New amendments to the Industrial Relations Act 1967 ("IRA 1967") came into force with the new year, heralding significant changes to employment-related litigation, especially at the higher levels of court.
Although the amendments were initially passed in early 2020, the subsequent change in government and looming pandemic had left the effective date of the changes an open and unanswered question until late last year.
Notably, while the amendments as passed included significant reforms to trade union-related matters, only certain provisions have entered into force with the new year, and these relate primarily to how industrial relations cases (and unfair dismissal cases in particular) are litigated at the Industrial Court and above.
These amendments are not retrospective, and will only apply to cases which have been filed from 2021 onwards. Most relevantly, these amendments comprise of the following:
[A] Dispensation of Ministerial Discretion [ss. 9 and 20]
Under the previous scheme of the IRA 1967, any claim of recognition by a trade union or representation of unfair dismissal by a workman had to be notified to the Minister of Human Resources, who had the discretion to decide whether recognition should be accorded or refer the representation of unfair dismissal to the Industrial Court for adjudication.
Moving forward, claims of recognition will not be decided by the Minister, but rather directly by the Director-General of Industrial Relations upon completing the necessary enquiries and conducting a secret ballot of all eligible workmen.
Likewise, representations on unfair dismissals will no longer be subject to Ministerial discretion, and will be directly referred to the Industrial Court in the event reconciliation fails at the Industrial Relations Department.
In real terms, this amendment removes a long-standing bottleneck in industrial relations adjudication; given that the Ministerial reference was oftentimes a formality and could itself become the subject matter for protracted litigation, this change streamlines the litigation process and helps to ensure cases are brought to the Industrial Court more quickly.
[B] Disputes on Date of Dismissal and Deceased Workmen [s. 29]
Under the old regime, prevailing case law had held that the date of dismissal (as contained in the Ministerial reference) was a central facet to the viability of a claim of unfair dismissal, meaning that a challenge to the stated dismissal date would go to the root of the Industrial Court's jurisdiction and could render a claim void or vulnerable to challenge via judicial review proceedings. Moreover, it had been held that a workman's unfair dismissal claims were personal to him, and abated immediately upon his death irrespective of merits.
Now, however, any dispute as to the date of dismissal falls within the scope of the Industrial Court's power to determine in the course of hearing the claim, and the claims can proceed even where the workman has passed prior to the determination of his claim (and ).
[C] Introduction of Interest on Award Sums [s. 30]
Pursuant to the amendments to the IRA 1967, any monetary sum awarded by the Industrial Court will now carry interest at the rate of eight percent (8%) per annum "or such lesser rate as the Court may direct, the interest to be calculated commencing on the thirty-first day from the date of the making of the award until the day the award is satisfied".
This is in stark contrast to the previous scheme, whereby Industrial Court Awards did not carry any fixed interest.
[D] Appeals Against Awards [s. 33C]
Perhaps the most significant change to industrial relations adjudication is the introduction of a statutory appeal process to challenge Industrial Court Awards. Historically, a dissatisfied party had to resort to judicial review at the High Court in order to have Awards set aside, varied or remitted back for re-hearing.
Beyond the fundamental procedural changes flowing from this amendment, there are several key considerations for stakeholders, including the following:
Deadline to Challenge Reduced to Fourteen (14) Days
Under the judicial review process, a party would have three (3) months from the date of receiving the Award to file their application for review. Now, however, this timeframe is drastically reduced, as any appeal would need to be filed within fourteen (14) days of receipt of the Award.
High Court may Scrutinise Merits and Reconsider Evidence
Judicial review is traditionally limited in scope, and a party would have to demonstrate that the existence of significant illegality, irrationality or procedural impropriety in order to succeed in challenging an Industrial Court Award.
Now, the High Court will have an expanded scope as an appeal is a rehearing on the merits of the case, and it will no longer be limited to the previous limbs. This will enable the High Court to delve into the full facts and circumstances of the case and reach its own decision on the same.
Case Ends at the Court of Appeal
A case commenced via judicial review entails the original jurisdiction of the High Court, which in turn means that it may ultimately go all the way to the Federal Court. However, where the High Court hears the case in its appellate jurisdiction, the final arbiter would be the Court of Appeal (see: s. 96 of the Courts of Judicature Act 1964).
Judicial Review Extinguished?
It is to be noted that this amendment does not extinguish the right of a party to seek judicial review, which is always at the discretion of the civil courts. However, the superior courts have held that where the avenue of appeal exists, judicial review is only available in exceptional circumstances, i.e. (i) where there is a clear lack of jurisdiction; (ii) where there has been a blatant failure to perform some statutory duty; or (iii) where there is a serious breach of the principles of natural justice.
In any other case, judicial review would not be permitted to supplant the appeal process.(see: Government of Malaysia & Anor v. Jagdish Singh [1987] CLJ Rep 110 (Supreme Court); Iskandar Coast Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2019] 7 CLJ 143 (Court of Appeal).)
[E] Augmented Penalties for Non-Compliance [s. 56]
The amendments have also increased the penalties for any party who does not comply with an Industrial Court Award, whereby the limit of any fine imposed has been increased from RM2,000 to RM50,000.
The court imposing the above fine has also been given the additional power to directly order the party to make payment in accordance with the Award, if necessary.
Moving Forward
These amendments represent the most significant changes to industrial relations adjudication in decades; introducing new procedures, creating new rights and obligations and reposing new powers.
Employers must bear in mind the various ways in which these amendments are likely to affect them, in particular, with the imposition of interest on Award sums and increased penalties for non-compliance, and of course the fundamental change to litigation timelines in the event they intend to challenge an adverse decision from the Industrial Court.
On a positive note, stakeholders may hopefully enjoy a streamlined adjudication process, with reduced time wasted waiting for a workman's representation to be referred to the Industrial Court for adjudication. In real terms, this may work to reduce financial exposure for employers, as this time has traditionally translated to part of any backwages which may be ordered.
Ultimately, however, these amendments and the changes they represent will need to be tested and clarified through judicial interpretation, and it remains to be seen how Malaysian industrial jurisprudence will shift and grow in light of these new developments.
About the Author:
David Tan Seng Keat is a Partner at T. Thavalingam & Co., specialising in trade disputes, unfair dismissal and non-compliance claims in the Industrial Court and appellate and review matters in the civil courts.
If you have any questions or would like to know more, please contact the author at dt@tt-co.com.my.