All about Collective Bargaining

Definition of Collective Bargaining

Collective Bargaining is defined in the Industrial Relations Art 1967 (IRA) as negotiating with a view to the conclusion of a collective agreement (Chen, 2008). “Collective Bargaining is a process in which the representatives of a labour organization & the representatives of business organization meet and attempt to negotiate a contract or agreement, which specifies the nature of employee-employer union relationship”.  Collective bargaining is the process whereby workers organize collectively and bargain with employers regarding the workplace.

In various national labour and employment law contexts collective bargaining takes on a more specific legal meaning. In a broad sense, however, it is the coming together of workers to negotiate their employment conditions. Collective Bargaining will not be in existence without the formation and activities of Trade Union in an organization either public or private sector.

Collective bargaining is a process of voluntary negotiation between employers and workers' organizations (generally trade unions) aimed at reaching agreements which regulate working conditions. Collective agreements usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms and rights to participate in workplace or company affairs (Glossary. 2008).

The purpose and contents of Collective Bargaining

The main issues of Collective Bargaining:

·           Process involving discussions and negotiations

·           ‘collective’ – group

·           'bargaining' – proposals and counter proposals

·           to reconcile their conflicting interests

·           is a flexible approach

The main terms and conditions of employment of employees covered by Collective Bargaining:

·           wages,

·           hours of work,

·           working conditions 

·           grievance-procedures and

·           about the rights and responsibilities of trade unions.

Collective Bargaining Process

Generally, the bargaining process as below:-

·           Prepare

·           Discuss

·           Propose

·           Bargain

·           Settlement 

During the bargaining process, employees are typically represented by a trade union. (Sheffrin, Steven M. 2003). The union may negotiate with a single employer (who is typically representing a company's shareholders) or may negotiate with a federation of businesses, depending on the country, to reach an industry wide agreement.

Prepare:

This phase involves composition of a negotiation team. The negotiation team should consist of representatives of both the parties with adequate knowledge and skills for negotiation. In this phase both the employer’s representatives and the union examine their own situation in order to develop the issues that they believe will be most important. The first thing to be done is to determine whether there is actually any reason to negotiate at all. A correct understanding of the main issues to be covered and intimate knowledge of operations, working conditions, production norms and other relevant conditions is required.

Discussion:

The parties decide the ground rules that will guide the negotiations. A process well begun is half done and this is no less true in case of collective bargaining. An environment of mutual trust and understanding is also created so that the collective bargaining agreement would be reached.

Propose:

This phase involves the initial opening statements and the possible options that exist to resolve them. In a word, this phase could be described as ‘brainstorming’. The exchange of messages takes place and opinion of both the parties is sought.

Bargaining:

Negotiations are easy if a problem solving attitude is adopted. This stage comprises the time when ‘what ifs’ and ‘supposals’ are set forth and the drafting of agreements take place.

Settlement:

Once the parties are through with the bargaining process, a consensual agreement is reached upon wherein both the parties agree to a common decision regarding the problem or the issue. This stage is described as consisting of effective joint implementation of the agreement through shared visions, strategic planning and negotiated change.

In Malaysia, the collective bargaining process consists of three phases:

·           Prepare for negotiations

·           Actual face-to-face bargaining

·           Administration of the collective agreement (Chen, 2008).

Once a Trade Union is accorded recognition under Section 9 of Industrial Relation Act the union has the right to invite the employer to commence collective bargaining on behalf of all the employees (except those in the managerial, executive, confidential, personnel and security capacity). The union has to submit its proposal for a Collective Agreement. The proposals will contain terms and conditions of employment and other benefits which the Union asks for, on behalf of the employees.

Collective bargaining is the process by which the management and the union meet to discuss, propose, counter-propose, agree, disagree or defer the various items (Articles in the Collective Agreement). It is where each party tries to get the best bargain. The Union wants more of wages, allowance, sick leave, annual leave, public holidays, retirement and termination benefits, etc. The management on the other hand tries to minimise labour costs to maximise profit. If both parties agree to all Articles, a Collective Agreement is drawn up and signed by both parties. The Collective Agreement should then be jointly deposited with the Industrial Court for its cognisance.

If the process of collective bargaining fails, the unresolved terms may be referred to the Industrial Relation Department for mediation/conciliation.

If still there is no agreement on all Articles, the Industrial Relation Department will refer the matter to the Director-General of Industrial Relations who will again try to resolve the disputed Articles. If his efforts fail, he will refer the matter to the Minister who may again conciliate on the disputed Articles or refer the matter to the Industrial Court for arbitration. Once the Industrial Court decides on all Articles (disputed and agreed) it becomes an Award of the Industrial Court.

An Industrial Court Award is final and conclusive and is binding on both parties. It cannot be challenged, appealed against, quashed or reviewed by any other court of law, except for reference to the High Court on a question of law (Section 33A and 33B).

If either party fails to honour any of the Articles of a Collective Agreement, the other party has the right to file a case of non-compliance against the other party in the Industrial Court (Section 56). Majority of Industrial Court cases and its Awards are on Collective Agreement's, dismissal and Non-compliance.

When the entire agreement has been negotiated, it is signed by representatives of the organisation and the union. Ten copies of the Collective Agreement should then be lodged with the Industrial Court for its cognisance within one month of the date of its signing.

Once the collective agreement is signed, the human resource manager should organise briefing sessions for all the management staff, including the first-line supervisors to point out significant features of the new agreement, and to do a clause-by clause analysis. In this way, all the level of employee will know what their responsibilities are and what to do in the case of disagreements.

Restrictions in Collective Bargaining

Public Sector

In the public sector, the joint council system limits public sector unions to a consultative role where their only power is to "express their point of view" on principles regarding wages and working conditions. Trade unions do not have the right to take their disputes to the industrial court without the specific permission of the King of Malaysia.

Threat of the Internal Security Act (ISA): Under the Act, any person suspected of threatening national security may be detained by the police for up to 60 days without trial, a period during which the person is held incommunicado, with no access to lawyers or to family members. After this initial 60 day detention period, a two year detention order may be issued with the Home Minister’s approval. The detention order is renewable indefinitely. Trade union leaders have been repeatedly threatened in the past with this draconian law.

 

Private Sector

The Industrial Relations Act excludes hiring and firing, transfer and promotion, dismissal and reinstatement from the scope of collective bargaining. This provision allows employers to get rid of union activists with impunity, and thus serves to intimidate other workers into leaving the union. The IRA also limits collective bargaining in "pioneer" companies. The electronics industry, among others, still has this status. Since 1994, the government has claimed that measures were being taken to repeal this provision, but nothing has been done so far.

Migrant workers intimidated to not join trade unions: There are approximately 2.5 to 3 million migrant workers in Malaysia, 1.8 million of whom are documented. However, notices on work permits state that workers who are not Malaysian nationals are not allowed to join associations. Most migrant workers, who come from all over South East Asia and South Asia, work long hours, for very low pay, if any, and are often subject to verbal and physical abuse. Other trade union bodies including MTUC continually called for migrant workers to be given full rights to associate and form labour unions, and continued to advocate for that right. The system for registering migrant workers also discourages workers from asserting their rights because it grants total discretion to employers to terminate workers for virtually any reason.