Chapter 11

DYNAMICS OF EMPLOYEE
RELATIONS
Chapter 14 in Ab. Aziz & Tan (2014)

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Learning Objectives
At the end of this chapter, you should be able to:
1. Define industrial relations.
2. Discuss industrial relation system.
3. Identify the role of trade unions.
4. Discuss collective bargaining and its process.
5. Define grievance.
6. Describe grievance procedure.
7. Describe the legal forms of industrial action.
8. Identify the methods of trade dispute settlement.

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Industrial Relations System

Also known as labour relations or employee relations.
Refers to the relationship between an employer and his
employees or union.
A good industrial relation system involves complex
relationships between:
1. Employers (and their professional associations, managers, and
formal organisations like trade).
2. Workers (and their formal and informal groups such as
organisations and their representatives and trade union).
3. The government, government agencies, independent
agencies,
Advisory Conciliation, and Arbitration Service.
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Environmental factors

Management

Harmonious
workplace

Government
agencies

Environmental factors

Environmental factors

Labour
(employees/union)

Environmental factors
Figure 14.1 Industrial Relations System
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The Roles of Union

Trade Union is an organisation whose membership consists
of workers and union leaders, united to protect and promote
their common interests.
The principal purposes of a trade union are to:
Negotiate wages and working condition terms;
Regulate relations between workers and the employer;
Take collective action to enforce the terms of collective
bargaining;
Raise new demands on behalf of its members; and
Help settle their grievances.
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 The common roles that trade unions have undertaken

can be summarised as:
a) Regulation
b) Representation and Negotiation
c) Information and Service

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Types of Unions
a) National and Regional Unions
Recruit members from workers in different companies in
the same industry or workers in the same trade or
occupation.
Their membership is not restricted to a particular
establishment but geographically, a national union can
only recruit its member from Peninsular Malaysia, or
Sabah, or Sarawak.

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b) In-House Unions
In-house unions are formed by workers in a company or
organisation whereby membership is confined to
employees in that particular company.

c) Employer Associations
Employers can also form unions or associations as they
are commonly called.
Examples: The Association of Hotel Employers; The
Malaysian Association of Human Resource Consultants.

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Collective Bargaining
Section 2 of the Industrial Relation Act 1967: Collective
bargaining means negotiating with a view to the conclusion
of a collective agreement.
Collective bargaining will not be in existence without the
formation and recognition of trade union in an organisation.
The main terms and conditions of employment that are
always negotiated in the collective bargaining involve:
a) Wages and benefits
b) Hours of work
c) Working conditions.

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The collective bargaining process consists of three phases:

Phase 1: Preparation for negotiation

Begins when a trade union submits a proposal for a
collective agreement to an employer.
The employer must respond to the invitation within 14 days
from the date of proposal.

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Phase 2: Bargaining
Collective bargaining must be carried out within 30 days from
the date of invitation acceptance.
If the employer refuses to negotiate, or fails to reply within the
stipulated time, the union may notify the Director of General
Industrial Relations to take steps towards conciliation.
If the parties (either representative of employees or employer)
are still unable to agree on terms, the Minister of Human
Resources may refer their dispute to the Industrial Court for
arbitration.

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Phase 3: Signing and administration of collective

agreement.
When a consensual agreement is reached, the agreement
must be signed by representatives of the organisation and
the union.
The outcome of collective bargaining is collective
agreements.
Collective agreement is a written agreement between
employers and employees that regulates the employment
terms and conditions of employees in the workplace.

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Grievance
Refers to any matter raised by employees to show their
dissatisfaction towards management practices.
Grievance may exists when there is unfairness of rewards
allocation, performance evaluation, discrimination, lack of
appreciation, neglected promotion chances, as well as
sexual harassment or unsafe working conditions.

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Grievance Procedure
Step1: Make a complaint to his/her immediate supervisor who
is responsible to solve the complaint.
Step 2: If the immediate supervisor is unable to settle the
complaint within the determined time, he/she may refer it to
the Head of Department.
Step 3: If the Head of Department fails to settle it within the
stipulated time, the employee may bring the matter to the
attention of Chief Executive Officer (CEO) of the organisation
for the settlement.

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Industrial Actions
In the event the organisation fails to resolve the
grievances, a dispute is created.
Trade dispute is any disagreement between the employer
and employees, which is connected with the employment
or non-employment matters leading to industrial actions.
Industrial actions is taken by employees or employer to
force/persuade either parties to give into their demands.

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 The only forms of employee or employer industrial action

recognised by the labour laws in Malaysia are:

a) Picket
Workers can picket at or near their place of
work, provided:
(a) They do not obstruct the exits or entrances
(b) They do not intimidate anyone
(c) Their activities are peaceful

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b) Strike
The strike arises when a large number of workers
stop working in protest.
Only members of a registered trade union may
strike.
They must have an unsettled trade dispute with their
employer.
They must take a secret ballot to find out what
percentage of those involved in the dispute agree to
holding a strike.

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c) Lock-out
Is an industrial action initiated by the employer.
Employer withholds the work from employees by
disallowing them access to the work station for a
period until certain terms are agreed to.

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Procedure for Settling Disputes

There are three main methods for settling trade disputes:

a) Direct negotiation
Occurs when two or more conflicting parties meet
together by means to resolve their conflict by
reviewing the terms of their interdependence.
Direct negotiation is the fundamental form of
dispute resolution.

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b) Conciliation
This method can only be taken when the direct
negotiation fails.
Either the employer or the union can report the
matter to the Director General of Industrial Relations
to appoint a neutral party, that is, the officers of the
Department of Industrial Relations to serve as the
mediator.
The officer only can act as an advisor and cannot
force the parties to accept his/her proposals for
agreement.
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c) Arbitration
Arbitration is the final process of trade dispute
settlement.
Can only be taken when the conciliation fails.
The Industrial Court is empowered to settle trade
disputes.
Once the dispute is in the process of hearing, both
parties can no longer try to reach an agreement
on their own outside the court.
Industrial Courts decisions are final and both parties
have to comply with its awards.
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