8 Collective Agreement

Collective Agreement
Section 2 defines a collective agreement as an agreement in writing concluded between an

employer or a trade union of employers on the one hand and a trade union of workmen on the
other relating to the terms and conditions of employment and work of workmen or
concerning relations between such parties.
So, it is an agreement between the parties.
s. 14(1) & (2) – requirement
Section 14(1) requires the agreement to be in writing and signed by both parties.
Section 14(2) a collective agreement shall set out the terms of the agreement and shall, where
appropriate
(a) name the parties thereto.
(b) specify the period it shall continue in force which shall not be less than three years from
the date of commencement of the agreement; Once recognition is given it is at least for 3
years.
(c) prescribe the procedure for its modification and termination; (what if the collective
agreement is outdated, it needs modification)
Terengganu Bus Co Ltd v TWU [1983] 1 MLJ 393, the Industrial Court had made an award
on a reference between the parties. Subsequently a joint application was made for the
interpretation of the award. There were two areas of dispute, one on the interpretation of a
clause of the original award, and the second whether the original award continued to have
force and effect after its expiry date. The Industrial Court made its award directing payment
to certain workers and also that the payments should be made to the workers until the date
when the new collective agreement became effective. The applicant applied for the award to
be referred to the High Court on a question of law but this was refused. The applicant then
applied for an order of certiorari to quash the award of the Industrial Court. The court held
that according to the scheme of the Industrial Relations Act 1967 some finality must be read
into the power of the Industrial Court to interpret its own award and the party should not be
allowed to seek the aid of the High Court to quash the order under s 33 of the Act and in this
case the Industrial Court was right in following the precedent and ruling that the award
continued in force until superseded by a new award or a collective agreement.
National Union of Hotel, Bar & Restaurant Workers v Casuarina Beach Hotel Sdn Bhd
[1986] 2 MLJ 17 – the court opted to use contractual approach. The court treated the
collective agreement as any other contract and the court said that since 14(2)(c) the parties
could include the modification clause in the agreement when this was not done, it indicated
that clearly the parties does not want the collective agreement to continue once it has expired.
Kesatuan Pekerja-Pekerja Perkayuan v Syarikat Jengka Sdn Bhd [1997] 2 CLJ 276 – did not
think the approach by the supreme court was correct. The court of appeal was of the opinion
that the ordinary rule of construction could not be used in giving the meaning of the
collective agreement. So, the court in this case, this collective agreement was not prepared by
lawyers, so it is not same as any commercial contract. Therefore, the court said that with this
kind of agreement, one should opt a pragmatic, liberal and wide approach in interpreting the
provisions in the collective agreement.
National Union of Hotel, Bar and Restaurant Workers P. Malaysia v Shangri La Hotels
(Malaysia) [2017] MLJU 536
(d) an agreement between the parties for the settlement of disputes, prescribe the procedure
for the adjustment of any question that may arise as to the implementation or interpretation of
the agreement and reference of any such question to the Court for a decision.
Section 14(3) requires the terms and conditions in the collective agreement must be more
favourable than any written law or not in contravention with any written law.
(iii) the agreement must be deposited with the Industrial Court in accordance with section 16
Both the trade union and the employer must deposit the agreement to the industrial Court, in
order to be given cognizance by the Industrial Court. Once the agreement is given
cognizance, it is considered as an award of the court and will have a legal binding effect to
the parties.
s. 16 (1) of IRA both parties must deposit the collective agreement within 1 month from the
date on which the agreement has been entered into to the Registrar shall thereupon bring it to
the notice of the Court for its cognizance (legal binding effect)
IRC got 2 choices
s. 16(2) The Court may in its discretion—
s. 16(2)(a) refuse to take cognizance of the collective agreement deposited under subsection
(1) if it is of the opinion that the agreement does not comply with section 14; or
Therefore, the trade union and the employer need to make sure they comply with s. 14 or else
the IRC may refuse to accord recognition, without the recognition it would not be legal
binding contract.
Hotel Furama Sdn. Bhd v National Union of Hotel, Bar & Restaurant Workers [1992] 2 ILR
418 – the collective agreement was signed but both parties did not submit the collective
agreement to the industrial court for cognizance. So, when the employer did not fulfil the
obligation under the collective agreement the trade union brought the case to the industrial
court for adjudication and the court was of the view that since the collective agreement was
not given the cognizance therefore it was not a legally binding contract. Thus, the company
was not at fault for not upholding the terms and conditions under the collective agreement
s. 16(2)(b) before taking cognizance of the collective agreement deposited under subsection
(1), require that such part thereof as does not comply with section 14 shall be amended in
such manner as the Court may direct
s. 17(1) A collective agreement which has been taken cognizance of by the Court shall be
deemed to be an award and shall be binding on –
(a) the parties to the agreement including in any case where a party is a trade union of
employers, all members of the trade union to whom the agreement relates and their
successors, assignees or transferees; and
(b) all workmen who are employed or subsequently employed in the undertaking or part of
the undertaking to which the agreement relates.
(2) As from such date and for such period as may be specified in the collective agreement it
shall be an implied term of the contract between the workmen and employers bound by the
agreement that the rates of wages to be paid and the conditions of employment to be observed
under the contract shall be in accordance with the agreement unless varied by a subsequent
agreement or a decision of the Court.
National Union of Hotel, Bar & Restaurant Workers v Casuarina Beach Hotel Sdn Bhd
[1986] 2 MLJ 17 – the only way for the agreement to be continue if it is varied by a
subsequent agreement or a decision of the Court. The court held that there is nothing of such
as once the old collective agreement lapse, there was no new collective agreement, there was
no decision of the court. The only way the contract will continue is when a new collective
agreement is signed or there was an order from the court in relation to that particular
agreement.
Leng Seng Omnibus v TWU I.C. Award 43/72 – the court discussed the contract of
employment, and the collective agreement will have the binding effect at the same time.
Disputes only under 2 circumstances for collective agreement; interpretation and non-
compliance
1. Interpretation
s. 33 (1) If any question arises as to the interpretation of any award or collective agreement
taken cognizance of by the Court, the Minister may refer the question, or any party (trade
union or employer) bound by the award or agreement may apply, to the Court for a decision
on the question.
s. 33 (2) The Court may, upon the application of any party, by order vary any of the terms of
an award or agreement if it considers it desirable so to do for the purpose solely of removing
ambiguity or uncertainty. However, Section 33 does not require the court to find there is
ambiguity in the terms before it can give interpretation.
Syarikat Kenderaan Melayu Kelantan Bhd v Transport Workers Union [1995] 2 MLJ 317
where the Federal Court decided that section 33 could be used without having to look for
ambiguity or uncertainty in the provisions of the collective agreement. If there was an
application for interpretation, the court must interpret the said provision.
2. Noncompliance
Section 56(1) allows the trade union or any person who is bound by the agreement to lodge a
written complaint to the Industrial Court for non-compliance.
The Court has a few options:
1. ordered the parties to the agreement to comply with any terms in the agreement.
2. to cease or desist from doing any act in contravention of any term of the agreement.
3. to make such order to rectify or restitution for any contravention of the terms of the
agreement
4. make such orders as it considers desirable to vary or set aside upon special
circumstances any term of the agreement.
The variation of the award can only be made where there are special circumstances, provided
that:
1. the special circumstances occurred after the collective agreement was signed
2. the special circumstances are not something that is forseeable-Covid-19 and MCO
3. if it involves financial factor, the court requires the employer to prove the measures
taken to overcome this factor
HM Shah Enterprises v National Union of Hotel, Bar & Restaurant Workers [1988] 1ILR 552
– the company has been facing financial problems before the collective agreement was
signed, then they sign the collective agreement with NUHBRW in that collective agreement
they still include the provision for payment for annual bonus. However, they fail to pay the
bonus, the Trade Union brought the case to industrial court and the employer tried to ask for
variation on the basis of that there is special circumstance i.e., financial loss, the court said
that the special circumstances existed even before the collective agreement was signed so that
mean the employer knew for sure they would not be able to pay bonus but they still agree to
it in the collective agreement. Therefore, the court held that special circumstances did not
arise after the collective agreement was signed.
Prestige Ceramic Sdn Bhd v Kesatuan Pembuatan Barangan Logam [2001] 5 MLJ 289 –

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Collective Agreement

Section 2 defines a collective agreement as an agreement in writing concluded between an

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