6 June, 2018
The Minister of Human Resources, M. Kulasegaran, has announced that the Minister will no longer screen an unfair dismissal complaint before it is brought to the Industrial Court. Once the reforms are made, an employee should be able to lodge a claim directly with the Industrial Court.
Here are some important things to note about the proposed reforms.
What is the current system?
Under the Industrial Relations Act 1967 (“IRA”), unfair dismissal claims are heard before the Industrial Court. However, an employee who believes they have been unfairly dismissed cannot directly file a claim at the Industrial Court (unlike in a civil court).
The current process for an unfair dismissal claim under the IRA is:
- An employee must file a representation of unfair dismissal at the Industrial Relations Department within 60 days from his termination date.
- Employer and employee will be required to attend a conciliation meeting.
- In the event parties cannot settle the matter amicably, the IRD will refer the representation to the Minister of Human Resources (“Minister”) to assess.
- The Minister will decide whether the representation should be referred to the Industrial Court. A representation of unfair dismissal will usually be referred to the Industrial Court if the Minister is of the view that it is not frivolous or vexatious, and/or discloses some serious question of law or fact that needs to be determined by the Industrial Court.
- Once the representation is referred to the Industrial Court, the claim officially “commences” and parties have to go through the usual litigation process of mentions, case management, and a trial.
What is the problem with the current system? Why is the new Minister of Human Resources proposing a reform?
The chief complaint about the current system is that it results in significant delays. The IRA does not fix any timelines for a conciliation meeting to be heard, and it does not require the Minister to make a decision within any fixed time frame. From our experience, unfair dismissal representations can take anywhere between a few months to more than 1 year to be referred to the Industrial Court.
Further, no reasons will be provided by the Minister when he decides to refer or not refer a representation. There is therefore no certainty or predictability as to how a Minister will decide on a particular complaint.
Parties who believe the Minister has made an irrational or unreasonable decision, will have to apply for judicial review at the High Court to quash the Minister’s decision, leading to additional delays. The judicial review process itself can take months, and is still subject to appeal by the losing party.
Delays adversely affect the administration of justice. For the employer, delays are detrimental because witnesses may have left the company or will have difficulty recalling material facts or events. For the employee, delays are unfair because they will have to wait a long period of time to adjudicate a matter involving their livelihood.
What is the proposed change?
The proposed change appears to be an abolition of the statutorily required conciliation process under the IRA, so that employees can file unfair dismissal claims directly at the Industrial Court. The Minister will no longer need to “filter” complaints filed in order to assess whether they are suitable to be adjudicated by the Industrial Court.
When will the changes take effect?
The changes have not taken effect yet. Since the current system is codified via the IRA, any reform to abolish the conciliation process or the Minister’s referral power must come through a change in the legislation. The IRA must be amended first.
Kulasegaran was reported as saying that he will bring the proposal for the cancellation of the Minister’s power to a cabinet meeting in the near future before tabling it in Parliament.
How will this affect employers and employees?
Employers and employees can hopefully expect to see less delays in the disposal of an unfair dismissal claim. If an employee can lodge an unfair dismissal claim straight at the Industrial Court, this can cut short the waiting period anywhere between a few months to more than a year.
However, if employees are allowed to lodge claims directly at the Industrial Court, it is hoped that there will be some mechanism to allow the Industrial Court to weed out frivolous claims and dispose of them summarily. Otherwise, we could expect a heavy influx of unfair dismissal claims before the Industrial Court, which could also defeat the purpose of the reform.
There are currently no further details about whether the proposed abolition of the Minister’s power would come with other changes, so right now we will have to wait until the proposed amendments to the IRA are tabled.
(PS: In April 2017, we previously wrote about the need for reform to our current unfair dismissal regime. You can read about it here).
For further information, please contact:
Donovan Cheah, Partner, Donovan & Ho
donovan@dnh.com.my
