INDUSTRIAL RELATIONS (AMENDMENT) BILL

Order for Second Reading read.

4.40 p.m.

The Minister for Foreign Affairs and Minister for Labour (Mr Rajaratnam): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

This Bill, like the Employment Bill, is an attempt to rationalise employer-employee relationship with a view to attracting new investments and increasing the efficiency of our trading and industrial enterprises. This Bill, unlike the Employment Bill, deals with the rights and responsibilities of management. Efficiency of an enterprise depends on effective management, more so as our commercial and industrial enterprises become more modernised, more complex and bigger as they must if they are to hold their own in an increasingly competitive world. The more highly organised our economy becomes, the more up-to-date, resourceful and imaginative must become our management methods.

The trade unions have never questioned the rights of management to manage, first, as a matter of common-sense and, second, because these rights are common law rights. But whatever the theory the rights of management have over the years been eroded, perhaps not as a conscious policy, by trade unions. What this Bill seeks to do is to restore these rights of management to the employers by making common law rights into statute law. No rights are being taken away from the workers because the workers never claimed these rights, even though some of these rights have, in practice, been denied to management.

We are not restoring these rights to management merely out of a sense of justice and fair play, but because we are convinced that unless proper management functions are allowed to be performed unhampered there would be little or no economic expansion or fresh investments. No investor or entrepreneur is going to risk millions of dollars if he has not the final say and the responsibility to decide how the enterprise should be run. I am not saying that unions have deliberately claimed the rights of management because then they would also have to take on the responsibilities that go with it. But unwittingly they have trespassed into this sphere by querying the right of management to hire, fire, promote and transfer employees where these are necessary to enhance the efficiency of the enterprise. Yet the essence of management is the ability of the management to deploy its labour resources and skills in the most effective and most rational way - and central to this is to be able to recruit the most qualified worker, to promote the most able, to get rid of the inefficient and to transfer a worker where he is most needed. These, to a certain extent, involve judgment but, by and large, the judgment of the management should be the decisive one because if its judgment is erratic and ill-informed the enterprise sooner or later goes bankrupt.

I am not saying that management rights cannot be abused or improperly or unintelligently exercised by management. We have, therefore, in this Bill provided such safeguards as we can against flagrant abuse of management rights, but laws have to be designed for normal behaviour. It is reasonable to assume that most employers are interested, as most workers are, in efficiently managed and therefore profitable enterprises. One cannot make laws on the assumption that employers are going into business with the primary objective of hiring, firing and promoting workers arbitrarily and unfairly.

[Mr Deputy Speaker in the Chair]

4.43 p.m.

The Minister for Foreign Affairs and Minister for Labour (Mr Rajaratnam): Abuses and malpractices there will always be, and inroads into rights and privileges will always be made by one party or the other which, in the ultimate, can become detrimental to the public good.

The Industrial Relations Ordinance, which was enacted in 1960, gives expression to Government's declared policy of industrial peace with justice. Though the law has worked satisfactorily generally, experience in working it has shown that a reappraisal is necessary to eliminate certain fundamental areas of latent dispute which have caused serious concern to us, because in a large number of cases this has resulted in shattering confidence in Singapore's ability to create the necessary conditions to attract foreign investments, encourage industrial development, and generate much-needed employment opportunities for our people.

Let me give you some figures of work stoppages from 1960 to 1967, that is, during the last seven years. The total number of stoppages during this period of some eight years was 389, involving a loss in man-days of 1,284,029; the peak years were of course 1961, 1962 and 1963. It will be seen that the number of man-days lost is colossal. It is a loss which could have crippled a country of our size and in our position, but fortunately because we in Singapore are made of sterner stuff, we have managed to survive. What is even more interesting is a study of the causes of these disputes. Of the total of 389 disputes, 106 or about 27 per cent arose out of dismissals while another 120 or about 30 per cent were due to a number of other reasons which included demotion, discontinuance of life insurance scheme, discrimination in filling vacancy, grading of staff, recruitment of workers, reorganisation, transfer of company doctor, warning letters, and not least of all, a union's demand for dismissal of an employee. These disputes indicate that there is no clear demarcation between management functions and trade union functions. One can seriously ask whether in such a state of affairs any new employer would set up factories in Singapore if there is no clear dividing line between the functions of management and the functions of trade unions. This Bill is therefore a bid to create the necessary framework within which certain industrial matters between the employer and worker can find a new basis for a new working relationship.

I shall now deal with the major clauses of the Bill.

Clause 4 of the Bill seeks to amend section 16 of the Ordinance by providing that a trade union of employees, the majority of whose members consist of employees working in subordinate positions, may not seek recognition in respect of employees who are in managerial or executive positions. The existing provisions of subsection (2) of section 6 of the Ordinance merely stipulate that a trade union of employees, whose constitution and rules do not permit it to admit as members any class of employees, may not seek recognition in respect of that class of employees. But the constitution and rules of a trade union may be drafted so widely as to embrace all grades and categories of employees from the office boy up to the managing director. In any commercial or industrial undertaking, the supervisory category of employees constitutes a minority of the total number of employees. A trade union ostensibly works on the democratic principle that the will of the majority prevails, but sometimes this principle cuts across the interests of the minority. As the minority of employees are in supervisory or executive grades, one often finds that such a principle is incompatible with the enforcement of discipline. And discipline is undeniably a necessary prerequisite for effective and efficient management. Separate representation of different categories of employees is nothing new and is accepted in the highly industrialised countries of Europe and America. Further, it has been our experience that the provisions of the existing section 16 of the Industrial Relations Ordinance have not been effective in minimising the incidence of disputes on the question of trade union representation which, in practice, attempted to embrace managerial or executive employees. There is, therefore, a need for legislative intervention in this regard to regularise the position.

Clause 5 of the Bill amends section 17 of the Ordinance and a new subsection is now included to provide that certain fundamental management functions are not negotiable. These functions are as follows:

(a) the promotion of an employee;

(b) the internal transfer of an employee;

(c) the recruitment of staff;

(d) the retrenchment of an employee;

(e) the dismissal or reinstatement of an employee; and

(f) the assignment or allocation of duties or specific tasks to an employee.

It is undoubtedly true that such functions are common law rights and that, therefore, it would appear unnecessary to give further legal effect to such rights. However, as I said, experience has shown that the line between management functions and trade union functions becomes blurred in the process of heated negotiations, with neither side knowing where one's right begins or ends. It is, therefore, necessary to define clearly what management functions are, just as it is important to delineate trade union functions to eliminate an area of dispute which has caused considerable concern in regard to the industrial progress of Singapore. But unfettered rights there cannot be, because rights also beget obligations.

Employers are subject to human failings just as trade unions are, and these human failings can lead to aberrations. It is, therefore, necessary to build in certain safeguards to protect the employees. For instance, the right of an employer to transfer an employee is subject to the requirement that the exercise of such a right does not entail a change to the detriment of an employee in regard to his terms of employment.

Further, the right of an employer to terminate the services of an employee can only be exercised on the grounds of redundancy or reorganisation of the employer's profession, business, trade or work. The trade unions, however, have apprehensions in this regard. In view of the fact that retrenchment can only be carried out on the grounds of redundancy or reorganisation, the employer will have in fact to show that this is so. What the Bill intends to achieve is merely that the employer should have the prerogative to decide which of his employees should go, not just on the principle of "last in, first out", but more on the principle of "least efficient, first out".

An employer would naturally want to retain efficient workers if be wants to run his enterprise successfully. The principle of "last in, first out" prevents him from retaining useful employees in a redundancy or reorganisation exercise. The fears expressed in this regard are, therefore, somewhat exaggerated because in any case of abuse by the employers, remedial measures can be instituted under section 72 if the circumstances warrant the appointment of a Board of Inquiry.

[Mr Speaker in the Chair]

4.55 p.m.

The Minister for Foreign Affairs and Minister for Labour (Mr Rajaratnam): Similarly, the right of an employer to dismiss an employee is subject to certain restraints as provided for in an amendment to section 34 of the Ordinance as embodied in paragraph (d) of clause 8. An employee dismissed without just cause or excuse by an employer may, within one month of his dismissal, make through his trade union, representations in writing to the Minister to be reinstated in his former employment. The purpose of directing dismissal cases to the Minister is to provide for more speedy machinery to deal with individual cases of dismissal and to prevent the Industrial Arbitration Court from being bogged down by prolonged arguments over isolated cases. If the objective of the Bill is achieved and high employment created, we can expect the supply of jobs to outrun the demand for jobs. Such a situation would be a natural bar to employers wanting to terminate the services of employees because employees will be able to choose jobs from several alternatives that are open to them. In any case, the more efficient and useful a worker, the less are the chances of his losing employment, and improved performance and productivity will become a natural deterrent to unjust dismissals.

Similarly, whilst the employer is given the right to assign or allocate duties or specific tasks to an employee, this right is qualified by the fact that such assignment or allocation must be con sistent or compatible with the terms of employment.

Clause 6 of the Bill amends section 24 of the Ordinance to provide that the duration of a collective agreement should be for a minimum of three years and a maximum of five years as against the existing provisions for a minimum of 18 months and a maximum of three years. The reason for this extension is to enable stability to be maintained in the level of terms and conditions of service for a longer period. This would lead to more effective and efficient administration of an undertaking and enable entrepreneurs to plan ahead.

Hon. Members are aware that under section 53 of the Employment Act, no collective agreement entered into after the coming into operation of this Act shall contain provisions more favourable than the terms and conditions of service provided for in Part IV, except in respect of sick leave and annual leave.

In order to provide added inducement for new investors to come to Singapore, clause 7 of the Bill provides that all industrial and other approved undertakings, including pioneer industries, which commenced operation on or after the 1st day of January, 1968, shall comply wholly with the provisions of Part IV of the Employment Act, 1968. In other words, all the terms and conditions of employment, including sick leave and annual leave, of these new industrial undertakings will constitute the maximum terms of service for a period of five years from the date such undertakings commence operation in Singapore. The Minister, however, may extend the period at his discretion.

5.00 p.m.

Mr Speaker: Order. Mr Rajaratnam, I take it you have finished with clause 7?

Mr Rajaratnam: Yes.

Mr Speaker: This will be a convenient time to adjourn. Pursuant to the resolution made earlier, the House will now adjourn, and the Motion on the Second Reading will resume tomorrow.

Adjourned accordingly at Five o'clock p.m.