In Malaysia, the primary piece of legislation that regulates the relationship between employers and employees is called the Employment Act 1955.
The Employment Act of 1955 has been in need of revision for a very long time now because there have been a great deal of worries and omissions in regard to the protection that is offered to employees.
The Employment (Amendment) Bill 2021 was approved by the Dewan Rakyat on March 30, 2021. During the course of the debate, several major amendments were proposed.
The Employment (Amendment) Bill 2021 was passed with the intention of increasing and improving the protection and welfare of workers in the country in line with international labour standards as outlined by the International Labour Organization.
The bill's objective was to increase and improve the protection and welfare of workers in the country. Given that the Employment Act of 1955's First Schedule prescribes the application of the Act to certain categories of employees, it is unclear whether the amendments will alter such categories once they come into force.
This is because the First Schedule prescribes the application of the Act to certain categories of employees. As a consequence of this, Malaysian employers and employees have been eagerly waiting for the adjustments to the First Schedule that would be gazetted in respect to the types of employees that fall within the ambit of the amendments.
After a considerable amount of time, the Minister of Human Resources, M. Saravanan, made the announcement that the Employment (Amendment) Act 2022 will enter into force on September 1, 2022, simultaneously with the Revised First Schedule of the Employment Act 1955 ("Revised First Schedule"), which was gazetted on August 15, 2022.
This news came after a long period of anticipation. The breadth of the modified Employment Act of 1955 covers all employees, regardless of their monthly earnings, which contributes to the widespread perception that these revisions have a broad impact on the labour market.
Nevertheless, it is governed by the Revised First Schedule, which will be discussed in greater detail in the following paragraphs.
Important Changes Made to the Employment Act of 1955
The Employment Act of 1955 was updated in order to provide workers with increased protection in accordance with the recommendations made by the International Labour Organization. The following are examples of some of the most important changes:
Calculation of pay for a partial month
The revisions include a formula for estimating the salary of a worker with less than one month of service.
(Monthly salary divided by the number of days in the pay period multiplied by the number of days eligible in the pay period)
In accordance with the Act, monthly earnings are computed using a denominator of 26 days, which represents the number of days an employee is obligated to work per month.
Court orders for payment due
If an employer is guilty of a crime involving the payment of wages to employees, the court might order the employer to pay the amount owed to the employees.
Failure to comply may result in the court issuing a warrant for the employer's assets to be sold in order to pay the sum, or a fine.
Presupposition on who is an employer and who is an employee
In the lack of a documented employment contract, it will be believed that a person is an employee if the following conditions are met:
They are provided with tools, equipment, and supplies to accomplish work; They perform work for the sole advantage of another; Their hours of labour are under the supervision or direction of another; Their work is an intrinsic element of a business; or
Regular payments are made to the individual in exchange for performing work, and these payments constitute the majority of the person's income.
Maternity and pregnancy protection
The proposed revisions to the Act would increase paid maternity leave from 60 to 90 days, however this is still less than the 98 days suggested by the ILO.
The modified Act attempts to ban the termination of a pregnant employee suffering from a pregnancy-related ailment. This does not cover termination due to misconduct, business closure, or intentional breach of the employment contract.
The burden of proving that the termination is not due to pregnancy is on the employer.
In addition, the female employee may return to work during her maternity leave with the approval of her employer provided a physician certifies that she is fit to do so.
Father's leave
The new law stipulates that married fathers are entitled to three consecutive days of paternity leave for each birth, up to a maximum of five births (but irrespective of the number of spouses).
The employee must have been working for a minimum of 12 months and must have told his employer at least 30 days before to the anticipated incarceration.
Employing foreign personnel
If an employer want to hire a foreign worker, the Director-General of Labor (DGL) must grant permission. Employers who fail to comply might face fines of up to 100,000 ringgit or imprisonment for up to five years.
Currently, companies are only required to give the DGL with an employee's information within 14 days of hiring.
Flexible working setups
A new idea will permit employees to apply for flexible work arrangements to modify their working hours, location, or days. The application must be given to the employer in writing, and the employer will notify the employee of the decision within 60 days of receiving the application.
The Act proposes a reduction in the amount of working hours from 48 hours per week to 45 hours per week.
Agreement for labour
The revisions require contractors to furnish labourers with a written contract of employment. Failure to submit this document for review by the Director General is punishable by a fine of up to RM50,000.
Employment discrimination disputes
Under the Act, the DGL will have the authority to investigate and adjudicate any employment discrimination dispute between an employee and their employer. If the DGL determines that the employer has committed an offence, they may be fined up to 50,000 ringgit. In the event of a continuing infraction, the employer may be fined up to 1,000 ringgit every day.
Increased penalties for sexual harassment offences
Employers who fail to investigate and resolve sexual harassment accusations may be subject to fines ranging from 10,000 to 50,000 ringgit.
Employers are also required to provide a warning to raise sexual harassment awareness (similar to health and safety notices).
Forced labour
The statute seeks to prohibit bonded or forced labour by making it illegal for an employer to manipulate or scare a worker into performing any activity or work. If convicted, the employer might face a fine of up to 100,000 ringgite, up to two years in prison, or both.
Apprenticeships
Apprenticeships must be explicitly defined and stated in the employment contract and last between six and twenty-four months.
The Employment Act of 1955, Revised First Schedule
In light of the Ministerial Order, we shall now discuss the alterations that were made to the First Schedule of the Employment Act of 1955.
Before the changes, the Employment Act of 1955 was only applicable to workers earning up to RM2,000 per month and/or to a certain group of workers regardless of whether or not they were covered by the cap on monthly salaries.
Nevertheless, the First Schedule has been updated, and the Employment Act of 1955 is now applicable to all employees regardless of the earnings they earn, with the exception that certain clauses do not apply to employees whose monthly pay are greater than RM4,000.
Certain rules and/or benefits in the Revised First Schedule do not apply to employees whose monthly salaries exceed RM4,000.
The Revised First Schedule additionally specifies that the aforementioned regulations shall continue to apply, regardless of income, to the following groups of employees:
a) Paragraph 2(1): Employees performing manual labour, including artisan or apprentice work;
b) Paragraph 2(2): Employees involved in the operation or maintenance of any mechanically propelled vehicle used for the transportation of passengers or commodities, for compensation, or for business purposes;
c) Paragraph 2(3): Employees managing or overseeing other employees performing manual labour for the same employer throughout and during their work;
(d) Paragraph 2(4): Employees engaged in any capacity in any vessel registered in Malaysia and who are not officers certificated under the Merchant Shipping Acts of the United Kingdom as amended from time to time, or who have not entered into an agreement under Part III of the Merchant Shipping Ordinance 1952; and
e) Paragraph 2(5): Employees who are domestic employees.