How Important Is The Industrial Harmony Code of Conduct?

There have been numerous retrenchment exercises and layoffs taking place in Malaysia recently. However, the Association for Community and Dialogue (ACID) is concerned that some employers might have ignored the Code of Conduct for Industrial Harmony.

Chief statistician Mohd Uzir Mahiding believes that the unemployment rate has increased to 5% in April 2020 with about 778,800 Malaysians are without a job. This is a notable surge of 48.8% compared to the year 2019. 

Even though this extraordinary situation was created by the Covid-19 crisis and the resulting economic fallout, it does not mean employers can retrench employees with impunity, according to ACID.

ACID is concerned that some layoffs might have ignored the Code of Conduct for Industrial Harmony.

The Code of Conduct for Industrial Harmony (1975) refers to an agreement made between the Human Resources Ministry and the Malaysian Council of Employers’ Organisations (the predecessor to the Malaysian Employers Federation and the Malaysian Trades Union Congress).

The code explains that before a retrenchment exercise, the employer must first consult with employees’ representative, trade union and the ministry in charge of labour and take positive steps to prevent or decrease reductions of the workforce by the adoption of appropriate measures, such as:

• limitation on recruitment, 

• restriction of overtime work, 

• restriction of work on a weekly day of rest, 

• reduction in the number of shifts or days worked in a week, 

• reduction in the number of hours of work or retraining or transfer to other departments.

According to ACID, the code also provides that if retrenchment is inevitable, the employer should take the following actions:

• Give as early a warning, as practicable, to the workers involved;

• Introduce schemes for voluntary retrenchment and retirement, and for payment of redundancy and retirement benefits;

• Retire workers who are past their normal retirement age;

• Assist in cooperation with the Human Resources Ministry for the employees to find work outside the undertaking;

• Spread termination of employment over a longer period;

• Ensure that no such announcement is made before the employees and their representatives or trade union have been notified.

ACID questioned whether the employers adhered to above principles from the beginning of the movement control order (MCO). According to it, the enduring problem that has been disputed in court for many years is whether compliance with the code is mandatory and whether a failure to comply with the code would result in an otherwise fair retrenchment being considered as unfair.

ACID believes that there are different interpretations of the code within the legal community where some see it as simply a guide to employers and unions without the force of law, while others see as an important code to make sure there are no unfair labour practices.

Hence, ACID urged the Human Resources Ministry to review and observe organisations effectively on whether they have followed the principles of the Code of Conduct for Industrial Harmony in the current retrenchment exercise.

According to ACID, the principles should be given a legal force to ensure that unethical employers will not take advantage of extraordinary situations to retrench their workers without proper consultation that takes various solutions into account. Retrenchment should always be the last resort, it added.
 

Source: MalaysiaKini

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