Industrial Relations Act 1967: Trade Unions and Unfair Dismissal

You were dismissed this morning and told your “performance was unsatisfactory” — but there was no warning letter, no internal inquiry, and no chance to defend yourself. In Malaysia, this situation has a legal name and one dedicated forum: a representation under section 20 of the Industrial Relations Act 1967, heard at the Industrial Court. This is the layer of labour relations that the Employment Act 1955 does not handle.

The Industrial Relations Act 1967 (IRA 1967) regulates the collective and dispute relationship between employers and employees: how trade unions are recognised, how collective bargaining is conducted, and — the part the public touches most often — the right to challenge a dismissal considered unfair. This guide explains that mechanism step by step, with section numbers and figures you can verify.

What does the IRA 1967 actually govern?

The IRA 1967 is not a list of minimum wages or annual leave — that is the business of the Employment Act 1955. Instead, the IRA 1967 concentrates on three pillars of industrial relations:

• Trade union recognition (section 9) — the process by which a union obtains the right to represent workers at a workplace.
• Collective bargaining and agreements (sections 13-14) — how employment terms are negotiated collectively and bound in a collective agreement.
• Dispute resolution and dismissal (sections 20, 26 and 30) — including claims of dismissal “without just cause or excuse” and Industrial Court awards.

One important distinction that is often misunderstood: the IRA 1967 protects every “workman” — defined in section 2 as any person employed under a contract of service — with no salary ceiling. This means a senior manager or highly paid executive who is dismissed can still bring a section 20 claim, even though they may fall outside certain protections of the Employment Act 1955.

How does a trade union obtain recognition?

Before a union can bargain on behalf of workers, it must be recognised. The process begins when the union submits a written claim for recognition to the employer.

An employer who receives a claim must, within 21 days under section 9(3), either recognise the union or notify the union in writing of the grounds for refusal. After that, section 9(4) gives the trade union 14 days to report the refusal or non-compliance to the Director General of Industrial Relations (DGIR), who may intervene under section 9.

The DGIR then has several investigative powers:

• Requiring the union, employer, or employers’ association to produce relevant information.
• Referring to the Director General of Trade Unions to verify the union’s competence to represent the class of workers concerned.
• Entering the workplace to inspect records or conduct a secret ballot.

The secret ballot is administered by the DGIR under Regulations 6 to 13 of the Industrial Relations Regulations 2009. Section 9 sets no fixed statutory support percentage — under section 9(4A) the DGIR ascertains the percentage of workers supporting the union through the secret ballot, and under section 9(5) issues its decision based on the majority. The specific figure varies from case to case: in one reported case (Adabi Consumer Industries), over 72% of workers were confirmed as union members through the secret ballot — an illustrative figure from that case, not a mandatory minimum threshold. Once recognition is granted, the employer is obliged to bargain in good faith to form a collective agreement.

The 2020 amendments also introduced the concept of sole bargaining rights through sections 12A and 12B, and shortened the bar period for competing claims from three years to one year.

What is “dismissal without just cause or excuse”?

This is the part of the IRA 1967 that ordinary employees touch most often. Under section 20(1), if a workman considers that he has been dismissed by his employer without just cause or excuse, he may make a representation to be reinstated in his employment.

The phrase “without just cause or excuse” is central. The employer must not only show that the employee was dismissed, but why — and that reason must be valid and proven. The burden of proving just cause rests on the employer.

This principle also covers constructive dismissal: where an employer breaches a fundamental term of the contract to the point of forcing the employee to resign, the law may treat that resignation as a dismissal.

The most critical thing to remember is the 60-day limitation period. Under section 20(1A), the representation must be filed within 60 days of the date of dismissal. It is filed at any office of the Department of Industrial Relations (DIR) near the workplace. Missing this period can end a claim before it begins.

What happens after a representation is filed?

The section 20 process passes through several clear stages. The 2020 amendments (effective 1 January 2021) changed one of the most important steps.

Stage	What happens	Reference
1. File representation	Employee files at the DIR within 60 days	Section 20(1A)
2. Conciliation	The DGIR tries to reconcile employer and employee	Section 20(2)
3. Referral to Court	If conciliation fails, the DGIR refers the matter straight to the Industrial Court	Section 20(3)
4. Hearing & award	The Court decides whether the dismissal was fair, and the remedy	Section 30

Before the 2020 amendments, the third step depended on the discretion of the Minister of Human Resources — the Minister decided whether to refer the case to the Industrial Court. This discretion has been abolished. Now, if conciliation fails, the DGIR must refer the representation straight to the Industrial Court for an award. The aim is to speed up resolution and remove the delay at the Ministerial stage.

During the conciliation meeting, section 20(6) (as amended) allows the employer and employee to be represented by any person — except advocates and solicitors — with written authorisation and the permission of the DGIR.

What remedies apply if the Court finds the dismissal unfair?

If the Industrial Court finds that a dismissal occurred without just cause, it has the power to grant remedies under section 30. There are three main forms:

1. Reinstatement. This is the primary remedy under section 20(1) — restoring the employee to their original position. However, the court may decline reinstatement if the employee has reached retirement age, if the employer-employee relationship has severely broken down, or if the position no longer exists.

2. Backwages. Compensation for income lost from the date of dismissal to the date of the award. Under the Second Schedule of the IRA 1967, backwages are capped as follows:

Employee category	Maximum backwages cap
Confirmed (permanent) employee	24 months’ last-drawn salary
Probationer	12 months’ last-drawn salary

The court may reduce part of this amount if the employee earned income after the dismissal, or if the employee’s conduct contributed to the dispute.

3. Compensation in lieu of reinstatement. Granted where reinstatement is unsuitable. It is calculated at one month’s last-drawn salary for each completed year of service, following Practice Note No. 1 of 1987 (this practice note has no binding legal force and the court retains its discretion). The court assesses the amount based on “equity and good conscience” under section 30(5).

Under the Second Schedule of the IRA 1967, an award for loss of future earnings is not included among the Industrial Court’s remedies. This Second Schedule was inserted by Act A1322 (the Industrial Relations (Amendment) Act 2007), which came into force on 28 February 2008, and caps backwages at not more than 24 months from the date of dismissal based on the last-drawn salary. Costs are rarely awarded except in exceptional circumstances.

For monetary awards, the 2020 amendments introduced interest at 8% per annum under section 30(1A), calculated to begin on the 31st day from the date the award is made — a deterrent so that employers do not delay payment.

Can an Industrial Court award be appealed?

Yes, and the 2020 amendments made it easier. Previously, the only way to challenge an Industrial Court award was judicial review at the High Court — a process limited to errors of law or procedure, not merits.

Section 33C (new) now permits a direct appeal to the High Court against an award, filed within 14 days, without requiring leave first. This opens the door to review on “substantive merits” that is broader than judicial review.

Where an employer fails to comply with an award or collective agreement, section 56 (as amended) raises the fine for non-compliance from RM2,000 to a maximum of RM50,000, with an additional fine not exceeding RM500 for each day the offence continues.

IRA 1967 versus Employment Act 1955 — what is the difference?

The two Acts are often confused. In short, the Employment Act 1955 sets the minimum terms of individual employment, while the IRA 1967 manages collective relations and disputes, including unfair dismissal.

Aspect	IRA 1967	Employment Act 1955
Main focus	Unions, collective bargaining, disputes, unfair dismissal	Minimum terms: wages, leave, working hours
Who is protected	Every “workman” with no salary ceiling	Its own scope under that Act
Forum	Industrial Court	Labour Court / Labour Department
Dismissal remedy	Reinstatement, backwages, compensation	Claim for terms & conditions
Dismissal test	”Without just cause or excuse”	—

For most dismissal claims, the correct route is section 20 of the IRA 1967 at the Industrial Court, not a civil claim or the Labour Court.

Should I file a section 20 claim? A decision framework

Use this quick framework to assess your position:

1. Are you a “workman”? If you work under a contract of service, the answer is almost certainly yes — there is no salary ceiling.
2. Were you “dismissed”? This includes direct dismissal, non-renewal of a contract in certain circumstances, and constructive dismissal (the employer forcing you to quit).
3. Did the employer show just cause and fair procedure? The absence of an internal inquiry, a show-cause letter, or a chance to defend yourself is often a sign of unfair dismissal.
4. Are you still within 60 days? If more than 60 days have passed from the date of dismissal, a section 20 claim is most likely barred.

If the answers to 1, 2 and 4 are “yes” and there is doubt over 3, a section 20 claim should be seriously considered.

Common mistakes to avoid

• Missing the 60-day period. This is the most damaging mistake. Count from the date of dismissal, not the date you get advice.
• Assuming only low-paid workers are protected. The IRA 1967 imposes no salary ceiling — executives and managers are “workmen” too.
• The employer dismissing without an internal inquiry. For misconduct cases, the absence of a fair domestic inquiry often renders a dismissal invalid even if the misconduct is genuine.
• Assuming resignation closes the door. Resignation arising from an employer’s breach can be treated as constructive dismissal.
• Confusing backwages with compensation. Backwages (the 24/12-month cap) and compensation in lieu of reinstatement (one month per year) are two separate items that can be awarded together.
• The employer delaying payment of an award. Interest at 8% per annum now applies from the 31st day, so delay adds to the cost.

What next

If you have just been dismissed, the most urgent action is to mark the day-60 deadline on the calendar and gather documents — the offer letter, payslips, the dismissal letter, and any record of an internal inquiry. A section 20 representation can be filed at any office of the Department of Industrial Relations.

If you are an employer or a human resource representative, check whether your dismissal process has a provable reason and a fair procedure — because the burden of proof rests on you at the Industrial Court, and the 2021 amendment has sped up the path of cases to court.

For the full picture, read the related guides on the Employment Act 1955 (minimum employment terms), the Trade Unions Act 1959 (union registration and governance), and the process at the Industrial Court of Malaysia. For a specific case, obtain advice from a lawyer who handles industrial relations — this guide is general information and not legal advice.