Report in which the committee requests to be kept informed of development - Report No 391, October 2019

Case No 3334 (Malaysia) - Complaint date: 16-JUL-18 - Closed

Allegations: The complainant alleges violations of freedom of association and collective bargaining rights

1. 349. The complaint is contained in a communication dated 16 July 2018 from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF).
2. 350. The Government provided its observations in communications dated 12 March and 10 September 2019.
3. 351. Malaysia has ratified the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). It has not ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87).

A. The complainant’s allegations

1. 352. In its communication dated 16 July 2018, the IUF alleges violations of freedom of association and collective bargaining rights by the management of the Hilton Kuala Lumpur Hotel (hereafter “the hotel”).
2. 353. The IUF alleges that the Government of Malaysia has failed to effectively uphold its obligations under Conventions Nos 98 and 87 by allowing the management of the hotel to exploit the weakness of the legal industrial relations system for the past five years to prevent workers employed at the hotel from legally forming and registering a trade union and exercising their right to collective bargaining. The IUF points out that these obstacles to the exercise of freedom of association and collective bargaining are systemic and are not limited to this case, the details of which, it outlines as follows.
3. 354. On 8 April 2013, the hotel workers submitted a claim for recognition of the National Union of Hotel, Bar and Restaurant Workers (NUHBRW) as their collective bargaining representative in a letter to the management. Following the request for recognition, on 30 April 2013, the union informed the Director-General of Industrial Relations that the hotel management had not responded to their letter within the required 21 days. The hotel had eventually responded to the union on 6 May 2013 by denying the recognition on the grounds that the management was unconvinced that the union had recruited a majority of the employees as members.
4. 355. The union wrote to the Director-General of Industrial Relations on 3 June 2013 requesting that a secret ballot be held as soon as possible. On 19 June 2013, the union received a letter dated 23 May 2013 from the Director-General of Industrial Relations requesting specific documents; the union provided the requested documents that same day.
5. 356. On 24 July 2013, the union wrote to the Director of Trade Unions requesting the results of the investigation to determine the scope of union representation so that the union could formally request the Director-General of Industrial Relations to fix a date for a secret ballot election. On 15 August 2013, the union received a reply from the Director of Trade Unions stating that the conclusions of the investigation had been forwarded to the Director General of Industrial Relations on 10 July 2013. The union accordingly wrote to the Director General of Industrial Relations on 20 August 2013 requesting it to hold a meeting to fix the date for the secret ballot as soon as possible.
6. 357. On 13 September 2013, the union once again wrote to the Director of Industrial Relations Kuala Lumpur stating that it had been informed that the Department was waiting for the hotel to submit a list of its employees before calling a meeting to fix the date for the secret ballot. The union emphasized that the hotel could easily furnish the list of names since it was computerized, hence, there was no acceptable reason for the delay.
7. 358. The Director of Industrial Relations Kuala Lumpur wrote to the union and the hotel on 22 October 2013 advising that a meeting was scheduled for 11 November 2013. During the meeting, the union was informed that the hotel had disputed the inclusion of employees in the position of team leader/supervisor. The hotel claimed that they should be excluded from the union membership and representation as their positions entail serving in a managerial, executive, confidential or security capacity, categories referenced in section 9 of the Industrial Relations Act (IRA), 1967. The union offered to exclude the workers in disputed positions from the secret ballot and to proceed with the election on the understanding that the status of the contested employees could be resolved subsequently. The hotel maintained, however, that once excluded from the secret ballot, the disputed employees were to be definitively excluded from the possibility of union membership and representation. The union rejected this proposal and requested the hotel to provide a list of names and job descriptions of the team leaders/supervisors for the next meeting scheduled for 22 November 2013.
8. 359. During the 22 November 2013 meeting, the hotel management declared that out of a total workforce of 750 employees, 200 were in the position of team leaders/supervisors and ineligible for union membership; it rejected the union’s request to furnish a list of their names, positions and responsibilities. The management has also insisted that no secret ballot could be held until the scope of union representation was defined. A Government representative chairing the meeting indicated that she would interview the employees and submit an official report.
9. 360. In a letter dated 19 March 2014, the Director of Industrial Relations Kuala Lumpur informed both parties that she had officially reported her findings for further action. Following further delay and communication by the union, on 14 July 2014, the Director General of Industrial Relations informed both parties that the Government had determined, pursuant to section 9 of the IRA, that the positions of team leader (food and beverages operations), kitchen coordinator (culinary department), secretary (engineering department) and bell captain involved managerial, executive, confidential and security capacity and therefore, these employees were ineligible for union membership.
10. 361. On 17 July 2014, the union acknowledged receipt of the decision and once again requested the Director of Industrial Relations Kuala Lumpur for a meeting to schedule a secret ballot. On 24 September 2014, when the union inquired by phone why their letter remained unanswered, it was informed that the hotel had failed to respond and would face prosecution. On 30 September 2014, the union sent a letter inquiring as to the progress of the prosecution. In his reply, the Director-General of Industrial Relations indicated that the investigation had been suspended due to the judicial review of the scope of representation sought by the hotel in the Court of Appeal and that the investigation would continue following the outcome of the appeal.
11. 362. On 15 July 2017, more than four years after the union’s application to register, it was informed by the Department of Industrial Relations Kuala Lumpur that the appeal filed by the hotel was still pending. A conciliation meeting between the parties was scheduled for 25 July 2017. As the hotel management failed to attend it, another meeting was scheduled for 5 September 2017. However, the management failed to attend it as well.
12. 363. When representatives of the management and the union met at the Department of Industrial Relations Kuala Lumpur on 2 October 2017 to sign a memorandum for a secret ballot to take place at the hotel on 29 November 2017 between 10 a.m. and 4.30 p.m., the management objected to the election venue. On 30 October 2017, the Department of Industrial Relations informed the hotel in writing that the ballot would be held as scheduled at the hotel premises and requested its full cooperation, failing which it would face prosecution for violation of the IRA and Regulations (2003). The voting process was prevented from proceeding when the hotel management announced that they had filed a court application challenging the use of the company as the election venue.
13. 364. On 22 May 2018, the High Court dismissed the hotel application and authorized the secret ballot to take place at the hotel premises. The complainant points out that assuming that there are no further legal obstacles, if the election takes place it will be on the basis of an employee list agreed to in 2013, which does not take into account the changes that occurred in the hotel staffing and arbitrarily excludes a large number of staff on the basis of an imputed managerial authority, confidentially and security grounds.
14. 365. The IUF alleges that the requirement that both parties agree on a list of workers in order for a secret ballot to be held allows an employer to block the recognition of a union for an indefinite period. It further alleges that the Department of Industrial Relations lacks sufficient authority to compel the employer to cease repeatedly challenging the list. According to the IUF, such an abuse of the system is not limited to the present case. On 31 May 2000, the NUHBRW applied for recognition at the Kuala Lumpur Hotel Istana; the legal recognition was only granted on 28 February 2017. Similarly, it applied for recognition at the KLIA Airport Hotel on 26 July 2005; the recognition was approved only on 18 July 2013. The IUF thus considers that violations of freedom of association and collective bargaining are systemic.
15. 366. In addition, the IUF considers that the broad definition of “team leader/supervisor” allowing the exclusion from union eligibility of some 200 workers at the hotel constitutes an egregious violation of freedom of association. The complainant also alleges that the system of secret ballot elections, as currently established in practice, may allow for workers to be denied their rights. In this respect, it considers that the decision by the Department of Industrial Relations to hold the secret ballot in a large establishment where workers are employed on continual shifts for a mere six-and-a-half hours effectively disenfranchises many employees and allows the employer to limit participation through scheduling, rostering, etc. According to the IUF, any election, if it is to have democratic legitimacy, must clearly take place over a longer period and in a manner which permits a maximum number of workers to take part without undue inconvenience. The IUF questions whether the secret ballot process, as currently practised, meets this criterion.
16. 367. The complainant believes that to remedy the ongoing violations at the hotel, the Government needs to engage in a fundamental review of the current laws and procedures regarding the establishment of trade unions.

B. The Government’s reply

1. 368. In its communications dated 12 March and 10 September 2019, the Government indicates that the IRA recognizes the right of workers to form a trade union and exercise their bargaining rights. For the purpose of collective bargaining, the law requires the trade union to seek recognition before inviting the employer to commence collective bargaining. The Government explains that the NUHBRW is a registered national union since 3 January 1963. However, the existing legislation (section 9(4) of the IRA) allows the management to challenge the union claim for recognition if it believes the union does not represent the majority of workers.
2. 369. The Government indicates that in the present case, the Department of Industrial Relations requested, on 20 May 2013, the Director-General of Trade Unions to instigate the issue of competency under 9(4B) of the IRA. The union was informed that the Department had not received Form B (Particulars of workmen) from the employer. Reminders were sent to the hotel on 22 August and 13 September 2013.
3. 370. The Department then conducted a meeting between the parties on 11 November 2013 during which the management claimed that workers employed as “team leaders” should be excluded from the union representation as they are employed under executive capacity and are not supposed to be represented by the union as per section 9(1) of the IRA. As a dispute arose regarding this matter, the Department requested the employer to lodge an official complaint under section 9(1A) of the IRA and the meeting was rescheduled for 22 November 2013. During that meeting, the Department informed the union and the hotel that an investigation regarding the capacity issue of “team leader” would be carried out. On 10 July 2014, the Minister of Human Resources made a decision that workers employed as team leaders are engaged in executive capacity and therefore ineligible for union membership. Afterwards, the Department could not proceed with a secret ballot as the management challenged the Minister’s decision on the capacity issue through a judicial review.
4. 371. Since the hotel management failed to attend several meetings, the Department decided that a secret ballot should be held on 29 November 2017 from 10 a.m. to 4.30 p.m. However, the Department had to stop the secret ballot process at 3 p.m. upon notification by the Attorney General that the hotel management obtained a stay order from the High Court. The Department is now awaiting feedback from the Attorney General’s Chamber regarding actions to be taken after the High Court’s decision. The Government indicates that the union did not raise any objection after the Department made the decision on the time allotted for the secret ballot.
5. 372. The Government emphasizes that the law does not deny the right to form a trade union and to bargain collectively to employees in managerial, executive, confidential or security capacity; the law only prohibits trade unions for managerial, executive, confidential or security capacity to represent employees that are not confined to their own categories.
6. 373. The Government indicates that the Ministry is embarking on the review of the recognition process both in the IRA and the Trade Union Act (1959). The review is being done with the ILO technical assistance through the Labour Law and Industrial Relations Reform Project.

C. The Committee’s conclusions

1. 374. The Committee notes that the complainant in this case, the IUF, alleges that for the past five years, the employer has been exploiting the weaknesses of the industrial relations system to prevent the workers of the hotel from legally forming and registering a trade union and exercising their right to collective bargaining. The Committee further notes that the allegations refer to the delays caused by the employer to recognize the union, an excessively broad definition of “team leader/supervisor”, which precludes many workers from exercising freedom of association and collective bargaining rights, and the existing secret ballot system, which, according to the complainant, allows employers to limit the participation of workers through various means. The Committee observes that while this case involves a particular company, the IUF alleges that due to the existing legislation and practice, violation of freedom of association and collective bargaining rights are systemic and that a fundamental review of the laws and procedures needs to be carried out.
2. 375. The Committee notes that the Government does not dispute the particulars of the case as described by the IUF and which can be summarized as follows. The workers of the hotel first submitted a claim for recognition of the NUHBRW as their collective bargaining agent on 8 April 2013. On 6 May 2013, the management of the hotel denied the requested recognition on the grounds that the union had not recruited a majority of the employees as members. On 3 June 2013, the union requested the Director-General of Industrial Relations to hold a secret ballot. Once the Department of Trade Unions has carried out its investigation to determine the scope of the union representation, the union requested the Department of Industrial Relations to fix the date for the secret ballot by a letter of 20 August 2013. Having learned that the hotel management was delaying the submission of the list of its employees, the union wrote to the Director of the Industrial Relations Kuala Lumpur once again on 13 September 2013. On 22 October 2013, the Director of Industrial Relations Kuala Lumpur wrote to both parties informing them that a meeting was scheduled for 11 November 2013. During the meeting, the company disputed the inclusion of employees in the position of a “team leader/supervisor” in the scope of representation of the union, claiming that their positions entailed serving in managerial, executive, confidential or security capacity. Despite the union’s offer to exclude workers in the disputed positions from the secret ballot and to proceed with the election on the understanding that the status of the contested employees could be resolved subsequently, as allowed by section 9(1A) of the IRA, the hotel management allegedly maintained that once excluded from the secret ballot, the disputed employees were to be definitively excluded from the possibility of union membership and representation. The union opposed this position and requested a list of names and job description of the employees in question. At the next meeting, held on 22 November 2013, the hotel management declared that out of a total workforce of 750 employees, 200 were team leaders/supervisors. The hotel management insisted that no secret ballot could be held until the scope of the union representation is defined; at the same time, it denied the union’s request for a list of names, positions and responsibilities. The Director of Industrial Relations Kuala Lumpur indicated that she would interview the employees and submit an official report. On 14 July 2014, the Director-General of Industrial Relations informed both parties that the positions of team leader (food and beverages operations), kitchen coordinator (culinary department), secretary (engineering department) and bell captain were ineligible for union membership.
3. 376. On 17 July 2014, the union once again requested a meeting to schedule a secret ballot. On 24 September 2014, the union was informed that the hotel failed to respond to the Department of Industrial Relations’ request for a meeting and was going to face prosecution. On 1 October 2015, the union was informed by the Director-General of Industrial Relations that the hotel sought a judicial review of the scope of representation, which effectively suspended the investigation. As the appeal was still pending in July 2017, two conciliations meetings were scheduled in July and September of the same year, which the hotel management failed to attend.
4. 377. The parties finally met on 2 October 2017 to sign a memorandum providing for a secret ballot to take place at the hotel premises on 29 November 2017. The management objected and challenged the use of its premises for election purposes. On 22 May 2018, the High Court dismissed the company’s application, authorizing the secret ballot to take place at the hotel. The Committee understands that as of the date of the Government’s reply, the election has not taken place as it was awaiting feedback from the Attorney General’s Chamber regarding the actions to be taken after the High Court’s decision.
5. 378. The Committee deeply regrets that six years after the union first submitted its requests for recognition, this question is still pending and consequently, the workers at the hotel are precluded from exercising their freedom of association and collective bargaining rights. The Committee notes that, on the one hand, the excessive delay has been caused by the employer’s no-shows at meetings called by the Director-General of Industrial Relations and the systematic appeal of decisions and that, on the other, the legislation and practice in place would appear to facilitate such delays. The Committee regrets that, despite being invited to solicit information from the employers’ organization concerned with a view to having its views as well as those of the enterprise concerned, no information has been provided by the Government in this respect.
6. 379. The Committee recalls that the recognition by an employer of the main unions represented in the undertaking, or the most representative of these unions, is the very basis for any procedure for collective bargaining on conditions of employment in the undertaking. It further recalls that the competent authorities should, in all cases, have the power to proceed to an objective verification of any claim by a union that it represents the majority of the workers in an undertaking, provided that such a claim appears to be plausible. If the union concerned is found to be the majority union, the authorities should take appropriate conciliatory measures to obtain the employer’s recognition of that union for collective bargaining purposes [see Compilation of decisions of the Committee on Freedom of Association, sixth edition, 2018, paras 1355 and 1366].
7. 380. Regarding the exclusion of workers employed as “team leader/supervisor” from union representation, the Committee notes the Government’s indication that the law does not deny the right of the employees in managerial, executive, confidential or security capacity to form a trade union and exercise collective bargaining rights but only prohibits trade unions for those employees to represent employees from other categories. The Committee recalls that it has dealt with this issue in Case No. 2717 (see Report No. 356, paras 840–841). On that occasion, it noted, in particular:
   • 840. … that the IRA provides no definitions for the above noted categories, but stipulates rather that whether a particular occupation falls into any of the said categories is a matter to be determined by either the Director-General of Industrial Relations (section 9(4)) or the Minister of Human Resources (section 9(5)).
   • 841. As concerns managerial and supervisory staff, the Committee recalls that it is not necessarily incompatible with the requirements of Article 2 of Convention No. 87 to deny managerial or supervisory employees the right to belong to the same trade unions as other workers, on condition that two requirements are met: first, that such workers have the right to establish their own associations to defend their interests and, second, that the categories of such staff are not defined so broadly as to weaken the organizations of other workers in the enterprise or branch of activity by depriving them of a substantial proportion of their present or potential membership [see Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 247]. Moreover, the Committee has taken the view that the expression “supervisors” should be limited to cover only those persons who genuinely represent the interests of employers [see Digest, op. cit., para. 248]. The Committee has previously recognized that limiting the definition of managerial staff to persons who have the authority to appoint or dismiss is sufficiently restrictive to meet the condition that these categories of staff are not defined too broadly, and that a reference in the definition of managerial staff to the exercise of disciplinary control over workers could give rise to an expansive interpretation which would exclude large numbers of workers from workers’ rights. …
8. On that occasion, the Committee requested the Government to take the necessary measures to amend the IRA 1967 so as to ensure that: (1) the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss; and (2) managerial and supervisory staff have the right to establish their own associations for the purpose of engaging in collective bargaining (see Report No. 356, para. 841).
9. 381. The Committee notes the Government’s indication that it was in the process of amending the provisions of the IRA and the Trade Union Act dealing with recognition, in cooperation with the ILO. The Committee expects that the necessary legislative amendments aimed at ensuring that the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss, will be prepared in consultation with the social partners and adopted without further delay. It requests the Government to keep it informed of the developments in this regard. In the meantime, the Committee requests the Government to take the necessary measures to ensure that the secret ballot for the recognition of the NUHBRW as the collective bargaining agent of the workers in question is held without delay, either on the basis of the updated employee list or on agreement that the status of the contested employees will be resolved subsequently. It requests the Government to keep it informed in this respect.
10. 382. As to the allegation that the secret ballot procedure allows employers to limit the participation of workers through various means, the Committee requests the Government to review in consultation with the social partners the existing secret ballot system in the framework of the above-mentioned legislative reform. It requests the Government to keep it informed in this regard.
11. 383. The Committee wishes to conclude by recalling the importance it attaches to measures being taken to facilitate the establishment and growth, on a voluntary basis, of free, independent and representative employers’ and workers’ organizations, and their recognition for the purposes of collective bargaining, it also emphasizes the importance of mutual trust and confidence for the development of harmonious labour relations.

The Committee’s recommendations

1. 384. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) The Committee expects that the necessary legislative amendments aimed at ensuring that the definition of managerial and supervisory staff is limited to those persons who genuinely represent the interests of employers, including, for example, those who have the authority to appoint or dismiss, will be prepared in consultation with the social partners and adopted without further delay. It requests the Government to keep it informed of the developments in this regard.
   • (b) The Committee requests the Government to take the necessary measures to ensure that the secret ballot for the recognition of the NUHBRW as the collective bargaining agent of the workers in question is held without delay, either on the basis of an updated employee list or on agreement that the status of the contested employees will be resolved subsequently. It requests the Government to keep it informed in this respect.
   • (c) The Committee requests the Government to review in the framework of the above-mentioned legislative reform and in consultation with the social partners, the existing secret ballot system. It requests the Government to keep it informed in this regard.