FAQs on Malaysia's Employment Act

FAQs on Malaysia's Employment Act

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Details pertaining to coverage following the 1 January 2023 amendments, eligibility under each amendment, and more.

With amendments to Malaysia's Employment Act now in force effective 1 January 2023, the Department of Labor Peninsular Malaysia (JTKSM) has shared a series of frequently asked questions (FAQs) employers and employees may have on these amendments made.

The questions, pertaining to coverage, specific eligibility under each amendment, and more, are shared below.

General questions

Q What is the main objective of the amendment to the Employment Act 1955?

The main objective of the amendment of the 1955 Employment Act is to :

  1. increase and improve the protection and welfare of workers in this country;
  2. ensure that the provisions of labour laws in this country are in line with international standards outlined by the International Labor Organization, and
  3. make it easier for Malaysia to negotiate trade agreements which at this point often include clauses regarding minimum labour standards as one of the terms of the agreement that must be adhered to.

Q What is the main essence of the amendments?

The main essence of the amendments to the 1955 Employment Act is as follows:

  1. Expansion of the coverage of the Act to all employees regardless of the salary limit;
  2. Increase in maternity leave from 60 days to 98 days;
  3. Grant of paternity leave for seven days;
  4. Reduction of working hours to 45 hours a week;
  5. Isolation of hospitalisation sick leave;
  6. Ease of flexible work arrangements;
  7. Prohibition of discrimination in employment;
  8. Prohibition of forced labour;
  9. Obligation to obtain prior permission from the Director General of JTKSM before employing foreign workers;
  10. Prohibition of dismissal of female workers during pregnancy;
  11. Salary payment obligations through financial institutions;
  12. The need to display a sexual harassment prevention notice;
  13. Contractor's obligation for labour to prepare a written contract;
  14. Determining the salary calculation formula for insufficient monthly work;
  15. Provisions related to "presumption of employees" and "presumption of employers";
  16. Increase in the general penalty to RM50,000, and
  17. Other related minor amendments.

Q Do all amendments to this Act have to be implemented directly by the employer?

Yes, employers must implement all matters related to the amendment of the Employment Act 1955 effective 1 January 2023.

Coverage

Does this amendment apply throughout Malaysia? Nope. This amendment only applies in Peninsular Malaysia and the Federal Territory of Labuan. While for Sabah and Sarawak, Labor Ordinance (Sabah) Chapter 67 and Labor Ordinance (Sarawak) Chapter 76 are still applicable until amended later.

Q Through this amendment, do all workers in the private sector, regardless of the salary limit, now protected and get benefits under this act?

Yes. Through the amendment to the First Schedule, all employees in the private sector, regardless of salary limit will get benefits and protection under this act.

Q Does this mean that highly paid employees are also entitled to overtime pay?

Employees who earn more than RM 4,000 per month (except for manual workers) are not eligible for overtime pay, pay for work on rest days, pay for work on public holidays, and termination benefits.

Maternity protection (Part IX) and paternity leaves (Section 60FA)

Q Why, through this amendment, was the number of maternity leave days increased from 60 days to 98 days, instead of 90 days or 100?

The 98-day maternity leave period established through the amendment of this Act is in line with the International Labor Organization's Maternity Protection Convention, 2000 (No. 183) which stipulates a leave period of no less than 14 weeks (98 days)

Q If a female employee gives birth on or after the effective date of the amendment of this Act, is she eligible for 98 days of maternity leave?

Yes. Female employees who give birth on or after 1 January 2023 are eligible for 98 days of maternity leave if they meet the prescribed conditions.

Q Does the repeal of section 44A of this Act mean that maternity cover will no longer apply to all female workers regardless of the salary cap?

The maternity protection provided under this act is still applicable to all female employees regardless of the salary limit. The repeal of section 44A of this Act was made because the First Schedule was amended to enable this Act to apply to all employees with certain conditions.

Q Through the amendment of this Act, female employees who are on maternity leave are allowed to go to work early before the end of the 98-day maternity leave period. Does this mean that employers can also order female employees who are on maternity leave to go to work early before the end of the 98-day maternity leave period?

This is not possible, except with the application of the female employee herself and with the consent of the employer, and the employee must be certified fit to work by a registered medical practitioner.

Q If a female employee who is eligible for maternity allowance agrees to go to work before the end of the maternity leave period, does the employer have to provide an additional payment in addition to the maternity allowance?

No. However, employers are encouraged to pay extra.

Q Can an employer terminate the service of a female employee who is pregnant?

Through the amendment of this Act, the employer cannot terminate the service of a female employee who is pregnant or ill as a result of pregnancy except in the following circumstances:

  1. Termination due to a willful breach of contract of service under section 13(2);
  2. Termination due to misconduct under section 14(1), and
  3. Termination due to the closure of the employer's business.

Q Why was a seven-day paternity leave introduced in the amendments?

This was introduced to allow husbands to take care of their wives and children and manage matters related to birth such as birth registration.

Q What are the conditions that need to be met in order for a male employee to get seven days' paid paternity leave?

Conditions to get seven days' paid paternity leave:

  1. the employee is married to his partner;
  2. the employee has worked for at least 12 months with the same employer before starting the leave;
  3. the employee must inform his employer at least 30 days before his wife gives birth or as early as possible after the birth, and
  4. entitlement to paid paternity leave is limited to 5 births regardless of the number of wives.

Q If a female employee experiences a miscarriage after 22 weeks of pregnancy, is her husband entitled to seven days of paid paternity leave if he has met all other conditions?

Yes, he is eligible because the definition of childbirth under section 2 of this Act is giving birth to a child after at least 22 weeks of pregnancy regardless of whether the child is alive or stillborn.

Q Are rest days and general holidays taken into account in the calculation of the seven-day paternity leave?

Yes, because paternity leave is counted continuously from the date the wife gives birth, including rest days and general holidays.

Q If the employee's wife gives birth to five babies, is it counted as one birth or five births?

It is counted as one birth.

Sick leave (Section 60F)

Q Before the amendment to this Act came into effect, Company ABC had a collective agreement with the Union of Employees of Company ABC which provided for paid paternity leave for seven days, limited to five births. If Mr. Hadi has been granted five paid paternity leaves according to the provisions of the collective agreement, after 1 January 2023, will Mr. Hadi still be eligible for paid paternity leaves stipulated through the amendment of this Act?

Mr. Hadi is still eligible for paid paternity leave because paternity leave granted before the effective date of this Act is not taken into account in the calculation of the maximum limit of five births.

Q Why are the entitlements for sick leave and hospitalisation sick leave separated through the amendment of this Act?

Eligibility for sick leave and hospitalisation sick leave is separated to allow employees to obtain adequate treatment and recovery periods. With the separation of sick leave made through this amendment, employees will get a higher number of paid sick leave from 60 days a year to 74 to 82 days a year (depending on the length of service).

Q What is the new entitlement amount for sick leave and hospitalisation sick leave with effect from 1 January 2023?

Effective January 1, 2023, the new amount of eligibility for sick leave and hospitalisation sick leave is as follows:

Length of service  Paid sick leave  Paid hospitalisation leave  Total eligibility  
 < two years 14 days 60 days74 days
 two to five years 18 days60 days78 days
> five years22 days60 days

82 days

 

Working hours (Sections 60A and 60C)

Q Why is it that through the amendment of this Act, working hours have been reduced from 48 hours a week to 45 hours a week?

The working hours per week are reduced so that it is in line with the recommendations of the International Labor Organization through the Reduction of Hours of Work Recommendation, 1962 (No. 116), which recommends countries that practise working hours of 48 hours per week to take steps to reduce the working hours without involving a reduction in wages.

Q What is the employer's responsibility when the amendment involving the reduction of working hours per week is enforced?

The employer needs to amend the working hours contained in the service contract so that it is in line with the amendment of this Act and provide a copy of the amendment to the employee concerned.

Q Can an employer reduce an employee's salary following the implementation of a reduction in working hours from 48 hours to 45 hours a week?

No, they cannot.

Q Do working hours of 45 hours a week include rest time?

These hours do not include break time, provided the employee is free to use his time and movement during the break time.

If there has been an agreement between the employer and the employee in the service contract that rest time will be counted as working time, can the employer force the employee to exclude the rest time from the calculation of working hours to enable the adjustment of working hours to 45 hours per week?

No, they cannot.

Q How can employers implement a reduction in working hours from 48 hours to 45 hours a week?

A reduction in working hours from 48 hours to 45 hours per week can be implemented as follows:

workinghours employmentactmalaysia jtksmworkinghours employmentactmalaysia jtksm

Q Does the employer need to obtain the consent of the employee to reduce working hours from 48 hours per week to 45 hours per week?

No need. However, employers are encouraged to consult with employees.

Q Company A practises working hours of eight hours a day with six working days a week. In order to implement the reduction of working hours from 48 hours per week to 45 hours per week, can Company A reduce the working days to five days per week and increase the working hours per day to nine hours?

Yes.

Q If an employer who practises six working days a week reduces the working hours a day from eight hours to 7.5 hours to meet the requirement of 45 working hours a week, how is the calculation of Ordinary Rate of Pay (ORP) and Hourly Rate of Pay (HRP) for the purpose of work payment more time?

  • ORP = Monthly Salary ÷ 26
  • HRP = ORP ÷ 7.5 hours

Q If an employer who practises six working days a week maintains a working day of eight hours (Monday to Friday) and reduces the working day on Saturday to five hours to meet the requirement of 45 working hours a week, how is the calculation of the Ordinary Rate of Pay (ORP) and Hourly Rate of Pay (HRP) for the purpose of overtime pay?

  • ORP = Monthly Salary ÷ 26
  • HRP = ORP ÷ 8 hours

Calculation of salary for incomplete working months (Section 18A)

Q What is the formula for calculating salary for incomplete working months established through the amendment of this Act?

The salary calculation formula for incomplete working months is as follows:

  • (Monthly salary ÷ No. day in the salary period) × No. eligible days in the period

Q In which situation should the salary calculation formula for an incomplete working month be used?

The salary calculation formula for an incomplete working month is only used in the following four situations:

  1. The employee starts work after the first day of the month in question;
  2. Employees are terminated before the end of the relevant month;
  3. Employees take leave without pay for one day or more in the month in question, or
  4. The employee is absent due to attending national service under the National Service Act 1952 [Act 425], attending National Service Training under the National Service Training Act 2003 [Act 628], or complying with any written law relating to national service.

Payment of salaries (Section 25 and 25A)

Q What amendments involve the payment of wages?

Through the amendments to this Act, payment of salary by check or cash is only allowed upon the written request of the employee to the employer and with the permission of the Director General of JTKSM. In addition, this amendment also empowers the Minister to authorise any other wage payment instrument stipulated under the Financial Services Act 2013 [Act 758] and the Islamic Financial Services Act 2013 [Act 759].

Q With this amendment, do salary payments by check and cash for employees other than domestic servants also need permission from the Director General of JTKSM?

Yes. Salary payment by check or cash is only allowed upon the employee's written request to the employer and with the permission of the JTKSM Director General.

Employment of foreign workers (Section 60K and 60KA)

Q What are the new conditions for the employment of foreign workers established through the amendment of this act?

Any employer who wishes to employ foreign workers must obtain prior approval from the Director General of JTKSM. Approval will only be granted if the employer meets all the following conditions:

  1. there are no pending cases related to decisions, orders, or instructions issued under this Act; 
  2. there is no pending case relating to any conviction for an offense under this act [Act 265], the Employees' Social Security Act [Act 4], the Minimum Standards of Housing, Facilities and Worker Accommodation Act [Act 446], and the National Wage Consultative Council Act [Act 732 ], or
  3. the individual has not been convicted of any offense under any written law relating to human trafficking and forced labour.

Q If the employer employs a foreign worker without obtaining prior approval from the Director General of JTKSM, what punishment can be imposed?

Any employer who is found to employ foreign workers without obtaining prior approval from the Director General of JTKSM, if convicted can be fined not more than RM100,000 or imprisoned for not more than five years, or both.

Q What is the employer's responsibility when the foreign worker's service is terminated?

The employer must, within 30 days from the date of termination of the service, report to the Director General of JTKSM if the foreign worker's service has been terminated:

  1. by the employer; 
  2. due to the expiry of the employment pass issued by the Immigration Department, or
  3. terminated due to repatriation or deportation.

Q Is the employer also responsible for reporting to the Director General of JTKSM in the event that the foreign worker self-terminates or disappears from the workplace? Yes. In this situation, the employer must report to the Director General of JTKSM within 14 days from the date the foreign worker terminates his service or disappears from his place of work.

Employment of women (Part VIII)

Q Does the repeal of Part VIII (Employment of Women) of this Act mean that with effect from 1 January 2023, employers no longer need to apply to the Director General of JTKSM if they wish to require female employees in business or agricultural activities to work between 10pm and 5am?

Yes.

Q Does the employer still need to obtain the employee's consent if he wants to require the female employee to work between 10pm and 5am?

Consent must be obtained from the employee if the instruction to work at night involves a change to the existing working hours.

Contractors for labour (Section 33A)

Q What are the additional obligations on contractors for labour established through the amendment of this Act?

Through an amendment to this Act, contractors for labour who supply workers to principals, contractors, or subcontractors are required to make the contract in writing and ensure that the contract and related documents are available for inspection.

Q Is failure to make a contract or other document relating to a contract available for inspection an offence under this Act?

Yes. Contractors for labour can be fined up to RM50,000 if found guilty of committing any of the following offences:

  1. supplying workers without being registered with the Director General;
  2. fails to ensure that the contract or contract-related documents are available for inspection, or
  3. fails to keep employee registers or ensure that relevant documents are available for inspection.

Q Does the Employment (Exemption) Order 2012, which exempts the application of this section 33A to contractors for labour other than agricultural enterprises, still apply?

The Employment (Exemption) Order 2012 will continue to apply until the order is revoked.

Notice related to sexual harassment

Q What are the additional obligations of employers in dealing with the issue of sexual harassment established through the amendment of this Act?

Through the amendment of this Act, employers are required to display a notice to raise awareness about sexual harassment.

Q Where should the notice be displayed?

The relevant notice must be displayed in the work area that is easily visible to the employees. For example where employees record attendance, meeting rooms, dining halls, or lounges.

Q What content should be stated in the notice?

Any statement that can raise awareness about sexual harassment, for example, "Stop Sexual Harassment", "Sexual Harassment Is A Crime" and "Strict Action Will Be Taken Against Sexual Harassment Perpetrators".

This notice can also be in the form of a description or explanation of sexual harassment.

Q When must this notice be displayed?

This notice must be displayed with effect from 1 January 2023.

General penalties (Section 99A)

Q Why is it that through the amendment of this Act, the general penalty is increased from RM10,000 to RM50,000?

Through the amendment of this Act, the fine for any person who commits an offence or violates any provision of this Act or its regulations is increased from a fine not exceeding RM10,000 to a fine not exceeding RM50,000, to increase compliance with this Act.

Q Does the latest fine rate apply to cases that are currently in court?

No, this is only applicable to prosecution cases initiated after the effective date of this Act.

Definition of apprenticeship (Section 2)

Q What amendment involves apprenticeship?

The definition of "apprenticeship" has been created, and the definition of "apprenticeship contract" is amended.

Q What is the definition of apprenticeship and apprenticeship contract?

An apprentice is defined as any person who enters into a contract of apprenticeship. While an apprenticeship contract is defined as a written contract made by a person with an employer who admits to employing that person and training or making them systematically trained for a trade for a certain period which should be a minimum of six months and a maximum of 24 months in the period during which the apprentice is bound to work in the service of the employer.

Flexible working arrangements (Part XIIC)

Q Why was a new section related to flexible working arrangements (FWAs) created through the amendment of this Act?

This section was created to meet the current need to implement FWAs in necessary circumstances such as to curb the spread of the COVID-19 disease outbreak.

Q What form of FWA can an employee apply for with his employer?

Employees can apply for any of three forms of FWAs, namely:

  1. Change in working hours;
  2. Change of working day;
  3. Change of workplace.

Q Can an employee apply for all three forms of FWAs, i.e. change of working hours, working days, and workplace?

Yes.

Q Can an employer no longer grant rest or annual leave after approving an FWA application?

No, because the FWA is subject to Part XII of this Act.

Q How can employees apply for FWAs?

Employees need to make a written application to the employer stating the form of FWA applied for. Employees are advised to state the reasons for the application.

Q When can an employee submit an FWA application to the employer?

Effective 1 January 2023.

Q What is the employer's responsibility when receiving an application for an FWA from its employee?

The employer must provide feedback, whether approving or rejecting the application, within 60 days from the date of receipt. The response must be made in writing and if the application is rejected, the employer must state the reason for the rejection.

Q Can the employer grant approval for FWAs based on a certain period? For example, the approval given is for a period of six months only?

Yes.

Discrimination in employment (Section 69F)

Q Why were new provisions related to discrimination created through the amendment of this Act?

The new provision related to discrimination, created through the amendment of this Act, is in line with the Convention of the International Labor Organization related to Discrimination (Employment and Occupation) Convention 1958 (No. 111). Through this new provision, the Director General of JTKSM has the authority to investigate and decide any dispute between an employee and his employer in relation to any matter related to discrimination in employment.

Q What forms of discrimination can be reported to JTKSM?

Any form of discrimination in employment can be reported by the employee involved, for example, discrimination in terms of terms and conditions of employment based on race, religion, gender, or political beliefs.

Q I attended an interview session to fill a vacancy in a company but was unsuccessful because I could not speak Mandarin. Is this subject to discrimination in employment?

No, because the protection provided through this amendment only involves a person who has entered into a service contract.

Q Does this employment discrimination protection apply to all employees regardless of the salary cap?

Yes. This protection against discrimination applies to any employee who enters into a contract of service with an employer regardless of the wage limit.

Forced labour (Section 90B)

Q What is the purpose of the new provisions relating to forced labor introduced in the amendment of this Act?

New provisions related to forced labour were introduced to prevent the practice of forced labor in the workplace.

Q What is defined as forced labour under this amendment?

Forced labour is defined as the act of an employer threatening, deceiving, or forcing its employees to perform any activity, service, or work and preventing the employee from leaving the place or area where the activity, service, or work is carried out.

Q What are the elements that need to be proven to show the occurrence of forced labour?

In order to prove the existence of forced labour, the following three elements must exist, namely:

  1. the existence of threats, fraud, or coercion against workers to perform any work, service, or activity;
  2. the existence of acts that prevent employees from leaving the place of work or the work area where the said work, service, or activity is carried out, and
  3. the acts in paragraphs (i) and (ii) above are committed by the employer (including any person acting on behalf of the employer) against his employees.

Presumption of "employee" and "employer" (Section 101C)

Q Why was the new provision related to "presumption as to who is an employee and employer" created in this amendment?

The provision related to "presumption as to who is an employee and employer" was created to facilitate prosecution cases in the absence of a written service contract involving the employees specified under the First Schedule of this Act.

Q What elements can prove that a person is an employee in the absence of a written service contract?

In proceedings for offences under this Act, a person is considered an employee if one of the following elements exists, namely:

  1. the way of working is under the control or direction of another person;
  2. working hours are under the control or direction of another person;
  3. equipment, materials, or equipment to do work provided by others;
  4. the work performed is part of another person's business;
  5. work done solely for the benefit of others, or
  6. receiving salary payments for work done periodically and the payment in question is the majority of his income.

Q What elements can prove that a person is an employer in the absence of a written service contract?

In proceedings for offenses under this Act, a person is considered an employer if one of the following elements exists, namely:

  1. he/she controls or instructs others on how to work;
  2. he/she controls or directs others regarding working hours;
  3. he/she supplies tools, materials, or equipment to others to do work;
  4. work done by others is part of his/her business;
  5. the work done by another person is solely for his/her benefit, or
  6. payment made by him/her to another person in return for work done.

Photo / Shutterstock

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