Job security for workers

I rise under Standing Orders 49 to move a motion to seek leave of the House to introduce a private member’s bill named Employment (Unfair Dismissal) Bill 1976.

The purpose of this Bill is to guarantee to the worker the security of tenure in his job by conferring upon him the right not to be abruptly or unfairly dismissed, and the right to reinstatement or compensation for such unfair dismissals.

At present, a worker has no job security as his services can be properly terminated provided the employer complies with the requisite minimum notice stipulated by Section 12(3) of the Employment Ordinance 1955.

Thus Section 12 of the Employment Ordinance 1955 reads:

“12.(1) Either party to a contract of service may at any time give to the other party notice of his intention
to terminate such contract of service.

(2) The length of such notice shall be the same for both employer and labourer and shall be
determined by any provision made for such notice in the terms of the contract of service, or , in the absence of such provision, shall be in accordance with the provisions of sub-section (3).

(3) The notice to terminate the services of a person who is employed under a contract of service shall
be not less than –

(a) one week’s notice if he has been so employed for less than two years;

(b) two week’s notice if he has been so employed for two years or more but less than five years;

(c) four week’s notice if he has been so employed for five years or more.”

Section 13(1) of the Employment Ordinance reads:

“Either party to a contract of service may terminate such contract of service without notice or if has already been given in accordance with Section 12, without waiting for expiry of that notice, by payment to the other party a sum equal to the amount of wages which would have accrued to the labourer during the term of such notice.”

Thus, an employer can properly terminate the services of an employee who had spent, say, 15 to 20 years in his employment by four weeks’ notice of termination as provided by Section 12 of the Employment Ordinance.

This is clearly unfair where an employee had not been guilty of either incompetence or misconduct. There can be no comparison between the consequences for an employer if an employee terminates the contract of employment and those which will ensue for an employee if his service is terminated by the employer.

In reality people build much of their lives around their jobs. Their incomes and prospects for the future are inevitably founded in the expectation that their jobs will continue. For workers in the majority of instances, not only dismissals, but also proper termination of service, is a disaster. It may involve the uprooting or even the breaking up of homes and families. Older workers will find the greatest difficulty in getting work at all.

We in Malaysia must recognize what is really at stake for an employee when his job is involved. Just as the employer has the interest in planning production and in being protected against its interruption, similarly, workers have the equivalent interest in planning his and his family’s life and in being protected against interruption in his mode of existence through the loss of his job.

The need to provide statutory protection to workers to guarantee to them security of job tenure is particularly acute in sectors where workers are less highly organized, or not organized at all. We will appreciate the magnitude of this problem when we realize that only some 10% of the work force in Malaysia is organized.

Workers who are members of strong unions can use their industrial power to protect themselves against unfair dismissals, including proper termination of notice by the employer. The majority of workers however are not unionized to be able to enjoy this protection.

The new concept of ‘unfair dismissal’ introduced by the proposed employment (Unfair Dismissal) Bill 1976 is designed to provide protection to employees, whether organized or unorganized, from loss of employment unless for reasons of incompetence or of misconduct.

The giving of proper notice or termination where the reason is neither incompetence or misconduct does not make such a termination fair, and under the proposed Bill, it will be considered as ‘unfair dismissal’.

It is a grave defect in the labour law that there is no clearly enunciated tight of the workers not to be unfairly dismissed, or have his services unfairly terminated, and to accord to all employees the right to stability of employment.

At present, a worker who is not a member of a trade union who “considers that he has been dismissed without just cause or excuse by his employer” may have some remedy if he can bring his case within Section 17(A) of the Industrial Relations Act.

But this is a most unsatisfactory and tortuous process, and among the many unsatisfactory features is the provision vesting absolute discretion on the Minister, if he thinks fit, to refer or not to refer the representations to the Industrial Court, without the need to give any supporting reasons.

Workers given a raw deal

In refusing to give reasons, the Minister of Labour in cases referred to him under Section 17(A) has failed to act impartially and neutrally for there is no way to ascertain whether he has made an objective assessment of the respective merits of the parties in the complaint against “dismissal without just cause or excuse”, or whether he has arrived at a decision with a closed mind or had taken irrelevant considerations into account. The basis of public confidence and acceptability is also lacking as the proceedings before the Minister is wholly secret.

I have come across many cases where representations were made to the Minister of Labour under Section 17(A) and previously under Section 16(A), where the Minister rejected the representations without any reasons being given, and where the workers were given a raw deal!

The proposed Employment (Unfair Dismissal) Bill 1976 will clearly enunciate the right of an employee not to be unfairly dismissed, including the right not to have his services unfairly terminated, and that every case of dismissal which is not because of incompetence or misconduct, an employee has a direct remedy to complain to the Industrial Court without any intervention by the Director-General of Labour or the Minister concerned.

The onus of proof is on the employer to show that the reason for the dismissal or termination of service is not ‘unfair dismissal’, in other words, it is either because of incompetence or misconduct. If the employer fails to discharge this onus, then the Industrial Court can order reinstatement, re-engagement or compensation.

Redundancy Rights

I propose to provide for separate provisions for dismissal or termination of service due to redundancy, for at present workers whose services are terminated because of redundancy or re-organisation have no proper and adequate remedy over and above the minimum period of notice provided by Section 12(3) of the Employment Ordinance.

The indirect recognition of the right to redundancy entitlement of a worker who has worked for more than three years as embodied in Section 60G of the Employment Ordinance is being repealed, by the Minister of Labour, which will come before the Dewan probably later today.

This is most inconsistent with the declared objective to protect the legitimate rights of workers. A worker of long standing must be recognized as having an accrued right in his job; and his right gains in value with the years. So much so that, if the job is shut down, he is entitled to compensation for loss of office.

Basis for Fair Compensation

I also intend to provide the basis for the computation of compensation for unfair dismissal, as the present common law computation of compensation for wrongful dismissal and the industrial court award of compensation for dismissal “without just cause or excuse” are grossly inadequate.

Thus, under common law, the compensation for wrongful dismissal is strictly limited. It means that if an employee is dismissed without due notice he can claim the payment of wages he would have earned for the period of notice. From this payment will be deducted any amount which he earned (or through his fault failed to earn) during the period of notice. Beyond this, the employee has no legal claim at common law, whatever hardships he suffers as a result of his dismissal. Even if the way in which he is dismissed constitutes an imputation on his honesty and his ability to get another job is correspondingly reduced, he cannot obtain any redress.

In the case of industrial court compensation for “dismissed without just cause or excuse”, it is limited to a maximum compensation of full back pay till the date of award – and in most cases it is very much less as the Court has the discretion on the matter.

I propose to provide that an award of compensation for unfair dismissal shall consist of a basic award, a compensatory award, and a punitive award. The basic award shall be calculated by reference to the period during which the employee has been continuously employed, in other words, the longer a worker has been in employment, the greater the basic award. The compensatory award shall be such amount as the Court considers just and equitable in all the circumstances having regard to the future loss sustained by the complaint in consequence of the dismissal. The punitive award shall be awarded to the benefit of the complaint for non-compliance with the awards of the Industrial Court.

ILO Convention

These above provisions will give workers statutory protection against unfair dismissals and terminations of service, and will be in line with Recommendation 119 of the International Labour Organisation in 1963 on “Termination of Employment” at the Initiative of the Employer” that termination of employment shall not take place unless there is a valid reason for such termination connected with capacity or conduct of the worker..

The details of these proposals are amenable to criticism, suggestions and even amendments after this motion to seek leave to introduce this proposed Bill. As the purpose is to provide statutory protection for stability of employment to workers, I do not see how any Member of Parliament who claims to have the interests of the workers at heart could object to the principles underlying those proposals – as it is aimed at creating a more just and equal Malaysia.

I therefore seek the support of this House for this motion to introduce the Employment (Unfair Dismissal) 1976 Bill whose object is to confer upon an employee the right not to be unfairly dismissed, whether it is for reasons of race, colour, marital status , religion, political opinion, or complaints of violation of laws, and whose features would include: (1) Definition of ‘fair and unfair dismissal’ restricting fair dismissal to dismissal which is related to incompetence or misconduct; and (2) provision for the remedy of reinstatement, re-engagement or compensation which an aggrieved employee can directly apply for from the Industrial Court.

(Speech by Ketua Pembangkang and DAP Member of Parliament for Kota Melaka, Lim Kit Siang, in the Dewan Rakyat on Monday, 5th July, 1976, when moving a motion to seek leave of the House to introduce the Employment (Unfair Dismissal) Bill 1976)