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10.1.1The Director-General



10.2.1Employment Disputes

10.2.2Composition of the Industrial Court

10.2.3Reference by the Minister

10.2.4The Jurisdiction of the Industrial Court




The court is only an arbitrator instead of a court of law which is empowered by the Employment Act 1955. Under this Act, the Labour Department under the Ministry of Human Resources bears the responsibility to make sure that the employers and employees follow the Employment Act 1955. It has the power to investigate and to resolve any dispute arising between the employer and employee (Part XIV and XV of the Employment Act 1955).

To put it in a nutshell, the department performs its judicial function in resolving disputes between employer-employees such as hearing and resolving the dispute at the departmental level. Such process would be the “labour court” and its decision would bind the parties involved in the dispute. In situation where the parties are unsatisfied with the award made by the Labour Court, appeals can be made by them to the High Court on condition that questions of law are involved.[1] (section 76).

10.1.1The Director-General

The Employment Act 1955 confers the following powers to the Director General:

Table 10.1:Powers of the Director-General conferred by the Employment Act 1955



Powers of the Director-General conferred by the Employment Act 1955


s.69 of the Employment Act 1955,empowers the Director General to inquire and to decide any dispute between an employer and his or her employee on issue of wages or other payment under a contract of service, this Act or the Wages Council Act 1947.[2]


s.69(3)provides the power for the Director-General to inquire, to confirm or to set aside any decisions made by the employer on condition that the employee suffers losses from it. Such power can only be used if the employee made a complaint to him.[3]


s.69(4)provides that the failure by any party to comply with the decisions made by the Director-General is an offence and would be liable for a fine not exceeding RM10,000 on conviction.[4]


s.70 and 71 of the Employment Act 1955talks about the procedure of inquiries that must be followed by the Director-General[5] and the records of inquiries needed to be maintained by him[6]. In situations where several parties made the same complaint, then the Director-General can make a joinder of the complaints in one complaint.[7]


Unders.75, the Sessions Court has the power to enforce any orders issued by the Director-General provided that such order has not been complied with. The enforcement of such order can be made on condition that there is no sale of immovable property involved. The Director General may also submit any question of law to the High Court if he thinks that it is important to do so. [8].


Section 77 provides that if there is any dissatisfaction with the decision or order made by the Director-General, an appeal can be made to the High Court[9] and the appeal rules insection 4 of the Subordinate Court Rules Act 1955 must be followed.[10] If the employer is believed to have absconded to avoid paying the wages, the employee can summon him (section 78).[11]

Even in situations where there are no complaints made by any parties,section 79gives the Director-General the power to make inquiries concerning any possible offences under the Act and may summon any person whom he would have reasons to believe that the person could provide information.[12]


The Industrial Court was formed under the Industrial Relations Act 1967 and acts as an arbitrator in resolving trade disputes. Under Section 2A Industrial Relations Act 1967, the Yang di-Pertuan Agong can appoint a Director General and the Director General would have the powers to the general discretion, control and supervision on matters related to industrial relations.[13] The power of the Director-General of the Industrial Relations Department in resolving disputes between the employer and the employee at the departmental level is vested under Part V of the Industrial Relations Act 1967. Either the employer or the trade union can made references to the department. Even in situations where no complaint is being made, the Director General may commence the reference on the ground that he believes that it is necessary for him to intervene to resolve such dispute or otherwise the dispute would remain unresolved. The Director General will make a report to the Minister in situations where the dispute cannot be resolved and in turn the Minister will refer the case to the Industrial Court. Part VII of the Industrial Relations Act 1967 provides further provision regarding the Industrial Court.

10.2.1Employment Disputes

Cases relating to employment dispute will be refer to the Industrial Court by the Director-General. This issue had been addressed by the Industrial Relations Act 1967 as virtue to section 2[14] “…any dispute between an employer and his workmen which is connected with the employment or non-employment or the terms of employment or the conditions of work of any such workmen…” Trade disputes could take place when the trade union had failed to establish a consensus of view and demand with the employer on the behalf of the employee, this could also take place with a line of counter claims from the employer. Such failure of consensus could take place on the ground of difference in opinion between the trade union and the employer, or the employer had went back on his enforcement of an agreement that should had been compelled. As regard to dispute arising from the definition of agreement, it will be considered as a trade dispute thereafter the industrial court will come into the picture.

10.2.2Composition of the Industrial Court

The minister has the jurisdiction to refer cases to the industrial court provide that the dispute could not be resolved at the departmental level. However, the referring of cases can only take place with alliance of a report of the Director-General as virtue to s.26 of the Industrial Relation Act 1967. The hierarchy of the Industrial Court is chaired by the President or Chairman appointed by the Yang di-Pertuan Agong and also members of the panel as shown in Figure 10.1


Figure10.1:Constitution of the Industrial Court

The chairman can appoint other member which he deems suitable to take over his duties, to be substitutes during his absence or incapacity. In these below situation, the court may still proceed with any trial without being concerned of the non-existence of members, or even the lack of sufficient member, and if the members concerned are obligatory the court can appoint other person to represent these members.

10.2.3Reference by the Minister

Section 26(1) provides the discretion of the Minister to refer any dispute to the Court upon the communication of both the trade union and employer whom are the parties to the dispute.[15] Upon such power, the Minister can refer any matter to the matter if he deems it to be ad hoc to do so.[16] If such dispute involved a government departments or statutory bodies, then the Minister’s own motion shall not be enforceable not pertaining that the consent of the Yang di-Pertuan Agong or the state authority was obtained. However in situation whereby the case had been referred to the Industrial Court by the Minister himself, the interception of other courts shall not be allow, as virtue to the following case:

Perkara Permohonan oleh Sreedharan (1974), the applicant was terminated by the employer. The Minister had ordered for matter to be investigated and crux out that the matter shall be place before the Industrial Court with reference to Section 16A(9) of the Industrial Relations Act 1967.[17] However, the applicant had submitted an application for certiorari order to the High Court to obtain injunction against the continuation of proceeding of the Industrial Court on his case. However, such application was rejected on the ground that the Minister had the absolute power to refer the said matter to the Industrial court. In a proceeding, the person in the matter can be represented either by he himself or by his trade union.[18] Similarly for the employer, he could be represented by officer or even the employer union. If there is a contingent upon the representation in any proceeding, the President or the Chairman shall have the final say.

10.2.4The Jurisdiction of the Industrial Court

Section 29 of the Industrial Relations Act 1967,provides for the jurisdiction of the Industrial Court as shown in Figure 10.2.

Figure 10.2:Powers of the Industrial Court

The Act itself frees the court from the technicalities experienced by the ordinary courts. This judicial power in turn allows the court to quickly settle the issues between the employer and the employee. There are two cases which demonstrate this judicial power:

First, in the case Hotel Jaya Puri Bhd v Kesatuan Kebangsaan Pekerja-pekerja Hotel, Bar dan Restoran dan seorang lagi[19], the question raised here concerned the workers as to whether they were employees to the restaurant or the hotel itself. By justifying that the workers themselves counted as substantive and material to the hotel, the Industrial Court thus held that they were workers to the hotel, in which in the end, compensation was paid by the hotel to the workers for their unwarranted dismissal.

In an appeal by the hotel to the High Court, the High Court then reasoned under section 29 that the Industrial Court has their own discretion to such matters. By this reasoning and also demonstrating the inherent powers of the Industrial Court, the hotel’s appeal that the Industrial Court was wrong in their application of the law was turned down as the High Court did not want to involve themselves in the matter pertaining to the Industrial Court’s jurisdiction. Even then, such judicial powers do not exempt them from following the rules of natural justice and ensuring that the trial is a fair one, as such, it is still required to make a decision based on the arguments on both sides without a sense of biasness towards one side. This rule is known as Audi arteram partem.

The second case to be discussed here is the case of Perkara Permohonan oleh Kesatuan Syarikat Omnibus Sdn Bhd[20]. Here, the rule of Audi arteram partem was challenged by the appellants when they claimed that the Industrial Court was unfair in their decision because their views were not accepted as much as the respondent’s. The High Court, in this appeal case, held that the Industrial Court has the power and authority to discard evidences in which they consider to be immaterial or unconnected to the issue at hand and this can happen after the Industrial Court had spent days listening to evidences and arguments on both sides. In the end, the parties involved are expected to concede to their judgments.

However, even though it is equipped with such discretion, the Industrial Court may still refer to the High Court on matters pertaining to questions of law. This is provided under section 33A of the Industrial Relations Act 1967 where if the gravity of the award is of the highest priority. As in the two cases above, no party may challenge in any court the judgments of the Industrial Court.


If the power of the Director-General under Part XV of the Employment Act or if the power of the Industrial Court under the Industrial Relations Act are violated, then the proceedings initiated by the Industrial Court can scrutinised in the form of judicial review. An example of this is when the Industrial Court has made a judgment by means of which they have no authority to do so, i.e. acting ultra vires. In such situations, the extreme decision of the Industrial Court can be quashed by means certiorari. The table below shows the situations where the Industrial Court has acted outside their power.


Situations Giving Rise to Ultra Vires


When the majority in the Industrial Court is inadequate as required under s 22(1) or the consent of the parties are not given.


When the Industrial Court itself does not have the power in a particular issue. For example, under section 26 of the Industrial Relations Act, the power to refer lies with the minister or matters pertaining to trade union disputes can only be heard by the Industrial Court[21].


When the actions of the parties are too much or they have acted too inadequately in reference to their given powers.

An interesting note here is that the matter of the Industrial Court questioning the cases referred to them by the minister has only risen since 1985. Before that, the Industrial Court had heard and made a judgment on every case given to them by the minister. A case which demonstrates this point is ofAsia Motor Sdn Bhd and Cho Mai Sum[22]. Here, a reference made by the minister regarding the applicant’s status as an employee was challenged by Asia Motor due to the fact that ‘employee’ did not follow the definition set out in the Act. In an explanation, Salleh Abbas who was the Federal Court judge then said that it is not the obligation of the Industrial Court to hear on matters given to them by the minister specifically when it is not within their power to do so.



Asia Motor Sdn Bhd and Cho Mai Sum [1986] 2 ILR 919

Hotel Jaya Puri Bhd v Kesatuan Kebangsaan Pekerja-pekerja Hotel, Bar dan Restoran dan seorang lagi [1980] 1 MLJ 109

Perkara Permohonan oleh Kesatuan Syarikat Omnibus Sdn Bhd (1977)

Perkara Permohonan oleh Sreedharan (1974)

[1] Employment Act 1955, S.76

[2] Employment Act 1955, S.69

[3] Ibid, S.69(3)

[4] Ibid, S.69(4)

[5] Ibid, S.70

[6] Ibid, S.71

[7] Ibid, S.72

[8] Ibid, S.76

[9] Ibid, S.77

[10] Subordinate Court Rules Act 1955 , S.4

[11]Employment Act 1955, S.63

[12]Ibid, S.79

[13] Industrial Relations Act 1967, S.2A

[14] Ibid, S.2

[15] Industrial Relations Act 1967, S.26(1)

[16] Ibid, S.26(2)

[17] Ibid, S.16A(9)

[18] Ibid, S.27

[19] [1980] 1 MLJ 109

[20] (1977)

[21] Ibid, S.26

[22] [1986] 2 ILR 919

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