Malaysia Employment Act amendments: 7 key changes for employers to note (2022)

Malaysia Employment Act amendments: 7 key changes for employers to note (1)

[Update: The Bill was tabled for its second reading and passed on 21 March 2022. There were only two minor amendments from the first draft which was the subject of this article, in relation to maternity and paternity leave. These have been updated in the text below.]

Wide-ranging amendments to Malaysia’s Employment Act 1955 (“the EA”) are now going through Parliament. The Employment (Amendment Bill) 2021 (“the Bill”) was tabled for its first reading on 25 October 2021.

The Explanatory Statement to the Bill states that it seeks to amend the EA “to comply with the international standards and practices as required by the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan and the International Labour Organization”. It further states that the purpose of the amendments, among others, is “to provide for the protection against discrimination and forced labour, and to provide for maternity benefits”.

As the Bill is only in its first reading, I expect some changes before it is finalised and passed. The current draft of the Bill does appear quite disjointed in parts, and there are some inconsistencies that will need to be cleaned up. It is worth noting that many of the amendments contained in the Bill have been mooted as far back as 2017, so while the fact that the Bill has been tabled is promising, there is no guarantee that it will be passed — though for political reasons it does appear very likely that it will happen this time.

(Video) Amendments to Employment Act 1955 Webinar, recorded on 27 June 2022 by Malaysia HR Forum

The current draft of the Bill contains comprehensive amendments — there are 46 sections in total — but at this stage I will briefly set out the key changes that employers should take note of, along with some commentary.

(1) Increase in paid maternity leave

The change: The Bill increases the paid maternity leave entitlement from the existing 60 days to 90 days. [Update: The revised Bill which was passed on 21 March 2022 provides for 98 days paid maternity leave.]

Comment: This is welcome, and is long overdue. The government has been promising to legislate this since 2017. Public sector employees have been entitled to 90 days paid maternity leave for several years now.

(2) Restriction on termination of pregnant employee

The change: The Bill introduces a new Section 41A in the EA which will prohibit an employer from dismissing an employee who “is pregnant or is suffering from an illness arising out of her pregnancy” except on the grounds of — (a) wilful breach of contract; (b) misconduct; or (c) business closure. The new Section 41A also provides that where the employment of a pregnant female employee is terminated, the employer will bear “the burden of proving that such termination is not on the ground of her pregnancy or on the ground of illness arising out of her pregnancy”.

Comment: These changes provide much greater protection to pregnant employees from being dismissed from their employment. The existing provisions of the EA [at Section 42(1)] only protect a female employee from being dismissed if she is absent for up to 90 days post maternity leave due to illness arising from her pregnancy that renders her unfit to work. A notable effect of the protection being put forward by the Bill is that employers cannot terminate the employment of a pregnant employee for poor performance, or as part of a retrenchment exercise arising from redundancy.

(Video) Changes to Employment Terms and Conditions

Interestingly, unlike the existing Section 42(1), the new Section 41A does not contain the limit of a 90-day period. Also, while Section 42(1) refers to “illness certified by a registered medical practitioner to arise out of her pregnancy and confinement and to render her unfit for her work”, Section 41A only refers to “an illness arising out of her pregnancy”. As a result, if the new Section 41A is passed in its current from, it may render Section 42(1) redundant, as Section 41A is not limited to 90 days, and has a seemingly lower bar as to what constitutes a pregnancy-related illness.

(3) Paternity leave

The change: The Bill introduces 3 days paid paternity leave for married male employees, for up to 5 confinements. [Update: The revised Bill which was passed on 21 March 2022 provides for 7 days paid paternity leave.]

Comment: Again a much welcome and overdue change, though obviously 3 days is well short of international standards. Public sector employees have been entitled to paid paternity leave (3-10 days) for several years now.

(4) Employees can apply for flexible working arrangement

The change: Pursuant to the Bill, employees will be able to submit a written application to their employer “for a flexible working arrangement to vary the hours of work, days of work or place of work”. An employer who receives such an application will be required to approve or refuse the application within 60 days, and if it is refused, the employer must “state the ground of such refusal”.

Comment: This is an interesting change, but arguably is just performative, with no real impact. The employer is under no obligation to reasonably consider these applications, or to provide fair or reasonable grounds for refusing them.

(Video) Employment Standards Act – Amendments in 2018 and 2019 and what they mean for you

(5) Employment discrimination disputes

The change: The Bill seeks to introduce a new Section 69F. which gives the Director General the power to “inquire into and decide any dispute between an employee and his employer in respect of any matter relating to discrimination in employment [and] make an order”. Non-compliance by an employer with such an order would be an offence.

Comment: As Malaysia is notably lacking in terms of any discrimination protection, this is a move in in the right direction. However, the new provisions are very vague. There are no details at all in terms of what sort of “discrimination” is being addressed, and no indication of what types of orders the Director General may make pursuant to these new powers.

(6) Notice on sexual harassment

The change: The Bill introduces a new Section 81H, which requires employers to “exhibit conspicuously at the place of employment, a notice to raise awareness on sexual harassment”.

Comment: This is another very vague provision. There are no details at all regarding regarding what this “notice” must state, and really does appear to be something that was pencilled in to tick off the box of doing something about workplace sexual harassment.

(7) Formula for calculating wages for incomplete month’s work

The change: The Bill proposes a new Section 18A, which introduces a formula for calculating wages where an employee has not worked a full month. The new Section 18A provides that “notwithstanding Section 60I” (which I will explain below) the formula to be used to calculate the wages due in these circumstances is: [(Monthly wages / Number of days of the particular wage period) x Number of days eligible in the wage period]

(Video) Employment Relations Amendment Bill- First Reading - Video 1

Comment: This provides welcome clarification, as this is often an administrative issue for HR/payroll. However, there may be confusion regarding the Section 60I mentioned above, as Section 60I — which only applies to Part IX (Maternity Protection) and Part XII (Rest Days, Hours of Work, Holidays, and Other Conditions of Service) — provides the following formula for determining the “ordinary rate of pay” for employees employed on a monthly rate of pay: [monthly rate of pay / 26]

Confusion regarding the Bill’s effect on the scope of the EA and applicability to all employees

One general drafting comment I would like to add is that there is an overall confusion regarding whether the Bill seeks to expand the scope of the EA to beyond the existing definition of “employees”. Currently, employees who fall within the scope of the EA (“EA Employees”) are those defined in the First Schedule — generally, those earning up to RM2,000/month or engaged with manual labour. This legal separation of EA Employees and non-EA Employees has long been a feature of Malaysian employment law, and certain provisions of the EA which are intended to apply to both EA Employees and non-EA Employees would be specifically carved out and stated as applying to all employees.

However, many of the drafting changes proposed by the Bill seem to be contradictory, and appear to be drafting mistakes. Some brief notes on this:

  • The Bill proposes to delete provisions such as Section 44A which extends the Part IX maternity protections to all employees (“Notwithstanding paragraph 1 of the First Schedule, this Part extends to every female employee who is employed under a contract of service irrespective of her wages”), and Section 81G which extends the Part XVA sexual harassment provisions to all employees (“Notwithstanding paragraph 1 of the First Schedule, this Part extends to every employee employed under a contract of service irrespective of the wages of the employee”).
  • Unless the intention is to extend the coverage of the EA to all employees — and there is no indication that this is the case, and the First Schedule has not been amended by the Bill — there seems no reason to delete these existing provisions.
  • It also would not make sense to expand the EA’s coverage to all employees without then carving out exclusions for provisions which would be impractical to apply to all employees irrespective of wages, such as entitlement to overtime compensation and limits on working hours. EA Employees are also entitled to termination compensation pursuant to the Employment (Termination and Lay-Off Benefits) Regulations 1980.

Concluding comments

There are many welcome changes proposed under the Bill. However, while these changes move industrial relations in Malaysia in the right direction, many of them are too shallow, and too bereft of detail to make a material impact. I would hope that, as the Bill goes through Parliament, constructive feedback will be provided, and some of these new provisions can be reworked and strengthened before the Bill is finalised.

FAQs

Can employer change working hours Malaysia? ›

Malaysia Employment Act, 1955, § 60B. Flexible Working Arrangements – Employees have the right to submit a written request to their employers to change the hours, days, or location of their employment.

What is the most important Malaysian legislation related to employment issues? ›

The main statute governing employment disputes between employer and either trade unions or individual employees, is The Industrial Relations Act (IRA) 1967.

How long is maternity leave in Malaysia 2022? ›

Among the key amendments include the extension of maternity leave allocations from 60 days to 98 days, reduced weekly working hours from 48 to 45 hours, and a seven-day paternity leave for married male employees.

Who is covered under Malaysian employment Act? ›

those who, regardless of how much they earn, are covered by section 2 of the First Schedule, e.g. employees who are, engaged in or who supervise manual labour; operate or maintain vehicles; engaged to work on Malaysian registered vessels; and domestic employees.

Can your employer change your hours without asking? ›

If your contract is clear and says that your employer can make the specific change that they want to make e.g. to vary or reduce your hours, then your employer may be able to make the change without your agreement. Although you may still have rights to protest the change.

Can an employee work more than 12 hours a day in Malaysia? ›

The rules and regulations for working hours in Malaysia pursuant to Section 60A EA 1995 are as follows: Every 5 consecutive hours followed by a rest period not less than 30 minutes. A maximum of 8 hours work in one day (based on a 6-day working week) or max 9 hours in one day (based on a 5-day working week).

What benefits must be provided by employers to employees by law in Malaysia? ›

Employers are required to pay the lay-off benefits to their employees no later than 7 days after the relevant date.
...
Types of employee benefits under the Employment Act 1955
  • Annual leave. ...
  • Public holidays. ...
  • Maternity leave. ...
  • Sick leave and hospitalisation leave. ...
  • Lay-off benefits.
22 Oct 2020

What are 3 employer's duties under the regulations? ›

Your employer's duty of care in practice

prevent risks to health. make sure that plant and machinery is safe to use. make sure safe working practices are set up and followed.

What are the employers duties under the legislation? ›

It is an employer's duty to protect the health, safety and welfare of their employees and other people who might be affected by their work activities. Employers must do whatever is reasonably practicable to achieve this.

Will I get full salary during maternity leave? ›

Income. The maternity leave is awarded with full pay on completion of at least 80 days in an establishment in the 12 months prior to her expected date of delivery. The maternity benefit is awarded at the rate of the average daily wage for the period of a worker's actual absence from work.

Can employer terminate pregnant employee in Malaysia? ›

Any employer who terminates the service of a female employee during the period in which she is entitled to maternity leave commits an offence. So, if you get fired, you can lodge a complaint against your employer.

Can I resign during maternity leave Malaysia? ›

You should resign in the normal way, giving the notice period stated in your contract or agreed with your employer. If you resign during your maternity leave, you do not have to go into work during your notice period, you can remain on maternity leave.

What are the 3 types of employment status? ›

The three main types of employment status are: worker. employee. self-employed.

What is the latest Basic Conditions of employment Act? ›

The Basic Conditions of Employment Act, 75 of 1997 gives effect to the right to fair labour practices referred to in section 23(1) of the Constitution by establishing and making provision for the regulation of basic conditions of employment; and thereby to comply with the obligations of the Republic as a member state ...

Who is not covered under Part IV of employment Act? ›

All employees under a contract of service with an employer are covered, but there are exceptions. For example, Part IV of the Act which provides for rest days, hours of work and other conditions of service, does not cover managers or executives.

Can an employer just change your working days? ›

Your employer does have the right to change your working hours as they see fit if you do not have an employment contract in place that specifically states your hours of work. However, there are some legal obligations that must be met in order to do so.

What happens if I don't agree to contract changes? ›

If you don't agree with changes to your employment conditions. If you don't agree, your employer is not allowed to just bring in a change. However, they can terminate your contract (by giving notice) and offer you a new one including the revised terms - effectively sacking you and taking you back on.

Can employees be dismissed for refusing to accept new terms and conditions of employment? ›

Section 187(1)(c) of the LRA prohibits the employer from firing employees who refuse to agree to changes in terms and conditions of employment.

Can employee work 7 days straight in Malaysia? ›

Working Hours—The Malaysian Employment Act defines the workweek as 48 hours, with a maximum of eight working hours per day and six working days per week.

What is the minimum salary to not pay overtime in Malaysia? ›

From 1 September 2022, when the new Employment Act (“EA”) amendments come into force (See: Employment Act to apply to all employees from 1 September 2022, some sections subject to increased salary threshold of RM4,000/month), all employees with wages up to RM4,000/month will be entitled to overtime payments.

Can an employee reject overtime? ›

"Yes," your employer can require you to work overtime and can fire you if you refuse, according to the Fair Labor Standards Act or FLSA (29 U.S.C. § 201 and following), the federal overtime law. The FLSA sets no limits on how many hours a day or week your employer can require you to work.

What are the 4 mandatory benefits for an employee? ›

Statutory benefits, also known as mandatory benefits, are entitlements that employers are obligated by law to provide to their employees. Common examples include benefits like paid annual leave, parental leave, worker's compensation insurance, and paid sick leave.

Which benefits provided by the employer is required? ›

Social Security and Medicare. Unemployment insurance. Workers' compensation insurance. Family and Medical Leave Act (FMLA) protections.

What are the benefits given to employers? ›

Medical insurance refers to coverage for health, vision and dental services that employers may offer you as part of a benefits package. This is one of the most common workplace benefits you might get at a job, and it ensures employees can get basic medical care to improve their health and well-being.

What are 5 employer rights in the workplace? ›

Duty of care

the work environment, systems of work, machinery and equipment are safe and properly maintained. information, training, instruction and supervision are provided. adequate workplace facilities are available for workers. any accommodation you provide to your workers is safe.

What are 5 responsibilities of employers? ›

Know your employer responsibilities
  • Act in good faith and treat employees fairly.
  • Pay employees on time.
  • Deduct the correct amounts.
  • Get leave and public holidays right.
  • Health and safety responsibilities of employers.
  • Protect the privacy of your employees.

What 4 duties are for employer? ›

5 6 7 Provide and maintain a safe workplace, machinery and equipment. Manage work to ensure the safety, health and welfare of employees. Assess risks and put a safety statement in place. Provide and maintain facilities for your employees, such as clean toilets and washing facilities.

What is Section 7 of the health and safety at work Act? ›

What does section 7 say? Section 7 is aimed at employees rather than the employer. It states that every employee while at work must: Take reasonable care for their own health and safety, as well as the health and safety of others who may be affected by their acts or omissions at work.

What are the rights of the employee? ›

Not to be unfairly dismissed. To be treated with dignity and respect. To be paid the agreed wage on the agreed date and at the agreed time. To be provided with appropriate resources and equipment to enable him/her to do the job.

How many hours can a pregnant woman work by law? ›

Legally, pregnant women can continue to work the average 40 hours a week or the hours that they were working previously. However, a pregnant employee must only continue to work these hours if it is safe to do so, physically and emotionally.

Can a company terminate a pregnant employee? ›

It is unlawful for an employer to discharge or dismiss a pregnant worker during or on account of absence due to pregnancy, delivery or any post-natal illness, or to give notice of discharge or dismissal, or to vary to her disadvantage any of the conditions of her service.

Can I take maternity leave at 3 months pregnant? ›

According to the Maternity Benefit (amendment) Act 2017, expectant women are entitled to 26 weeks of maternity leave starting from up to 8 weeks before your due date. But you are eligible for this leave only: for your first two pregnancies.

Is it legal to work for 2 companies at the same time in Malaysia? ›

While some employers allow their employees to engage in double employment, there are few legislations clearly prohibit this practice. In Malaysia, as to date there is no specific law regulating double employment by employees.

Can I get fired for calling in sick while pregnant? ›

It is usually illegal to fire someone for being sick during their pregnancy. Pregnant workers in California are entitled to leave under the Pregnancy Disability Leave Law (PDLL) as long as their employer has five or more employees.

Can employer terminate employee without notice in Malaysia? ›

When an employee is dismissed, section 12 of the Employment Act 1955 provides that an employee must be given due notice. This means that if an employer intends to terminate a contract of service, they must give the employee notice to inform of them of said intention and the justification behind it.

How long is maternity leave in Malaysia 2022? ›

Among the key amendments include the extension of maternity leave allocations from 60 days to 98 days, reduced weekly working hours from 48 to 45 hours, and a seven-day paternity leave for married male employees.

Is 90 days maternity leave compulsory in Malaysia? ›

Beginning January 1, 2021, the new Malaysian 2020 Budget extended the maternity leave period for employees in the private sector to 90 consecutive days. This mandatory change was reportedly made to bring Malaysian maternity benefits closer to the international standard period of 98 days.

Can you claim benefits if you resign? ›

You can claim benefits as soon as you know the date you're stopping work. You'll need to show you had a good reason for resigning, or you might get less money for around 3 months.

What are 5 main types of employment? ›

5 types of employment structures
  • Part-time employment. Part-time team members are individuals who work less than 35 hours a week and are typically paid by the hour rather than salaried. ...
  • Full-time employment. ...
  • Seasonal employment. ...
  • Temporary employment. ...
  • Leased employment.

What are the 4 types of employees? ›

Types of employees:
  • Full-Time Employees.
  • Part-Time Employees.
  • Seasonal Employees.
  • Temporary Employees.
9 Jun 2020

What are the 4 types of employment contracts? ›

There are four main types of contract businesses use, these are permanent, fixed-term, casual and zero hour. The contract you receive is based on your employment status and is to be agreed with the employer to ensure both parties are happy with its terms.

What are the 7 types of employment? ›

Seven common employee classification types
  • Full-time. Full-time employees work for a specified number of hours every week and are typically paid on a salary basis that does not change. ...
  • Part-time. ...
  • Contract. ...
  • Independent contractor. ...
  • Temporary. ...
  • On-call. ...
  • Volunteer.

What are the 5 principles of fair employment? ›

Fair employment practices are based on the five principles below.
  • Recruit Based on Merit. ...
  • Respect Employees. ...
  • Provide Fair Opportunities. ...
  • Reward Fairly. ...
  • Comply with Labour Laws.

How Basic Conditions of employment Act affect employers? ›

According to the BCEA, every employer must regulate each employee's working time and work week in line with occupational health and safety regulations. The employer is also required to consider the employees family responsibilities.

Who is excluded from the Basic Conditions of employment Act? ›

Employees who earn in excess of the present threshold amount are not subject to the provisions of section 10 (overtime) of The Basic Conditions of Employment Act. This means that such employees cannot demand to be paid for overtime worked, nor can they demand to be granted paid time off in view of payment.

Who is covered under Malaysia employment Act? ›

It involves employees earning RM2,000 and below; workers with no wage limits, such as manual labour workers; workers involved in the operation of motor vehicles; workers who supervise manual labour workers; and domestic workers.

What is the minimum age to work? ›

Working Age

You are permitted to employ children and young persons aged 13 years to 16 years, but take note of restrictions on the type of work that children and young persons may perform. For example, a company cannot employ workers below the age of 16 in any workplace with harmful or dangerous working conditions.

Can you change an employee's working hours? ›

An employer can only change the terms of the contract with the agreement of the employee. A contract of employment is legally binding, it would be a breach of contract to change the terms without the employee's agreement.

Can my employer change my shift times? ›

If the contract permits the employer to change the days on which you work, it is likely that you will be required to change your shifts. However, if the contract states that your working pattern is 20 hours per week over 3 days, the employer is not permitted to change your shift pattern without your agreement.

How much notice must be given to change working hours? ›

The notice period for the change to working hours must also be agreed with the employee in advance of any change being imposed. The general rule here is that you must provide a minimum of one week's notice for each completed year of service and at least the same amount of notice if you were dismissing the employee.

What is the legal working hours in Malaysia? ›

REDUCTION OF MAXIMUM WORKING HOURS FROM 48 HOURS TO 45 HOURS

The Amendment Act 2022 reduces the maximum working hours per week to 45 hours, for all employees under the scope of EA 1955 irrespective of whether they are non-shift employees or shift employees.

Can I refuse a change to my contract? ›

It's good practice to offer to discuss any concerns, which again might help encourage them to agree to the changes. However, in short, an employee can refuse to accept a change or variation in their contract's terms and conditions.

Can an employer make you do something not in your job description? ›

So, the short answer is, yes, your employer may assign you tasks not specifically outlined in your job description. Unless you work under a collective bargaining agreement or contract, your employer can legally change your duties.

Under which circumstances can working hours be changed? ›

Question: May an employer increase or decrease agreed working hours of its employees? Answer: Agreed working hours may only be increased or decreased by agreement between the parties. Brief explanation: An employer may not unilaterally change agreed terms or conditions of employment.

Can a manager change your schedule last minute? ›

Can My Employer Change My Schedule Last-Minute in California? Under the Fair Labor Standards Act, most employers are allowed to change an employee's schedule without prior notice – but some cities have adopted stricter regulations that require employers to make scheduling changes far in advance of workdays.

Can an employer stop you from working somewhere else? ›

The only way an employer can restrict your conduct or your choice of future employment when you leave is if there's a written contract and they need to protect their business.

Can your employer reduce your salary? ›

An employer cannot usually impose a pay cut unilaterally on employees. However, there are situations where this may be possible – for example, the right to reduce their remuneration package may be covered in the employment contract.

What is the minimum salary to not pay overtime in Malaysia? ›

From 1 September 2022, when the new Employment Act (“EA”) amendments come into force (See: Employment Act to apply to all employees from 1 September 2022, some sections subject to increased salary threshold of RM4,000/month), all employees with wages up to RM4,000/month will be entitled to overtime payments.

What is the maximum overtime hours in Malaysia? ›

Hours of Overtime Work

The Employment (Limitation of Overtime Work) Regulations 1980 provides that the limit of overtime work shall be a total of 104 hours in any 1 month. This means an average of about 4 hours in 1 day.

Is lunch time considered working hours Malaysia? ›

the normal hours of work per day. employee is permitted to leave the premises during his meal break, that break would not be part of his hours of work. work carried out in excess of the normal hours of work (does not include meal break) as agreed under employment contract. - Work in excess of normal hours of work.

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