Our Fair Work Act research series started with Part 1, presenting a case for updating Malaysia’s employment classifications to capture the evolving power dynamic between employers* and workers. Part 2 argued for clarifying the meaning of minimum wage in achieving the ideal of ‘fair pay’. Part 3 dissects the broad topic of ‘fair working conditions’ and in Part 4, we examine the idea of ‘fair contracts’.

*Note: The term ‘employer’ is used broadly throughout this piece, representing the party that either employs the worker directly or an intermediary such as gig platforms.

In the fifth and final instalment of this research series, we look at the last two pillars of the Fair Work Act, namely ‘fair management’ and ‘fair representation’. What do they cover and mean for different worker categories prevalent today? We ask this question and more in this article.

What does fair management cover?

According to the Oxford Internet Institute’s Fair Work Initiative, ‘fair management’ encompasses labour practices towards fair hiring, disciplining and firing of workers, irrespective of their employment status.

The essence of fair management is also reflected in the International Labour Organisation (ILO) conventions that focus on discrimination, workplace violence and sexual harassment. The 1958 Discrimination (Employment and Occupation) Convention introduced anti-discrimination labour guidelines to promote equal employment opportunity and labour treatment. The more recent 2019 ILO Convention on Violence and Harassment requires governments to implement measures protecting workers in the formal and informal economy against violence and harassment at work.

Building on the Fair Work Initiative and the ILO conventions, our definition of fair management is two-fold. Firstly, fair management should guard against and eliminate all discriminatory practices in every stage of employment. Secondly, fair management should protect all workers against invasive labour practices, for example, labour monitoring or job allocation practices implemented in the name of efficiency or productivity.

Current laws on fair management

In Malaysia, the principle of fair management is most closely captured in Article 8(2) of the Constitution, which states that “… there shall be no discrimination against citizens on the ground only of religion, race, descent, place of birth or gender, in any law or in the appointment to any office or employment …”.

Current labour laws (see Figure 1) also provide guidelines for payment and deduction of wages, termination of employment and protection for whistleblowing, though provisions cover employees only. For contractors, the Contract Act 195 governing contracts for service between contractors and client-employers does not provide any terms that touch on fair management.

Figure 1: Current Malaysian legislation relating to fair management

In case of dispute, employees can file complaints relating to the monetary aspect of employment at the Labour Court. Contractors can only bring complaints to the civil court where decisions would mostly be made on the terms and conditions written in their service contract.

Current shortfalls relating to fair management

(1) Insufficient protection against discriminatory practices

The problem with today’s labour laws on discrimination is that there is neither an official definition for discrimination nor comprehensive legal protection for workers against discriminatory labour practices. Article 8 of the Federal Constitution has been the main guiding legislation on this score but its provisions are quite high level, making it insufficient as a safeguard in specific cases.

At the time of writing, Malaysia has not ratified both the 1958 Discrimination (Employment and Occupation) Convention and the 2019 ILO Convention on Violence and Harassment which aim to eliminate discrimination, violence and harassment in employment. The insufficiency of current laws enables discriminatory labour practices in almost every employment stage: in hiring, promoting and firing of workers.

In the Beatrice a/p AT Fernandez court case for example, the Federal Court dismissed a pregnant air stewardess’ claim of being unlawfully terminated by her employer, judging that there is no provision expressly prohibiting firing due to pregnancy, and that the laws only mandate employers to provide maternity allowance to female employees on maternity leave.

Nevertheless, the recently tabled Employment (Amendment) Bill 2021 is a step in the right direction. If passed, the newly added legal provisions will empower the Labour Department-General to investigate disputes on discrimination. Apart from that, the legislation update will also provide maternity protection which prohibits the dismissal of a pregnant employee or an employee suffering from illness arising out of pregnancy. However, the new amendments still do not clarify the definition of discrimination and grounds for discriminatory practices for all workers, including non-employees and migrant workers.

Policy Recommendations

For Malaysia to eliminate all forms of discrimination in every stage of employment, the government should revise existing labour laws by referring to relevant ILO conventions, such as the 1951 Equal Remuneration Convention, the 1958 Discrimination (Employment and Occupation) Convention and the 2019 Violence and Harassment Convention. When updating the labour laws, the government should ensure similar anti-discrimination provisions are spelled out clearly and be made applicable to all workers, including contract workers and migrant workers.

Politically, socially tricky: Defining what is ‘unacceptable’ labour discrimination in Malaysia

The Malaysia NGO CEDAW Alternative Report Group has reported various discriminatory practices against vulnerable groups, such as women, LGBTQ, refugees, migrant workers and more.

While the Constitution is clear that there should be no discrimination on the count of religion, race, descent, place of birth or gender, it is silent on groups such as LGBTQ and non-Malaysians; inclusion of such groups in the definition of labour discrimination would require much dialogue and leadership. 
By the same token, Article 154 of the Constitution justifies positive discrimination for Bumiputera in certain fields, but it is arguably not meant to be applied without limitation or without qualifying criteria. Defining labour discrimination would require serious discussion on what should be permissible and prohibited in Malaysian society. Elements of an Equal Opportunity Commission, proposed in 2010, could serve as a starting point to this effort.

(2) Lack of legal provisions against invasive labour practices

With the increasing digitalisation of work fueled by the COVID-19 pandemic, there has been a seismic change in labour monitoring. The rise of remote working culture drives many employers to adopt surveillance software for monitoring employees’ work-from-home activities, tracking workers micro-behaviours such as internet activities and keystroke movements. These technologies raise serious concerns about the extent of permissible surveillance, privacy and wellbeing.

To date, the government plans to include clauses on employer responsibility for employees’ safety and wellbeing in remote working settings in the proposed Employment (Amendment) Bill 2021. However, it is as yet unclear whether the undisclosed clauses can truly address the lack of transparency and level of assurance needed to protect workers against any invasive use of surveillance systems at work.

Apart from surveillance software, the use of algorithms particularly on gig platforms is also arising as a potential concern. Algorithmic technologies automate worker job allocation and monitoring via the 6R mechanism, where the algorithms direct workers by restricting and recommending, evaluate by recording and rating, and discipline by replacing and rewarding. Given that there is no law in place for governing the use of algorithms in employment, platform algorithms have the potential to invade workers’ privacy or significantly reduce their wellbeing.

Policy Recommendations

It is high time for the government to take a closer look at technological applications in employment. The government should update existing labour laws or consider new legislation for regulating the use of automated monitoring systems as well as task assignment algorithms.

Such regulations should clarify how employers can ethically access, monitor and control such information. This has become an emerging policy area in recent years. Jurisdictions including China and Europe have introduced regulations to require that workers be informed on the use of algorithms as well as to prevent algorithimic settings from endangering workers’ safety and wellbeing. A recent example is the draft law published by the European Commission which details the parameters and prohibitions for automated monitoring and decision-making systems in use with digital platform workers.

What does fair representation cover?

What about fair representation? As suggested by Fair Work Initiative, the term ‘fair representation’ means giving workers the right to express their voice, organise in collective bodies and negotiate with employers, irrespective of their employment status.

The principles of fair representation are also reflected in several ILO conventions. The 1948 Freedom of Association and Protection of the Right to Organise Convention sets out principles to ensure workers and employers have the right to establish or join a collective body freely without interference. The 1949 Right to Organise and Collective Bargaining Convention provides workers protection against anti-union discrimination and enshrines the right to collective bargaining. The 1971 Workers’ Representatives Convention calls for governments to provide effective protection for workers against any act prejudicial to them due to the workers’ activities as a worker representative or participation in union activities, provided that their acts abide by the laws and by collective agreements.

For the purposes of this piece, our notion of fair representation comprises two pillars, namely the right to express and the right to organise. The right to express covers aspects that allow workers to express their voice and communicate to management without fear of retribution. The right to organise covers aspects that enable workers to form and act as collective bodies that can engage in meaningful collective bargaining with employers.

Current laws on worker representation and its shortfalls

Currently, there are three main labour laws touching on workers’ right to express (only employees however), namely the Employment Act 1955, the Trade Unions Act 1959 and the Industrial Relations Act 1967.  Although the laws do not explicitly spell out the right to express, employees are allowed to voice out and file labour complaints. Early this year, the Human Resources Ministry (MOHR) also launched an online grievance channelling platform called Working For Workers (WFW) to enable workers to communicate their labour complaints to the government and seek government assistance in highlighting grievances to employers without exposing the workers’ identities.

The same three laws apply (similarly, employees only) to the right to organise. The Employment Act 1955 grants all employees the right to representation while prohibiting employers from preventing and penalising them from being unionised. The Trade Unions Act 1959 sets guidelines for the registration of unions, memberships and organisation of a worker strike. The Industrial Relations Act 1967 regulates industrial relation matters between employers, workers and unions.

There are two types of labour unions that employees can join: a national union or an in-house union within a specific company. National unions like the Malaysian Trade Union Congress (MTUC) and the Congress of Unions of Employees in the Public and Civil Services (Cuepacs) tend to have larger membership, more funding for union activities and address broader labour issues. In-house unions are organised by relatively smaller groups of workers with a focus on matters concerning a specific company or an occupational group.

On paper, employees appear to have the right to express and to organise. However, there are several shortfalls in current policies that restrict them from voicing out and engaging in collective bargaining with employers without fear of being punished.

Inadequate facilitation of workers’ right to express

Both the Employment Act 1955 and the Industrial Act 1967 focus on enabling employees to voice out and negotiate better working conditions formally as a collective group. There is no law or regulation that expressly requires or encourages employers to establish internal communication channels for workers to express their labour grievances informally.

Proactive employers do hold town hall sessions and other communication platforms to hear labour complaints from employees and contractors. However, these communication channels and employee engagement are done voluntarily.

Besides that, legal protection for the right to express only covers unionised employees who engage in collective bargaining with employers. Workers who express their labour concerns as an individual or non-unionised group are legally open to employer retaliation. And although current laws prohibit employers from discriminating, punishing and dismissing unionised employees for expressing their labour demands, some employers still accuse and punish union workers for tarnishing the company’s reputation and violating disciplinary rules.

Policy recommendations

Irrespective of employment classification, all workers should have access to communication channels to voice out complaints or grievances to management without fear of reprisal. The government should ensure employers provide internal communication channels by issuing guidelines for establishing worker liaison platforms. An example is found in Germany’s Works Council Constitution Act which establishes guidelines for employers to form in-house work councils for communicating and addressing labour complaints. Under the Works Council Constitution Act, workers of each company are free to elect their representatives to discuss labour matters with employers and ensure compliance with the laws, ordinances and collective agreements.

Apart from that, the government should strengthen the legal protection for the right to express by extending the coverage to all workers regardless of their employment status and the level of organisation. Whether it is an individual, a group or a union, all workers should be empowered to raise labour complaints with their employers and the officials without fear of being punished.

Extremely tight controls over union activities

One major issue with workers’ right to organise is the extremely tight controls the government has over union activities. The government essentially wields the power to provide the right to representation for workers by approving the formation of unions and union activities. However, tedious bureaucratic hoops and stringent control over registration requirements and membership eligibility of labour unions are imposed, deterring union formation*.

*Read this four-part article by Aliran on the history and state of Malaysian labour movements.

Currently, the government only permits the formation of a worker union representing employees of a specific company, occupation or industry. To form a new union, workers have to show the Industrial Relations and Trade Unions Director-Generals that they meet the eligibility to represent workers and have the majority support (50% + one worker) of the relevant worker segment. Then only would their union application be submitted to the Human Resources Minister to decide and accord statutory recognition.

Even after a labour union is formed and recognised, strict regulations and complex procedures limit unions from mobilising and organising any labour movement. For unionised workers to conduct a labour strike, the Trade Unions Act 1959 requires them to conduct a secret ballot and gain two-thirds support of union members before seeking the government’s approval to launch a strike. These applications for organising labour movements could also be rejected based on the decision of the Human Resources Minister or if they fail to comply with the standard procedure. Other countries, particularly in Europe such as Denmark, Finland and Sweden have a simpler administrative process by which to allow for and organise labour movements.

Perhaps due to these restrictions, the unionisation rate of Malaysia’s labour force has been decreasing over the years (Figure 2).

Figure 2: Unionised and non-unionised workers, 2012-2019

Policy recommendations

At the time of writing, Malaysia has caught international attention for repeated cases of forced labour prevalent in electronic manufacturing, glove making, and palm oil plantation industries, to name a few. Though the issue is complex, the right to organise plays a significant role in limiting situations of forced labour and should be facilitated.

The government should consider transferring the discretionary power in registering a union to an independent agency with representatives of major worker unions, key employer federations and the government. Having representation from different stakeholders would facilitate more balanced judgements on the formation of unions and rules on union activities. The independent body could function like the Canada Industrial Relations Board and Australia’s Fair Work Commission which manage trade union matters and facilitate trade disputes while ensuring transparency and fairness.

Navigating the path to a Fair Work Act

Many of the policy shortfalls discussed in this and past instalments point to the need to have several legislative amendments in Malaysia’s current laws. Amendments of current laws will only go so far however; we will always be playing catch up with changes in the employment landscape.

As such, it is time for the government to consider a more forward-looking legislative approach to reform our labour laws and social protection in ways that are adaptive to the changing labour market. To achieve this, our five-part Fair Work Act research series calls for three major policy changes in Malaysia.

As suggested by the title of this research series, we propose an omnibus Fair Work Act that, amongst other things, recognises a third employment classification that addresses the employment dynamics of informal gig workers. The omnibus Fair Work Act should also lay out the principles of fair pay, fair working conditions, fair contracts, fair management and fair representation for all workers, including migrant workers.

To realise the fair work provisions for all workers, we suggest establishing an independent statutory body similar to Australia’s Fair Work Commission that enforces the various labour legislation and handles labour disputes. The government can formulate a Malaysian Fair Work Commission represented by all stakeholders with sufficient fundings and regulatory power to ensure compliance with the Fair Work Act and equitable labour outcomes.

Admittedly, the path to a Fair Work Act is not without challenges, as some policy recommendations may have unintended consequences. But we can navigate potential policy pitfalls through a national regulatory sandbox with the participation of all stakeholders for experimenting and fine tuning relevant labour policies. This approach to mitigate implementation risks is currently underway in Denmark, where the world’s first collective agreement was reached between gig platform Hilfr and Danish union 3F after both parties conducted a one-year trial to test out a new classification method for gig workers.

In a world of COVID-19, labour reforms are no longer a choice but a necessity to ensure the promise of the future of work still holds for every worker, regardless of their employment status and demographics. The case for a Fair Work Act is also a case for Malaysia to achieve the 8th United Nations Sustainable Development Goal in promoting inclusive and sustainable economic growth, employment and decent work for all.

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