(Update: The Employment Amendment Bill 2021 received Royal Assent on 26th April 2022 and the Employment (Amendment) Act 2022 was gazetted on 10th May 2022. The amendments will come into force on 1st September 2022. On 15th August 2022, the Employment (Amendment of First Schedule) Order 2022 setting out changes to the scope and applicability of the Employment Act 1955 was gazetted. Read more about the changes that are brought about by the Order here.)
The Employment (Amendment) Bill 2021 (“Bill”) was recently passed by Dewan Rakyat on 21st March 2022 and Dewan Negara on 30th March 2022. It will come into force on a gazetted date upon receipt of Royal Assent. The Bill brings about changes to the Employment Act 1955 (“EA”), some of which are intended to be in line with standards outlined by the International Labour Organisation (“ILO”). We have summarized herein the salient changes brought about by the Bill.
The duration of an apprenticeship contract is now a period of between 6 months (minimum) and 24 months (maximum). Previously, the duration of an apprenticeship contract was not less than 2 years.
(See: Section 2)
“Domestic servants” and “foreign domestic servants”
The usage of the word “servants” has been discontinued and the above terms have been changed to “domestic employees” and “foreign domestic employees”.
(See: Section 2)
Calculation of wages
The newly inserted Section 18A provides clarity on the computation of wages of an employee who has worked for an incomplete month. The computation is based on the actual calendar days for a particular wage period and the formula is as follows :
(See: Section 18A)
Employment of women for night work and underground work
Prohibitions against employment of women for night work and underground work have been removed.
(See: Part VIII which has been deleted pursuant to the Bill)
Pregnancy and maternity
In accordance with ILO standards under the Maternity Protection Convention, 2000 (No. 183), maternity leave entitlement will be increased from 60 days to 98 days.
In addition, the newly inserted Section 41A expressly prohibits the termination of employment of a pregnant employee or a pregnant employee who is suffering from an illness arising from her pregnancy, except on grounds of wilful breach of employment contract, misconduct or the closure of the business. The burden of proving that the employee’s termination is not due to pregnancy or illness arising out of pregnancy lies with the employer. Prior to the Bill, the EA only expressly prohibits the termination of employment during maternity leave except on grounds of closure of business.
(See: Sections 37 and 41A)
The maximum number of working hours per week has been decreased to 45 hours from 48 hours. As a result of this amendment, the normal hours of work for employees who are covered by the EA will have to be reviewed to ensure compliance with the prescribed limits. The number of hours of work carried out in excess of the normal hours of work will attract overtime payment.
(See: Section 60A)
Non-hospitalization sick leave and hospitalization sick leave entitlements are now to be treated separately. The 60-day hospitalization sick leave entitlement will now be in addition to non-hospitalization sick leave entitlement.
(See: Section 60F)
In a measure which is intended to allow a father sufficient time to deal with matters in respect of the birth of his child, the newly inserted Section 60FA provides for a 7-day paternity leave entitlement subject to the following conditions:
- he must be married to the birth mother;
- the paternity leave is restricted to 5 confinements (irrespective of number of spouses);
- he must have been employed by the same employer for at least 12 months immediately before commencement of his paternity leave;
- the employer must be notified of the pregnancy at least 30 days from the expected confinement or as early as possible after the birth.
(See: Section 60FA)
Employment of foreign employees
Employers will now require approval of the Director General of Labour for employment of foreign employees. Further, under the newly inserted Section 60KA, there is a requirement for employers to notify the Director General of Labour of the termination of employment of the foreign employee within 30 days from the date of termination. If the foreign employee terminates his/her service or absconds, the employer is required to notify the Director General of Labour within 14 days.
(See: Sections 60K & 60KA)
Flexible working arrangements
The newly inserted Part XIIC (Sections 60P and 60Q) allows an employee to apply for a flexible working arrangement to vary the hours of work, days of work or place of work. The employer has the discretion to approve or refuse such applications and the employer’s decision must be communicated to the employee in writing within 60 days from the receipt of the application. If the application is refused, the ground for refusal is to be given.
(See: Part XIIC (Sections 60P and 60Q))
Discrimination in employment
Pursuant to the newly inserted Section 69F, the Director General of Labour may inquire into and decide any dispute between an employee and employer in respect of any matter relating to discrimination in employment and thereafter make an order. Failure to comply with any such order will render the employer liable to a fine not exceeding RM50,000.00, if convicted and, in the case of a continuing offence, a daily fine not exceeding RM1,000.00 per day the offence continues after conviction.
(See: Section 69F)
Notice on sexual harassment
Employers are now required to exhibit conspicuously, at the place of employment, a notice to raise awareness on sexual harassment.
(See: Section 81H)
The newly inserted Section 90B provides for liability for the offence of forced labour. Under the said Section, any employer who threatens, deceives or forces an employee to do any activity, service or work and prevents that employee from leaving the area where the said activity, service or work is done, has committed an offence. If convicted, the employer will be liable to a fine not exceeding RM100,000.00 or to imprisonment not exceeding 2 years or to both.
(See: Section 90B)
The general penalty for offences where no specific penalty is provided has been increased from RM10,000.00 to RM50,000.00.
(See: Section 99A)
Presumption of employer-employee relationship
In the absence of a written contract of service, the newly inserted Section 101C creates a presumption of an employer-employee relationship for individuals covered under the 1st Schedule of the EA until it is proven otherwise, if any one of the following factors is present :
- where the individual’s manner of work is subject to the control or direction of another person;
- where the individual’s hours of work are subject to the control or direction of another person;
- where the individual is provided with tools, materials or equipment by another person to execute work;
- where the individual’s work constitutes an integral part of another person’s business;
- where the individual’s work is performed solely for the benefit of another person; or
- where payment is made to the individual in return for work done by the individual at regular intervals and such payment constitutes the majority of the individual’s income.
This newly inserted provision may result in a gig worker (if he/she falls under the categories set out in the 1st Schedule of the EA) being deemed as an employee by operation of law, in the absence of any written contract to the contrary.
(See: Section 101C)
The scope and applicability of the EA pursuant to the Bill
Prior to the Bill, the EA applies to employees who fall under the categories listed in the 1st Schedule of the EA unless specifically stated otherwise. However, the Bill has removed certain provisions which expressly extended the coverage of certain parts of the EA (such as those relating to pregnancy and maternity (Part IX) and sexual harassment (Part XVA)) to all employees. Although it appears that those parts will now only apply to employees who fall under the 1st Schedule, it must be borne in mind that, the Deputy Human Resource Minister, when tabling the Bill for 2nd reading at the Dewan Rakyat on 21st March 2022, announced that the provisions under the EA will be expanded to all workers in the private sector regardless of their wage levels, “subject to certain conditions” and the 1st Schedule will be amended via a Minister’s Order to reflect this. To-date, the Minister’s Order is yet to be issued. The Minister’s Order will have to be reviewed once it is available to ascertain the scope and applicability of the EA and the amendments which have been brought about by the Bill.
Tham Li Vyen (Partner)
(T): 603 – 2632 9875
Sia Wui San (Associate)
(T): 603 – 2632 9956