HR Case Study: Foreign & Migrant Workers Rights

Last Friday, the foreign press and our local newspapers reported an Industrial Court decision concerning the rights of foreign/migrant employees working in Malaysia. This decision has huge repercussions for Malaysia and I've compiled an update on this seminal case. Here is my analysis of the situation and the case.

Airi Laxman Singh & Others 
         v
Goodyear Malaysia Berhad    
[Industrial Court Award No. 1154 of 2021]

Overview

This update addresses the following question:

“Does a foreign/migrant worker who is not a union member have legal recourse under Malaysian law (Industrial Relations Act) to lodge a complaint of non-compliance to the articles of a Collective Agreement governing the company’s Malaysian employees?”

In our feature case, the claimants comprised 65 foreign workers from Nepal, Myanmar and India who had lodged a complaint of non-compliance by their employer on the a) shift allowances, b) annual bonuses and salary increments articles of the collective agreement. They alleged specifically that their employer had purposely denied them their shift allowances, annual bonuses and pay increases which were paid out to its Malaysian staff.

The company denied their allegations contending that at the time the employees joined the company, they had signed a separate employment agreement which did not contain any obligation for the company to pay them the shift allowances, annual bonuses or salary increments. The company in disputing the allegations also maintained that as the collective agreement it signed with its union was only meant to extend to its Malaysian workforce, not its foreign employees. Finally, the company also sought for a preliminary objection on the ground that the Industrial Court did not have the jurisdiction to adjudicate the matter as a non-compliance of the CA given that this matter was a trade dispute in substance and fact.

Given these conflicting viewpoints, the Industrial Court was tasked with determining whether:

1. Foreign/migrant workers have the same rights as local Malaysian employees even where the foreign employees are not members of the union,
2. Foreign/migrant workers who are not union members have the right to individually raise a complaint of non-compliance of a collective agreement’s articles by their employer, and
3. An employer is bound to extend the benefits provided in a collective agreement to its foreign/migrant workers even where the foreign/migrant workers had earlier signed an employment agreement providing for lesser benefits.

What the Industrial Court Held

The Industrial Court held in favour of the claimants, finding that the company had discriminated against them in depriving them of the shift allowances, annual bonuses and salary increments that were being paid to its Malaysian employees. In coming to this conclusion, the court first addressed the issue of whether foreign/migrant workers have the same rights as local Malaysian employees (even where the foreign employees are not members of the union) wherein it cited the following:
Quotation/Citation 1

“In Chong Wah Plastics Sdn Bhd & Ors v. Idris Ali & Ors [2001] 1 ILR 598 (“Chong Wah Plastics”), the Industrial Court held that foreign workers could pursue their rights under s.56 of the IRA 1967 as they were covered under the scope of the collective agreement between the Company and the Union.
This decision was affirmed by both the High Court and the Court of Appeal. Hence, it is binding on me. In that case, the Industrial Court emphasized that it would be contrary to equity and good conscience to pay foreign workers less than local workers where there is no evidence to show that the foreign workers were not as good as the local workers.”

Following this, the court also addressed the issue of whether foreign/migrant workers who are not union members still have the right to individually raise a complaint of non-compliance of a collective agreement’s articles by their employer. Here, it said the following:
Quotation/Citation Two

“The question on what is the procedure available to employees who are not members of a union to file a complaint of non-compliance of a collective agreement has long been decided in Kontena Nasional Berhad v. Transport Workers’ Union [1990] 1 ILR 154 wherein the court stated:
‘... Not only can the Union lodge a complaint against the Company, should the Company fail to comply with any of the terms of the 1985 Agreement, but also any workers who are employed or subsequently employed in the Company, if any of the provisions in the collective agreement have been breached by the Company…… We therefore, hold that the Union has locus standi to lodge a complaint against the Company for non-compliance of Article 42.2 of the 1985 Agreement. But for workers who are not members of the Union and who wish to avail themselves of the benefits of the 1985 Agreement, they will have to lodge a report for non-compliance against the Company themselves.”

Finally, the court addressed the issue of whether an employer is bound to extend the benefits provided in a collective agreement to its foreign/migrant workers even where the foreign/migrant workers had earlier signed an employment agreement providing for lesser benefits wherein it said:
Quotation/Citation Three

“Based on the evidence adduced, it is proven that the company had failed to comply with the said articles under the collective agreement and that the claimants are covered under the scope of the collective agreement. Although the claimants had signed an employment contract which did not provide for any clauses on shift allowances, annual bonuses or salary increments, they nevertheless once employed by the company (as proven via their employment passes/work permits) were deemed to be under the scope of the union where all terms and conditions of their employment were subject to the collective agreement entered into by the union representing all workers not covered under Section 9 of the Industrial Relations Act 1967.” 

How Your Organisation Can Benefit From This Case

A New Dawn for Corporate Malaysia…

This huge decision means that companies have to rethink their approach in hiring foreign workers as a cost-savings mechanism. The old days where a company could hire foreign employees and have them sign an employment contract with lesser benefits is not legally permitted under the law. A foreign worker can still have recourse under the terms of a collective agreement even where they are not members of the union and can in an individual or collective capacity (on their own) choose to sue their employer for similar benefits. This case decision now opens the proverbial can of worms for many factories/manufacturers who would now potentially face similar lawsuits from foreign/migrant workers seeking to be accorded similar benefits as local Malaysians be it with regard to shift allowances, bonuses, salary increments and overtime payments.

It appears this is the price Malaysian organisations must be prepared to pay for reaching a ‘developed country’ status, i.e. we can’t simply focus on being a high income nation without the social responsibility of treating foreign/migrant workers equitably.

Short-Payments on Benefits Extend Beyond the Term of the Current Collective Agreement

Another important aspect from this case decision is the court’s willingness to extend any short-payments to these foreign workers beyond the terms of their existing collective agreement wherein the court here ruled that any short-payments in terms of the shift allowances, annual bonuses and salary increments were not limited to the duration of the collective agreement but from the start date of the foreign workers employment with the company.