Trade unions in Malaysia are regulated by the Industrial Relations Act (IRA) 1967.

Membership

The IRA protects the right of every worker in Malaysia to join or not to join a trade union.

It protects workers from being victimised by an employer for joining a union. However, the same section of an act states explicitly that an employer may dismiss, demote, transfer or refuse to promote a worker on other grounds.

Unions may undertake collective bargaining on behalf of members if they have obtained recognition from the employer.

A general practice is for unions to request recognition after obtaining more than 50% of the staff as their members. After that, the employer has 21 days in which to recognise the union. If the employer does not provide recognition within the stipulated period the matter will be taken to the Director General of Industrial Relations (DGIR) for arbitration.

The IRA allows employers to prohibit management, executives and those who work in a confidential or security capacity from joining a union. The definitions of these terms are left to the employers' discretion. In practice, some employers classify all clerical staff as working in a confidential capacity and production workers as working in a security capacity since they oversee their machines.

Should the DGIR fail to get both parties to reach an agreement, the matter will be referred to the Human Resources Minister. The minister will investigate and make a decision which may not be overturned by a Malaysian court.

Agreements

Unions may submit collective agreements on behalf of their members but the IRA (Part IV) forbids such agreements to deal with any matter pertaining to promotion, transfers, termination of service, dismissal and retrenchments.

A deadlock here is referred to the DGIR for arbitration. Failure to obtain compromise results in the case being referred to the minister who shall refer it to the Industrial Court at his discretion.

Decisions of the Industrial Court may be challenged further in the high court, the appeals court and the federal court.

The law allows for submission of a collective agreement three years from the resolution of the last one.

Strikes

The IRA defines a "strike" in a sufficiently broad manner to include Work-to-Rule, and Go-Slow actions. "Any act or omission by a body of workers, which is intended or which does result in any limitation, restriction, reduction, delatoriness in the performance of their duties connected to their employment"

Illegal strikes have consequences such as fines or imprisonment.

A legal strike requires that the union have a trade dispute. A secret ballot whith not less than two thirds of the workers involved is required. The Director General has to be informed next. After that, the employer must be informed of the date of the strike. This is all required to prepare for a strike.

If the Minister should refer the case to the Industrial Court before the strike occurs then the strike must not be carried out.

If it is a public sector union then the Minister refer the disputed matter to the Industrial Court only with the consent of the Agong (King) or the state ruler, if it is a state body in question.

The last major strike in Malaysia occurred in 1962. 9,000 railway workers went on strike to demand conversion of daily wages be changed to monthly salaries. The strike lasted 22 days and all government workers were converted to monthly wages. The railway was belonged to and was operated by the government at the time, but has since been corporatised.