How would the amendments to the 1st Schedule of Employment Act 1955 change the Malaysian employment landscape?

In our earlier write-up (Read more here), we looked into the salient changes brought about by the now gazetted Employment (Amendment) Act 2022.  The amended Employment Act 1955 (“EA”) will come into force on 1st September 2022. 

On 15th August 2022, the Employment (Amendment of First Schedule) Order 2022 (“Order”) was gazetted.  Prior to the Order and unless specifically stipulated in the EA, the statutory entitlements in the EA apply only to employees who earn RM2,000 and below monthly and,  regardless of wages, employees who are described in Paragraph 2 of the 1st Schedule.  

The recently gazetted Order amends the scope and applicability of the EA effective 1st September 2022 and brings with it changes to the statutory entitlements of the different categories of employees set out in the amended 1st Schedule.

The general scope and applicability 

Generally speaking, the provisions of the EA will apply to all employees subject to the exceptions set out in the 1st Schedule.  The definition of “employee” has been amended to refer to any person who has entered into a contract of service.  

(See: Paragraph 1 of the 1st Schedule)

Entitlement to overtime payment and termination, lay-off and retirement benefits

Despite the general applicability of the EA being expanded to cover all employees, employees whose wages exceed RM4,000 monthly are not statutorily entitled to overtime payment for extra hours worked,  or for working on rest days and/or public holidays or to termination, lay-off and retirement benefits.

(See: Paragraph 1A of the 1st Schedule)

However, it is to be noted that notwithstanding Paragraph 1A, an employee who is in any of the following categories set out in Paragraph 2 will be entitled to overtime payment and termination, lay-off and retirement benefits (even if the employee’s wages exceed RM4,000 monthly):

  1. engaged in manual labour; 
  1. engaged in the operation or maintenance of any mechanically propelled vehicle operated for the transport of passengers or goods or for reward or for commercial purposes; 
  1. supervises or oversees other employees engaged in manual labour employed by the same employer in and throughout the performance of their work; and
  1. engaged in any capacity in any vessel registered in Malaysia and who is not an officer certificated under the Merchant Shipping Acts of the United Kingdom as amended from time to time, is not the holder of a local certificate as defined in Part VII of the Merchant Shipping Ordinance 1952, or has not entered into an agreement under Part III of the Merchant Shipping Ordinance 1952.

For domestic employees, there is statutory entitlement to termination, lay-off and retirement benefits, irrespective of monthly wages.

(See: Paragraph 2(5) of the 1st Schedule)

What should employers do?

In anticipation of the changes that will take place effective 1st September 2022, it is advisable for employers to undertake a review of their existing employment documentation and practices to ensure compliance with the provisions of the amended EA.

Contributed by:

Tham Li Vyen (Partner)
T: 603-2632 9875
E: livyen@rdl.com.my

Sia Wui San (Associate)
T: 603-2632 9956
E: siawuisan@rdl.com.my

Please do not hesitate to contact any of the following persons from our Employment and Industrial Relations team; R. Ravindra Kumar, Tham Li Vyen, Cheong Jun Kid and Sia Wui San if you require any clarification.  

R. Ravindra Kumar (Partner)
T: 603-2632 9863
E: ravindrakumar@rdl.com.my

Cheong Jun Kid (Associate)
T: 603-2632 9931
E: junkid@rdl.com.my 

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