LETTER | The Association for Community and Dialogue (Acid) is concern that retrenchment exercises and layoff that is taking place nationwide might have ignored the Code of Conduct for Industrial Harmony.

According to Chief Statistician Mohd Uzir Mahidin the employment rate has gone up to 5 percent for April with a total of 778,800 Malaysians becoming jobless. It is a significant rise of 48.8 percent compared to the year 2019.

While the Covid-19 crisis and the resulting economic fallout have created an extraordinary situation, that does not mean employers can retrench workers with impunity.

The Code of Conduct for Industrial Harmony (1975) is an agreement made between the Human Resources Ministry and the Malaysian Council of Employers’ Organisations (the predecessor to the Malaysian Employers Federation and the Malaysian Trades Union Congress).

The code provides that prior to a retrenchment exercise, the employer should, in consultation with employees’ representative, trade union and in consultation with the ministry in charge of labour, take positive steps to avert or minimise reductions of the workforce by the adoption of appropriate measures, such as limitation on recruitment, restriction of overtime work, restriction of work on weekly day of rest, reduction in the number of shifts or days worked in a week, reduction in the number of hours of work or retraining or transfer to other departments.

It also provides that if retrenchment becomes necessary, the employer should take the following measures:

  • Give as early a warning, as practicable, to the workers concerned;
  • Introduce schemes for voluntary retrenchment and retirement, and for payment of redundancy and retirement benefits;
  • Retire workers who are beyond their normal retirement age;
  • Assist in cooperation with the Human Resources Ministry for the workers to find work outside the undertaking;
  • Spread termination of employment over a longer period;
  • Ensure that no such announcement is made before the employees and their representatives or trade union have been informed.

Have employers adhered to above principles from the start of the movement control order (MCO)? The perennial issue that has been litigated in court for many years is whether compliance with the code is mandatory and whether a failure to comply with the code would result in an otherwise fair retrenchment being considered as unfair.

There seem to be different interpretations of the code within the legal community where some see it as merely a guide to employers and unions without the force of law, while some see it as an important code to ensure there are no unfair labour practices.

Therefore, Acid urges the Human Resources Ministry to check and monitor organisations effectively on whether they have followed the principles of the Code of Conduct for Industrial Harmony in the current retrenchment exercise.

It is also time to give these principles a legal force to ensure unscrupulous employers will not take advantage of critical situations to retrench their employees without proper consultation that takes into consideration various solutions. Retrenchment should always be the last resort.