Over the years, I have noticed that many Malaysians have heard of the Employment Act 1955, but very few understand the role of the Industrial Relations Act 1967 (“IRA 1967”). Yet when serious workplace disputes arise, it is often this law that becomes the centre of the battle.
The Industrial Relations Act 1967 is one of the key laws discussed in our complete guide to Employment Law in Malaysia.
In simple terms, the Employment Act 1955 mainly deals with employment benefits and minimum rights, while the Industrial Relations Act 1967 deals with disputes between employers and employees.
This guide explains the Industrial Relations Act 1967 in plain English, what it covers, and why it matters to every employee and employer in Malaysia.
What Is The Industrial Relations Act 1967?
The Industrial Relations Act 1967 is a Malaysian law designed to promote harmony between employers and employees.
Its primary objectives include:
- Preventing industrial disputes
- Encouraging good employer-employee relations
- Providing mechanisms for resolving workplace disputes
- Regulating trade unions and collective bargaining
- Protecting employees from unfair dismissal
Think of it this way:
The Employment Act tells employers the minimum rights they must provide to employees.
The Industrial Relations Act tells parties what happens when disputes arise.
Without the Industrial Relations Act, many employees would have no effective way to challenge unfair treatment at work.
Why Was The Industrial Relations Act Introduced?
Employment relationships are not always smooth.
Disputes can arise over:
- Dismissals
- Salary issues
- Promotions
- Transfers
- Disciplinary action
- Workplace misconduct
- Collective bargaining disputes
Without a proper legal framework, these disagreements could escalate into strikes, lockouts, or prolonged conflicts.
The Industrial Relations Act was introduced to create a structured process for resolving such disputes fairly and peacefully.
Its ultimate goal is to maintain industrial harmony while protecting the legitimate interests of both employers and employees.
Who Does The Industrial Relations Act Apply To?
One of the biggest misconceptions is that the Industrial Relations Act only applies to lower-income employees.
This is not true.
Unlike certain provisions of the Employment Act 1955, the Industrial Relations Act generally applies to employees regardless of salary level.
This means that all private sector employees may all potentially rely on the Act when challenging an unfair dismissal.
However, the existence of an employer-employee relationship remains crucial. For more guidance on whether an employer-employee relationship exists, see: Contract of Service vs Contract for Service.
Independent contractors and freelancers are generally not protected under the Act.
What Is An Industrial Dispute?
An industrial dispute refers to any disagreement between an employer and employees relating to employment matters.
Examples include:
- Wrongful termination
- Unpaid benefits
- Working conditions
- Disciplinary action
- Recognition of trade unions
- Collective agreements
Not every workplace disagreement becomes an industrial dispute.
However, when parties cannot resolve matters internally, the mechanisms under the Industrial Relations Act may be triggered.
Unfair Dismissal: The Most Important Protection
For most Malaysians, the most important part of the Industrial Relations Act concerns protection against unfair dismissal.
Employers in Malaysia generally cannot terminate employees arbitrarily.
A dismissal must be supported by:
- Just cause, or
- Excuse
This principle forms the foundation of Malaysian employment law.
An employer cannot simply decide:
“I don’t like this employee anymore.”
and dismiss the employee without proper grounds.
The Industrial Court will often examine whether:
- The alleged misconduct actually occurred
- Proper procedures were followed
- The punishment was proportionate
- The dismissal was justified
If the employer fails to establish just cause or excuse, the dismissal may be declared unfair.
Common Grounds For Dismissal
Some examples that may justify termination include:
Misconduct
Examples include:
- Theft
- Fraud
- Dishonesty
- Insubordination
- Harassment
- Violence at the workplace
Poor Performance
An employer may dismiss an employee for poor performance, but usually only after:
- Identifying performance issues
- Providing guidance
- Giving opportunities to improve
- Documenting deficiencies
Redundancy
Businesses sometimes need to reduce their workforce due to restructuring or economic difficulties.
However, redundancy must be genuine and not merely used as an excuse to remove unwanted employees.
Breach Of Company Policies
Serious violations of workplace rules may also justify disciplinary action or dismissal.
What Is A Domestic Inquiry?
Many people assume a domestic inquiry is always required before dismissal.
That is not entirely accurate.
A domestic inquiry is an internal investigation conducted by the employer to determine whether misconduct occurred.
A typical process may involve:
- Issuing a show cause letter
- Receiving the employee’s explanation
- Conducting a hearing
- Evaluating evidence
- Reaching a decision
While domestic inquiries are important and often recommended, whether one is legally required depends on the circumstances of the case.
The Industrial Court will ultimately assess whether the employee received procedural fairness.
How To File An Unfair Dismissal Claim
Employees who believe they have been unfairly dismissed may file a representation under section 20 of the Industrial Relations Act.
The process generally involves:
Step 1: File A Representation
The employee files a complaint with the Industrial Relations Department.
Step 2: Conciliation Meeting
A conciliation meeting is usually arranged.
The purpose is to encourage settlement between the parties without litigation.
Many disputes are resolved at this stage.
Step 3: Reference To The Industrial Court
If settlement efforts fail, the dispute may proceed to the Industrial Court.
Step 4: Industrial Court Hearing
Both parties present:
- Witnesses
- Documents
- Evidence
- Legal arguments
The court then issues an award.
What Is The Industrial Court?
The Industrial Court is a specialised tribunal that deals primarily with employment disputes.
It differs from ordinary civil courts because it focuses specifically on industrial relations matters.
The court frequently hears cases involving:
- Unfair dismissal
- Trade union disputes
- Collective agreements
- Employment-related industrial disputes
Industrial Court awards are legally binding.
What Remedies Can The Industrial Court Grant?
If an employee successfully proves unfair dismissal, the Industrial Court may grant various remedies.
Reinstatement
The employee may be returned to their previous position.
Although available in law, reinstatement is relatively uncommon in practice because the employment relationship has often broken down.
Back Wages
Employees may receive compensation for income lost due to the dismissal.
Compensation In Lieu Of Reinstatement
Where reinstatement is unsuitable, the court may award compensation instead.
The amount depends on various factors including:
- Length of service
- Circumstances of dismissal
- Mitigation efforts
Trade Unions And Collective Bargaining
The Industrial Relations Act also regulates trade unions and collective bargaining.
A trade union is an organisation formed to represent employees collectively.
Trade unions may negotiate with employers regarding:
- Salaries
- Benefits
- Working conditions
- Workplace policies
The resulting agreement is known as a collective agreement.
The Act provides legal procedures governing:
- Recognition of trade unions
- Collective bargaining
- Industrial action
- Resolution of collective disputes
Strikes And Lockouts
The Industrial Relations Act regulates industrial action.
Strike
A strike occurs when employees collectively stop work to pressure an employer.
Lockout
A lockout occurs when an employer prevents employees from working.
Because strikes and lockouts can significantly affect businesses and the economy, Malaysian law imposes strict legal requirements before such action may occur.
Why The Industrial Relations Act Matters
The Industrial Relations Act affects far more Malaysians than most people realise.
If you are an employee, it may protect you from arbitrary dismissal.
If you are an employer, it provides a framework for managing workplace disputes lawfully.
Understanding the Act can help both sides avoid costly mistakes, lengthy disputes, and unnecessary litigation.
In many employment disputes, the real question is not whether a problem exists.
The real question is whether the employer acted fairly, reasonably, and in accordance with the principles established under the Industrial Relations Act 1967.
Final Thoughts
The Industrial Relations Act 1967 sits at the heart of Malaysian employment law.
While the Employment Act 1955 establishes many basic employment rights, the Industrial Relations Act provides the mechanisms that allow employees and employers to resolve disputes when relationships break down.
Whether you are facing dismissal, considering disciplinary action against an employee, or simply trying to understand your workplace rights, a basic understanding of this law can go a long way.
The best disputes are often the ones that never reach court. Knowing your rights and obligations under the Industrial Relations Act is one of the best ways to achieve that.
For a broader overview of employment rights, visit our Employment Law Malaysia guide.
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