Industrial Relation

BM3307
INDIVIDUAL ASSIGNMENT

PREPARED BY;
STUDENT NAME : Mumit Ahmed
ID NUMBER : 00017021
PREPARED FOR : Pramanathan Vasuthevan
SUBMISSION DATE : 11th July 2019

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List of Contents

1. Overview of Issue Page 03 ~ 10

1. Unfair Termination
2. Retrenchment
3. VSS (Voluntary Separation Scheme)
4. Downsizing
5. Sexual Harassment
2. Trade Union in Malaysian Context Page 10
3. Objectives of a trade union Page 11
4. Trade union from the employee’s perspective Page 11 ~ 12
5. Trade union from the employer’s perspective Page 12
6. Recommendation Page 13
7. Conclusion Page 14
8. Reference Page 15 ~ 16
9. Appendix Page

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Overview

Malaysian Airlines, the government owned national airlines of Malaysia, went through a lot of
changes over the decade and still going through a lot of issues. We will talk about 5 issues in MAS
below,

1. Unfair Termination: Termination of a contract of employment for unfair or inadmissible

reasons. When challenged in a court, the employer must establish that the dismissal was
based on a substantial reason such as gross misconduct, lack of qualification, incapability
to perform assigned duties, or redundancy. In such cases, the courts usually take the
employee's statutory rights into consideration. (BusinessDictionary.com, 2019)

On June 2015, MAS terminated 3000 employees on a sudden notice which was met with
huge protests and claims for unlawful dismissals. Malaysia Airlines System Employees
Union (MASEU) secretary-general Abdul Malek Ariff, whose union is representing most
of former staff, said the last complaint was filed last Friday, since the workers had 60
days to do so after the termination date which came into effect on Sept 1.

As per Malek, since it was a retrenchment, the company should have followed the last-in,
first-out (LIFO) system. Instead, it picked on people whose services it wanted to
terminate.

For this unfair dismissal, less than 500 employees found new jobs and rest were jobless.
The services of all 20,000 MAS employees were terminated on June 1 and offer letters
were given to 14,000 of them to join the new Malaysia Airlines Berhad (MAB) entity.
About 6,000 MAS employees were therefore laid off, effective Sept 1. (Malaysian Trades
Union Congress, 2019)

The National Union of Flight Attendants Malaysia said the most concerning issue was the
axing of 6,000 Malaysia Airlines workers in 2015, which it alleged was not done
according to law. Complaints had also been received from workers of Rayani Air and

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 Eaglexpress, it said. The union urged new Human Resources Minister, K Kulasegaran to
reopen the file of unanswered complaints sent to the previous Ministry. In 2015,
Malaysia Airlines laid off 6,000 of its workers as part of a restructuring program. The
union had said 3,500 of those dismissed were its union members. (Free Malaysia Today,
2019)

No response was received to repeated complaints, letters and memoranda sent to the
Human Resources Ministry, the union said in a statement today.

“The union hopes the new Manpower (Human Resources) minister could reopen the file
on old complaints and restudy the memoranda sent by the union before. (In our
complaints), there were many matters decided against us which was not compliant with the
laws,” the statement said today. (Free Malaysia Today, 2019)

“Airline companies were protected by the previous minister with no action taken on airline
companies which had gone against labor laws (in laying off staff),” it said. After more than
two years, there were no written responses from the ministry.

Besides illegal layoffs, the union was concerned over the livelihoods of the retrenched
workers, most of whom remained unemployed and did not receive assistance from the
ministry.

“Until late last night, many laid-off workers from Rayani Air and Eaglexpress have
complained to us about their issues. It is time for the new minister to reopen the files and
help us,” the union said. (Free Malaysia Today, 2019)

2. VSS (Voluntary Separation Scheme): Voluntary Separation Scheme. This arises when
a company that is not officially retrenching but nonetheless wishes to get rid of
employees. (Employment Laws in Malaysia, 2019)

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 In this scenario, the company will make an announcement that is addressed to the
employees along the lines of 1) “Profit hasn’t been good” 2) “We have been making losses”
3) “The company is not dismissing anyone, but will welcome application from employees
to be considered for VSS”.

It is like a job advertisement that invites applicants. The difference here is that it is not a
job advertisement, but rather, an invitation by the company for application by the
employees, to be considered for VSS. Usually the company will also talk about the terms
and conditions of the VSS (compensation terms, qualifications, requirements etc).

Because of the nature of VSS, it is usually more difficult for employees who have left the
company on VSS to challenge this in the Malaysian courts.

According to a press release of 2006, Malaysian airlines offers Payment based on current
monthly salary ranging from 1-3 months for every year of service. Apart from that, MAS
will give a one-off medical benefit, buy back all unutilized leave, give a free air ticket to
be used by the end of the year and give laid-off staff hospitalization coverage for a year.

This whole package is based on the organization model and it has been incremented in
previous years periodically as an effort from the MASEU.

3. Retrenchment: Retrenchment is a dismissal process of employees who are regarded as

surplus to requirements of the company. The company itself is not being closed, but
rather a select group of employees are selected to be retrenched. Any company in
carrying out retrenchment are required to follow the legal provisions of Employment Act
1955(where relevant). (Nhrc.com.my, 2019)

The largest event of retrenchment from Malaysian Airlines happened on June 2015 when
MAS retrenched 6000 employees due to restructure of the organization. In those times,
various issues sprouted. The Human Resources Ministry is not obligated under the law to
provide an explanation to the 3,600 Malaysia Airlines (MAS) staff who were laid off two

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years ago.

Its minister Datuk Seri Richard Riot said a written explanation will be sent out to the
retrenched staff through the ministry's Industrial Relations Department, adding that some
1,500 letters have already been sent out.

"We have written to every single individual who were laid off by MAS through our
Industrial Relations Department. Right now, we have written to 1,500 individuals giving
full explanations. To me, this is sufficient to provide an answer. Under the law, we are
not required to give an explanation," he told the media after the closing ceremony of the
Asean Productivity-Linked Wage Conference (Asean-PLIC) at the Pullman Hotel Kuala
Lumpur today.

In 2015, MAS retrenched 6,000 workers, of which 3,600 took their cases up to the
Human Resources Ministry. Two years down the line, the National Union of Flight
Attendants Malaysia (Nufam) said they have not heard anything from the ministry and no
referrals have been made to the Industrial Court.

Riot said that given that MAS is no longer in existence, the ministry cannot go after the
company. The complete takeover process of MAS by Malaysia Airlines Bhd (MAB), is
expected to be completed by next year. “MAS is no longer in existence. And according to
the law, we cannot go after a company which has been declared bankrupt because it is no
longer in existence," he said.

Riot added that no individual can be penalized as well once the company has been declared
as bankrupt. When pressed further on the two-year delay, the Director General of the
Department of Industrial Relations Malaysia Khalid Jalil said it was due to the moratorium.
The moratorium which details the transition of the business, property, rights, liabilities and
affairs of MAS to MAB was extended to May 24 this year. However, MAB commenced
full airline operations on Sept 1, 2015, and MAS ceased operations on the same day.

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4. Downsizing: A "layoff" or "downsizing" is an action by an employer to terminate
employees for lack of work. The term connotes that the termination is temporary—but it
may well become permanent. It simply means releasing employees because the operation
no longer needs them; reorganization or restructuring of the institution has eliminated
jobs. The euphemistic "right-sizing" is sometimes substituted—to flatter management,
one assumes. A "RIF," which stands for "reduction in force," is an old and rather
straightforward term, its most likely source being governmental and military changes in
employment: both actually take place from time to time. The newest addition to this
lugubrious terminology (at least from the employees' point of view) is "outsourcing" or
"off-shoring," meaning that the work is being transferred to another organization either
domestically or overseas. (US Legal, 2019)

Sovereign wealth fund Khazanah Nasional Bhd announced plans to cut 6,000 jobs after
the carrier amassed more than RM4.9 billion in losses since the start of 2011. Efforts to
save Malaysia Airlines (MAS) need to begin with downsizing its staff to make it
competitive, said Maybank Investment Bank aviation analyst Mohsin Aziz. (Buzz travel |
eTurboNews |Travel News, 2019)

The plan by MAS to retrench 6,000 workers out of its total workforce of 20,000 is critical
to the national carrier’s survival, and as part of its recovery plan, the ending of unprofitable
routes and services would unavoidably result in the termination of redundant staff, he said.
But the most critical issue, he said, is MAS’s own survival, adding this is the right time to
continue with measures that have been postponed for so long.
“What is more important is that we need to do it now, it cannot be postponed any longer,
otherwise the airline will not recover and will be in worse shape,” he said. (Buzz travel |
eTurboNews |Travel News, 2019)

Mohsin said compared with other airlines, MAS is overly burdened with problems with its
workers unions that affect its commercial performance, pointing out that bitter and
unpopular sacrifices have to be made in the commercial interest.

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 “Many other companies have undergone a retrenchment process, banks such as CIMB and
others, oil and gas firms such as Petronas, and subsidiaries in the vendor system are going
through the same process. And telecommunications companies such as Maxis, DiGi and
Celcom have also gone through it several times, so this is normal practice among
commercial companies, and Malaysia Airlines is a commercial company.” (Buzz travel |
eTurboNews |Travel News, 2019)

Asked on the willingness of AirAsia to take in some of the MAS staff to be retrenched,
Mohshin said in 2002, 2003 and 2004, nearly 90% of its workers were ex-MAS employees.
“And the new airline Malindo is also going through the same phenomenon, many of its
workers are from MAS and AirAsia,” he said, adding workers with marketable skills can
job hop with few problems. (Buzz travel | eTurboNews |Travel News, 2019)

Mohsin said fewer aircraft and workers would be needed with the axing of unprofitable
routes, such as to Europe and the Middle East, and the possibility of cutting down the flight
frequencies on many Asian services. “For MAS this is a question of life and death. The
people are tired of hearing another restructuring every two to three years, so I think this
would be the last one.

“It’s the last chance and if this ends in failure, then you probably need to rebuild. What is
clear is that we cannot repeat the same thing over and over,” he said. Asked on the
challenges facing new MAS chief executive officer Christoph Mueller, Mohsin said
teamwork is essential for any organization, whether it has 10 or 10,000 workers, and that
Mueller needs to ensure staff at all levels work as a team with the same objective, and that
anyone who refuses to do so will have to be terminated. (Buzz travel | eTurboNews |Travel
News, 2019)

5. Sexual Harassment: Sexual harassment is an unwelcome sexual advance, unwelcome

request for sexual favors or other unwelcome conduct of a sexual nature which makes a
person feel offended, humiliated and/or intimidated, where a reasonable person would
anticipate that reaction in the circumstances. The Sex Discrimination Act 1984 (Cth)

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defines the nature and circumstances in which sexual harassment is unlawful. It is also
unlawful for a person to be victimized for making, or proposing to make, a complaint of
sexual harassment to the Human Rights and Equal Opportunity Commission.
(Humanrights.gov.au, 2019)

Malaysia Airlines (MAS) today (Nov 13) confirmed that it terminated the services of a
flight attendant who had been held in a Paris detention center since August for alleged
sexual assault on a passenger. But, in a statement to The Malaysian Insider, the national
carrier said it was not at liberty to discuss the matter further as the case was under the
judicial purview of the Industrial Relations Department (IRD). Malaysia Airlines is not at
liberty to comment on the matter as it is currently under the judicial purview of the
authorities and we confirm that the person is no longer an employee of the company,” the
statement read.

National Union of Flight Attendants Malaysia (Nufam) president Ismail Nasaruddin said
the letter was sent while the attendant was still languishing in an overseas detention
centre. Mr Ismail said that MAS gave the attendant 60 days to appeal against the
termination on grounds of “misconduct”, but added that he could not appeal as he had no
idea he had been sacked. The union had since referred the matter to the IRD to reinstate
the 57-year-old employee.

The attendant was detained on Aug 7 after an Australian passenger Ms Laura Bushney,
26, said he had sexually assaulted her twice during a flight from Kuala Lumpur to Paris.
Ms Bushney said the first incident occurred on the flight before it took off.

The second incident took place three-and-a-half hours later while the plane flew over the
Bay of Bengal, India, in international airspace. The passenger apparently expressed her
nervousness about flying over the Indian Ocean following the disappearance of flight
MH370 and the downing of flight MH17.

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 The passenger, it was reported, lodged a police report upon reaching the Charles de
Gaulle airport on Aug 5. Mr Ismail said MAS had not provided any assistance to the
family of the attendant, adding that the Malaysian embassy in Paris was the one helping
him and the family cope. He said that MAS wanted to wash its hands of the incident as it
was struggling from the negative publicity generated following the MH370 and MH17
incidents.

Trade Union in Malaysia

Malaysia has a three-party labor system. The Ministry of Human Resources formulates and
implements labor policies and legislation. In addition, the labor and employer trade unions
represent their constituents with advice and guidance on labor issues and are actively involved in
public consultative committees.

In Malaysia there are 591 unions with about 800,000 members. The Government continues to be
criticized for its long-standing policies concerning employees ' rights and their liberty to organize
associations. (Lawteacher.net, 2019)

As for what is a trade union, we can say that a trade union is a group of people. Whether permanent
or temporary, this includes the federations of two or more labor organizations as defined in Article
2(6) Labor Act, 1926, mainly in relation to the rules on relations between employees and employer
and the labor organizations for imposing restrictions and conditions in the conduction of any trade
or business. (Agc.gov.my, 2019)

The MTUC, a federal association of trade unions registered in the 1955 Society Act, is the largest
national center representing Malaysian workers and all major industries and sectors with about
500,000 members are represented by the MTUC-affiliated unions. (Malaysian Trades Union
Congress, 2019)

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Objectives of Trade Union

Trade unions are established to ensure the proper rights and various issues of employment. The
trade union is an autonomous organization and mixture of staff which functions as a voice for the
regulation and improvement of employee relations, the enhancement of both parties ' financial and
social status and the search for ways of increasing productivity for those engaged. The objectives
are briefly discussed below;

1. Enforcing worker security and rights: Trade unions ensure that employees have stable
job security, proper work environment, and ensure that there’s no unethical retrenchments,
layoffs or dismissals.
2. Obtain better economic/financial benefits: Trade unions takes in account for global
situation and demands/see for wage hikes/bonus hikes or appropriate benefit scheme in
periodic intervals.
3. Secure power/authority to influence the management and government: Trade unions
make sure of the participation of workers in management decisions, voice their opinions
appropriately. Moreover, trade unions take in enough influences to influence the
government Influence on the government to adopt labor law which improves working
circumstances, security, welfare, safety and pension advantages for employees and
employees, seeks to rectify complaints when necessary.

Trade Union from the employees Perspective

The existence of Trade union in the business and workplace is always a controversial issue with
numerous good and bad points. From the viewpoint of employees, trade unions enable themselves
to have a better sense of job security and participation. In unionized companies, employees are
more engaged to the management and welfare works through the trade union. As found in Indian
Journal of Industrial Relations, 46(3), pp.384-395, only 14% of the employees believed that

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employers hold a positive attitude towards workers (Rose, Kumar and Ramasamy, 2011). In these
scenarios, Trade unions enforce their presence and authority in the organization.

Also, we can see from the survey piloted by Rose, Kumar and Ramasamy (2011), the employees
believe that trade unions enable them to safeguard themselves from the infringement of rights from
managerial prerogatives (McKay and Gall, 2009). Thus, we can see that Trade unions are regarded
as the safe guard of the employees for their rights and safety.

Trade unions from employer’s perspective

According to Hyman (1989:12), employers create internal mechanisms for the purpose of
challenging workers' collective identification with unions. Fewer employers consider the need to
use union to mediate their dealings with employees, reflecting an antipathy to unions (Gilbert
1993). Similarly, Kelly (1996) argued that there is a growing readiness on the part of employers
to bypass trade unions and reduce the range of issues over which they have influence. Gall and
McKay (2001) suggests that employers may use suppression strategy or the substitution strategy
to make the organization union- free. Employers using the suppression strategy create an
atmosphere of fear and through intimidation they aim to sabotage or put an end to existing or
expected attempts at union organization and re- quests for union recognition or at the least, prevent
un ions from getting to a critical mass. According to Rajasekaran (2002), the Secretary General of
MTUC, there are increasing anti-union activities by major corporations. They are demanding for
the removal of legal safeguards that provide employment security to workers on the ground that
removal of these safe- guards is essential to face the increasing global competition.

Thus, we can see a disliking attitude towards unions from the companies or business organizations
at large,

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Recommendations

With its reputation now severely damaged, executives are grappling with tough questions about
the future of the airline. Should the name be changed? Should the business go private? Can the
airline even survive?

According to the former CEO, Malaysian Airlines didn’t face present kind of situation ever before.
And the business model definitely needs to be changed. (Riley, 2019)

Here are three things management must do to rescue Malaysia Airlines:

Restructure the business: Even before Flight 17 was shot out of the sky; the airline's majority
owners were working on a wide-ranging review of its business. It hadn't turned a profit in years,
efforts to compete with low-cost carriers had failed, and the need for yet another government
bailout was growing. These are big problems, and any new turnaround plan will mean major
change.

Malaysian state investor Khazanah Nasional, which owns nearly 70% of the airline, is reportedly
considering taking it private. Shares are trading near record lows, and buying out the remaining
shareholders could cost as little as $325 million. (Riley, 2019)

After taking the business private, management could sell some desirable assets, including Firefly,
its budget unit. The state investor could then reduce its stake in the leaner company, opening the
door to new investors.

Another option is a tie up with Air Asia, one of the budget carriers that has been taking
Malaysia's business by offering cheap fares on short routes. A partnership has been rumored in the
past, but nothing materialized.

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Cut costs in a big way: Analysts argue that Malaysia Airlines needs to slim down, and drop some
of the flashy features of a flag carrier, in order to compete. Abdul Aziz said Malaysia Airlines
needs fewer full-service flights, and more discount fares. The airline also needs to lower food costs
and increase seat counts. The company's powerful labor union, however, is unlikely to support any
major changes.

Change perceptions: Perhaps the biggest challenge faced by the airline is its association with two
doomed flights -- events that are likely to be remembered by potential customers. Airlines often
change their logos and color schemes after disasters, as Japan Airlines did after a 1985 crash. But
media reports have suggested Malaysia Airlines might go further and change its name. (Riley,
2019)

Abdul Aziz, the former CEO, is optimistic about the airline's ability to emerge from tragedy.

Conclusion

As through out this paper, we saw the dilemmas MAS airlines going through in various factors
and how labor union is trying to take care of that. We found out how MAS might improve upon
its current situation.

As we could see, various situations like mass lay offs and internal turmoil were seen in this
national airlines and MAS authority has been failing to properly deal with it. In a industrial law
view point, it could be attributed to the authorities lac of concern towards its employees. Which
calls for the trade union intervention. These are the situations where trade unions work as the
shield of workers/employees, protecting their rights and making the authority take concern of the
issues.

All in all, A stricter authority and law enforcement would be very welcome to subside these
unlawful acts. Skillful managers should be hired and legal team should be restructured to deal
with these situations.

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