What is Co-Determination?
Co-determination according to the Cambridge Dictionary refers to a system in which both employers and employees are jointly involved in making important decisions within a company.
Under the 12th Malaysia Plan (RMKe-12), Chapter 10, through Strategy A1, efforts must be implemented to promote equality in Compensation of Employees (CE) through employee participation at the organizational level. In line with this, a co-determination approach should be introduced to enable the joint involvement of employee and employer representatives in decision-making.
The Department of Industrial Relations Malaysia (DIRM) conducted the National Industrial Harmony Index (IHI) 2022 study. The findings of IHI 2022 indicate that elements of co-determination were practiced within organizations while facing the challenges of the COVID-19 pandemic. Employers and employees were found to have established connectivity and mutual cooperation in making joint decisions using various interactive formal and informal channels.
These elements of co-determination have become contributing factors to the continuity of organizational operations, job retention, and the minimization of conflict, which in turn encouraged a sense of belonging that led to organizational success. Benchmarking conducted in IHI 2022 found that Germany is the world’s primary reference for co-determination practices, having introduced the Co-Determination Act 1976.
This model is a hierarchical structure of employee representation that begins with Level 1: Informal Collaboration, followed by Level 2: Trade Unions, then Level 3: JCC, and the highest level, Level 4: Co-Determination. At level 1, companies rely on informal collaboration without a formal representative body. This represents the majority of companies in Malaysia, especially SMEs and Micro-enterprises. The development of this model facilitates DIRM in providing different implementation methods of co-determination based on their respective levels of employee representation.