Wednesday, April 30, 2014

Malaysian Bar Resolution on Employment Relationship and 'Contractor For Labour' (2012)

Resolution on maintaining a just employment relationship, worker and trade union rights in Malaysia

Motion proposed by Charles Hector and seconded by Francis Pereira, dated 1 Mar 2012

(As amended)


(1) There has been a withering away of the rights of workers and/or their unions in Malaysia over the past years, and the most recent of this is the employment relationship, where Malaysia is in the process of amending (or has amended) the Employment Act 1955 vide the Employment (Amendment) Bill 2011, the result of which would be the legalisation of the “contractor for labour”, a third party, in an employment relationship which justly should be a two-party direct relationship between owner/operators of workplaces and their workers, who reasonably must be their direct employees.

(2) What the Malaysian government has done, earlier through policy and practice and now being legalised through the amendment of the Employment Act 1955, which was passed at the Dewan Rakyat on 6/10/2011 and the Senate on 22/12/2011, goes contrary also to international standards and principles concerning Decent Work and worker rights.  Avoiding employment relationship was being done by various means, agreements and contracts, which have been criticised even by the International Labour Organisation (“ILO”). Sadly, Malaysia goes even further by legalising evasion of employment relationships.

(3) Employment relationship in Malaysia, as also evident in our Employment Act, prior to this new amendment, was a two-party relationship between employer and worker (employee) between whom there will be a contract of service, whereby “the person or class of persons employed, engaged or contracted with to carry out the work shall be deemed to be an employee or employees and (a) the principal or owner of the agricultural or industrial undertaking, constructional work, trade, business or place of work; or (b) the statutory body or local government authority, shall be deemed to be the employer”.  Sadly, the Minister had the power to create exceptions to this general principle.

(4) The current amendments to the Employment Act 1955 now statutorily recognises a new third party in the employment relationship, being the “contractor for labour”, who unlike Private Employment Agencies, continue to remain the employer of workers that they supply to the principal or owner of the workplace, and as such the said principal or owner of the workplace effectively can avoid becoming employer of the workers working for them, and hence all employer obligations.

(5) This practice of using workers of third parties, without the entry of an employment relationship and/or contract of service, even though there was no provision in law that specifically allowed this, started on or about 2005 with essentially migrant workers through what was known as “outsourcing agents”, but as of 2010, it was no more just migrant workers but also local workers including those from Sabah and Sarawak.

(6) This new reality causes discrimination amongst workers, with regard to wages and other benefits, including also the right to join existing unions and/or to benefit from Collective Agreements, being agreements between worker-employees and their employers – the principal or owners of the workplace.

(7) In some workplaces, the workers who still are employees of the principal or owners of the workplace is about 50% or less, the rest workers there being  workers supplied to work by third parties, at a workplace. This results in an effective weakening of trade unions and their bargaining powers when it comes to collective agreements, including their struggle for better wages and work conditions.  The law does not provide any restrictions as to the number of non-employees at a workplace, and as such this may lead to a situation where even all workers in workplaces may one day be no more employees of the owner or principal of the workplace.

(8) Given the reality, that the workplace and all workers therein is still under the effective control and supervision of the principal or owners of the workplace, matters related to work and work condition, so many workers at the workplace, now treated as not employees of the principal or owner of the workplace, is deprived the right that any worker must have to be able to fight for better working conditions and work-related rights.  The third party suppliers really have no effective control or ability when it comes to improving working conditions and matters at the workplace.

(9) The reality today is also that these principals or owners of workplaces are getting workers from not one, but many different suppliers of workers (“contractors for labour”), which again would result in further discrimination. 

(10) The reality also is that suppliers of workers (“contractors for labour”) are supplying workers to many different workplaces, in many different sectors, and as such even if the workers (now considered) employees of these suppliers were to try to form a union, it is near impossible given this reality.  They also cannot join existing regional or national trade unions in Malaysia, given the fact that in Malaysia, unions are registered based on sectors, and it will be difficult for these worker/employees of the third party to form or join existing unions, given also that the flexibility of the situation that can result in overnight changing of which sectoral unions that they can join.  Effectively, these workers if they are employees of these suppliers have lost their basic freedom of association and the right to form and/or join trade unions.  Prior to this any new employee of the workplace can easily form/join trade unions, irrespective of whether they are local or migrant workers.

(11) The Private Employment Agency, as provided for in the Private Employment Agencies Act 1971, does the service of finding workers for workplaces, and once the workers are supplied, these workers automatically are employees of the principal or owners of the said workplace, and the private employment agency is paid a statutorily fixed rate for their services. This is certainly a better practice, not detrimental to a just employment relationship and worker rights. All suppliers of workers must be private employment agencies, confined to the providing of service of supplying workers, and not be made into employers themselves of the workers after they have supplied them to the principal or owners of workplaces.

(12) It must be pointed out that the Employment Act 1955 amendments were proceeded with and passed in both houses of Parliament, despite the fact that there was strong opposition and protest from workers, trade unions including the Malaysian Trades Union Congress and the International Trade Union Confederation (“ITUC”), and civil society groups.

We hereby resolve:

(1) That the Malaysian government immediately repeal the amendments to the Employment Act 1955 with regard to the employment relationship and the contractor for labour, introduced vide Employment (Amendment) Bill 2011, and pending repeal not put into effect the said amendments.

(2) That the Malaysian government do the needful to maintain existing 2-party employment relationships between principals or owners of workplaces as employers, and workers that work in the said workplaces as employees of the said principals and owners.

(3) That the Malaysian government promotes and protect worker and trade union rights in Malaysia, and not permit any form or discrimination at the workplace or related to work amongst workers doing the same work and/or working at workplaces of principals or owners.

(4) The Malaysian Bar takes the stand that labour suppliers and/or contractors of labour should never be or continue to be employers of workers after they are supplied, accepted and start working at the workplaces of principals or owners. Thereafter, these workers shall be employees of the principal or owners of the workplace.

(5) That the Malaysian Bar continues to struggle for the promotion and protection of worker and trade union rights in Malaysia, including for just employment relationship, basic living wages and freedom of association consistent with the Principles of Decent Work and other universally recognised standards and principles.

The motion, as amended, was unanimously carried.

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