Introduction
More protection to female employees
New benefit to male employees
Sick leave and hospitalisation leave
Flexible working arrangement
Reduced weekly working hours
Presumption of employer-employee relationship unless proven otherwise
Discrimination in employment is punishable
Duty of employer to raise awareness of sexual harassment
Calculation of wages for incomplete month's work
Prohibition of forced labour
Prior approval is required for employment of foreign employees
Comment
The ambit of the Employment Act (EA) 1955 changed on 1 January 2023 pursuant to the Employment (Amendment of First Schedule) Order 2022, in conjunction with the Employment (Amendment) Act 2022.
Prior to the order, the EA 1955 applied only to:
- employees whose wages did not exceed 2,000 ringgit per month; or
- employees engaged, irrespective of the amount of wages:
- in manual labour;
- in the supervision of employees engaged in manual labour;
- in the operation or maintenance of any mechanically propelled vehicle;
- in certain capacities in any vessel registered in Malaysia; and
- as domestic servants.
The order has now expanded the EA 1955 to cover all employees. The EA 1955 now applies to:
- any person who has entered into a contract of service, regardless of their salary. However, the following provisions in the EA 1955 will not apply to employees who earn more than 4,000 ringgit per month:
- section 60(3) – overtime for work on rest days;
- section 60A(3) – overtime for work in excess of working hours;
- section 60C(2A) – allowance for shift work;
- section 60D(3) – overtime and allowance for work on public holidays;
- section 60D(4) – overtime for work on holidays on half-days;
- section 60J – termination, lay-off and retirement benefits; and
- employees engaged, irrespective of the amount of wages:
- in manual labour;
- in the supervision of employees engaged in manual labour;
- in the operation or maintenance of any mechanically propelled vehicle;
- in certain capacities in any vessel registered in Malaysia; and
- as domestic employees.
It is important for employees and employers alike to be aware of the amendments to the EA 1955. Some of the changes are set out below.
More protection to female employees
The paid maternity period has been increased from 60 days to 98 days. Further, where a female employee is pregnant or suffering from an illness arising from her pregnancy, her employment may not be terminated except in cases of:
- a wilful breach of a condition of the contract of service;
- misconduct; or
- closure of the employer's business.
New section 60FA provides that a married male employee is entitled to paid paternity leave for a period of seven consecutive days for each birth. The paternity leave may be used for up to five births, irrespective of the number of spouses.
In order to be entitled to paternity leave, the employee must have:
- been employed by the same employer for at least 12 months immediately before the commencement of the paternity leave; and
- notified his employer of the pregnancy of his spouse at least 30 days from the expected birth date or as early as possible after the birth.
Sick leave and hospitalisation leave
Before the amendment, where no hospitalisation was necessary, an employee was entitled to 14-21 days of paid sick leave, depending on their length of service with the employer. On the other hand, where hospitalisation was necessary, the employee was entitled to 60 days of paid sick leave, provided that the total number of days of paid sick leave in a calendar year did not exceed 60 days in aggregate (in both cases of hospitalisation and non-hospitalisation).
However, this proviso has been removed. In effect, employees will now be entitled to paid sick leave of 14-21 days, plus 60 days of hospitalisation leave.
Subject to their contract of service, an employee may apply to their employer for a flexible working arrangement to vary their:
- hours of work;
- days of work; or
- place of work.
The application must be made in writing in the form and manner determined by the director general of labour. At the time of writing, the prescribed form and manner of the application is not yet available.
The employer must inform the employee in writing whether it will approve or refuse the application within 60 days from the date of application. In the case of a refusal, the employer must state the ground of such refusal.
An employee must not be required to work more than 45 hours in one week. Previously, the maximum was 48 hours.
Presumption of employer-employee relationship unless proven otherwise
In any proceeding for an offence under the EA 1955, in the absence of a written contract of service, a person will be presumed to be an employee of another person where:
- their manner of work is subject to the control or direction of another person;
- their hours of work are subject to the control or direction of another person;
- they are provided with tools, materials or equipment by another person to execute work;
- their work constitutes an integral part of another person's business;
- their work is performed solely for the benefit of another person; or
- payment is made to them in return for work done by them at regular intervals and such payment constitutes the majority of their income.
Discrimination in employment is punishable
A new provision empowers the director general to inquire into and decide on any dispute between an employee and their employer in respect of any matter relating to discrimination in employment. The director general may then, pursuant to such a decision, make an order.
An employer who fails to comply with such an order commits an offence and is liable to a fine upon conviction. However, the expression "discrimination" is not defined, and the provision does not set out the types of orders that may be made by the director general.
Duty of employer to raise awareness of sexual harassment
A statutory obligation is imposed on an employer to exhibit a notice to raise awareness of sexual harassment conspicuously at its place of employment, at all times.
Calculation of wages for incomplete month's work
New section 18A introduces a formula for calculating the wages of an employee:
- who is employed on a monthly rate of pay;
- who has not completed a whole month of service; and
- where one of the following situations applies:
- the employee commenced employment after the first day of the month;
- the employee's employment was terminated before the end of the month;
- the employee took a leave of absence without pay for one or more days of the month; or
- the employee took a leave of absence because they have been called up for national service, to be present for national service training or to comply with any other written law relating to national service.
The formula is as follows: the monthly wage is divided by the number of days of the particular wage period and then multiplied by the number of days eligible in the wage period.
"The number of days of the particular wage period" is not defined in the EA 1955. There could be two possible interpretations of this set phrase, considering the EA 1955 as a whole. Either:
- it should be read together with section 60I. As a result, it would refer to a period of 26 days pursuant to section 60I, which provides that such a period should represent the number of working days in a month for calculation of the ordinary rate of pay under Part IX (maternity allowance) and Part XII (rest days, hours of work, holidays and other conditions of service); or
- it refers to the number of days of the particular month that the employee does not complete because:
- a "wage period" is defined as the period in respect of which wages earned by an employee are payable, which may not exceed one month;
- the opening words of section 18A, which reads "notwithstanding Section 60I", suggest that it is not subject to the number of 26 days provided therein; and
- if it is intended to be 26 days, it would have been provided as such, as is the case in section 60I.
It is now a statutory offence for any employer to threaten, deceive or force an employee to do any activity, service or work and prevent that employee from proceeding beyond the place or area where such activity, service or work is done. An employer who commits such an offence will be liable to:
- a fine of up to 100,000 ringgits;
- imprisonment for a term of up to two years; or
- both.
Prior approval is required for employment of foreign employees
Prior to the Employment (Amendment) Act 2022, an employer was only required to furnish the director general with the particulars of any foreign employees.
However, after the amendment, the employer must apply for an approval from the director general before employing a foreign employee. The approval of such an application is subject to the following conditions:
- the employer has no outstanding matter relating to any decision, order or directive issued under the EA 1955;
- the employer has no outstanding matter or case relating to any conviction for any offence under:
- the EA 1955;
- the Employees' Social Security Act 1969;
- the Employees' Minimum Standards of Housing, Accommodations and Amenities Act 1990; or
- the National Wages Consultative Council Act 2011; or
- the employer has not been convicted of any offence under any written law in relation to anti-trafficking in persons and forced labour.
Previously, for employees who fell outside the scope of the EA 1955, the terms of employment were subject only to negotiations between the employer and employee, except for some mandatory provisions – for example, those relating to maternity entitlements. In those days, the EA 1955 served as a guideline as to the minimum benefits to be provided by an employer to a non-EA employee.
However, with the amendments to EA 1955 and its first schedule, the distinction between an EA-employee and non-EA employee has been abolished.
As such, it is important for employers to revisit their employment contracts to ensure that they comply with the amended EA 1955. In any event, it is provided in section 7 of the EA 1955 that any term or condition of a contract of service which is less favourable than that prescribed in the Act shall be void to that extent and be substituted with the more favourable provisions of the Act.
For further information on this topic please contact Lee Sze Ching (Ashley) or Gan Khong Aik at Gan Partnership by telephone (+603 7931 7060) or email ([email protected] or [email protected]). The Gan Partnership website can be accessed at www.ganlaw.my.