In brief

  • The Employment (Part-Time Employees) Regulations 2010 (Regulations), which took effect on 1 October 2010, represent the first time that the government has sought to detail the entitlements applicable to part-time employees in Malaysia who are covered by the Employment Act.
  • The Regulations set out how legal entitlements such as overtime, public holidays, annual leave and sick leave are to be applied in relation to part-time employees subject to the Employment Act.
  • Unfortunately the Regulations do not provide a great deal of flexibility for employers, and furthermore leave a number of questions unanswered.  

The Employment (Part-Time Employees) Regulations 2010 (Regulations) came into effect in Malaysia on 1 October 2010, and apply to employees who are covered by the Employment Act (Act) and who work part-time.

Background

The Act applies to all employees in Malaysia earning less than RM1,500 per month. In addition, the Act also applies to all persons engaged in ‘manual work’ and all persons responsible for supervising those engaged in ‘manual work’, regardless of their salary level.

In 1998, the Act was amended to include a definition of ‘part-time employee’ and to vest power in the Minister to make regulations in respect of part-time employees. However, this is the first time that any such regulations have been promulgated. To date therefore, employers have been left to guess how Act entitlements, such as paid public holidays, annual leave and sick leave, should be correctly applied to part-time employees.

A ‘part-time employee’ is defined in the Act as an employee covered by the Act whose average hours of work as agreed with his/her employer do not exceed 70% of the normal hours of work of a full-time employee employed in a similar capacity in the same enterprise. Hence for example, in an enterprise where similar full-time employees work 48 hours per week, a part-time employee will be an employee whose average hours of work do not exceed 33.6 hours per week.

Key provisions The key features of the new Regulations are:

  • Casual employment: The concept of ‘casual employment’ is introduced into Malaysian legislation for the first time. A ‘casual employee’ is one engaged occasionally or on an irregular basis, as and when needed, and whose weekly working hours do not exceed 30% of the weekly working hours of a full-time employee (eg if full-timers work a 48 hour week, casuals work no more than 14.4 hours per week).
  • Normal hours of work: The concept of ‘normal hours of work’ for part-time employees, being ‘the hours of work as agreed in the contract of service’—or if not so agreed, then certain deeming rules apply. ‘Normal hours of work’ impact upon when overtime rates kick in on normal days, public holidays and rest days, and also affect the definition of ‘ordinary rate of pay’.
  • Overtime: Paid overtime applies where a part-time employee works in excess of their ‘normal hours of work’. Special loadings apply where hours exceed the normal hours of work of a full time employee, as well as for work on public holidays and rest days.
  • Public holidays: It is made clear that part-time employees have an entitlement to be paid for public holidays on which they do not work. Payment is to be made at an employee’s ‘ordinary rate of pay’.
  • Annual leave: The Regulations provide for annual leave entitlements of part-time employees, again with payment for such leave to be made at the ‘ordinary rate of pay’. The quantum of annual leave entitlements are (much like public holidays) set at a fixed amount of 6-11 days per year depending on length of service.
  • Sick leave: Similar to annual leave, part-time employees are entitled to sick leave of a fixed annual amount (ie 10-15 days per annum depending on length of service). Payment is to be made at the employee’s ‘ordinary rate of pay’.

Key issues

The new Regulations leave a number of questions unanswered, for example:

  • The Regulations provide that they do not apply to ‘casual employees’, although they do not go so far as to say that the Act does not apply to casual employees. Technically, therefore, one might argue that ‘casual employees’ have access to the same entitlements as full-time employees under the Act.
  • Although the Regulations have been touted by the government as being designed to increase flexibility for employers and employees, they are drafted on the assumption that ‘normal hours of work’ will be fixed by the parties, and do not include any mechanism to deal with scenarios where a part-time employee’s hours vary from week to week or month to month.
  • The term ‘ordinary rate of pay’ is important for determining payment entitlements for public holidays, annual leave days and sick leave days, however this term is not defined in the Regulations. The definition in the Act refers to wages which an employee is entitled to receive under the terms of his/her contract of service ‘for the normal hours of work for one day’. However, this does not seem appropriate for part-time employees who may have days on which they do not work at all and variable hours on the days on which they do work, hence it may be very difficult to determine what are ‘the normal hours of work for one day’.
  • The Regulations fix the precise number of days of public holiday, annual leave and sick leave to which a part-time employee is entitled each year, rather than providing that the entitlement will be calculated on a pro-rata basis as compared with full-time employees. This produces a somewhat curious result where, for example, a part-timer who works 15 hours per week and a part-timer who works 33 hours per week will be entitled to same number of paid public holidays, annual leave days and sick leave days each year. Some might consider this a disincentive for employers to engage employees on a lower number of weekly working hours.  

Implications for employers

Employers in Malaysia who currently engage part-time employees should familiarise themselves with the new Regulations and review their current practices to ensure compliance. Employers who currently provide part-time entitlements on a pro-rata basis compared with full-time employees may need to revise their approach, particularly in respect of part-time employees with a low number of weekly working hours.

For employers in Malaysia who engage part-time employees on variable working hours, the new Regulations present particular challenges. Employers will need to consider how they will deal with the concepts of ‘normal hours of work’ and ‘ordinary rate of pay’ given that the Regulations appear to have been written without contemplating that variable working hours might be used.

Moving forward, employers intending to engage new part-time employees in Malaysia will need to carefully consider the Regulations when determining terms and conditions of employment for such employees.