Labour law amendments

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Workers are being squeezed as proposed labour law amendments do little to remedy long-standing injustices for employees, points out Syed Shahir Syed Mohamud.

MTUC president Syed Shahir has spoken out against the proposed labour law amendments

The Malaysian Trades Union Congress (MTUC) has long been concerned about existing employment laws, amendments to labour laws and government policies which of late seem to favour employers more and more.

The Malaysian government has been planning new amendments to the Labour Laws, i.e. Employment Act 1955, Industrial Relations Act 1967, and the Trade Unions Act 1959, since early this year. The first of these amendments that has come before Parliament is D.R.25/2010 (Employment (Amendment) Bill 2010).

Alas, much needed amendments to our employment laws to remedy current injustices have again not been included in D.R.25/2010 (Employment (Amendment) Bill 2010). In fact, the amendments proposed in this Bill, did not even go through the National Labour Advisory Council (NLAC), a tri-partite body representing the government, workers and employers. The correct procedure is to bring whatever amendments the government intends to make to labour laws to the NLAC first, before they are tabled before Parliament. Hence, MTUC is certainly outraged by this bypassing of the NLAC.

Before I proceed to look at some of the government-proposed labour law amendments, I would like to talk about some of the labour law amendments that the MTUC believes we need to better protect workers’ rights and to reduce violations by employers.

a) No penalty, no deterrence

At present when an employer violates a worker’s legal rights with regard to wages, overtime payments, rest days, paid public holidays, paid annual leave, paid sick leave or hospitalisation leave, maternity leave, etc, at the end of the of the day, if the employer is found to be guilty, he is required to pay the worker only what he should have paid at the very first instance. There is no additional penalty imposed on the employer for breaking the law, and hence there is no deterrence.

In fact, many bad employers will just continue to deprive workers their legally recognised worker rights, knowing that even if their workers do complain to the authorities, at the end of the day all they are required to pay is just what they should have paid in the very first place. There must be a penalty imposed, say maybe, a sum of not less than RM10,000 and not more than RM50,000 for each violation. Such an amendment would certainly be a deterrence to employers violating workers’ rights. Maybe, all or part of this additional penalty should be paid to the affected worker.

b) Terminated/discriminated if workers claim rights

When a worker lodges a complaint at the Labour Department, many employers act against the workers, either by terminating them or by discriminating against them. Yet there is no provision in the Employment Act 1955 that deters this kind of retaliation by employers on workers who are just exercising their legal rights. It is worse for migrant workers, because their very legal existence in Malaysia is based on the work pass obtained on application by their employer, which also comes to an end upon termination. Hence they are denied the chance to seek a remedy or to continue to fight for their rights in Malaysia. The physical presence of the worker in the Labour Office, Labour Courts and Industrial Courts is needed for their claims to be heard and determined. We need an amendment in the Employment Act, i.e. an inclusion of a section similar to those found now in sections 5 and 59 of the Industrial Relations Act 1967, which prevent termination/discrimination against workers who claim their rights as provided for in the Employment Act and other labour laws.

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c) Maximum probation period must be defined

Employers sometimes do not take the necessary steps to confirm employment. Hence, even when a worker has served for several years, the employer might still claim that the employee is still on probation. Note that the remedy available to a probationer is less than that available to a confirmed worker. There must therefore be a law that limits the time that a worker can be on probation, and reasonably this should not be more that three months. After that, the employer has the option to terminate; continued employment beyond three months should be taken as confirmed employment.

d) TU membership must exist beyond wrongful termination

According to section 26(1A) of the Trade Unions Act, trade union membership ends when the worker is terminated. This means that when the worker most needs the assistance of the union, especially in cases of wrongful termination, the current law denies him TU support.

26 (1A) now states that “No person shall join, or be a member of, or be accepted or retained as a member by, any trade union if he is not employed or engaged in any establishment, trade, occupation or industry in respect of which the trade union is registered.”

There are many other necessary amendments, which are pro-justice. I have just given you a little sample of required amendments to ensure that justice is done.

Govt proposed new amendments, 2010

Since early 2010, the government has been talking about new amendments to the labour laws – the Employment Act 1955, the Industrial Relations Act 1967 and the Trade Unions Act 1959

The MTUC came up with a position paper dated 21 April 2010, which not only responded to the government’s proposal but also offered new amendments needed. We were not given the actual wordings of the provisions, just a general idea of what it would entail.

To date, we have received only the D.R.25/2010 (Employment (Amendment) Bill 2010). But we expect Bills soon to amend the Industrial Relations Act 1967 and the Trade Unions Act 1959.

Here, I shall deal with just two major points

1. “contractor for labour”

2. The proposed extinguishing of the right to claim wrongful termination for certain classes of workers. Every worker wrongfully terminated should have the inalienable right to remedy of reinstatement and damages.

‘Contractor for labour’

Here, the intention is to make ‘contractors of labour’ employers of workers, and this is what we oppose.

The amendments define and state that a ‘contractor for labour’ means a person who contracts with a principal, contractor or sub-contractor to supply the labour required for the execution of the whole or any part of any work which a contractor or sub-contractor has contracted to carry out for a principal or contractor, as the case may be.

At the onset, it must be pointed out that, with the introduction of the Employment Act (EA) in 1955, the then British Administration effectively abolished indentured labour, bonded labour, the ‘kanggani’ system and the like in Malaya, effectively abolishing the middleman or the ‘contractor for labour’ as employers. The EA at the same time established two very important principles of law which are sacrosanct. They are: a) security of tenure – ensuring permanence of job; and b) proprietary right to the job – where the termination of a worker shall be with just cause and excuse and by due process.

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These new amendments do not adhere to the basic tenets of the original EA. The inclusion of these clauses would reduce the worker under the “contractor for labour” to a new sub-class of workers.

Additionally, the amendment to define ‘contractor for labour’ as employer is also against the Decent Work Agenda, as it:

• does not provide opportunities for work that is productive;
• does not deliver a fair income;
• does not provide security in the workplace and social protection for families;
• offers no prospects for personal development and social integration;
• instead, the proposed amendments contribute towards the creation of a new sub-class of workers.

The amendment also directly contradicts the Prime Minister’s goal of achieving a high-income-earning country for a labour supplier is allowed to siphon off as ‘commission’ (or whatever other term we prefer to use) part of the already low wages earned by the workers from the principal employer on every pay-day – for as long as the worker is ‘supplied’ by the ‘contractor for labour’!.

Hence, the inclusion of ‘contractor for labour’ in the EA will slowly and surely suppress the wages of all classes of workers, be they white or blue collar workers.

It must also be pointed out that the existing provisions in Parts VI, VII, XIIB, XIII, XIV and XV in the current EA provides for workers under contractors and sub-contractors, agents (please refer to definition of employer), any person or any establishment where any commerce, trade, profession or business of any description is carried on [please refer to 63A) (1)] and therefore there is no need to introduce such an amendment including the proposed 33A.

Unlike the principal employer or the contractor who carries out work, the ‘contractor for labour’ or labour supplier:

• does not own the means nor the factors of production or services and has no knowledge on how to carry-out work;
• does not possess capital nor technology nor are they innovators and definitely are not wealth generators;
• are actually parasites living off the blood and sweat of the workers they ‘possess’.

Indeed, if ‘contractors for labour’ are considered as employers, the MTUC foresees a nation of workers subjected to the whims and fancies of labour contractors. In all likelihood, the days of permanent employment under principal employers might come to an end and we will be going back to the dark days of indentured and bonded labour as was the case before Merdeka.

Also, labour suppliers as employers will legitimise human trafficking involving both locally and foreign workers. Workers under the ‘possession’ of labour suppliers are probably the least known form of slavery today.

Right to claim justice when unjustly or wrongfully terminated

The proposed amendments by the government we believe will also deprive certain classes of workers the right to claim justice when they are unjustly/wrongfully terminated because:
• employees with less than one year of service (probationers) are excluded from seeking reinstatement via Section 20 of the IRA;
• employees earning a basic salary of RM10,000 or more are excluded from seeking reinstatement via Section 20 of the IRA; and
• employees with fixed term contracts are excluded from seeking reinstatement via Section 20 of the IRA if termination is as per contract terms.

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The past amendment of the Second Schedule of the Employment Act only takes into account the interests of employers and discriminates against employees, especially those earning low wages. Apart from limiting back-wages to 24 months, the courts are now mandated to take into account post-termination gainful employment and contributory conduct.

However, the amendments did not mandate the court to impose any punitive damages in cases where in all fairness there must be another provision for the Court to take into account the pain and suffering of the poor worker when he was dismissed. Now there are no provisions for punitive damages in cases where employers acted wantonly in dismissing their employees.

The MTUC is of the opinion that damages and remedy must be left to the discretion of the Courts. Just because of one or two cases of highly paid directors/general managers being awarded huge sums by the Industrial Court – this does not justify amending the law to discriminate against poor workers. Note that most workers are lowly paid. I draw attention to the Human Resources Ministry’s study of 1.3 million Malaysian workers which indicated that a shocking 34 per cent earn below the poverty line of RM720 monthly. (Malaysiakini, 5 August 2010)

Again, when employers have been found to have wrongfully terminated their workers, they must also be penalised by having to pay a penalty for their wrong-doing – their breaking of the labour laws of Malaysia.

Of concern also is the real access to justice to a wrongfully terminated migrant worker, whereby the process of a matter coming to the Industrial Court and being heard and disposed of can take years, and the migrant worker, without the ability to live and work legally in Malaysia, will almost never get justice. The whole process must be speeded up, and for the migrant worker, they must also be given the right to work and earn whilst waiting for the industrial court and/or labour court matters to be completed.

There is also the need for the setting up of Industrial Courts in all major towns in Malaysia, maybe at least where there exist a High Court.

With regard to Labour Court/Industrial Court matters that end up in the High Court and/or higher courts, there must also be a provision that there be no order as to costs for really the worker cannot afford to pursue his rights further at this level if there is a risk that he be forced to pay costs. Hence, employers with deeper pockets will always win as poor workers will no longer be able to fight at these ‘expensive’ arenas of justice. Maybe, there is also a need for ‘court assigned counsel’ for workers when matters go on to High Courts and above, where the fees for these assigned counsel shall be paid by the government or some human resource/labour fund.

Remember, our interest is upholding the cause of justice for all. Let not cost or the fear of having to pay more money in fighting for justice be barriers that deny the poor worker justice.

Syed Shahir Syed Mohamud is president of the Malaysian Trades Union Congress. (MTUC). He delivered this speech at a public forum ‘Labour Law Amendments? – What does it mean to you?’, organised by the Bar Council in Kuala Lumpur on 21 August 2010.

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Dear Datuk Syed Shahir Syed Mohamud, Please also note the below problems facing poorer Malaysians as below highlighted by the Star Paper, I feel that Management Bodies have been given too much power and have been selected in an undemocratic and illegal manner that is exclusive and focuses power in colluision by developers and local governments as well. Being an MTUC related issue, I would like for Datuk to determine with MTUC to investigate which Management Body/Committees have been undemocratically elected *AND* which POOR families should be *EXEMPTED* on compassionate grounds by a proposal for a protective by-law that ensures the hardcore poor are differentiated from those who can afford to pay fees but refuse to. This issue has nothing to do with transparency or accountability, but rather is a bold faced attempt by government to give more powers to their DEVELOPER CRONIES in the management body. An element of protest at undemocratic or collusive placement of management bodies could also be prompting this intentional refusal by angry residents to pay fees which amount to little more than ‘protection money’ that under the below article, likely… Read more »