What to Expect from the New Amendments to the Employment Act 1955?  

Stay abreast with the latest laws and amendments

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As the Dewan Rakyat (House of Representatives) has passed the Employment (Amendment) Bill 2021 for the Employment Act 1955 on 21st March 2022 and the Dewan Negara has passed it on 30th March 2022, employers need to take note of the following key provisions on the amendments:

  • Pregnancy and Maternity Leave

Maternity leave has increased from 60 days to 98 days for all female employees.

The Bill also prohibits an employer to terminate a female employee who is pregnant or suffering from illness due to pregnancy except on the grounds of misconduct, wilful breach of contract or closure of business. The burden of proof on such termination is on the employer to prove that the termination is not due to the female employee’s pregnancy or illness arising out of her pregnancy.

  • Paternity Leave

A married male employee shall be entitled to 7 days of paid paternity leave for each confinement, up to a maximum of 5 confinements.

In order to be entitled to paternity leave, the married male employee must be employed by the same employer at least 12 months before the commencement of such paternity leave and he has to notify the employer of the pregnancy of his spouse at least 30 days from the expected confinement or as early as possible after the birth.

  • Sick Leave and Hospitalisation Leave

With the new amendment, both the entitlement of sick leave and hospitalisation leave will be separated.

This means that for example, an employee who has less than 2 years of service will be entitled to 14 days of sick leave and 60 days of hospitalisation leave instead of a total of 60 days for both sick leave and hospitalisation leave.

  • Flexible Working Arrangements

An employee can make an application for flexible working arrangements (hours of work, days of work or place of work) to the employer.

The application must be in writing and the employer is required to approve or refuse the application within 60 days. The employer is required to inform the employee in writing on the ground for such refusal.

  • Forced Labour

Any employer who threatens, deceives or forces an employee to do any work and prevents an employee from leaving their work shall be considered an offence and the employer can be liable to a fine not exceeding RM100,000 or to imprisonment for a term not exceeding 2 years, or both.

  • Sexual Harassment

It will be a requirement for employers to exhibit conspicuously at the workplace, a notice to raise awareness of sexual harassment.

  • Presumption as to who is an employee and employer

This will be one of the main amendments as the Bill set out certain factors to determine a person is an employee or an independent contractor in absence of a written contract of service. The factors to be considered as an employee are as follows:

  • Where his manner of work or hours of work is subject to the control or direction of another person;
  • Where he is equipped with tools, materials or equipment by another person to execute work;
  • Where his work constitutes an integral part of another person’s business;
  • Where his work is performed solely for the benefit of another person; or
  • Where payment is made to him in return for work done at regular intervals and such payment constitutes the majority of his income.
  • Working Hours

The maximum of normal working hours for employees who are within the scope of the Employment Act is reduced from 48 hours to 45 hours per week.

  • Discrimination

The Director General of Labour can inquire about any dispute relating to discrimination in employment and make an order.

  • Wider jurisdiction of the Labour Department

The Employment Act 1955 has a salary cap of employees (RM5,000) who can bring a claim before the Director General of Labour. With this amendment, any employee without a salary cap is allowed to bring a claim before the Director General of Labour (Labour Department).

  • Hiring Foreign Domestic Employees

If an employer wants to employ a foreign employee, it shall first obtain approval from the Director General of Labour by submitting the relevant application form. Failure to do so may lead to a fine of not exceeding RM100,000 or to imprisonment for a term not exceeding 5 years, or both.

  • Apprentices

The minimum duration of an apprentice contract will be changed from 2 years to a term of 6 months and not exceeding 2 years.

  • Calculation of wages for an incomplete month’s work

The formula to calculate wages when an employee has not completed a whole month of service:

                     Monthly wages                      x  No. of days eligible in the wage period

No. of days in the particular wage period

This will clear the doubt for the calculation of wages when the employee is on unpaid leave, resigned before the end of the month or joined after the first day of the month.

Do the Amendments apply to all employees?

It is uncertain whether there will be a change in the scope of the Employment Act 1955 but based on the statement from the Ministry of Human Resources, the Ministry is looking into widening the scope of the Employment Act 1955 to be applicable to all employees regardless of their wages. Therefore, with this direction, there will be no cap on wages and the Employment Act 1955 might applies to all employees upon the amendments take into force.

What to Expect from the New Amendments to the Employment Act 1955?  
Koh Eng Hong (Head Office)
Consultant
MECA South Sdn Bhd
david@meca.com.my

Amendments are not in force yet as the Bill still needs to have royal assent before the HR Minister can make an order on the effective date of the amendments.