1

LESSON
Overview of Industrial
Relations

Chapter Overview
1.1
1.2
1.3
1.4
1.3
1.4
1.5

Definition
Principles of industrial relations
Definitions of harmonious relations
Effects of harmonious relations
Types of decision making in the industrial relations system
Roles and functions of government in the industrial relations
Summary

Learning Objectives
This lesson introduces the field of industrial relations by drawing learners attention to
several pertinent aspects. Upon completing this lesson, students should be able to:
1.
2.
3.
4.
5.
6.

Define the term industrial relations

Outline principles of industrial relations
Define harmonious industrial relations
Explain the effects of harmonious industrial relations
Describe types of decision making in the industrial relations system
Elaborate on roles and functions of government in the industrial relations

Introduction
This lesson focuses on the concept of industrial relations and several relevant aspects.
It comprises four main parts. The first part describes the definition and principles of
industrial relations. The second part is about harmonious industrial relations i.e.
definition and principles. Part three consists of the types of decision making in the
industrial relations system. Part four outlines the roles and functions of government in the
industrial relations. This will help you to acquire an in-depth understanding of this topic.
Please note that the term industrial relations and industrial relations system is used
interchangeably in this lesson.
Definition and principles of industrial relations
Definition
Many definitions have been given to the term industrial relations. In the simplest words it can be
understood as the relationship between emplopyees and their employers within the work
environment. The relationship also involves trade unions. Therefore, the relationships are
between employers and unionized as well as non-unionised employees.
Principles of industrial relations
In Malaysia the employersemployees relations (in the private sector) are governed by the
Industrial Relations Act 1967 (IRA). This Act establishes the principles on which the relations are
founded. The principles are the following:
i.

Trade Unionism
This principle states that workmen (and employers too) are entitled to basic trade
union rights such as the right to form unions, the right to join unions, and the right to
participate in the activities of unions.

ii.

Union Recognition
The principle explains that employee unions must be recognised by employers as a
legal or official representative before they represent employees to bargain whether
individually or collectively.

iii.

Collective Bargaining
This principle guides how employee unions may negotiate with employers the terms
and conditions of employment and work of workmen, and may conclude with
employers binding and enforceable written agreements incorporating the terms and
conditions agreed upon.

iv.

Dispute Resolution
This is the principle that attempts to offer the effective resolution of conflicts between
disputing parties. Employers, workmen and their unions should, if possible, be
prevented through a grievance machinery or collective bargaining, and if not, be
settled through conciliation or arbitration, rather than aggressive methods or
industrial action (i.e. strikes, lockouts etc).

Definitions and effects of harmonious relations

Harmonious industrial relations
Harmonious industrial relations refer to peaceful relationship between employers or
management and employees. Sometimes people use the term sound industrial relations as
harmonious industrial relations. The relation is considered harmonious when the number of
disputes and industrial actions are minimal. The relationship is also considered harmonious if
both parties choose peaceful ways to settle the conflict. In addition, successful dispute
resolutions at the early stage also indicates the availability of harmonious industrial relations.
Effects of harmonious industrial relations
The effects of harmonious industrial relations can be seen from three levels i.e. national
(country), industry and organisational (enterprise) level.
1.

Effects on the country

Harmonious industrial relations have effects on national productivity and prosperity. It can
ensure political stability, economic development and social well-being among people n a
country.

2.

Effects on the industry

Industries will also gain benefits from harmonious relationship. Good industrial relations
help in uninterrupted production by ensuring continuity of production, continuous
employment and full utilization of capacity. This results in maximum production which in
turn keeps income flow steady for everyone involved in production. This also results in
timely arrival of goods at the market thus helping economy as a whole.

3.

Effects on the organisation

The effects of harmonious industrial relations are obviously seen at the organisational
level i.e. employer and employees. By maintaining excellent industrial relations the
wastage of machines, materials and men can be reduced. Mutual understanding and
cooperation may avoid industrial dispute that help organisation to save cost. Peaceful
industrial relations makes employees feel appreciated, keeps employees moral high and
enables them to work with sincerity and enthusiasm. Sound industrial relations reduce the
numbers of industrial disputes and industrial actions. Proper elimination of workers'
dissatisfaction results in peaceful industrial surroundings and increased production.

Types of decision making in the industrial relations system

Governments, employers and employees are three players in industrial relations. These groups
may interact differently in making decisions related to work life. The decisions can be made in
any of three ways i.e. :
i.

Unilaterally
The decision is made by one party in disregard for other parties i.e. the employers.
People tend to associate this way of making decisions in the Malaysian public sector
industrial relations.

ii.

Bilaterally
The decision is made by two parties i.e. employers and employees. The best example is
collective bargaining practices.

iii.

Tripartite manner
The decision is made by three parties i.e. employers, employees and government.
Arbitration is a good example where decisions are made by Industrial Court
(government), employers and employees.

Roles and functions of government in the industrial relations

i.

Legislator
This is the role where the government legislates or enacts law through the Parliament.
Examples of legislations are the Trade Unions Act 1959 (TUA) the Industrial Relations
Act 1967 (IRA) and the Employment Act 1955 (EA).

ii. Administrator
The government performs this role through the Ministry of Human Resources. The core
activity is enforcing the above three legislations i.e. translating written laws into actual
action and taking corrective actions when necessary.
iii.

Participant
This role is performed by the Minister of Human Resources in the Code of Conduct for
Industrial Harmony and the National Labour Advisory Council. The Minister with the help
of MTUC and CUEPACS formulates appropriate industrial relations policies and promote
peaceful industrial relations policies.

iv. Employer
The federal government plays this role as the largest employer in the public sector.
People are hired to fill vacant positions available in this sector. Salaries and benefits are
provided to compensate them.

POINT TO PONDER
Every method in making decisions has its own merits and demerits. Examine the
tripartite manner of making decision in industrial relations.

Summary
The establishment of Malaysian industrial relations is based on certain principles. The ultimate
aim is to achieve peaceful relationship between employers and employees in both sectors. In
addition, government has specific roles pertinent to ensure sound industrial relations.

Activity 3.1
You have now reached the stage where you should be able to explain the concept and
importance of harmonious industrial relations. Try the following activity to test your
understanding of this lesson.
QUESTION SAMPLE
This is one of commonly ask questions for this lesson.
Explain the roles and functions of government in industrial relations.
1.
2.
3.
4.

legislator make law

administrator translate laws into actual actions and take corrective actions
participant take part in the discussion and endorsement of documents
employer hire people, allocate tasks and, provide salaries and benefits

CHECKLIST
At this point you should be able to:

to explain the effects of non harmonious industrial relations

to explain the principles where private sector industrial relations are founded

STUDY QUESTIONS
PART A: DEFINITION
Define the following terms:
1.
2.
3.
4.
5.

legislator
administrator
participant
government
bilateral

PART B: SHORT ANSWER

Answer the following questions:
1.

Explain the impacts of harmonious industrial relations on organisations

2.

Describe the effects of non harmonious industrial relations in a country.

(10 marks)

Feedback to Activity 3.1

Feedback to question sample
Explain the roles and functions of government in industrial relations.

(10 marks)

i.

Legislator
This is the role where the government legislates or enacts law through the Parliament.

ii.

Administrator
The government enforces the labour laws through the Ministry of Human Resources.

iii.

Participant
This role is performed by the Minister of Human Resources in the Code of Conduct for
Industrial Harmony and the National Labour Advisory Council.

iv.

Employer
The federal government plays this role as the largest employer in the public sector.
Government hires people and provides compensation.

(2.5 marks x 4 points with appropriate explanation = 10 marks)

Feedback to study questions

PART A: DEFINITION
1.
2.
3.
4.
5.

legislator lawmaker
administrator enforcer
participant member or partaker
government a group of people who have the authority to govern the country
bilateral the practice that involves two sides/parties

PART B: SHORT ANSWER

1.

Explain the impacts of harmonious industrial relations on organizations.

i.
ii.
iii.
iv.
v.

can reduce wastage of machines, materials and men.

Mutual understanding and cooperation may avoid industrial dispute that help
organisation to save cost.
Peaceful industrial relations makes employees feel appreciated, keeps
employees moral high and enables them to work with sincerity and enthusiasm.
Peaceful industrial relations reduce the numbers of industrial disputes and
industrial actions.
Proper elimination of workers' dissatisfaction results in peaceful industrial
surroundings and increased production.

2.

Describe the effects of non harmonious industrial relations in a country.

Politics stable government administration.
Economy national productivity and prosperity, national development
Social higher standard of living, safety and security of life are protected.