Effects of Industrial Relations Act amendments

WITH the movement control order now in effect in five states and the Federal Territories, and economic activities necessarily halted to flatten the Covid-19 curve, the economy will surely take another hit. The proclamation of a state of emergency shortly after the announcement of the MCO further caught many Malaysians off guard. The current unpredictable Covid-19 situation and political atmosphere in Malaysia add up to an uncertain start to 2021.

In 2021, Malaysians also welcome the amendments to the Industrial Relations Act 1967 (IRA 1967) which came into force on Jan 1. How will these amendments affect us, especially during the recently reimplemented MCO?

> The amendments allow cases that are not resolved through conciliation at the Industrial Relations Department to be referred directly to the Industrial Court without the previous filtering mechanism of the minister’s input. The director- general of Industrial Relations can refer wrongful dismissal representations directly to the Industrial Court if he/she is satisfied that there is no likelihood of settlement through conciliation.

> The amendments allow the Industrial Court to impose interest of up to 8% a year to an award, from the 31st day of the award. In addition, the court is also empowered to award back wages or compensation to the next of kin of a deceased worker.

In the event an employee who lodged a wrongful dismissal claim dies (perhaps due to Covid-19), the court is empowered to continue the proceedings and to award compensation to his or her next-of-kin.

> The procedure to challenge an Industrial Court award will be by way of an appeal (instead of a judicial review) to the High Court in accordance with the new Section 33C of IRA 1967.

Sitting as the appellate court, the High Court can rehear and reassess evidence produced in the Industrial Court to reverse an award. There is also no requirement for leave from the High Court to challenge an Industrial Court award.

It is notable that an appeal against an Industrial Court award must be made 14 days from the receipt of the award in contrast with the three-month limitation period for a judicial review.

The current MCO may hinder the process for all parties concerned to file an appeal in this shortened period and parties who intend to challenge such awards must be cautious about the new stipulated timeline.

The new amendments coupled with the current reimplementation of the MCO raise the concern of whether there will be an influx of wrongful dismissal claims (including frivolous ones) at the Industrial Court in absence of the filtering mechanism of the minister’s purview. The potential backlog of cases will surely burden the infrastructure of Industrial Court and it may take us back to the old situation we once desperately tried to resolve.

Employers may be concerned that the amendments will encourage the filing of frivolous complaints during these difficult times and unnecessary costs to defend such claims will burden them further. It may be too soon to make a statement on whether the amendments will lead to a positive development of the employment landscape in Malaysia.

Time will tell.


Kuala Lumpur

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