INDUSTRIAL RELATION:
AMENDMENTS TO THE INDUSTRIAL RELATION ACT 1967
WHAT EMPLOYERS SHOULD KNOW
The Industrial Relation (Amendment) Act 2020 has come into force from 1 January 2021. The following are the key features of the amendments.
Complaints referred to Industrial Court
Prior to the amendments, the Minister of Human Resources has the power and discretion to refer a complaint for dismissal to the Industrial Court for resolution ‘as he sees fit’. What it meant was that there was a filtering mechanism whereby the Minister could refuse referral to the Industrial Court.
The new amendment removed the Minister’s discretion to refer representation of unfair dismissal to the Industrial Court. The new section 20(3) provides that when the Director General is satisfied that there is no likelihood of the representation being settled by way of conciliation, then the Director General ‘shall’ refer the representation to the Industrial Court. As such, cases that are not resolved through the conciliation process are now mandated to be referred to the Industrial Court by the Director General of Industrial Relation.
This amendment can be a double-edge sword. It ensures that all the complaints which cannot be dealt at the stage of conciliation be referred to the Industrial Court but the removal of the discretion to refer will increase the number frivolous and vexatious claims. Another question that concerns us is whether the Industrial Court is able to manage with the influx of cases invariably will be referred to it.
It is premature to comment on how the amendments will impact the efficiency of the Industrial Court system when it is expected that there will be a substantial increase in the volume of cases going through the Industrial Court given that the Director General will now be under an obligation to refer the representation to the Industrial Court once it is unable to settle the dispute at the conciliation stage. Further, employers may be negatively impacted by this amendment to the Act as, at the present, there is no mechanism to prevent frivolous complaints being referred to the Industrial Court.
Representation in Conciliation Meeting at the Industrial Relations Department
The amendment to Section 20(6) of the Act provides an option for both employer and employee to appoint “any other person except an advocate and solicitor” to represent them in the conciliation meeting provided that a written authorization is obtained from the Director General of Industrial Relation.
The new section 20(6A) enables the next-of-kin of any workers with mental disability to apply to the High Court for an order to appoint a guardian ad-litem.
Appeal against Industrial Court Award to the High Court
Previously, an award, decision or order of the Industrial Court is final and conclusive and cannot be challenged, appealed, reviewed, quashed or called in question in any court. An aggrieved party can only file a judicial review against the Industrial Court and the scope of review is limited to the manner in which a decision was made i.e. if there was any illegality, irrationality or impropriety. The High Court is not entitled on an application for judicial review to consider whether the decision itself, on the merits of the case, was fair and reasonable.
The new section 33C of the Act introduces an appeal mechanism allowing a party aggrieved by an award from the Industrial Court to appeal to the High Court within 14 days from the receipt of the award. The procedure for such an appeal is subject to the procedure prescribed in the Rules of Court 2012. It is provided in section 33C(3) that the High Court “shall have like power as if appeal is from the Sessions Court”. The High Court would exercise its appellate jurisdiction in dealing with such appeals from the Industrial Court. The appeal will allow the party to challenge the findings of the Industrial Court on the substantive merits of the decision not just decision-making process.
Although the amendment does not expressly prohibits judicial review, the likelihood of the High Court dismissing the application for judicial review is high when there is an appeal procedure available to the aggrieved party as prescribed by an Act of Parliament.
Further, this amendment would mean that the parties would be deprived of appealing the matter to the Federal Court as one of the conditions for the leave to appeal to the Federal Court is the case started in the High Court in exercise of its original jurisdiction (Section 96 of Court of Judicature Act 1964). This would compromise the development of the law relating to industrial relation in Malaysia.
Power of the Industrial Court in relation to a deceased claimant
By virtue of the new section 29(ea) of the Act, the Industrial Court is empowered to conduct its proceedings notwithstanding the death of the worker who made the representation. Further, the Industrial Court is empowered to award compensation to the next of kin of the deceased employee [Section 30 (6B)].
The benefit of this amendment may remain in doubt because generally the worker will most likely be the main witness of the claim. Continuing the proceeding in the absence of the worker would means that the hearing is done without the evidence of the worker.
The amendment to give the Industrial Court the power to award compensation to the next of kin was rather impetuous as it failed to take into consideration that the primary remedy for a worker under the Industrial Relation Act is for reinstatement. The courts have consistently denied giving any remedy to workers when such workers failed to ask for reinstatement and only claim for compensation (see: Holiday Inn, Kuching v Lee Chai Siok, Elizabeth [1992] 1 MLJ 230). Although the industrial court invariably award compensation, instead of reinstatement, the compensation is always expressed as ‘compensation in lieu of reinstatement’. The Federal Court in the case of Unilever (M) Holdings Sdn Bhd v So Lai @ Soo Boon Lai [2015] 4 MLJ 326 held that the element of compensation in the phase ‘compensation in lieu of reinstatement’ would only arise if the employee is in the position to be reinstated. Thus, if a worker cannot be reinstated because he has passed away, the issue of compensation should not arise.
Power of the Industrial to impose interest
Previously, the failure to make payment of back-wages or compensation in lieu of reinstatement may not attract interest. The Industrial Court can now impose interest up to 8% per annum commencing from the 31st day from the day of the award, until the award is fully satisfied. The Industrial Court has the discretion to choose any other date from which the interest is to be calculated upon receiving an application by an aggrieved party within 30 days from the date of award. [Section 30(1A)].
Penalty for non-compliance of the award
The penalty for non-compliance with an Industrial Court award has been increased from RM2,000 to maximum RM50,000 [Section 56(3)]. The Industrial Court can now order a person convicted under Section 56(3) of the Act to make payment due to the worker by virtue of an order under Section 30 [Section 56(3A)]. This increase in penalty for non-compliance an award will ensure that an employer takes the award of the Industrial Court seriously.
Date of dismissal
Section 29(da) of the Act is amended to provide the Industrial Court with the power to hear and determine a matter notwithstanding the fact that the date of dismissal stated in the reference is disputed by any party in the proceeding or is incorrect [Section 29(da)]. The Industrial Court is also vested with the power to determine the date of dismissal by virtue of the Section 29(da). By virtue of this amendment, a preliminary objection on the ground that a wrong date of dismissal was stated in the representation may not be upheld.
Industrial Court empowered to hear unfair dismissal claims brought by employee of
statutory bodies
With the new Section 52(3) of the Act, any employee of a statutory body (prescribed by the Minister in a Gazette) may bring unfair dismissal claim to the Industrial Court against the statutory body.
A commentary by:
Lee Huai
Ong and Manecksha
Date: 20th January 2021