, for example,
use the two boundaries of industry and occupation in recruiting workers to be
union members based on the three classifications. Nevertheless, unions will go
through the process of adaptation according to the current needs.
Whereas in Malaysia, as we have discussed, the unions which were formed to

this day is divided into three types: unions in the public sector, unions in the
private sector and the employersÊ associations.
SELF-CHECK 5.6
List three traditional categories of classification of unions especially

those formed in the United Kingdom.

5.5 TRADE UNION CONGRESS

Now let us look at the role of the trade union congress in the public sector, the
private sector and also the employersÊ association in Malaysia.
5.5.1 Congress of the Union of Employees of the

Public and Civil Services (CUEPACS)
We often hear the name CUEPACS, which fight for the rights and welfare of the
public servants in Malaysia. CUEPACS is the federal union for workers in the
civil service. CUEPACS was registered in 1959. The Trade Union Act 1959 states
that unions in specific trades, industries and occupations must register with the
Registrar of Trade Unions.
Next, let us look at the objectives of CUEPACS as the trade union congress that
fights for the welfare of its members at the national level. The objectives are to:
(a) Carry out what is needed to raise the importance of or improve the way for
all or any members of the trade unions;
(b) Protect the interests of the affiliated trade unions and their members;
(c) Undertake the task of improving the work conditions of the members of the
affiliated trade unions; and
(d) Improve the legislations regarding the interests of the members in the
union in particular and in general.
CUEPACS membership is open to all trade unions registered with the civil
service in Peninsular Malaysia. Even so, any trade union that wishes to join and
become a member of CUEPACS must conduct a secret ballot among its members
to decide whether the members agree or disagree to do so. The administration of
CUEPACS is run by a board selected at a convention held every three years.
5.5.2 Malaysian Trade Union Congress (MTUC)

In the Malaysian Trade Union Congress (MTUC), a large part of their
membership is from the private sector. MTUC functions as a spokesperson for
the unions at the national and international levels. The role of MTUC is to bring
up and represent the opinions of the members in any body which has been
formed to discuss matters related to the workers just as we have seen through the
National Labour Advisory Council (NLAC). MTUC also functions as an advisor

to the unions in any disputes whenever they need assistance. Besides this, MTUC
also runs training programmes to assist union leaders to understand their roles
and responsibilities.
Next, we will look at the objectives of the MTUC. They are to:
(a) Provide advisory services for the members;
(b) Present the opinions of the employees to the government;
(c) Present the views of the employees on national issues such as planning,
development and education;
(d) Assist in managing workers who are non-members;
(e) Represent the Malaysian workers movement overseas;
(f) Provide trade union education; and
(g) Carry out research on matters which are of interest to the workers.
As a vocal organisation, it cannot be denied that from time to time, debates will
arise regarding the effectiveness of MTUC as a representative of the interests of
the workers and the union.
However, MTUC is a body which plays an important role in the labour

movement to portray the local industrial relations in Malaysia.
5.5.3 Malaysian Employers Federation (MEF)

The Malaysian Employers Federation (MEF) has the same status as the MTUC to
the employers who are its members. MEF is a body which represents employers
in the private sector. Its members are from individual companies and also the
employersÊ associations. MEF is a member in various councils such as:
(a) National Labour Advisory Council (NLAC);
(b) Employees Provident Fund (EPF/KWSP);
(c) Social Security Organisation (SOCSO/PERKESO);
(d) National Productivity Corporation (NPC);
(e) Wages Council; and
(f) National Council for Occupational Safety and Health (NCSH).

MEF is a registered association, similar to MTUC. The objectives of MEF are to:
(a) Ensure that the interests of the employersÊ organisation are safeguarded;
(b) Coordinate and bring forward the views of employers with regards to
labour issues;
(c) Improve in protecting and defending the interests of the employers in

general;
(d) Inform and advise its members regarding the implementation of labour
laws; and
(e) Give advisory service to its members regarding the resolving of industrial
disputes.
To achieve the objectives, the functions of MEF are to:
(a) Carry out research needed by the members especially for the purpose of
collective negotiation, to study salaries and wages and keep a close watch
on the Consumer Price Index (CPI);
(b) Organise training for the members by holding seminars and lectures on
topics related to labour laws and other matters concerned with industrial
relations;
(c) Provide industrial relations service by representing its members in the

industrial court; and
(d) Give advice to the members while during collective negotiation and
provide assistance to members who need assistance.
MEF also publishes a monthly bulletin called „The Malaysian Employer‰ which
contains current issues regarding the decisions of the industrial court.
ACTIVITY 5.6
What is the difference in the roles of CUEPACS, MTUC and MEF in

charting out the local industrial relations?

SELF-CHECK 5.7
1. Name six councils that MEF is a member of.
2. List the objectives of the Malaysian Trade Union Congress.
3. What must be done by a union who intends to join the Congress

of the Union of Employees of the Public and Civil Services
(CUEPACS)?
 Topic 5 has explained in detail the meaning of a trade union according to the
Trade Unions Act 1959 as well as discussed the development in the trade
union movement in Malaysia.
 The Trade Unions Act 1959 determines the structure of the local trade unions.
 This act gives the right to the workers and also to the employer to form a
union to represent their interests.
 In addition, you were also exposed to the general functions of a trade union.
 Next, the difference between „structure‰ and „congress‰ of trade unions was
explained with examples of the union affiliates as follows; Union in the
public sector: Congress of the Union of Employees of the Public and Civil
Services (CUEPACS); union in the private sector: Malaysian Trade Union
Congress (MTUC); and employers union: Malaysian Employers Federation
(MEF).
Congress in trade unions Private sector

Employees Public sector
Employers union Structure
Malaysian Employers Federation (MEF) Trade unions
Malaysian Trade Union Congress (MTUC)

Topic  Employer and
6 Employers
Union
LEARNING OUTCOMES
1. Differentiate between trade union and employers association;
2. Differentiate between employers associations under the Trade
Unions Act 1959 and the Societies Act 1966;
3. Discuss three examples of employers associations under the Trade
Unions Act 1959 and three of its functions; and
4. Appraise four functions of the employers association.
 INTRODUCTION
The Trade Unions Act 1959 provides the employer the right to form a union or an
association and the employers association has similar rights as the trade unions
under the Industrial Relations Act 1967. In this topic, we will discuss the unions
for employers and their functions in industrial relations. As we have discussed
earlier, the employer also has the right to form unions which are normally known
as employers associations. In the Malaysian context, most employers associations
formed are based on industry and are affiliated for the purpose of handling
industrial disputes at the national level. The employers association acts as a
negotiator in facing the claims of the trade union and the labour laws.

TOPIC 6 EMPLOYER AND EMPLOYERS UNION  71
It is very clear that the development of trade unions in most countries including
Malaysia is patterned by history and local needs even though trade unions had
its beginnings in the West. Actually, the framework of industrial relations in
Malaysia is inherited from the British Colonial Government.
6.1 RIGHT OF FORMATION OF EMPLOYERS

UNION
Trade Unions Act 1959 (Section 2) defines a union as „any association or
combination of workmen or employers, being workmen whose place of work is
in West Malaysia, Sabah or Sarawak as the case may be, or employers employing
workmen in West Malaysia, Sabah or Sarawak as the case may be.‰ Here, it
clearly shows that the proviso to form a union is not only open to workers, but
also to employers. The employers union does not always use the term „union‰,
but it is still known as an association.
The procedures and conditions to form an employers union are the same as a
workers union. The formation of an employers association covers a vast
occupation or industry. Employers who desire to form an association must be
from the same industry or occupation, for example, the banking and plantation
industries. Nevertheless, in the Malaysian context, employers associations are
divided into two types. They are:
(a) Employers associations registered under Trade Unions Act 1959; and
(b) Employers associations registered under the Societies Act 1966.
6.2 EMPLOYERS ASSOCIATIONS UNDER THE

TRADE UNIONS ACT 1959
Let us recapitulate on what has been discussed on the employers association
under this Act:
(a) It is similar to the workers trade union and normally the employers
association is formed in the same industry or occupation. Furthermore, it
acts as a valid representative for its members in collective negotiation and
collective agreement; and
(b) Through their affiliates, the employers which have the same occupation or
industries can legally form a national employers association. With this, the
employers association is qualified to act as representative for its employers
involved in industrial disputes.

72  TOPIC 6 EMPLOYER AND EMPLOYERS UNION
Example
The National Union of Plantation Workers (NUPW) is one of the national unions
which have long been active in fighting for issues related to the welfare of the
plantation workers. Thus, to counter the claims of NUPW, the employers
association known as the Malayan Agricultural Producers Association (MAPA)
acts as the representative of the employers in discussing problems involving the
plantation workers in Malaysia.
The example above clearly shows the two parties, NUPW and MAPA are acting
as representatives in the process of bargaining concerning the plantation workers
in Malaysia. With that, the two parties can form one collective agreement
which covers all the employees and the employers in the agricultural industry in
the country. For the employers, this approach is more comprehensive and
professional as compared to taking personal action against the NUPW in the long
run.
In Malaysia, there are a total of 22 employers associations, of which 13 are

registered in Peninsular Malaysia. From the total number, seven employers
associations act for the national association covering the entire Peninsular
Malaysia. These seven associations are shown in Table 6.1.
Table 6.1: The Employers Associations Acting at the

National Level in Peninsular Malaysia
No. Name of Employers Association Industry

1. The Malayan Agricultural Producers Association (MAPA) Estates
2. Malayan Commercial Banks Association (MCBA) Banking
3. The Malayan Mining Employers Association (MMEA) Mining
4. Commercial Employers Association of Peninsular Malaysia Commerce
(CEAPM)
5. Malaysian Automotive Association (MAA) Motor Vehicle
6. State of Malaya Insurance Association (SOMIA) Insurance
7. Electrical Industry Employers Association (EIEA) Electric
The main objectives for the formation of an employers association are to:
(a) Struggle for, defend and protect the rights and interests of the employers in
the same industry;
(b) Organise and arrange the movement and development of industrial

relations of all the employers in a particular occupation or industry;

(c) Get group support from all members in resolving claims in industrial
disputes; and
(d) Represent members collectively in the process of bargaining related to

industrial disputes, negotiations on wage system and so on.
SELF-CHECK 6.1
Apart from NUPW, list two employers associations which are
registered under the Trade Unions Act 1959 and based in Peninsular
Malaysia.
6.3 EMPLOYERS ASSOCIATIONS UNDER THE

SOCIETIES ACT 1966
An employers association registered under the Societies Act 1966 acts as a
referral body in seeking alternatives to resolving industrial disputes. This is
because the employers association does not want to be tied down by the
collective agreement with the employees trade union. With that, any employer
who only wants service and assistance in handling claims in industrial relations
which comes under the Societies Act 1966 can become a member. The clear
difference between this association in comparison to the employers association
registered under the Unions Act is that there is no restriction on the type of
occupation or industry.
Besides this, the objective of the association is to defend the rights and interests
of the employers in the drafting of acts and rules in industrial relations. In
Malaysia, most business firms and business associations are members of this
association. For example, the Malaysian Employers Federation (MEF) which
was formed in 1978, consists of five national employers association and 750
individual firms. Membership is open to any employer, whether individually or
as an affiliate of the employers association. With that, MEF acts as the main
association for the employers and is the association most qualified to represent
the interests of the employers. The objectives of the Malaysian Employers
Association are to:
(a) Organise the administration and management of the employers

organisation;
(b) Coordinate the views of the employers regarding affairs related to the
labour system;

(c) Fight for, protect and defend the rights and interests of the employers;
(d) Give advice and consultation about matters of manpower and legal
practices;
(e) Play the role of a resource of information in finding alternatives in the

search for methods of resolving industrial disputes and court actions; and
(f) Act as a representative to the majority of the employers on issues related to

the rights and interests of the employers.
ACTIVITY 6.1
What is the difference between the employers associations under the

Trade Unions Act 1959 and the Societies Act 1966?
SELF-CHECK 6.2
List three out of the six objectives for the formation of an employers
association under the Societies Act 1966.
6.4 FUNCTIONS OF EMPLOYERS ASSOCIATION

After understanding what employers associations are and their differences, we
will now discuss the functions of the employers associations as a whole. The
functions of the employers association can be summarised as shown in Table 6.2.
Table 6.2: Functions of the Employers Associations
Function Area
Representative Collective negotiation and collective agreement
Reference consultant Industrial relations and industrial disputes
Organiser Workers management training programme
Spokesperson Resolving salary and wage claims

The following are further descriptions of the functions of the Employers

Association:
(a) Act as Representative in Collective Negotiation and the Collective

Agreement
In industrial relations, the employer is subjected to the demands of the
trade union and claims in trade disputes. The employers association will act
as a representative to the employers at national level in negotiations to find
a solution. With that, the views and proposals channelled by the employers
association are not termed as individual, but as a representation of all the
members in the whole nation or territory.
(b) Act as Reference Consultant in Industrial Relations and Trade Disputes

As a large organisation, an employers association has vast resources and
experience in resolving trade disputes. Through previous cases, the
employers association can channel views and alternatives which can
function as a reference in dealing with the claims of the unions.
(c) An Organiser for Training Programmes in Workers Management

As a valid association and representing the members at the national level,
the employers association can organise training programmes in the form of
seminars or short-term courses for the employers in handling of issues
related to the countryÊs workforce. Through this programme, the members
can exchange experience and ideas to maintain and update the rights and
interests of the employers.
(d) Spokesperson in Resolving the Salary and Wage Claims of the Workers
With the resources of knowledge and experience and also a big influence,
the employers association can act as a spokesperson in handling current
issues related to the legal control, the interests of the employers and the
salary demands of the workers. Moreover, in the Malaysian context, the
government always consider the views of the employers association before
taking any action or drafting the legislation which involves the workers and
the employers.
ACTIVITY 6.2
If your organisation is of average size with no union and it is faced with

the demand from a group of workers for an excessive salary raise, what
steps can be taken to handle this demand? Discuss.

SELF-CHECK 6.3
Explain two distinct differences between the National Union of
Plantation Workers (NUPW) and the Malaysian Employers Federation
(MEF).
 In this topic, we have defined what is known as a union and a workers

association.
 We have also discussed the differences between an employers union or an

association formed under the Trade Unions Act 1959 with one that is formed
under the Societies Act 1966.
 Besides that, we have listed the functions of the employers association under
these two acts.
Employers association The Societies Act 1966

Employers union Trade Unions Act 1959

Topic  The
7 Government
and Its
Agencies
LEARNING OUTCOMES
1. Discuss the three roles of government in industrial relations;
2. Explain the four roles of the Ministry of Human Resources;
3. Relate the four departments under the Ministry of Human
Resources which are involved directly in industrial relations;
4. Classify the four functions of the Labour Department in Peninsular
Malaysia; and
5. Appraise the two functions of the industrial court.
 INTRODUCTION
In Topics 1 to 4, we have discussed the concept of industrial relations in
Malaysia. One of these concepts has three components, involving three parties,
the trade union, the employer and the government. In Topics 5 and 6, we have
discussed the relationships between the employees and the employers, as well as
the formation of the employersÊ union and its functions. In this topic, we will
look at the governmentÊs role in industrial relations in Malaysia.

78  TOPIC 7 THE GOVERNMENT AND ITS AGENCIES
7.1 THE ROLES OF THE GOVERNMENT
ACTIVITY 7.1
What roles can the government play in issues related to industrial

relations?
The duties and the area of power of the government differ from one country to
another. This difference is influenced by the political structures and the
approaches which are practised. In Malaysia, the government has three
important roles in industrial relations, which are, as the:
(a) Legislator (Parliament);
(b) Administrator and conciliator (Ministry of Human Resources); and
(b) Employer to the unions and associations in the public sector.
In other words, in Malaysia the government acts as the controller and arbitrator
between the employer and the workers. It is different compared to Western
countries where governments do not interfere very much in the activities of the
industrial relations movement. For example, in the UK, the government only
supports the principles of voluntarism in industrial relations.
7.1.1 Legislator (Parliament)

In forming and maintaining a harmonious industrial relationship, the
government has drafted and passed legislations that bind both the employer and
the worker. Moreover, to update the present laws, the government is always
making amendments and rules that are in line with current issues related to the
employees, for example, issues on occupational safety and health at a
construction site. Employees in the construction occupation must attend safety
orientation courses and must hold a Green Card, before they are allowed to
work. The other laws which are passed and are relevant to industrial relations in
Malaysia are as follows:
(a) Workmen Compensation Act 1952;
(b) Employment Act 1955;
(c) Trade Unions Act 1959;

TOPIC 7 THE GOVERNMENT AND ITS AGENCIES  79
(d) Industrial Relations Act 1967;
(e) Employees Social Security Act 1969;
(f) Employees Provident Fund Act 1991; and
(g) Occupational Safety and Health Act 1994.
7.1.2 Administrator and Conciliator (Ministry of

Human Resources)
Through the Ministry of Human Resources, the government clearly underlines
its vision, mission and strategies which explain the approaches in industrial
relations practised in Malaysia. Among the purposes of using these approaches
are to:
(a) Develop a caring organisation which is effective, efficient and proactive in

contributing to the efforts of the government to generate and produce a
highly-skilled, productive and disciplined workforce in a harmonious
industrial relations environment towards achieving Vision 2020;
(b) Look after the interests of the workers, create and maintain a harmonious
industrial relations environment based on the countryÊs tripartite principle;
(c) Form a sharing of strategies through tripartite negotiations, the cooperation

between the government, employers and workers in order to produce a
skilled, productive, disciplined and quality workforce that have positive
values and good work ethics towards achieving the Government Labour
Policies and Vision 2020;
(d) Use the tripartite mechanism, meetings, dialogs and other innovative
approaches to improve the welfare, worker security, social security and the
quality of life of the workers as well as to increase their awareness of the
labour laws;
(e) Form a collective bargaining committee at the enterprise level and nurture a
union movement which is progressive and responsible and use it to nurture
the harmonious relationship between the workers and the management as
well as implement the wage system related to productivity; and
(f) Negotiate with the employers and the employees through the National
Labour Advisory Council regarding the drafting of policies and labour
laws which are dynamic and flexible towards improving productivity,
competitiveness and profit.

Hence, the Ministry of Human Resources has formed departments specially to

improve the effectiveness in industrial administration and relations. The
departments mentioned are as follows:
(a) Department of Labour Peninsular Malaysia;
(b) Department of Labour Sabah;
(c) Department of Labour Sarawak;
(d) Department of Occupational Safety and Health;
(e) Department of Industrial Relations;
(f) Department of Trade Union Affairs;
(g) Industrial Court; and
(h) National Labour Advisory Council.
These will be explained next:
(a) Department of Labour Peninsular Malaysia

The Department of Labour was formed in 1912 and its objectives are to
protect the interests and improve the welfare of the working community in
the private sector, to assist the industries optimise operations so as to
improve productivity as well as to create a labour environment which is
conducive to the purpose of improving industrial development through the
administration, implementation and enforcement of labour laws as well as
control steps which are efficient and effective.
Its functions are to:
(i) Look after the social and economic interests of the workers through
the implementation of labour standards and protective steps laid
down under the nationÊs labour laws and policies;
(ii) Assist the improvement of the countryÊs productivity through:
 Implementing a system of administration and management of

manpower and creating a workforce that has potential and are
disciplined and productive; and
 Offering advisory services related to labour laws to increase the

efficiency of the resulting process of production and service.
(iii) Assist in encouraging racial balance in the manpower structure of the

private sector;

(iv) Assist in the implementation of government policies regarding

manpower by giving precedence to citizens through the prevention
and wage control on foreign workers;
(v) Assist in improving the quality of life and welfare of workers in the
plantation sector;
(vi) Act as a catalyst in generating the concept of a caring society through

the implementation of steps to improve the interests of the less
fortunate sections of society who need special protection;
(vii) Assist in improving investments through taking steps to look after

industrial harmony and providing consultancy services for investors;
and
(viii) Monitor and keep track of the labour and wage situations so as to
assist the government in setting new policies and laws in the labour
and social areas through the analysis of current information and data.
(b) Department of Labour Sabah

This department is directly responsible to the Ministry of Human Resources
in matters of administration and enforcement of labour laws in the state of
Sabah. Besides these, it is also responsible for all industrial relations matters
in the state. The departmentÊs roles are to:
(i) Enforce labour laws so that the interests and welfare of the workers in
the state are always protected and looked after;
(ii) Minimise industrial disputes so that industrial relations that are

harmonious and encouraging always exist for the industrial and
economic development of the nation; and
(iii) Protect and look after the job opportunities of local workers through
the wage control on foreign employees.
(c) Department of Labour Sarawak

This department is directly responsible to the Ministry of Human Resources
in matters of administration and enforcement of labour laws in the state of
Sarawak. The headquarter is situated in the city of Kuching and there are
ten labour offices throughout the state. This department is also responsible
for all matters related to industrial relations in the state. The departmentÊs
roles are to:
(i) Ensure that the rights, interests and welfare of the employees are
always protected;

(ii) Encourage a harmonious industrial relations environment towards

improving the nationÊs economic development;
(iii) Ensure that job opportunities for local employees are not threatened
as the result of the foreign workersÊ salaries; and
(iv) Provide consultancy service to generate employers and workers who

are knowledgeable in labour affairs.
(d) Department of Occupational Safety and Health

This department is responsible for ensuring the safety, health and welfare
of the workers as well as the public from the dangers of the activities of the
workers. The departmentÊs roles are to:
(i) Amend and study from time to time through the tripartite process, the
policies, laws, code of practice and guidelines related to safety, health
and welfare of the workers as bases for ensuring a safe and healthy
workplace;
(ii) Ensure through enforcement activities and incentives, that employers,

self-employed workers, designers, suppliers, importers and
employees always abide by the requirements of law, code of practice
and rules which are laid down so as to obtain a safe and healthy work
culture; and
(iii) Assist and give consultancy and expert services in the form of
training, dissemination of information, and research organised by
government and non-government agencies, institutions of higher
learning, employers associations, workers and professionals in the
effort to further improve the level of safety, health and welfare of the
workers.
(e) Department of Industrial Relations

The Department of Industrial Relations of Malaysia is responsible for
forming positive and harmonious relationships between employers,
employees and their unions in order to maintain the investment climate
and safety of the workers. The departmentÊs roles are to:
(i) Advise the Minister on all matters related to industrial relations and
the relevant laws including matters referred to the industrial court;
(ii) Advise the employers, employees, and their unions and other
organisations on matters relating to industrial relations in general;

(iii) Encourage the formation and development of workers and employers

unions which are democratic and responsible;
(iv) Encourage and assist in voluntary collective negotiations between the

employers organisations and the workers trade unions regarding the
terms and conditions of employment;
(v) Provide conciliation services when trade disputes occur;
(vi) Encourage the formation of voluntary collective negotiation

machinery to resolve the differences between the employer and
employees;
(vii) Have a good rapport with the employers and employees

organisations so as to maintain a good relationship between the
employers and employees; and
(viii) Assist in preventing and resolving trade disputes, lock-outs and

strikes by the use of initial preventive steps.
(f) Department of Trade Union Affairs

The objective of this department is to ensure that the trade union movement
is harmonious and proactive. This department practises the democratic
and responsible approach in generating a workforce that is satisfied,
progressive, productive and disciplined. The functions of this department
are to:
(i) Coordinate and monitor affairs related to trade unions in this country;
(ii) Check and consider applications for the registration of trade unions
and employers associations which are formed by the employees and
employers;
(iii) Ensure that the registered unions abide by the trade union laws, the
constitutions and their own union rules; and
(iv) Advise the officers and their members about the aspects of
management, finance and the trade union laws.
(g) Industrial Court

The industrial court was formed in 1940 under the Industrial Court and the
Court of Inquiry Rules. The Trade Unions Act which was passed in 1967
introduced the concept of arbitration. If any trade dispute occurs, the
government can intervene by forcing the two disputing parties to the
negotiation table and then be referred to the industrial court.

The industrial courtÊs roles are to:
(i) Set the principles and guides for labour laws in the private sector
through the decision or the award of the court, which as a result will
become a recognisance, example or guide in the labour laws and the
industrial relations system;
(ii) Hear trade dispute cases and give decisions or awards regardless of
whether the cases were referred by the Minister or directly by the
parties involved in the dispute; and
(iii) Register and recognise the collective agreement entrusted by the

employer and the union.
(h) The National Labour Advisory Council

The National Labour Advisory Council is a tripartite forum to discuss
matters pertaining to labour and manpower issues including labour policies
and laws and to make recommendation to the Minister of Human
Resources with a view to fostering a harmonious industrial relations
environment so as to increase workersÊ productivity.
7.1.3 Employer in the Public Services Sector

The government is the employer of the workers in the public sector. It is
responsible for the interests and welfare of the employees in the public sector.
Many unions in the public sector have merged with the Congress of the Unions
of Employees in the Public and Civil Services (CUEPACS). Based on the Ministry
of Human Resources Annual Report, in 1999 there were 209 trade unions in the
public sector, with 125 in the government and 84 registered under statutory
bodies and local authorities. With that, CUEPACS is the representative at the
national level for workers in the public sector in negotiations and discussions
involving the rights and interests of the workers in the public sector.
7.2 GOVERNMENT INVOLVEMENT AND

STRATEGY
The governmentÊs main objective is to create an industrial relations environment
that is harmonious and suitable for the employers, workers as well as the trade
unions and employersÊ unions. In fact, the government has set comprehensive
policies and strategies to handle industrial disputes. Among the approaches and
methods practised by the government to oversee the industrial relations system
are as follows:

(a) Employer
As an employer, the government has the power to decide policies which
are in line with the nationÊs development policies. Furthermore, the
government has the right to keep intervening in order to control trade
disputes. This is the responsibility of the Ministry of Human Resources and
the departments mentioned earlier, for example, the recognition and
cancellation of the registration of unions or associations.
(b) Legislator
The government has drafted various acts and rules related to labour laws.
With that, the employers and the workers are tied to their respective rights
and responsibilities. Furthermore, these two parties must have a positive
attitude towards industrial relations that are both harmonious and
encouraging.
(c) Arbitrator
The government also acts as an arbitrator between the employer and the
employees. If one of the parties fails to give the appropriate feedback and
acknowledgement, the problem can be referred to the Director General of
Trade Unions to act as an arbitrator. For instance, if the union decides to
have collective negotiations with the employer, but the employer refuses to
acknowledge the claim within a period of seven days, the union can refer
this problem to the government to take action against the employer.
(d) Conciliator
If at all a dispute reaches a deadlock, the last resort is to refer the case to the
industrial court which will act as a conciliator.
SELF-CHECK 7.1
State three roles of the government in industrial relations.
 In this topic, we have learned about the three roles of the government in
industrial relations, which is as a legislator (parliament), administrator and
conciliator (Ministry of Human Resources) and employer to the unions and
associations in the public sector.
 We have also learned about the governmentÊs involvement and strategy in

the handling of disputes in industrial relations.

Administrator Department of Occupational Safety

and Health
Agencies
Department of Trade Union Affairs
Conciliator
Government
Department of Individual Relations
Industrial court
Department of Labour Peninsular
Malaysia Ministry of Human Resources
Department of Labour Sabah The National Labour Advisory
Council
Department of Labour Sarawak

Topic  Collective
8 Bargaining
LEARNING OUTCOMES
1. Define collective bargaining;
2. Discuss the process of collective bargaining; and
3. Review the contents in collective bargaining.
 INTRODUCTION
The bargaining process involves communication skills and it has also become
part of our daily lives. When we go to the market, for example in order to buy
fish or vegetables, the process of bargaining will take place. Similarly, as in the
case of purchasing a vehicle or a house for example, bargaining will take place.
Therefore, from a small transaction to a big transaction, the process of bargaining
is involved. This topic will discuss the process of collective bargaining between
the management and the workers or the trade union.
8.1 DEFINITION
Salamon (2001) defines collective bargaining as:
A method of determining the terms and conditions of employment and

regulating the employment relationship between representatives of
management and employees with the intention to reach an agreement which
may be applied to a group of workers.

88  TOPIC 8 COLLECTIVE BARGAINING
Bohlander, Snell & Sherman (2000) on the other hand define collective bargaining
as:
Negotiation process for labour agreement which includes the use of economic
pressure by both parties; the workers and the management.
The discussions on collective bargaining in this topic are based on the two
definitions mentioned.
Before we proceed with the discussions, it is best that we know two preliminary
conditions to make the bargaining process more effective, namely:
(a) The workers must have the right to form unions collectively; and
(b) The union must have bargaining strength.
8.1.1 The Right to Form a Union

As was discussed previously, the workers must have the right to form and join a
union. At the same time, union activities must be valid in the eyes of the law.
Without these rights, union activities and the process of collective bargaining will
not be able to proceed.
8.1.2 Bargaining Strength

To ensure the bargaining strength of the union, the following conditions must
exist:
(a) Recognised by the employer;
(b) Financially sound; and
(c) Have members who are united.
The recognition of the union by the employer is very important because it

signifies that the employer has accepted the union as a legal body to represent
the employees. Refer to Topics 5 and 6 to recall the process of union recognition.
Being financially strong can also play an important role in the process of
collective bargaining. If the union has a large membership, then it will definitely
have bigger revenue from the membersÊ subscriptions. Why would the union
need a lot of money? It is because when a union is confronting management

TOPIC 8 COLLECTIVE BARGAINING  89
during a negotiation session, it must be equipped with various facts to

support its requests. The acquisition of these facts requires certain research and
investigations which are costly.
Members who are united are an important aspect in collective bargaining.

Therefore, it is important for the members in the union to be united so that the
employers are aware of the strength of the union. With this, requests from the
union will not be viewed as unimportant by the employer.
ACTIVITY 8.1
If you are faced with an employer who always refuses to hear your
grouses, what steps will you take to ensure that the negotiation process
mentioned is successive and effective? Your answers can act as a guide
in studying this topic in further detail.
8.2 THE COLLECTIVE BARGAINING PROCESS

The collective bargaining process normally goes through four main stages, which
are preparation for negotiation, building a strategy, controlling a negotiation and
making the collective agreement. Figure 8.1 explains the mentioned process.
Figure 8.1: Four main stages of the collective bargaining process

8.2.1 Preparation for Negotiation

In the negotiation process, preparation is a very important aspect which can
decide the success or the failure of the collective bargaining process. This
preparation includes collecting data to support the bargaining proposals and
forming a negotiation team. Normally, the negotiators will prepare a special
book that will note down all the facts of the issues to be negotiated.
Data related to grievances, disciplinary action, transfers, promotion and overtime

can support the bargaining position of the management. These data are in the
form of written reports.
The number of members in the negotiation team depends on the practice of both
negotiating parties. Normally, each party sends between four to six representatives
to the negotiation table. The head of negotiation for the management normally is
the vice president or the manager of human relations, whereby the head of
negotiation for the union is normally the president of the union.
8.2.2 Building a Negotiation Strategy

Before both parties enter into a negotiation process, the formulation of a strategy
is very important. Imagine an army going to war. Certainly they will have to
undergo training, think of the appropriate strategies, consider the strengths and
weaknesses of the enemy and all aspects related to the enemy as well as have an
action plan. This is similar to the process of collective bargaining. For example,
the management will draw out a written plan which covers matters as shown in
Figure 8.2.

Figure 8.2: Contents of the employerÊs strategic plan in collective negotiation
8.2.3 Controlling a Negotiation

Controlling a negotiation is very important in determining the success of a
negotiation. Among the important factors which can influence the success of a
negotiation are the:
(a) Economic situation;
(b) Experience of the negotiator;
(c) Personality of the negotiator; and
(d) Objectives of the negotiation.

The factors that can influence the success of a negotiation are explained as
follows:
(a) Economic Situation

The economic situation is related to the objectives of the negotiations. This
is because in most collective bargaining, the main issue discussed is the
issue of wages. If the economic situation in the country is on the downturn,
it is without doubt that a wage demand will not be entertained and on the
other hand if the economic situation is stable, the demand may be heard.
This is because the economic situation of the organisation largely depends
on the economic situation of the country.
(b) Experience of the Negotiator

Experience can assist the negotiator to control the negotiation process. We
have heard the saying that „experience will teach us to be more adult‰. For
a negotiator who is familiar with negotiations, the experiences in which
they have gone through would make them more skilful with the tactics
involved in collective bargaining.
(c) Personality of the Negotiator
Personality can be defined as the pattern of relatively enduring ways in

which a person feels, thinks and behaves (George & Jones, 2002).
In the discussion of the personality of the negotiator in collective

bargaining, we will only discuss one model known as the Big Five
Personality Dimensions (refer to Figure 8.3). This model discusses the five
main dimensions of personality which an individual possesses.

Figure 8.3: Big Five Personality Dimensions
ACTIVITY 8.2
Based on your experience, list down five more characteristics of

personality which you feel are necessary for a negotiator to succeed in
the negotiation process.
(d) The Objectives of the Negotiation

In the process of collective bargaining, the objectives of the negotiation are
of utmost importance. The two negotiating parties must clearly be aware of
the objectives of the negotiation. Are they negotiating over the increase in
salary or to ensure that the welfare of the workers is guaranteed? Are they
negotiating over other matters? All these are among the main objectives in
the proceedings of a negotiation. Only after the objectives are clearly
specified, that they can proceed to the next step which is the building of a
negotiation strategy.

8.2.4 Collective Agreement

After the proposals of the collective bargaining have been agreed upon by both
parties, the next step is to have a collective agreement. According to the
Industrial Relations Act 1967, this is a written agreement between the employer,
or the employersÊ union, and the trade union related to the terms and conditions
of employment of the two parties. This rule also explains the relationship
between the employer and the workers for a fixed period of time. It is also a term
woven into the contract of employment of the workers. Therefore, if the
employer fails to abide by this agreement, the union has the right to voice its
objections to the Industrial Court.
In order to get confirmation of the agreement from the Industrial Courts, it must
fulfil several conditions as follows:
(a) It must name the parties in the agreement;
(b) It must specify the time frame whereby it must not be less than three years;
(c) It must include the procedure for the review and termination of the
agreement;
(d) It must specify the procedure to be used to resolve any dispute about the
implementation of the agreement; and
(e) It must not include matters which are considered as the managementÊs
special rights. Those rights according to the Industrial Relations Act 1967
[Section 13(3)] includes promotions, transfers, recruitment and dismissal/
termination of work.
On the point of language used in this collective agreement, it must use a

language which is brief and must not be vague. The language used must be
easily understood by both parties. Normally, the employer will give one copy of
the agreement to the workers for their reference.
On the point of details of the agreement, it can differ depending on the particular
agreement. Nevertheless, among the subjects normally stated in the collective
agreement are:
(a) Recognition
This section is normally stated in the initial stages of the collective
agreement. The purpose is to identify the union that is recognised as a
representative in the collective bargaining and to explain the unit or group
that they are representing, that is, the workers. An example of a text in this
section is as follows:

„ABC Company recognises XYZ union as the party who will represent the
workers in a collective bargaining related to wages, overtime and other
work conditions.‰
(b) Rights of Management

This section sometimes is not written into the collective agreement.
Nevertheless, it explains the rights of the management in collective
bargaining. If this section is written in the collective agreement, it will
normally consist of three sections, which are:
(i) The freedom to pick the objective of the companyÊs business;
(ii) The freedom to determine the use of workers; and
(iii) The power to take disciplinary actions.
(c) Security of Union

The security of the union is normally the item which is first to be discussed
in collective bargaining. The purpose for the provision of the security of the
union is to ensure the union will continue to exist and proceed with their
functions. The security of the union guarantees that the union maintain its
members. The basic form of security of the union is similar to the concept of
prevention which was discussed in Topics 5 and 6. To gain better
understanding, refer to these topics.
(d) Compensations and Rewards

This section usually covers the bigger part of the collective agreement.
Generally, any matter that can affect compensations and rewards will be
included in the agreement. Among the subjects that are always included
are:
(i) Salary rate table;
(ii) Overtime payment;
(iii) Leave; and
(iv) Welfare of the family.
(e) Grievance Procedure

This section of grievance procedure specifies the way through which the
workers can voice their grievances and appeals for action to the
management. This section will also include the procedure for disciplinary
action by the management as well as the procedure for dismissal which
needs to be followed.

(f) Security of Workers

Worker security represents the assurance to the employees from being
dismissed. This section in the agreement covers the security of every
employee. Seniority is the main topic related to employee security and it
refers to the period over which the employee has worked in the company.
This agreement on seniority is very important because the most senior
employee according to the agreement will be the last to be terminated if
there is a problem in the company. The seniority system also provides the
basis for promotion considerations.
(g) Factors Related to Employment

Other factors related to employment are also included in this agreement.
It includes important factors such as the companyÊs work rules, work
standards and rules pertaining to safety.
ACTIVITY 8.3
Look at your conditions of employment. Do they fulfil the above

characteristics?
SELF-CHECK 8.1
Explain the steps in the process of collective bargaining. You can make
illustrations in the form of diagrams to explain your answers.
8.3 CONTENTS OF COLLECTIVE BARGAINING

For the purpose of understanding the contents of collective bargaining, the
contents will be divided into three main components, which are:
(a) Substantive terms and conditions of employment;
(b) Rules of procedure; and
(c) Organisation of work.

8.3.1 Substantive Terms and Conditions of

Employment
Substantive terms and conditions of employment are related with rules
pertaining to economic factors such as salary, working hours, leave and so on.
Often in collective bargaining, substantive terms and conditions of employment
are the main issues for both parties, which are the union and the management.
Table 8.1 explains clearly the examples of the economic factors mentioned above.
Table 8.1: Explanation of Various Economic Factors in the Substantive Terms and
Conditions of Employment
Economic Factors Explanation

Salary Salary includes basic salary together with other payments such as
overtime, allowance, commission and bonus.
Working hours Working hours refers to the total hours a worker works. Normally
in Malaysia, in the public sector the total working hours per day is
eight hours. Even though certain organisations practise flexible
time, the allocated hours must not exceed nine hours per day.
Additional Additional benefits are rewards other than the salary which is paid
benefits to the employees. This includes pension, paid leave when sick and
is unable to perform duties, company car, medical facilities and also
loans such as car loan, housing loan and computer loan.
8.3.2 Rules of Procedure

Rules of procedure are related to management rules. The management will
decide the framework of the job to manage the pressure between management
and the employees, for example, the procedure to handle grievances and
objections with the union, disciplinary action and job termination. All the
procedures mentioned are included in the contents of the collective bargaining.
Further descriptions related to the rules of procedure will be discussed in the
following topics.
8.3.3 Organisation of Work

Working structure refers to the definition of work situation and the method to do
the job by the employees. Work organisation is closely related to the bargaining
at the organisational level. It is also a factor which can decide productivity, the
use of the latest technology in the organisation and also flexibility arrangements.
However, the definition of work organisation is not limited in the collective

agreement because it is also found in other systems in the organisation. For

example, it is in the procedure of operation, work description and also in job
evaluation.
The main issue in work organisation is related to control, which refers to the
question as to who will control the employees and for what purpose? The
organisation must think about whether the flexibility of the employees is for
the benefit of the employees, or to fulfil the need of the organisation. Take for
example, if an organisation practises flexible hours, is it for the benefit of the
employees or to fulfil the organisationÊs needs? The reverse situation is if the two
parties benefit from the work organisation mentioned above.
SELF-CHECK 8.2
1. List the matters which are normally found in the collective

agreement.
2. In about 50 words, explain your understanding of collective

bargaining.
3. State the aspect which usually becomes the main issue in

collective bargaining in Malaysia.
 The bargaining process involves communication skills.
 Collective bargaining is a method of determining the terms and conditions

of employment and regulating the employment relationship between
representatives of management and employees with the intention to reach an
agreement which may be applied to a group of workers.
Bargaining strength Negotiation strategy

Collective agreement Rules of procedure
Collective bargaining Working structure

Topic  Employee
9 Involvement
and
Participation
LEARNING OUTCOMES
1. Differentiate between the involvement and participation of
workers;
2. Explain the forms of worker involvement and participation; and
3. Evaluate the views of the management and union regarding
involvement and participation.
 INTRODUCTION
Have you ever participated in any activity in the workplace? Certainly, the
answer would most likely be „yes‰. Each individual certainly does not want to
isolate themselves from others. Each individual would require others to
communicate and to be together with each other in a particular activity. Have
you ever participated in making decisions for your organisation? Again, most
probably the answer would be „yes‰. In this topic, you will have a better
understanding of what is meant by worker involvement and worker
participation, particularly in the workplace. To get further details, continue
reading the following sections.

100  TOPIC 9 EMPLOYEE INVOLVEMENT AND PARTICIPATION
9.1 DEFINITION OF WORKER INVOLVEMENT

AND PARTICIPATION
SELF-CHECK 9.1
What is meant by worker involvement and worker participation? How

are these connected with your working environment?
The terms involvement and participation are generally used interchangeably to

cover all processes that influence the workers in an organisation. This includes
the process of collective bargaining. For example, McShane & Von Glinow (2002)
defines:
Worker involvement as the level where the workers share information,

knowledge, rewards and power in the organisation.
However, to understand and differentiate between the two terms, refer to the
following definitions:
Involvement is defined as the process of getting the support and commitment

of the workers regarding the objectives and values of the organisation.
Participation is defined as the process of providing the employees with the

opportunity to influence and take part in decision making in the organisation.
9.2 FORMS OF INVOLVEMENT AND

PARTICIPATION
The traditional approach for an industry-based organisation differs from the
approach of the roles of the management, that is, from the viewpoint of the roles
of planning, arranging, motivating and instructing the workers. The main issue
in the approach of worker involvement and participation is how to provide a
bridge that connects the form of interaction and the roles of the management.
See Figure 9.1 for an explanation on the types of employee involvement and
participation.

TOPIC 9 EMPLOYEE INVOLVEMENT AND PARTICIPATION  101
Figure 9.1: Types of worker involvement and participation
Salamon (2001) divided the approaches to worker involvement and participation

into four, as shown in Table 9.1.
Table 9.1: Four Approaches to Worker Involvement and Participation
Approach Description
Method and level Method can be divided into two forms, namely, direct and
indirect forms. The direct form allows the employee to
participate individually and actively in decision making in the
organisation, whereas the indirect form only allows a
representative of the employees to participate actively in
decision making in the organisation and not the involvement
of the employee as an individual. The employees play a
passive role only.
Level in the hierarchy The decision making process can occur at all levels in the
of the organisation organisation, that is, from the bottom to the top levels.
Objective or scope Objective or scope can be divided into two, that is, based on
task or based on power. Scope based on task focuses on
structure and performance for a work situation, whereas
power focuses more on the authority of the management and
decision making.
Quality of interaction This refers to the internal level of interaction between the
between workers and employees and the management.
management

McShane and Von Glinow (2002) divide worker involvement and participation
into three main forms such as shown in Table 9.2. It includes formality, legal
mandate and directness.
Table 9.2: Forms of Worker Involvement
Form Description
Formality Formal ă Participation is the practice of the organisation and the

policy that has become a code of ethics
Informal ă Undocumented activity
Legal mandate Statutory ă Activity required by law
Voluntary ă Worker participating without being legally forced
Participation Direct ă Personal worker participation in decision making
Indirect ă Worker participation via representation
The main forms of worker involvement are further explained as follows:
(a) Formal participation involves quality control groups, such as those in

factories. This requires the formal participation of all workers because the
evaluation of their performance will be measured on the basis of their
participation;
(b) Informal participation includes approaching the worker or supervisor to

ask for their opinions and ideas regarding a matter;
(c) Direct participation is the involvement of the worker individually in the

decision making of the organisation, for example, the formation of formal
groups or meetings between workers and supervisors, and the formation of
work redesign groups. All these processes are for the purpose of motivating
the workers directly and also to increase work satisfaction among the
workers; and
(d) Indirect participation is exemplified through the enlargement of the

contents of collective bargaining and the balance of power between the
management and workers in decision making.

Level of Employees Involvement

The level of employee involvement reflects the level of power regarding
decisions and also the number of decision steps where the worker gets to exercise
power. This can be divided into three levels, namely, low, medium and high,
which are as follows:
(a) Low Level Involvement

The lowest level of worker involvement is selective consultation, where the
worker is personally asked for information and opinions regarding one or
two aspects of a decision. However, the worker need not suggest any
solution and does not need to know the problem in detail.
(b) Medium Level Involvement

A medium level involvement exists when the worker is told, either
individually or in a group, about a problem in the organisation. Besides
this, the worker is also asked to give his views and suggestions regarding
the problem. However, the final decision is still in the hands of the
management.
(c) High Level Involvement

A high level involvement occurs when the worker has full powers in
decision making. He is given the freedom to identify the solutions to a
problem and hence to suggest the best solution and also control the
decisions arising from that particular solution. This involvement is
characteristic of a team-based organisation.
9.3 EMPLOYEE INVOLVEMENT AND

PARTICIPATION IN AN ORGANISATION
Employee involvement and participation in an organisation is very important.
Many writers see employee involvement in the context of communication of
the organisation only. In fact, involvement and participation obviously go
beyond mere communication. Based on Figure 9.1, worker involvement in an
organisation occurs through empowerment and teamwork.

9.3.1 Empowerment
The purpose of empowerment of employees is to get them involved individually
so that they feel a sense of belonging in their work. This will make them feel
pleased and satisfied with their work. In many organisations, empowerment
occurs as a result of the delegation of decision making to the worker through the
following methods:
(a) Job Rotation

Job rotation in an organisation is the practice of transferring the employee
from one job to another. For example, an employee working in the
production department is rotated among three main activities of machine
operation, packaging and delivery. In the job rotation method, the
employee will work in all three sections in turn, that is, beginning from
the machine-operation section to the packaging section and finally to the
section of delivery of the product to the customer. This method will reduce
work boredom for the worker. In addition, the worker will have the
opportunity to increase and vary his skills.
(b) Job Enlargement

Besides the method of job rotation, the organisation can also use the
method known as job enlargement, that is, by combining several tasks into
one main job. This combination will encourage the worker to perform
several tasks in his or her job. For example, as a cameraman, the main task
for the cameraman is to take pictures at the company event. If the
organisation intends to use the method of job enlargement, instead of
just taking photographs, the tasks of writing news items, editing and
disseminating the news can be produced by the same individual. This
method can prevent boredom at the workplace and highly motivate the
worker.
(c) Job Enrichment

Job enrichment exists when the worker is given tasks that are more than
what is listed under his job description. An example is when the worker is
allowed to plan, coordinate and create his own work schedule. This method
is used effectively if the worker becomes a responsible person and is given
full autonomy to carry out his task as he sees fit.

ACTIVITY 9.1
What can be done to make the worker at a toll booth of the North-South
Expressway participate more in the decision making of the
organisation?
9.3.2 Teamwork
Teamwork has become the practice that is frequently used in organisations due
to its effectiveness in group setting. What is meant by a team? A team is a group
of two or more employees who interact and mutually influence one another in
order to achieve the goal of the organisation. In an organisation, teamwork gives
the opportunity to the employee to influence and lead through the distribution of
tasks to team members. The distribution of tasks will form team responsibility in
two main matters:
(a) The fixing of goals, objects or aims to be achieved, quality and performance,
budget and cost control, and also coordination with other teams; and
(b) Determining the division of tasks and responsibilities among individuals,

the training and development of the worker, and also the selection of new
employees.
Teamwork can be formed through certain groups such as quality circles.
Quality Circles
In a team-based organisation, the formation of a team called a self-directed work
team is always carried out. A quality circle is included in this team. The quality
circle consists of small groups of workers who voluntarily meet regularly to
identify, analyse and solve problems connected with their work. This group is
usually a permanent group consisting of workers in the same section.
This concept is used frequently by Japanese companies. Its purpose is to give

power to the worker to improve the work process. In this quality circle, each
worker participates in the process of increasing productivity. The workers
engage in brainstorming sessions to identify methods and the causes of problems
in quality. They make use of tools such as histograms and flow charts to help
them in their work.

SELF-CHECK 9.2
1. Differentiate between the terms „involvement‰ and „participation‰.
2. Explain the forms of worker involvement and participation in an

organisation.
9.4 VIEWS OF THE MANAGEMENT AND THE

TRADE UNION
It is important for us to know the views of the management and the trade unions
with regards to employee involvement and participation in an organisation in the
context of industrial relations. This is due to the possibility of the two parties
having different views and agenda regarding employee involvement and
participation. This can have an effect on the relationship between the employer
and the employees.
The view of the management is based on unitary perception or the community of

interest. It stresses on the goals of the organisation between the employer and the
employees as follows:
(a) The plan and strategy of worker involvement and participation must be
done early according to the high interest and interdependency between the
employer and workers; and
(b) The main basis for the programme of employee involvement and
participation is to increase the profit and success of the organisation.
Therefore, it can be concluded that the view of the management is to improve the
harmony, efficiency and productivity of the organisation.
The union too has its own view that the organisation is pluralistic and it requires
formal rules involving both parties. For the union, participation will mean the
increased influence of the worker in the organisationÊs decision making,
especially in the system of employee representation for collective bargaining.
ACTIVITY 9.2
State the forms of work groups in an organisation other than quality

circles. List three of them.

 You have learnt about worker involvement and participation.
 Worker involvement is defined as the level where the worker share

information, knowledge, rewards and power in the organisation.
 Salamon (2001) divided the approaches to worker involvement and

participation into four ă method and level; level in the hierarchy of the
organisation; objective or scope; and quality of interaction between worker
and management.
 Three main forms of worker involvement include formality, legal mandate

and participation.
 Worker involvement in an organisation occurs through empowerment and

teamwork.
 It is hoped that you can make the connection between the importance
of communication, collective bargaining and worker involvement and
participation.
 All the above aspects are considered as important in industrial relations. To

truly understand these processes, include more detailed reading.
Employee involvement Quality circles

Employee participation Teamwork
Empowerment

Topic  Industrial
10 Actions
LEARNING OUTCOMES
1. Explain trade disputes;
2. Discuss industrial actions;
3. Describe forms of industrial action; and
4. Review the functions of an industrial action.
 INTRODUCTION
Problems or arguments are an inevitable part of daily life. For example in a
household, misunderstandings and conflicts, regardless of whether they are
big or small, will occur between husband and wife. The same is true for an
organisation involving the employer and the employees. Sometimes, disputes
happen because of matters that are unpleasant for one or both parties involved.
This topic will discuss the solution of disputes through industrial action.
Industrial action is usually the last resort of the parties involved in the dispute.
10.1 TRADE DISPUTE

Before you can understand industrial action, it is better for you to know the
matters that would cause an industrial action. An industrial action begins with
the occurrence of a trade dispute.

TOPIC 10 INDUSTRIAL ACTIONS  109
The Industrial Relations Act 1967 defines a trade dispute as any dispute
between the employer and his workmen which is connected with the
employment or non-employment or the terms of employment or the
conditions of work of any such workmen.
From here, it is clear to us that any dispute between an employer and the
employees is a trade dispute and can result in industrial action. According to
Maimunah Aminuddin (1999) disputes occur because of several matters, for
example:
(a) Differences in opinion between employer and employees regarding the

terms and conditions of service of the employees;
(b) Differences in opinion between employer and employees regarding the

interpretation of the decision of the industrial court or collective agreement;
and
(c) In the event that the employer or employee did not carry out the provision
contained in the collective agreement.
Complaints from the employee are known as grievances. To understand this

dispute, please read the scenario below which illustrates an example of a trade
dispute occurring between an employer and the workers.
Scenario:
On 15 February 1990, an employee known as Rama made a complaint to the

Department of Labour and as a result of the action on 6 April 1990, the
employer Ladang Abagoo dismissed him. Following that, a strike lasting
24 days occurred, but the strike did not get Rama reinstated back into his job.
This caused the workers at Ladang Abagoo to become afraid to make any
open complaint with the Department of Labour. The issue raised by Rama and
the estate workers was regarding the supply of clean water which was
supposed to be given free to the estate workers. At that time, they were forced
to drink water from the river and rainwater. At the end of the year, the
employer supplied piped water to the estate workers.

110  TOPIC 10 INDUSTRIAL ACTIONS
However, their joy did not last long as the employer threatened to cut their
wages in order to pay for the water. Finally the employees of Ladang Abagoo
summoned up enough courage to lodge a complaint to the Department of
Labour. In the complaint, the representatives of the union consisting of six
workers requested the Department of Labour to take immediate action with
regard to their complaint. For reference, the following is an extract from the
letter of complaint from the Ladang Abagoo Action Committee in the trade
dispute.
Labour complaint against employer Bin Giat Hin Realty Sdn. Bhd. for
violating:
Ć The WorkersÊ Minimum Standards of Housing and Amenities Act 1990

Section 6(1a); and
Ć The Employment Act, 1955 Section 24(2).
With due respect, we refer to the above matter. We, the employees of Ladang
Abagoo, Beranang wish to make a complaint against Bin Giat Hin Realty Sdn.
Bhd., that is, our employer with regard to the following matters:
(a) The WorkersÊ Minimum Standards of Housing and Amenities Act 1990
Section 6(1a)
We, the residents of Ladang Abagoo only enjoyed sufficient clean water
since April 2002, that is, when the Department of Labour took our
employer to court because of the failure of our employer to supply
sufficient clean water to us for more than 10 years. The intervention by
the Department of Labour resulted in every house in our estate being
fitted with a water meter by the Water Supply Department JBA. The
employer then deducted RM25 from our wages for three months
successively as payment for the fitting of the water meters.
However, on 23 July 2002, the employer ordered us to pay for the water
used for the three months without giving us any bill. We were shocked
by the total payment that we need to pay. When we requested for the
water bill, only a piece of paper was given. We are very dissatisfied with
the action of the employer who asked us to pay, when in actual fact it is
the employer who should supply sufficient clean water to us free of
charge as stated in the Workers Minimum Standards of Housing and
Amenities Act 1990 ă No. 6(1a).

Furthermore, our employer has violated the same act on several other
issues. These issues have been brought to the attention of the Ministry of
Human Resources. Among the issues that were not resolved include
failure to repair the workersÊ houses whose planks are rotting, no toilet
facilities in most houses and the main road of the estate that is still not
repaired.
(b) The Employment Act, 1955 Section 24(2)

The employer also stated that the total payment for the water will be
deducted directly from our wages at the end of the month and the
employer also informed us that failure to pay will result in the water
supply being cut. The following is a list of names of some of the workers
and the total water bill that will be forcibly deducted from their wages
for this month:
(i) Pn. Tina : RM300
(ii) Pn. Tani : RM79
(iii) Pn. Tuna : RM273
(iiv) Others...
We strongly disagree with the action of the employer for wanting to deduct
the payment for the water bill from our wages because this is against the
Employment Act, 1955 Section 24(2). We, the residents of Ladang Abagoo
have met on 28 July 2002 and made the decision to submit this labour report
containing a list of our demands, which are as follows:
 We want the employer to give us the original bills from JBA just like the
electric bills that we are receiving from TNB all along;
 We request the employer to bear part/full cost of the workersÊ water bill;
and
 Other than that, we disagree with the employer for making deductions for
the water bill from our wages that do not reach RM300 per month. We can
make our own payment to JBA if we are given the original bill for a
reasonable total payment.
Therefore, we hope that the Department of Labour can intervene immediately

so that we are never cheated and forced against our will again.

10.2 INDUSTRIAL ACTIONS

After the occurrence of a trade dispute as discussed previously, the estate
workers were determined to take industrial action against their employer. What
is an industrial action? According to Salamon (2001),
Industrial actions include any temporary suspension of normal work that is

carried out by the employees (whether through the union or not) or by the
management with the goal of putting pressure in the collective bargaining
process.
Based on this definition, there are several important elements that make up an
industrial action:
(a) „Temporary suspension‰, for example in the form of pickets and strikes;
(b) Carried out by employees, for example, boycott;
(c) Action taken by „management‰, for example, not allowing the workers to
work; and
(d) With „putting pressure„ as the goal, any party will feel pressured and will
fulfil the request.
From the above definition, industrial action can be taken by the employees or the
employer.
10.2.1 Industrial Actions by Employees

According to Maimunah Aminuddin (1999), there are two forms of industrial
actions that are allowed by law, namely, strikes and pickets. Other forms of
industrial actions can also be taken but normally they are used as the last resort
in resolving the problem of the trade dispute.
(a) Picket
Picketing is an action that is most commonly used by employees to
demonstrate their dissatisfaction (refer to Figure 10.1). The Industrial
Relations Act 1967 (Section 40) allows the workers to picket when they
have a trade dispute issue with the purpose of informing the public and
other employees in their effort to persuade the management to fulfil the
employeesÊ demands. In order to ensure that the picketing is not against the
law, several conditions must be met:
(i) A trade dispute has occurred between the employees and the
employer;
(ii) Picketing is carried out near or at the workplace but it is not allowed
to block the entrance and exit to the workplace; and
(iii) It is done in a peaceful and orderly manner.
The employees who are picketing according to the conditions explained

above do not require the permission of the police to do so. During the
picket, the employees normally assemble in front of the work premises
carrying banners and posters to be displayed for the public to see. The
picket is also for the purpose of getting sympathy from the public, in
particular, the media and other employees. When the media is aware
of the picket, news about the dispute between the employees and the
management will be disseminated to the public. Through this, the public
get to know about the problems faced by the organisation.
Figure 10.1: Dissatisfaction that causes picketing
(b) Strike
A strike is an action of the union members who refuse to work for the
purpose of putting pressure on the management (Mondy & Noe, 1996).
There are four types of strikes that can be carried out by workers, as shown
in Table 10.1.

Table 10.1: Four Types of Strikes
Type of Strike Description

Economic strike This occurs when the involved parties fail to reach an
agreement during collective bargaining.
Unfair labour This strike happens when union members act by leaving
practice strike their jobs because they feel that the employer has taken an
unlawful action such as denying the rights of the workers to
negotiate with the employer.
Wildcat strike This occurs while the collective bargaining of the terms of
agreement is still going on. If this occurs, the employees who
strike can be dismissed or have disciplinary action taken
against them.
Sympathetic strike This is the expression of sympathy and support by one trade
union for another trade union that is having a trade dispute
with the management.
ACTIVITY 10.1
Based on the case of the industrial dispute between the workers of

Ladang Abagoo and the management, in your opinion, what type of
strike is carried out by the estate workers? Explain your answer.
When the decision to strike has been made by the employees, they need to
make detailed planning. Please refer to Table 10.2 for guidelines when
planning a strike.
Table 10.2: Guidelines for Planning a Strike
Ensure the safety of the premises where picketing will be carried out;
Inform all parties involved, for example, the customers of the company;
Take pictures/recording before, during and after the strike. This is for the
purpose of monitoring any misconduct from all parties (workers, employer
and media) during the strike; and
Collect evidence such as the number of picketing employees and their
names, time and date of the strike, the words on the posters and banners
and other important information.

(i) Procedure for Carrying Out a Strike

Before a strike is carried out, the union should follow the proper
procedures for carrying a strike. However, unlike the registration and
recognition of a trade union, the laws of industrial relations do not
state clearly what procedures should be followed to ensure the
validity of a strike. However, the requirements and prohibitions of a
strike can be taken from the Trade Unions Act 1959 and the Industrial
Relations Act 1967.
A strike is considered valid if it follows the requirements of both these

acts. The right to strike is only given to members who register as a
trade union member. It must be carried out only when a trade dispute
occurs. In Malaysia, sympathetic strikes are prohibited.
Section 40 of Trade Unions Act 1959 has the following provisions:
 Before a strike is carried out, a secret ballot must be taken by the

union members by stating clearly the issues that led to the
proposed strike;
 The result of the secret ballot must be delivered to the Director

General of the Trade Union by the union secretary within 14 days
of the taking of the secret ballot; and
 The strike can only be carried out if two thirds of the qualified
members vote to go ahead with the action and after waiting seven
days after the result of the ballot has been delivered to the Director
General of the Trade Union. The period of seven days is for the
purpose of giving time for the Director General of the Trade
Union to check the validity of the ballot and also to give time for
the union to reconsider the proposal to strike or to change their
minds. This period also allows the Minister of Human Resources
to intervene and refer the dispute to the Industrial Court or a
mediator. This section will be discussed later on in this module.
The secret ballot is only valid for a period of 90 days. If the union
does not carry out the strike within this period, a new ballot is
needed if the union still intends to go ahead with the strike.
Unlike an ordinary strike, a wildcat strike as explained earlier is a
strike that is carried out while the bargaining process is still going
on. The workers decide to strike, and would immediately carry
out the strike. This kind of strike is normally not supported by the
trade union and is strongly discouraged. In Malaysia, wildcat
strikes are invalid and unlawful.

(ii) Penalty for an Illegal Strike

If a trade union carries out an illegal strike, the executives of the union
can be fined or jailed or both. Union members who participate in the
strike will have their membership cancelled from the trade union and
they are not qualified to rejoin the union or any other union without
the permission from the director general of the trade union.
Workers who are involved in an illegal strike also have to face the risk
of being detained under the Internal Security Act (ISA) that allows
detention without trial for a fixed period of time. Besides this, there
are other situations where strikes are not allowed, and they are:
 When a collective agreement has been taken cognisance by the

industrial court;
 According to the prerogative of the management, there are certain

matters that are not allowed to be included in the proposals of the
collective bargaining;
 Before and after the discussion of the Investigating Body

appointed by the Minister;
 After the trade dispute has been referred to the industrial court for
arbitration;
 The recognition of the dispute that has been settled by the

minister; and
 When the Yang di-Pertuan Agong does not permit the trade
dispute in the public sector to be referred to the industrial court.
(c) Other Alternatives

Other than pickets and strikes, the employees can also take industrial action
against the employer using the methods listed in Table 10.3.

Table 10.3: List of Alternative Industrial Actions
Alternative Industrial
Explanation
Action
Boycott This is an action by the workers or other parties such as the
customers of the company who refuse to buy or use the products
of the employer.
Work to rule The employees will interpret the tasks that need to be done
exactly as they were written in the contract of employment,
collective agreement, job description and other rules.
Refuse to work on This is the action taken where the workers refuse to work outside
normal hours. This can disrupt the productivity rate of the
organisation.
Slow down of work The employees work without enthusiasm and exhibit low
performance and productivity.
Work-in/sit-in The employees continue to work as usual but deny the right of
the management to control them.
SELF-CHECK 10.1
List six situations where strikes are not allowed.
10.2.2 Industrial Actions by Employer

In most cases, we find that industrial action is taken by employees against their
employers. However, the employer can also take industrial action against the
workers. This industrial action is known as a lock-out during a strike. During a
lock-out, the management closes the companyÊs operations to prevent the union
members from working. The action is taken for the purpose of preventing the
possibility of damage or sabotage to the companyÊs facilities and equipment.
Another purpose is to prevent injury to other employees who are still working in
the company.

After the lock-out action has been taken by the employer, the employees cannot
work and as a result will not be paid for the period of not working. Even though
this action is seldom taken by the employer, the fear of the possibility that
the employer will take the lock-out action will normally bring both parties to the
negotiation table. A lock-out is very effective if the employer faces a weak trade
union, a trade union with deteriorating financial status and also when the
company has a large inventory.
One more step that can be taken by the management if the workers keep striking
is to replace the striking workers with employees that are not on strike. With this
method, the operation of the company will not be disrupted. If the company
cannot find non-union workers, the employer can borrow or lease other workers
on a temporary or permanent basis to run the companyÊs operation.
SELF-CHECK 10.2
Take any newspaper in Malaysia and search for news regarding
industrial action. Identify the workers involved, the issues in the trade
dispute, the type of industrial action taken and what the solution is. Fill
in the details in the space provided.
Trade dispute and industrial action:

Name of newspaper/date:
Title of news:
Sector:
Type of workers:
Issues disputed:
Type of industrial action:
Solution:

10.3 FUNCTIONS OF INDUSTRIAL ACTION

The conflict that occurs between workers and employer in the social structure
such as industrial relations can be viewed from three perspectives:
(a) The expression of the idea of conflict represents a direct challenge to the
internal direction and stability of a social system;
(b) Conflicts are necessary for the development of new social directions; and
(c) The expression of open conflict is an important element in establishing

stability in a social system.
The expression of conflict and how to manage conflict in the appropriate manner
is seen as a challenge that has to be faced by the management in particular.
 Industrial action is an action taken by workers or a trade union, usually if the

union is strong in terms of union members and financial strength.
Ć Industrial action can also be taken by an employer.
Ć Industrial action is usually the last resort to resolve the conflict between the
two parties.
Industrial actions Strike

Picket Trade dispute

Topic  Methods of
11 Resolving
Disputes and
Grievances
LEARNING OUTCOMES
1. Define the term trade dispute and state the reasons for the
occurrence of a trade dispute;
2. Describe conciliation and arbitration in resolving disputes;
3. Appraise briefly how negotiation and mediation are used in
resolving disputes;
4. Differentiate between the terms grievance and dispute;
5. Examine reasons for the occurrence of grievances and disputes;
6. Evaluate the grievance and dispute process; and
7. Explain the method of handling grievances and disputes.
 INTRODUCTION
The Industrial Relations Act 1967 defines a trade dispute as a dispute between
an employer and the employees. Disputes usually involve matters relating to
the recruitment of workers or the terms and conditions in the contract of
employment for a worker or a group of workers.

TOPIC 11 METHODS OF RESOLVING DISPUTES AND GRIEVANCES  121
A trade dispute is also referred to as an industrial dispute. A dispute can occur

when:
(a) The union representing a worker who has a grievance against the employer
and the grievance has undergone the grievance process but the union and
the employee are still not satisfied with the decision given;
(b) A difference in opinion occurs between the union and the worker regarding
the terms and conditions of employment that is rightly accepted by the
worker;
(c) A difference in the interpretation of the terms in the collective agreement or

the award that had been decided by the industrial court; and
(d) Any of the parties fails to carry out the promise that was agreed upon or the
award that had been decided by the industrial court.
Trade disputes can normally be resolved through negotiation methods where the
disputing parties can meet directly, discuss, propose alternative solutions and
resolve the problem that they are facing.
In the event that the disputing parties fail to resolve the problem through direct
negotiation, the assistance of a third party is required. The method of resolving
disputes by using a third party can be divided into three forms:
(a) Conciliation or peace-making where the third party appointed takes action
as a middleman to assist the disputing parties to reach a collective
agreement;
(b) Arbitration that requires the assistance of a third party but the third party
has the power or authority to decide the judgement on the dispute; and
(c) Mediation, that is, the used of a third party such as in conciliation but not in
the presence of an officer of the Industrial Relations Department.
In the context of the relations between the employer and employees, it cannot be
denied that conflicts can occur due to the dissatisfaction regarding the terms and
conditions of employment, the work environment and also the decisions made
by the management.

122  TOPIC 11 METHODS OF RESOLVING DISPUTES AND GRIEVANCES
Conflicts between the employer and employees will always occur because the
two parties have differences in what they consider to be important, especially
concerning salaries and wages. The employer hopes to maximise profit and has
the right to control and limit cost to the lowest figure. On the other hand, the
workers would consider it important to raise their standard of living to a better
and more comfortable one. The employees want higher wages, better working
facilities in addition to a more comfortable working environment.
Apart from economic factors, other things can also cause conflict. For example,
unfair disciplinary action including situations that renders the employees as
„victims‰ of the decisions and actions of the employer.
Therefore, a mechanism needs to be created for the employee to use in order to

channel and resolve matters related to their dissatisfaction. With this, the
employer needs to ensure that the organisation has clear procedures on the
management of the grievance and dispute process of the workers.
11.1 METHODS OF RESOLVING DISPUTES

Resolving disputes in the workplace can be pretty tough to handle, but it is still
important to know how. Let us have a look at the following methods of resolving
disputes.
11.1.1 Negotiation
Negotiation is considered the most ideal and effective method for resolving
disputes between disputing parties. Through negotiation, the parties involved in
the dispute can face each other directly concerning the problem and make an
effort to find the best solution to the problem. The disputing parties will have to
compromise in order to get the most agreeable solution to both parties. Refer to
Figure 11.1 for an example.

Figure 11.1: Negotiation is an effective way for resolving disputes

Source: http://www.nicholsoncartoons.com.au/cartoons/new/2005-05-
27%20Industrial%20harmony%20226.jpg
Negotiation, as defined by Salamon (2001) is the interpersonal process used

by representatives of management and employees, within the various contexts
in industrial relations, in order to resolve differences and reach agreement.
Thus, based on this definition, the main features of a negotiation can be stated as
follows:
(a) A process that is open and clear for the purpose of achieving a certain goal;
(b) A process carried out by the representatives of the principals;
(c) A process that has the objective of resolving differences in opinions,

requirements and interests between the parties involved; and
(d) The result and solution obtained depend on the relative relationship of
power between the parties involved.
If we assess the provisos of the Industrial Relations Act 1967, we can say that
the Act strongly encourages the dispute to be resolved voluntarily through
negotiation. For example, the Act does not allow the Director of the Industrial
Relations Department to intervene in any dispute by deciding on a solution
through compulsory conciliation until it is certain that the negotiation process
have failed.

11.1.2 Conciliation
Conciliation is the use of a third party (conciliator). It is another method for
resolving industrial disputes besides negotiation. The conciliator is used if the
disputing parties cannot resolve the dispute through negotiation and require the
intervention of a third party to settle the problem.
In the case of a trade dispute, conciliation can be initiated through the request of
any of the parties involved.
If conciliation is by the directive of the Director of the Industrial Relations

Department, it is known as compulsory conciliation. Compulsory conciliation is
usually used to resolve trade disputes that involve matters of public interest.
However, the intervention of the Director will only take place after the Director is
sure that the efforts made by the disputing parties to resolve the dispute have
reached a deadlock or have failed.
The following are further details about conciliation:
(a) Definition
Conciliation is defined as the strategy that involves a third party to

support or assist in the negotiation process between the disputing parties.
For a negotiation process that has reached a deadlock, the assistance or

support of a third party is urgently required to break the deadlock.
The support of the third party is in the form of assistance to the disputing
parties to identify the cause and level of differences existing between the
disputing parties. Besides that, the third party is also required to assist the
disputing party to find alternative solutions and to discuss the effects of
carrying out each alternative as well to form a collective solution.
(b) The Roles of the Conciliator

The role of a conciliator is to identify the important issues in a dispute and
to facilitate the communication process between the disputing parties. The
conciliator also plays the role of catalysing the discussion and encouraging
the collective resolving of the problem.
The goal of conciliation is so that the parties involved in the dispute get to
identify the issues involved. By having a facilitator, the disputing parties
may get to reassess the problem that they are facing from different
perspectives. Besides this, conciliation also tries to minimise or close up the
gap between the disputing parties that may be caused by differences in

opinion, understanding, interest and values. The conciliator plays this role
by assisting the disputing parties to communicate more effectively. With
this, the parties involved can find similarities that may exist between them
and hence to ensure resolving the problem to become a lot easier.
The conciliator also helps the disputing parties to form a solution that is
agreeable to both parties. Thus, the required result in the conciliation
process is that the disputing parties get to resolve the dispute by
reassessing the problem, proposing alternative solutions and hence forming
a collective agreement.
The conciliation process normally carried out by an industrial relations

officer, in general, is as follows:
(i) The officer who is given the responsibility over the case will meet
with the disputing parties together or separately. The purpose of the
meeting is to obtain information and facts regarding the dispute;
(ii) After being told of the problem faced, the officer responsible will
assist the disputing parties to reach an agreement to resolve the
problem; and
(iii) The officer will act as a middleman, a facilitator, a guide and a
catalyst to the resolving of the dispute.
Even so, in the conciliation process, the officer responsible does not have
the power to force the disputing parties to accept any proposed solution.
What is meant here is that the officer can only assist and support the
disputing parties, and does not have the power to decide on the solution to
the dispute. The disputing parties still have the power to determine the
form of the solution that they desire. The summary for the conciliation
process is shown in Figure 11.2.
Figure 11.2: Conciliation process

On average, about 70 to 80 per cent of the cases of industrial disputes are

resolved using the conciliation method. This makes the conciliation method
the most important in resolving industrial disputes in Malaysia (Maimunah
Aminuddin, 1999).
SELF-CHECK 11.1
1. What is the definition of the conciliation process?
2. State the forms of conciliation.
3. What are the roles played by a conciliator?
11.1.3 Arbitration
When the disputing parties fail to find a solution to the problem that they are
facing even after getting assistance from the Department of Industrial Relations,
that is, through the conciliation process, then arbitration will be used to resolve
the dispute.
In arbitration, a third party will be used and this party has the authority to decide
on the solution to the dispute. The third party appointed is a free or neutral
entity, that is, it is not biased towards any of the disputing parties.
The third party appointed, or the arbitrator, will give a judgement based on the
information given by the disputing parties. In Malaysia, only the industrial court
has the power of arbitration in resolving cases of industrial disputes. The
arbitration process is shown in Figure 11.3.
Figure 11.3: Arbitration process

(a) Definition of Arbitration
Arbitration can be defined as a strategy that is used to replace direct

negotiations between disputing parties by a process that involves the
decision of a third party in determining the position of the disputing
parties (Salamon, 2001).
The third party, or the arbitrator, is given the power to determine the form
of the solution or award for the disputed issue. Thus, the award decided in
the arbitration process must be accepted by the disputing parties. In other
words, it is compulsory for the disputing parties to accept the decision
made by the arbitrator. In this method, the disputing parties lose their
power to resolve the problem that they face.
(b) Role of the Industrial Court as Arbitrator

The industrial court plays the role of the arbitrator in the following
situations:
(i) A worker has a grievance and is represented by the union; or
(ii) The union, representing the employees in a company who are in a

dispute with the employer regarding the terms and conditions of
employment.
For a dispute that involves the matters stated above, if the dispute is not
resolved by other methods, that is, negotiation and conciliation, the
Minister of Human Resources will refer the case to the industrial court. The
Minister can also refer the cases of a workerÊs grievance represented by the
union or the union disputing with the employer over the terms and
conditions of employment to the Industrial court after receiving written
requests from both parties involved in the dispute. In a case that involves
public interest, permission from the Yang di-Pertuan Agong is required
before the Minister can refer the case to the industrial court.
For a case that is brought to the industrial court, an award, i.e. a decision
will made by the Court President. The parties involved in collective
bargaining needs to understand the award of the court clearly because the
court is very consistent with the decisions that it makes.

SELF-CHECK 11.2
1. Explain what is meant by arbitration process.
2. Who possesses the power of arbitration?
3. State the situations in which the industrial court will act as the
arbitrator.
11.1.4 Mediation
Mediation is a method of resolving disputes that is seldom used compared to the
above two methods. As in conciliation, mediation also uses a third party to assist
the disputing parties to reach a solution to the issues disputed. This differs from
a conciliator who is appointed from the Department of Industrial Relations in
that a mediator is appointed from a non-government party. Like a conciliator, a
mediator also does not have or is not given the power to direct or force the
disputing parties to accept their proposal.
The party appointed as mediator must be accepted by both disputing parties. The
mediator must be fair, that is unbiased, and is respected and trusted by both
parties. These characteristics have to be present in the mediator in order to
ensure an effective mediation process exists.
SELF-CHECK 11.3
1. How may a dispute involving workers and employer occur?
2. Describe the use of conciliation to resolve a dispute.
3. Compare the use of conciliation and arbitration to resolve a

dispute between an employer and workers.
4. How does the industrial court play the role of an arbitrator?
5. Explain the use of negotiation in resolving the problem of

disputing parties.

11.2 GRIEVANCES AND DISPUTES

Let us look at the following subtopics that discuss the definition, processes and
the method of handling grievances and disputes.
11.2.1 Definition
Complaints that were made by a worker are referred to as grievances. Grievances
that were represented by a trade union on behalf of the individual worker are
known as trade disputes.
It can be said that a large number of companies involved with trade unions have
their own grievance procedure. The company concerned may also include the
grievance procedure as a condition in the collective agreement with the trade
union.
ACTIVITY 11.1
Have you ever made a complaint in your work environment? Why did
you make the complaint?
As we have studied earlier, the Industrial Relations Act defines a trade dispute
as a dispute between employer and worker. The dispute usually involves
matters connected with worker recruitment or the terms and conditions of the
employment contract for a worker or a group of workers.
In recapitulating, a trade dispute is also referred to as an industrial dispute. A

dispute can occur when:
(a) The union representing a worker who has a grievance against the employer
and the grievance has undergone the grievance process but the union and
the worker are still not satisfied with the decision given;
(b) A difference in opinion occurs between the union and the worker regarding
the terms and conditions of employment that is rightly accepted by the
employee; and
(c) A difference in the interpretation of the terms in the collective agreement or

the award that has been decided by the industrial court.

From the previous discussion, it can be said that grievances and disputes
arise from the dissatisfaction of the employees concerning the decision of the
management, the terms and conditions of employment and the working
environment. An example is when the employees are not satisfied with the
employment facilities package offered by the company because there is no provision
for free medical treatment at the panel clinics. Thus, matters regarding medical
facilities in the panel clinics become grievances to the employees in the organisation.
Table 11.1 lists the causes that brought about trade disputes in Malaysia together
with the statistics compiled on the number of cases involved for each cause.
According to Table 11.1, the most cases of disputes are regarding the terms and
conditions in the collective agreement or other contracts. For the year 1993, 219
cases were reported. The year 1994 saw an increase to 254 cases and in 1995, cases
concerning disputes about terms and conditions dropped to 223 cases. Other
than disputes about terms and conditions in the collective agreement and
contracts, the second most important cause is the failure of the negotiating
parties to reach an accord in collective bargaining. The total number of such cases
recorded is 108 cases, 131 cases and 112 cases respectively in 1993, 1995 and 1997.
Table 11.1: Causes of Industrial Disputes in 1993, 1995 and 1997
Year
Cause of Dispute
1993 1995 1997
1. Refusal to participate in collective bargaining 44 25 12
2. Failure of negotiating parties to reach an accord in 108 131 112
collective bargaining
3. Dispute concerning terms and conditions of service in 219 254 223
collective agreement and other service contracts
4. Promotions, allocation of tasks, dismissals, transfers and 33 18 21
other management prerogatives
5. Demotions, suspensions, warning letters and other 48 16 17
disciplinary actions
6. Not keeping with labour standards and legal provisos 10 10 7
concerning amenities and facilities as well as non-
financial benefits
7. Violating rights of workers/Unfair labour practices 29 9 3
8. Others 34 48 68
Total 525 511 463
Source: Department of Industrial Relations

Forms of Worker Dissatisfaction

The definition stated earlier is the simplest general definition regarding the terms
of grievance and dispute. This is because it is difficult for us to get the most
accurate definition of these two terms. Other than the variety of issues involved
in defining grievance and dispute, we also need to assess the importance of the
issue with regard to the employees and management as well as how the issue is
presented or stated.
There are three factors that need to be considered or clarified before we can
define grievance and dispute. These three factors are:
(a) The issue that needs to be resolved whether it is a matter concerning a right
or a matter concerning an interest. A matter concerning a right is about the
interpretation and use of available rules and conditions. A matter
concerning an interest is regarding the difference in the determination of
the new terms and conditions of employment;
(b) The level of dissatisfaction involved in an issue whether it involves an

individual worker, a group of workers or all the workers in an organisation;
and
(c) The ways in which the dissatisfaction is stated or shown. The employees
may state their dissatisfaction informally by voicing their dissatisfaction to
the supervisor only. Other than that, the workers also have the choice of
stating their dissatisfaction through a formal channel, that is, by
channelling their dissatisfaction through an available grievance procedure
and then through the demand of a trade union according to the provisos in
a recognised process of negotiation.
SELF-CHECK 11.4
1. What do the following terms mean?
(a) Grievance
(b) Dispute
2. State how a grievance may occur.
3. State the matters that have to be considered before defining

grievance and dispute.

ACTIVITY 11.2
Look at the grievances that were voiced by the workers in your

organisation. Were they concerned with their rights or interests? How
did the employer deal with them? In your opinion, would the employer
respond differently if the grievances were channelled through a trade
union?
11.2.2 Grievances and Disputes Processes

The purpose of a grievance and dispute procedure is to form an objective and to
prepare a guide for the management in handling grievances and disputes
brought forward by the employees. In order to implement the grievance and
dispute procedure effectively, the management needs to inform the employees
regarding the procedure and to ensure that they understand the steps involved in
the procedure.
The discussion of the grievance and dispute process will not be complete if we do
not attempt to understand the relationship between the process and collective
bargaining. Salamon (2001) stressed that the grievance and dispute process
complements the collective bargaining process. This is because the grievances
and disputes process gives space to the employees and also the management to
formulate collective rules to handle various problems in the work situation. In
most collective agreements, words like „is considered reasonable‰ and „may‰ are
frequently been used. Thus, in any situation, an accurate explanation has to be
made regarding certain conditions and terms in the collective agreement. With
this, we can say that the grievance and dispute process is for determining the
rules and interpretation as well as the adoption of the rules.
The grievance and dispute process usually involves financial issues such as
wages and salaries as well as annual bonus payments. Apart from financial
issues, grievances and disputes also involve work-related issues such
promotions, transfer of workers and condition of the workplace. We should
remember that issues that become grievances or disputes may be restricted to
apparent issues and may be symptoms of a problem. Thus, in order to handle an
issue effectively, we need to identify the fundamental or basis of the issue. There
are four aspects that can be discussed in our effort to identify the fundamental or
basic issue of a problem. These are:

(a) Work Satisfaction

In work, the worker tries to find satisfaction whether intrinsic or extrinsic.
Intrinsic satisfaction refers to the satisfaction derived from doing

the work itself such as the challenge of doing the work, the creativity
and effort needed to perform a task as well as the responsibility in
performing a task. Extrinsic satisfaction refers to the rewards in
financial forms such as salary, wages and other incentives, a
comfortable working environment as well as a high level of supervision.
When employees are dissatisfied with their work, the main cause might
not be a low salary but by a more fundamental problem such as the
implementation of an ineffective performance evaluation system. Thus, the
determination of the fundamental problem is of vital importance so that the
management can take action that can really resolve the grievances of the
employees.
(b) Socio-technical System

A problem relating to the factors of structure such as the relationship
between the employees and the management as well as the factors of
instruction and control can also become a fundamental problem in a
grievances and disputes issue. The employees can use the grievances and
disputes process to enable them to have the opportunity of influencing the
decision of the management in determining their daily work situation. In
other words, the grievances and disputes process allows the employees to
influence the decisions regarding work schedule, work approach and
technique as well as their daily activities in the workplace.
(c) Change and Adaptation

The instability and uncertainty caused by frequent changes at work can
have a negative effect on the employees. Thus, through the grievance and
dispute process, the employees can challenge the decisions made by the
management. In addition, they can also ensure that the management
promises to consider their anxieties and aspirations while allowing them to
influence the changes that are carried out by the management.
(d) Power and Authority

Formal grievances and disputes can challenge a unilateral decision made by
the management and also the contents of the decision. By the grievances
and disputes process, the management and employees have the opportunity
to reach a collective agreement amongst them.

In the grievances and disputes process, apart from identifying the fundamental
problem that caused the grievances and disputes, we also need to understand
how worker dissatisfaction changes into action. The change from hidden to
obvious form is influenced by the perception factor of the employees regarding
the effectiveness of the formal process laid down by the organisation. Apart from
that, how far the employees accept the process as valid can also influence the
form of action taken by them. What it means is that if they are confident that the
grievances and disputes process of the organisation is valid and effective in
resolving their grievances, then they will channel their grievances through the
formal process of the organisation. However, if the employees are not confident
that the formal process can help them resolve their grievances, they may take
another course of action such as reducing the level of productivity at the
workplace.
The solution phase in the grievance and dispute process requires the dialogue
between the employees and the management. In this phase, the decision made
by the management will be influenced by the perception and observation of
the management regarding worker dissatisfaction. Apart from that, the
managementÊs decision also depends on how the management assesses the
implications or the effects of a particular form of solution to the organisationÊs
strategy and objective. Suppose that the solution is taken only to satisfy the
workers and bring about a collective agreement but it prevents the implementation
of the organisationÊs strategy and achievement of the objective, then the solution
may not be taken.
In brief, the grievances and disputes process involves three main phases such as
shown in Table 11.2.
Table 11.2: Phases in the Grievance and Dispute Process
Phase Description
Beginning Identify the issue that is fundamental to the problem that is brought up as a
grievance by the employees.
Middle Understand the process of transformation of employeesÊ dissatisfaction from a
hidden to an obvious form, that is, the action taken by them to resolve the
grievance.
End The ensuing grievances and disputes process involves the solution phase that
has the purpose of reaching a collective agreement between the management
and the employees.

SELF-CHECK 11.5
1. What is the purpose of having a grievance and dispute procedure?
2. State four aspects that can be used to identify the fundamental

issue of a problem.
3. State the three main phases involved in the grievance and dispute
11.2.3 Method of Handling Grievances and Disputes

As was mentioned earlier, the term grievance refers to the complaint made by a
worker. A complaint brought up by a worker must be reasonable and considered
valid in order for the grievance procedure to be carried out effectively. To resolve
the workerÊs grievance, most organisations use their own grievance procedure.
The grievance process usually begins when an employee voices his

dissatisfaction concerning the terms and conditions of employment, the decision
of the management or the working environment to his supervisor. If the
supervisor fails to resolve the grievance effectively or the employee is still
dissatisfied with the action taken by the supervisor, the grievance is then brought
up to a higher level.
This matter continues until the grievance is resolved or taken over by the trade
union as a dispute. In the grievance procedure, a fixed period of time is given for
each level.
Example:
When a grievance is brought up to the supervisor, the supervisor is given a
period of only one week to resolve the problem. If the employee is still not
satisfied and the period is over, the grievance is then brought up to the manager
of the department. The manager may be given up to two weeks to resolve the
problem before it is referred to the union by the worker.
A trade dispute only occurs if the union is able to represent the employee who
has the grievance. However, there are exceptions to this rule, namely:
(a) When the grievance concerns the intervention of the employer in the
workerÊs right to join the union.
In this situation, the worker can make his complaint to the Director of
Industrial Relations. If the Director fails to resolve the complaint, it will be
referred to the industrial court for a solution.

(b) When a worker makes a complaint of unfair dismissal.
A case regarding the accusation of unfair dismissal can be brought straight

to the Department of Industrial Relations. The worker involved can request
for reinstatement by making a report to the Department of Industrial
Relations. This is provided for under Section 20 of the Industrial Relations
Act 1967. Reinstatement of the worker occurs when the employee who was
dismissed by the employer is reinstated to work for the same employer and
is given the same post, salary and work facilities as before the dismissal of
the worker. A dispute between employee and employer regarding unfair
dismissal does not require the worker to be represented by the union.
SELF-CHECK 11.6
1. State two situations where a worker dispute cannot be

represented by a union.
2. What is meant by reinstatement of an employee?
3. List the factors that can be used to define grievance and dispute.
4. Describe the causes of grievances and disputes.
5. Explain the steps that can be taken by the management to ensure

the effectiveness of the grievance and dispute process.
6. Explain the relationship between the grievance and dispute

process and the collective bargaining process.
7. Describe the process of transformation of dissatisfaction from a

hidden form into a form of clear action.
8. Explain how grievances and disputes can be handled by an

organisation.
9. How would an organisation can handle the problem of an unfair

dismissal?

Ć A trade dispute is a dispute between employer and employee concerning

issues of recruitment or the terms and conditions in the contract of
employment.
Ć A trade dispute can usually be resolved by the method of negotiation where

the disputing parties meet directly, discuss and try to reach a settlement in
order to resolve the problem.
Ć Conciliation uses a third party who is appointed as a middleman to assist the

disputing parties to reach a collective agreement.
Ć Arbitration uses a third party who has the power or authority to determine
the award or the solution to the dispute.
Ć For mediation, the use of a third party is the same as conciliation but the third
party selected is not from the government.
Ć The conflict between employer and employee will always exist because of the
differences in interests regarding the terms and conditions of employment as
well as matters related to the decision of the management and the working
condition.
Ć A grievance is a complaint brought up by a worker.
Ć A grievance that is represented by a trade union on behalf of an individual

worker is known as a dispute.
Ć A trade dispute is defined as a dispute between employer and employee

involving matters related to employee recruitment or the terms and
conditions of the contract of employment.
Ć The purpose of the grievance and dispute procedure is to form an objective

and prepare a guide for the management to handle grievances and disputes
brought up by the employees.
Ć The grievance process usually begins when an employee informs the

supervisor regarding his or her dissatisfaction on any work-related issue.

Arbitration Grievances
Conciliation Mediation
Disputer Negotiation

Topic  Disciplinary
12 Procedures
and Actions
LEARNING OUTCOMES
1. Describe the process of disciplinary actions;
2. Differentiate between the types of minor and gross misconduct;
3. Explain the legal framework involved in the process and procedure
of a disciplinary action; and
4. Discuss the way of handling disciplinary problems and dismissal of
worker.
 INTRODUCTION
One of the important mechanisms for ensuring the smooth running of an
organisation in order to reach its goals is the element of discipline. An
organisation fixes its rules and procedures in order to create an orderly
environment for the workers to achieve the goals of the organisation while
fulfilling the personal goals of the workers.
Most employees understand and agree that self-discipline is necessary. However,

there are some workers who intentionally go against the rules of the organisation
for their own interests. For example, an employee who misuses the company
property for their own personal purpose or receives bribes for self gain is
violating the company rules and organisation has to take the appropriate
disciplinary action against the employee concerned.

140  TOPIC 12 DISCIPLINARY PROCEDURES AND ACTIONS
The action of disciplining a worker sometimes becomes an emotional or polemic

issue. The process would not only include subjective concepts such as „fair‰ and
„reasonable‰ but also „wrong‰ and „right‰ as well. Disciplining also involves
power, authority as well as the status of the management. The handling of a
disciplinary problem is a highly challenging task because it requires accurate
facts and appropriate action. Other than that, a disciplinary action should not to
be taken in haste.
A disciplinary action is a process that needs to be taken carefully because if the

organisation fails to follow the prescribed procedure, it can cause problems in
industrial relations. This means that the employees who were disciplined can
accuse the organisation of oppression because of the unfair disciplinary process
that was used against them.
This situation can cause the employee involved to report the dispute to the
Labour Department and the Industrial Relations Department and sometimes the
dispute can drag on to the Industrial Court. This is not good for the organisation
not only in terms of the time and the cost involved but also in terms of the
negative effects it can have on the reputation of the organisation.
12.1 FORMAL DISCIPLINARY ACTIONS

PROCESSES
The behaviour and action of a human being in an organisation is determined
through a system of reward and punishment that exists in the organisation. The
purpose of the system is to ensure that the workers keep to the standard
behaviour and performance prescribed in order to achieve the business objectives
of an organisation.
Discipline can be defined as the rule that controls the activities of a group of
human beings in order to produce a controlled performance (Salamon, 2001).

TOPIC 12 DISCIPLINARY PROCEDURES AND ACTIONS  141
Discipline can be divided into three levels as reflected in Table 12.1.
Table 12.1: Levels of Discipline
Level of Discipline Description

Management Imposed by the formal leadership or authority of an
organisation.
Team Requirements caused by mutual interdependency and
commitment.
Self Self-control.
A formal disciplinary action process refers to a formal action taken by the

management against an individual who has failed to obey the rules prescribed
by the management of an organisation.
A formal disciplinary action process contains several important elements,

namely:
(a) The definition of the standards of behaviour and performance desired by

an organisation. Usually the prescribed standards are documented in the
rules of the organisation. For unwritten standards, the management has to
assume that all the employees have already understood the standards;
(b) The measurement of the behaviour and performance of the employees and
hence the comparison of the measurement with the prescribed standards;
(c) The carrying out of corrective action (disciplinary procedure) when the
employeeÊs performance or action does not conform to the prescribed
standards; and
(d) The feedback regarding the effectiveness of the corrective action taken.
If the action taken is effective, the behaviour and performance of the
employee will conform to the standards.

Figure 12.1 is a summary of the formal disciplinary action process as previously

discussed. This formal process is usually documented by the organisation.
Figure 12.1: Formal disciplinary action process ă control process

Source: Salamon (2001)
12.1.1 Purpose of Formal Disciplinary Action Process

The formal disciplinary action process carried out against an employee can either
punish the employee involved in the misconduct or is regarded as a training
process for the worker. Thus, we can interpret the purpose of the formal
disciplinary action process into two approaches, which are, the positive approach
(corrective) and the negative approach (punitive).

(a) Positive Approach

The positive approach is aimed for the purpose of correction. This is based
on the process of social learning to change the attitude of the employee, not
only to agree but also to support and be committed in achieving the
performance standard and behaviour that is desired by the organisation.
(b) Negative Approach

The negative approach has the purpose of punishing the workers who has
erred or has broken the rules of the organisation. The principle used here
is that anyone who deviates or does not keep up to the rules as laid out
will bring unwanted consequences upon themselves. In other words, an
employee who breaks the rules or fails to achieve the required performance
will be punished.
Before we look in greater detail into discipline and the procedures involved
in disciplining an employee, we need to discuss the matters that can cause
disciplinary action to be taken against an employee. Thus, the following section
will define misconduct and discuss the classification of misconduct as well as
examples of misconduct.
12.1.2 Types of Misconduct

Misconduct, according to the definition of the industrial court is:
Conduct that is inappropriate or goes against the rules of the organisation.

This conduct which is not trivial or unimportant must have a motive and the
worker should know the consequence or the danger of the conduct.
Misconduct can be categorised as a minor misconduct or a gross (or major)

misconduct. Gross misconduct is an offence that can result in dismissal of or at
the least a stern disciplinary action taken on the offender. Minor misconduct is an
offence where the guilty employee is given a verbal or written warning.
However, if the employee repeats the same offence, sterner disciplinary action
can be taken or the employee can be dismissed. Table 12.2 shows the examples of
minor and gross misconduct.

Table 12.2: Examples of Minor and Gross Misconduct
Gross Misconduct Minor Misconduct

 Drunk during the working hour  Late for work
 Under the influence of drugs while on  Uttering obscenities
duty  Wearing inappropriate or revealing
 Quarrelling clothes to work
 Stealing
 Breach of trust
The classification of the types of misconduct is very important because this

classification will determine the form of penalty that will be imposed on the
worker that broke the rules of the organisation. The examples of misconduct
listed in Table 12.2 are not a complete or permanent list. To determine whether
the misconduct is minor or gross, we need to make an assessment of the situation
involved beforehand.
Take for example, the misconduct of sleeping at the workplace. For an

administrative clerk, sleeping in the workplace is categorised as a minor
misconduct but for a security officer, sleeping on duty can result in dismissal. A
security officer who sleeps on duty can is considered to have committed a serious
offence because of the possible danger that can come upon the organisation as a
result of the security officerÊs negligence.
12.1.3 Disciplinary Action for Unsatisfactory Work

Performance
Disciplinary action is not only taken on workers who have broken the rules of the
organisation or have misbehaved. As explained earlier in this topic, disciplinary
action can also be taken on workers who fail to show satisfactory performance.
In such a situation, a detailed diagnosis needs to be carried out in order to
determine the factors for unsatisfactory performance of the worker. The
management has to ensure that the poor performance shown is caused by
disciplinary problems and not by other factors. Figure 12.2 shows the steps that
have to be taken in making decisions in handling problems of unsatisfactory
work performance.

Figure 12.2: Determination of disciplinary problem for

worker with unsatisfactory performance
Source: Maimunah Aminuddin (1999)
First of all, when a measurement of performance is made, the organisation

must be clear about the factors used in measuring performance. As shown in
Figure 12.2, performance can be evaluated based on the quality or quantity of
work and the record of absenteeism of a worker. The next step is to ensure that
the unsatisfactory performance of the employee is caused by the workerÊs refusal
to perform the given task properly.

Before determining the causes for the unsatisfactory performance, several

important aspects must be examined beforehand by answering several questions.
Is the unsatisfactory performance caused by the employee not having the

necessary skill and ability to do the job? If the diagnosis indicates that the
employee definitely does not have the skill and ability to do the job, then the
problem is not caused by employee discipline but is caused by the ineffectiveness
of the organisationÊs employee recruitment process.
Is the unsatisfactory performance was due to the employee not having the
required knowledge to perform the task properly, that is, training problem and
the failure of the organisation itself to provide the equipment and training to
prepare the employee?
Factors such as these have to be evaluated in depth to prevent the employee from
taking disciplinary action on them for unsatisfactory performance when in actual
fact, the performance was influenced by factors outside the control of the
employee concerned.
ACTIVITY 12.1
In your opinion, is the action of transferring a problem worker to
another unit a wise one? What are the implications on (i) the worker (ii)
the head of the unit where the worker is transferred?
SELF-CHECK 12.1
1. What is the meaning of discipline?
2. State three levels of discipline.
3. What is meant by a formal disciplinary action?
4. What is meant by misconduct?
5. State the types of misconduct.

12.2 LEGAL FRAMEWORK

In Malaysia, the Employment Act 1955 is an important part of the legal
framework to control matters concerning labour and employment. The purpose
of this act is to provide the minimum benefits to the worker in Malaysia and
protect various rights of the worker and also the employer. The provisos in the
Employment Act 1955 regarding disciplinary action is contained in Article 33 of
the Act. A description of the Article is as follows:
(a) A firm that intends to carry out an internal investigation of a case involving
an offence committed by a worker must inform the worker concerned in
writing stating the date, time and place where the investigation will be
carried out. If the internal investigation concerned permits the worker to be
represented by the union, then a copy of the charge also needs to be given
to the union. After the investigation process, the company can take the
following disciplinary action:
(i) Give a warning letter to the employee; or
(ii) Suspend the worker from work without pay for not exceeding one
week; or
(iii) Not give an annual increment; or
(iv) Demote the worker; or
(v) Dismiss the worker without notice on the offence of misconduct.
(b) For the purpose of investigation, the company can suspend the employee
for a period of time not exceeding two weeks by only paying half the salary
to the employee concerned. If after the investigation, there is no evidence to
show that he has committed the offence, the company has to pay back the
balance or the full salary to the employee concerned.
Section 14 of the same Act lists the situations where suspension from work
is required. The situations are as follows:
(i) When the presence of the worker can threaten the work situation;
(ii) When it is felt that a cooling-off period is required such as after an

incident involving physical violence in the workplace;

(iii) When it is felt that the worker must be prevented from having the
opportunity to commit the same offence such as in a cheating case; or
(iv) When a suspicion arises that the worker involved may try to destroy
or alter evidence or threaten the witnesses in the case.
(c) During the period of suspension for the period of investigation, the
employee must be informed in writing to report to the normal workplace
for certain fixed days and at certain times as required by the company.
(d) The employee who is being suspended from work and is holding things
and equipment belonging to the company must return the aforesaid items
when requested by the company. The period for returning the items is
within the stipulated period of suspension from work.
(e) When a company gives a written warning to the employee as stated in the
Article, a copy of the warning letter must be given to the trade union.
An employee upon which disciplinary action has been taken has the right
to make an appeal such as that stated under Article 5(2) regarding
Grievance Procedure. Article 5(2) has the proviso for the worker to voice
their dissatisfaction. In addition, the Article also stresses on the need of the
disputing parties to ensure that all possible efforts have been taken to
resolve any misunderstanding and to maintain industrial harmony.
12.3 METHOD OF HANDLING DISCIPLINARY

PROBLEMS AND DISMISSAL OF
EMPLOYEES
Taking disciplinary action on an employee is a difficult challenge. Thus, the
management or the party directly responsible in the disciplinary action process
must be sensitive and follow the procedures fixed by the organisation. To handle
disciplinary problems effectively, the party involved in disciplining employees
must carefully weigh various important factors such as those discussed in the
following paragraphs:

(a) Disciplinary action on an employee must be taken privately and not in

front of other employees. Disciplinary action taken on an employee in
front of other workers, especially a verbal warning, can bring shame
to the employee concerned. The negative effect on the workers and the
organisation as a result of public warning include the employee feeling
ashamed and isolated, losing their focus of the job and having less
commitment in doing the job.
(b) The action taken must be one that is expected. This means the employees
must know the rules of the organisation and the consequences they will
have to face if they break the rules. To ensure that they really understand
the rules of the organisation, the management, especially the human
resources management section, must ensure that they know and
understand the rules of the organisation and the action that can be taken on
them if they break the rules by giving a copy of the rules of the organisation
to each employee. In addition, the management must also explain verbally,
if necessary, to enable employees to understand the rules of the
organisation and the penalty that may be imposed.
The management must prepare an acknowledgement form that must be

signed by the employee after they have read the list of rules of the
organisation and have subsequently understood the rules. The form that
has been signed must be kept in the personal file of the employee. This
matter, although seemingly trivial, must be carried out by the management
in order to prevent a repercussion from the employee after a disciplinary
action has been taken on him/her.
The management must be serious about the rules of the organisation and
ensure the employees know and understand the rules. This is to prevent
them from saying that they were not aware of the rules and hence making
the process of taking disciplinary action on them difficult when they break
the rules. Thus, information concerning the rules of the organisation must
be given to them the moment they are recruited by the organisation, that is,
during their induction. Any change in the rules of the organisation must be
notified to the employees from time to time.

(c) The action taken must be consistent. This matter is one that must be carried
out carefully. The meaning of being consistent in taking disciplinary action
is when two employees commit a similar misconduct, the action taken and
the penalty imposed must also be the same for both employees. Besides
that, different supervisors must also impose the same penalty on the
employee who breaks the rules.
This matter must be emphasised because any difference in handling a

disciplinary problem will have a negative effect on the morale of the
employees. However, even if we try to maintain consistency in action, in
taking disciplinary action, various factors must also be considered before
deciding on the form of penalty to be imposed on a subordinate. Thus
perhaps for the same misconduct, the form of punishment may differ. The
factors that must be considered before the form of punishment is decided
are:
(i) Record of work including period of service and previous record of

misconduct;
(ii) Whether there was any provocation that caused the misconduct such
as a worker punching another worker after being threatened by the
worker who was punched; and
(iii) The cause of the misconduct, that is, the motive that prompted the
worker to break the rules of the organisation. For example, an
employee who commits a breach of trust because he was forced by a
third party has a motive that is different from an employee who
commits a breach of trust for his own gain.
(d) Disciplinary action taken against an employee must be immediate.

Disciplinary action should be taken immediately after the occurrence of
an incident or immediately after the organisation finds out about the
misconduct. However, the management must be careful in examining the
facts of the case and not take action in haste.
(e) Action must be progressive. Disciplinary action taken on the employee

must be progressive, that is, beginning with the lightest punishment except
in a case of a really serious misconduct. If the same misconduct is repeated,
then a heavier form of disciplinary action can be taken.

Example:
An employee used office facilities for his personal purpose. To handle this
disciplinary problem progressively, for the first offence, the employee is only
given a verbal warning. If the offence is repeated, a written warning may be
given to the employee. If the misconduct is repeated still and becomes more
serious, the organisation after giving a final warning to the offender should
dismiss him.
Figure 12.3 shows the summary of progressive disciplinary action based on

the level of offence committed. However, it must be remembered that the
arrangement shown in that figure is not absolute. As discussed earlier, the
determination of the punishment depends on the classification of the misconduct
and the classification in turn depends on the situation that caused the
misconduct.
Figure 12.3: Procedure for progressive disciplinary action

Source: Maimunah Aminuddin (1999)

SELF-CHECK 12.2
1. State the factors that must be given attention when handling

disciplinary problems and dismissal of employee.
2. What factors would influence the form of penalty imposed on an

employee when the disciplinary action process is carried out?
3. Describe the meaning of discipline. Explain how discipline

becomes a mechanism of control in ensuring that an organisation
achieves its business objective.
4. What is the purpose of disciplinary action process? Discuss.
5. Why is the classification of the types of misconduct very

important in the disciplinary action process? Outline the types of
misconduct and give appropriate examples.
6. Discuss the aspects that must be considered before deciding that

the problem of unsatisfactory work performance is caused by the
employee themselves not wanting to do the job.
7. What must the management do to ensure that the employee can

expect that action will be taken on them if they break any rule of
the organisation?
8. Disciplinary action taken must be consistent. Explain.
9. Draw and elaborate a diagram that would explain the procedure

for progressive disciplinary action.
Ć An organisation must fix its rules and procedures in order to ensure that the
objectives of the organisation are achieved effectively and accurately.
Ć Discipline, that is, the rules that control the activity of a group of humans in
order to produce a controlled performance can ensure that the employees
agree with the standards of behaviour and performance that are fixed by the
organisation.

Ć Formal disciplinary action is taken by the management on an individual who

failed to obey the rules of the organisation. It has two approaches, which are,
the positive approach (corrective) and the negative approach (punitive).
Ć Disciplinary action can be taken on an employee when misconduct occurs.
Ć Misconduct can be categorised into two: gross misconduct that can result in
dismissal and minor misconduct are misconducts that can result in a light
penalty imposed on the employee such as a verbal warning.
Ć Disciplinary action taken must conform to the provisos in the Employment

Act 1955.
Ć Taking disciplinary action on an employee is a challenge. Thus, the

management must carefully ponder various important factors before taking
any disciplinary action.
Ć A disciplinary action is personal.
Disciplinary procedures Types of misconduct

Dismissal of employees Unsatisfactory work performance
Legal framework

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1. E-mail your comment or feedback to modulefeedback@oum.edu.my
OR
2. Fill in the Print Module online evaluation form available on myINSPIRE.
Thank you.
Centre for Instructional Design and Technology

(Pusat Reka Bentuk Pengajaran dan Teknologi )
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OUM Business School

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

Module Writers: Dr Fadzli Shah Abd Aziz

Moderator: Prof Dr Raduan Che Rose

Developed by: Centre for Instructional Design and Technology

First Edition, November 2007

Copyright © Open University Malaysia (OUM), April 2016, BBHI4103

Copyright © Open University Malaysia (OUM)

Topic 1 Perspectives in Industrial Relations 1

Topic 2 Perspectives and Approaches in Industrial Relations 15

Copyright © Open University Malaysia (OUM)

Topic 3 Concepts and Values in Industrial Relations 29

Topic 4 Context in Industrial Relations 44

Topic 5 Employees and Trade Unions 51

Copyright © Open University Malaysia (OUM)

Topic 6 Employer and Employers Union 70

Topic 7 The Government and Its Agencies 77

Topic 8 Collective Bargaining 87

Topic 9 Employee Involvement and Participation 99

Copyright © Open University Malaysia (OUM)

9.4 Views of the Management and the Trade Union 106

Topic 10 Industrial Actions 108

Topic 11 Methods of Resolving Disputes and Grievances 120

Topic 12 Disciplinary Procedures and Actions 139

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

COURSE GUIDE DESCRIPTION

Copyright © Open University Malaysia (OUM)

Table 1: Estimation of Time Accumulation of Study Hours

1. Explain the concept, theory, approach and values in industrial relations;

3. Evaluate trade disputes and actions;

4. Examine the legal framework which is the reference in the industrial

5. Review the development of industrial relations in Malaysia.

Topic 2 introduces the Unitary, Pluralistic and Marxist perspectives. It also

Copyright © Open University Malaysia (OUM)

Topic 4 discusses the main elements in the context of industrial relations. It

Topic 5 examines employees and the trade unions.

Topic 8 discusses collective bargaining in industrial relations.

Topic 9 examines employees involvement and participation. It explains the forms

Topic 11 explains the methods of resolving trade disputes and grievances.

Topic 12 describes disciplinary procedures and actions.

TEXT ARRANGEMENT GUIDE

Copyright © Open University Malaysia (OUM)

Self-Check: This component of the module is inserted at strategic locations

Activity: Like Self-Check, the Activity component is also placed at various

References: The References section is where a list of relevant and useful

Copyright © Open University Malaysia (OUM)

Fossum, J. (2001). Labor relations: Development, structure process (8th ed.).

Maimunah Aminuddin. (1999). Malaysian industrial relations and employment

Wu, M. A. (1985). The industrial relations law of Malaysia. Kuala Lumpur,

TAN SRI DR ABDULLAH SANUSI (TSDAS) DIGITAL

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

Copyright © Open University Malaysia (OUM)

1.1 DEFINITION AND IMPORTANCE OF

According to Salamon, (2001), industrial relations is „a set of phenomena,

Industrial relations emphasises three important aspects, namely:

(a) Relationships between employers and trade unions (workers);