MALAYSIAN TRADE UNION CONGRESS
SARAWAK DIVISION

SPECIAL FORUM
ON

SARAWAK LABOUR ORDINANCE 1959
&
EMPLOYMENT ACT 1955

25 MARCH 1998
KUCHING SARAWAK

BACKGROUND PAPER

Prepared by
Andrew Lo
General Council Member
MTUC

23/3/98 

1     THE LEGISLATION OF LABOUR LAWS

1. Under the Malaysia Constitution, industrial relations is the preserve of the Federal Government, as opposed to the state government. It makes laws affecting industrial relations, trade union movement and employment. It also lay out the economic policy of the country particularly guidelines on foreign investments and regulates the financial markets, and foreign labour.

2. The Agency principally entrusted with the responsibility of administering employment matters is the Federal Ministry of Human Resources. Together with the central employer and employee organizations, it formulates policy that promotes sound industrial relations practices.

3. The principal employment laws are the Employment Act 1955, The Sabah Labour Ordinance 1949 and the Sarawak Labour Ordinance 1952. These laws regulate employment and legislate the basic terms and conditions of service of employees in Peninsular Malaysia and Sabah & Sarawak respectively. Although the 2 East Malaysian Ordinance is much more comprehensive, it is the Employment Act that is far more beneficial to employees. The two ordinances cover manual workers only. Non- manual workers are excluded.

4. The most glaring inadequacies are

· Maternity Leave 
· Sick Leave
· Annual leave
· Retrenchment benefit 
· s 13 - allows summary termination of Employment 
· No provisions for a labour court.

5. Most of the laws relating to labour (Trade Unions Act 1959, The Industrial Relations Act 1967, the SOCSO Act, the EPF Act and the Occupational Safety & Health Act) is under the prerogative of the Federal government and is applicable to the whole country. . However in Sarawak labour matters is under the control of the state Government. Acts of Parliament relating to labour need the approval of the State Government before it can be extended to Sarawak. The employment Act has yet to be extended to Sarawak despite the fact that the pre colonial Sarawak Labour ordinance 1959 is hopelessly antiquated

2     BACKGROUND OF UNIONS' STRUGGLES

1. In 1983 11 of the largest Unions in Sarawak presented a memorandum to the Chief Minister of Sarawak, The Prime Minister of Malaysia and the Federal Minister of Labour & Manpower to extend the Employment Act 1955 to Sarawak. These Unions represented more than 80 % of the union membership in Sarawak. They are:

The Sarawak Commercial Employees Union
The Sarawak Bank Employees Union
Petroleum Workers Sarawak
Sarawak Teachers Union
SESCO Employees Union
Sibu District Council Employees Union
Sarawak Marine Employees Union
Kuching Water Board Employees Union
Sarawak Medical Employees Union
Rajang Port Employees Union
Kuching Municipal Council Employees Union

2. Various Unions and Labour Organisations in Sarawak and Malaysia has also called on the Federal and State Governments during the past 45 years to extend the Employment Act 1955 to Sabah & Sarawak or amend the SLO.

3. In addition, APRO FIET, the Asia Pacific Regional Organisation of FIET (The International Federation of Clerical, Commercial Technical & Professional Employees,) adopted a statement at its executive Council meeting held in Kota Kinabalu in 1993 urging the government to extend the act without further delay. 

4. The Sarawak Bank Employees Union has repeatedly urged the government to either introduce the Employment Act 1955 or to amend the Sarawak Labour Organisation 1959. Resolutions to this effect were adopted at the Union's Delegates conference in 1991, 1993 and 1996.

5. In September 1991 the Minister of Human Resources Dato Lim Ah Lek, in a speech read out by the Director of Labour, Sarawak at the SBEU 25th Anniversary Dinner in Kuching stated that the Employment Act will be extend to Sarawak.

6. In September 1993 the Assistant Minister of Social Development YB Alfred Yap Chin Loi promised that the SLO would be amended during the opening of the MLO Service Centre in Kuching.

7. In October 1994, The Sarawak Minister of Finance & Public Utilities YB Dato George Chan assured that the SLO will be amended in a speech to more than 100 delegates (of which 400 are from other countries) during the official opening of the APRO FIET Regional Conference in Kuching.

8. Similarly the Chief Minister made a similar assurance to delegates of the ASEAN Council of Teachers in November 1994 in Kuching. He repeated the assurance during Labour Day function on Kuching in May 1995

9. In October 1995 the Deputy Human Resource Minister stated in Kuching that it is up to the State government to amend the SLO.

10. In November MLO and SBEU presented a memorandum to the Minister of Social Development and the Federal Minister of Human Resources urging the statement Government to amend the SLO or extend the EA

NLAC AGREED TO EXTEND EA. TAKING INTO CONSIDERATION PECULIAR NEEDS OF SARAWAK

11. In August 1997 Dato Lim Ah Lek announce that the NLAC has agreed that the Employment Act 1955 be amended to include Sabah & Sarawak as part of the national integration process . The parties that agreed to this proposal included the Malaysian Employers Federation, MTUC & CUEPACS. The Ministry is also aware of sensitivity and peculiarities unique to Sabah & Sarawak, and any change will take into consideration provisions for their respective needs.

12. In September 1997 at a meeting called by the Labour Department to discussed the haze emergency, employers in Sarawak objected to the Unions request that workers affected by the stop work order be paid their wages . This prompted SBEU to offer to assist affected workers to take their employers to court. However the SLO does not allow this . (Under the EA workers will be able to utilize their entitlement to paid annual leave.)

13. In November 1997 SBEU gave the State Government an ultimatum to amend the SLO or extend the EA by 1 May 1998. The Union threatened to take the matter to Court, and ILO. 

14. on 7/11/97 MTUC Sarawak division also call for the State Government to amend the SLO without further delay 

15. On 20/11/97 The Minister of Social Development Datuk Adenan Satem claimed that the extension of the EA would mean the instant removal of special provisions under section 119, 21,22 and 47 of the SLO, which regulate the employment of Non Sarawak in Sarawak. He went on to say that the State wish to amend the SLO but approval was denied by the Federal Government. .

16. On 17/3/1998 Dato Lim Ah Lek repeated his call for the State government of Sabah & Sarawak to extend the EA. The summary termination of more than 700 workers of SASHIP in Labuan without any retrenchment benefit prompted the Minister to make the call. However the State Government of Sabah and Sarawak adamantly rejected the appeal.

17. On 19/3/98, the Chief Minister of Sarawak stated that the State is not ready for the extension. He refused to disclose the reasons.

18. On 20/3/98 The Minister of Industrial Development Datuk Abang Johari stated that there is no need for the EA as the SLO is adequate for current needs. He stated that the foreign investors are very happy with the SLO and there is no confusion. 

19. The Sarawak Labour Council echo similar views stating that Dato Lim Ah Lek has given approval during the NLAC meeting on 19/2/98, for the State to amend the SLO.

3     45 YEARS OF FRUSTRATION AND SUFFERING

1. It can be seen therefore that the Federal Human Resources Ministry wishes to extend the Employment Act to Sarawak, but they are unable to get the agreement of the state government. The state government does not want the extension of the EA but want to amend the SLO to be in line with the EA. Their excuse for not being able to do so is that the Federal Government did not give approval.

2. The end result is that after 45 years a hopeless antiquated piece of legislation is still around. Worse, about 250,000 non-manual workers do not even have any statutory protection. The SLO was formulated by the British colonial masters to suit them. Most of the provisions in the ordinance are biased towards employers to the detriment of workers. The SLO was based on the EA 1955 when it was first introduced. Whilst the EA has since numerous improvements in terms of benefits for workers, not a single improvement was made to the SLO in the past 45 years.

3. Such a situation is unacceptable. It is imperative that workers in Sarawak must get together to ensure that workers get our fair share.

4. While workers may blame the Federal and State Government and the employers for their predicament, ultimately we must blame ourselves for failing to adopt a united front to fight for our own rights.

4     A UNITED WORKERS RESPONSE

1. MTUC being the largest and most representative Labour Centre has now initiated moves to adopt a common stand and has called a meeting of all unions in Sarawak to formulated a united response and strategy. Basically, workers are not concerned on whether the SLO is amended or the EA extended as long as workers in Sarawak get equal if not better benefits than our counterparts in Peninsular Malaysia.

2. We understand the State government's need to protect the special powers of the State Government under the 20-point agreement. We recognised that the employment of non-Sarawakian must be regulated. We support the position that non Sarawakians require a work permit to take up employment in Sarawak

3. However we are unable to accept the contention of the Minister of Social Development during the Dewan Undangan Negeri sitting, that extension of the EA will jeopardize the interests of Sarawak workers.

4. The same old excuse of protecting the powers of the State has no substantive basis and is no longer tenable. Control of immigration is vested under the Immigration ACT that is under the control of the State Government. Extension of the EA. will not effect this right. As it is now, the State Director of Labour has absolutely no control over the employment of non-manual foreign workers in Sarawak. A manager in the private sector or a government official on transfer from Pen Malaysia apply for a work permit from the immigration dept., not the Labour Department.

NO SUBSTANTIVE BASIS

5. The need to retain the special provisions under sections 21,22,27 and 119 is a lame excuse and dragging wool over our eyes. The State government has accused workers of barking up the wrong tree. It is the state government that misses the trees for the woods.

• s21 on attestation of contract has no more use under a modern contract of employment in Malaysia, which is regulated by the Industrial Relations Act 1967(IRA) and the decisions of the Industrial Court which is applicable to Sarawak.
• By wanting to retain s21, the state government seems to take the position that an employer can terminate a contract by termination simplicitor i.e. that he can dismisses a worker by giving the required notice. This is the reason why it is so easy for employers in Sarawak to dismiss workers and retrench employees without providing retrenchment benefits.
• The IRA provided much better protection to workers and we do not need s21. In fact unscrupulous employers often make used of s21 to terminate contracts of employment, on the pretext that the contract has been attested by the Director of Labour. s13 of the SLO is not consistent with the Federal Court decision in Goon P H v. J & P Coats . Under the IRA, employer cannot use contractual notice to terminate a contract of employment and must show good cause to dismiss or terminate an employee.
• s22 relates to medical examination and has nothing to do with the giving up of powers.
• s47 refers to the need for recruiters of foreign workers to obtain a license. We failed to see any use for this as under current immigration laws (which we reiterate will not be given up), any Non-Sarawakian still needs a work permit whether through a recruiter or otherwise.
• s 119 further reiterates the above point., 

6. The Minister was absolutely right when he claim that too much is at stake to extend the EA. Yes the power to continue to exploit workers and deny them the basic rights is too much at stake for the government and big business to give up! 3 of the top 5 richest man in Malaysia are Sarawakians

WHEN WE WILL BE READY?

7. We express our deepest regret that the Chief Minister is against the extension of the Employment Act on the pretext that we are not ready.

8. 35 years after independence,; workers in Sarawak are still denied basic rights such as medical leave, sick leave and maternity leave and retrenchment benefit. Worse, non-manual workers such as clerks not protected at all.

9. Already employees are being retrenched and terminated due to the economic slowdown, yet the State Government claim it is not ready. When will we ever be ready? Until we have a similar situation as in Indonesia, where workers are now rioting? 

10. The government has already stated that the Sarawak is a model state. Sarawak is more developed than some states like Kelantan and Trengganu Peninsular Malaysia. We are supposed to be a fully industrialized State by 2005 Yet these states have the EA

IRRESPONSIBLE ATTITUDE OF GOVERNMENT

11. We cannot accept the statement of the State Minister of Industrial Development that

• the present Sarawak Labour Ordinance is adequate,
• and there is no urgent need to extend the Employment Act
• There is no confusion amongst investors

We find the statement that the SLO, an antiquated piece of social legislation that offers no protection at all to non-manual workers is adequate, is irresponsible. We maintain that the present situation is confusing to investors, employers and employees alike. We have numerous cases to substantiate this.

12. This clearly reflects the attitude of the State Government. There is no real intention to amend the SLO. The offer by the State Government to amend the SLO it is just an excuse to argue against the extension of the EA

5     CONCLUSIONS

1. Sarawak has a work force of about 790,000 out of which about 250,000 are non-manual workers. Only 2 percent (about 35,000) are unonised, under about 70 unions. Only 15000 are unionized in the private sector, representing less than 1 % of the total work force. Not all of the private sector unions have collective agreement. The few CA are with big employers like the Banking sector, Petroleum Industry, Airlines and Telekoms. Collective Agreement covering employees in the private total less than 10,000 overall.

2. The timber industry and the construction industry as well as the commercial sector employs most people but are not unionized. More than half a million Sarawakians works for employers with less than 50 employees This is the group which are need statutory protection for basic benefits as well as protection against exploitation and discrimination. They have no unions to turn to and it is almost impossible to organise them into unions.

3. As Malaysia move towards Vision 2020 and the State Government's stated emphasis on the human resources development to meet Sarawak's industrialization and development programme, it is imperative that a crucial piece of legislation (which affects the livelihood of Sarawakian Workers especially the non- unionized and lower income workers) be brought up to date. Any law affecting labour and social development must be dynamic to meet the changing world of work.

4. Under these circumstances, we believe that extending the Employment Act will be most expedient to meet the human resources need of Sarawak. We do not think such a move will jeopardize the interests of Sarawak workers far as job opportunities are concerned. Non Sarawakian workers will still need to have a work permit to work in Sarawak and the State immigration laws will remain under the control of the State Government.

5. Any legislation on labour has to be dynamic and be able to adapt to the changing economic situation. To amend the SLO to incorporate the provisions of the EA would mean that the SLO would always lag behind in terms of benefits for workers. Assuming that the SLO will be amended to incorporate the benefits of the EA as at 1st January 1999, what happens to amendments of the EA that is amended after that date? Already there are proposals to cover part time workers in the EA. Is the State Government prepared to immediately extend such provisions and incorporate them in the SLO as soon as they are incorporated into the EA?

FEDERAL GOVERNMENT AGREES TO AMEND SLO?

6. However we note that the Federal government has given approval on 17/2/98 to amend the SLO. Therefore there is no more excuse for the state government to delay amending the SLO. We therefore demand that the state government 

• amend the SLO to incorporate all provision in the EA that are beneficial to workers, including the establishment of a labour Court
• ensure that all future improvements to the EA will be extended automatically to Sarawak
• in addition we want the amended SLO to include the following;

I. Check off
II. Guaranteed no of days worked for daily paid workers
III. specific rest periods between shifts
IV. all benefits must be extended to daily paid workers
V. provided for stiffer penalties and jail sentence 
VI. mandatory due inquiry to overrule the Dreamland case 
VII. Priority of wages over debts

AMEND SLO BY LABOR DAY 1998 OR EXTEND EA

We expect the state government to give a guarantee by Labour Day,1/5/1998 and that the amendments to be effective by 1/1/1999 failing which we will demand the extension of the EA to Sarawak with immediate effect.

All unions in Sarawak will now work closely together to mobilise all Sarawakian workers in both the Public and Private sectors to fight for our rights.

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