Employment Act 1955 has been updated again to cater for the current work, economic, and business environment in Malaysia. Read on to get yourself updated with the changes.
What is Employment Act 1955?
The Malaysian Employment Act 1955 is an important piece of legislation in Malaysia, providing a framework for the rights and responsibilities of employers and employees. It sets out the minimum terms and conditions of employment, including wages, hours of work, overtime, leave, and other benefits. The Act also provides protection against unfair dismissal and discrimination in the workplace. The Act has been in force since 1955 and several amendments have been made since then.
The latest amendment was gazetted in 2022 and come into effect on 1 January 2023. This amendment updated the Employment Act to keep up with prevailing employment environment and seeks to strengthen the rights of employees in Malaysia. We see changes to the minimum wage, overtime, leave, and other benefits. It also seeks to provide better protection against unfair dismissal and discrimination in the workplace.
In this article, we will provide a comprehensive guide to the Malaysia Employment Act 2022 Amendment, including the key changes and how it affects HR managers. You can refer to the official documents here:
- Employment (Amendment) Act 2022
- Employment (Amendment of First Schedule) Order 2022
- Employment Act 1955
Key highlights on 2022 Amendment to Employment Act 1955
Below are the key changes contained in the Employment Act Amendment 2022 that SME business owners and HR managers need to take note of to ensure smooth implementation into their policies and operations:
1. The Employment Act 1955 now applies to all employees
(Applicable section: First Schedule of the Employment Act)
Previously, the Employment Act only applies to those who earn a monthly wage of RM2,000 and below. With this 2022 amendment, the Act now applies to any person who has entered into a contract of service with an employer, irrespective of wages.
The following provisions of the Act does not apply to employees whose wages exceed RM4,000 a month:
- Subsection 60(3) - Overtime for work on rest days
- Subsection 60A(3) - Overtime for work outside of normal working hours
- Subsection 60C(2A) - Shift work allowance
- Subsection 60D(3) - Overtime and allowance for work on public holidays
- Subsection 60D(4) - Overtime for work on holidays on half working days
- Subsection 60(J) - Termination, lay-off, and retirement benefits
That being said, employees who fall under the Paragraph 2(1) to 2(4) of the First Schedule of the Employment Act are not affected by the RM4,000 limit for the list of provisions listed above. Those employees are:
i. Those engaged in manual labour (First Schedule, Paragraph 2(1)); or
ii. Those engaged in the operation or maintenance of any mechanically propelled vehicle operated for the transports of passengers or goods or for commercial purposes (First Schedule, Paragraph 2(2)); or
iii. Those engaged to supervise manual labour (First Schedule, Paragraph 2(3)); or
iv. engaged in any capacity in any vessel registered in Malaysia (First Schedule, Paragraph 2(4)).
2. Paid maternity leave increased to 98 days + Protection of pregnant employees
(Applicable section: Section 37 of the Employment Act)
One of the biggest update introduced by the Amendment to Employment Act 2022 is the increase of paid maternity leave from 60 days from 98 days.
In a related update, a new Section 41A is introduced to place a restriction to terminate pregnant employees. This provision includes protection for pregnant female employees who are suffering from pregnancy-related illness. It shall be an offence for the employer to terminate or give notice of termination, except for; breach of contract, misconduct, or closure of the company.
These amendments are a positive step forward in providing better protection and support for working mothers in Malaysia. It provides them with the necessary financial security and peace of mind to take care of their newborn child, while also ensuring that they can continue to work and support their family.
3. Introduction of paid paternity leave
(Applicable section: Section 60FA of the Employment Act)
Fathers with new-borns can now enjoy paid paternity leave of 7 consecutive days to spend time with their families following the birth of their child. This is a significant event in the history of labor legislation in Malaysia in promoting equal parenting.
Married male employees are now entitled to 7 consecutive days of leave for up to 5 confinements irrespective of the number of spouses, with some conditions:
- He must have been employed by the same employer for at least 12 months
- He must notify the employer at least 30 days from expected confinement (or as early as possible)
4. Provisions against discrimination and sexual harassment in employment
(Applicable section: Section 69F & 81H of the Employment Act)
The amendment to Employment Act 1955 further protects employees from discrimination and sexual harassment. New provisions were introduced to give the Director-General powers to inquire, decide and make an order for any dispute between an employee and the employer relating to discrimination matters; as well as requiring employers to display a notice to raise awareness on sexual harassment in the workplace. This notice must be placed in a conspicuous location and it must be displayed at all times.
The introduction of these provisions are particularly important to prohibit employers from discriminating against employees on the basis of gender, race, religion, age, disability, marital status, or sexual orientation; making it illegal for employers to sexually harass employees in any form, including physical, verbal, and non-verbal; as well as requiring employers to provide a safe and secure working environment for employees.
These amendments to the EA 1955 are an important step forward in protecting employees from discrimination and sexual harassment in the workplace. Employers must ensure that they comply with the new provisions to protect their employees.
5. Flexible working arrangement is officially a thing
(Applicable section: Section 60P & 60Q of the Employment Act)
The Employment Act 1955 has been amended to include a new provision for flexible working arrangements. This means that employees now have the right to request flexible working arrangements from their employers, such as changes to their working hours, days of work, and place of work. This is a huge step forward for employees, as it gives them more control over their work-life balance and allows them to better manage their personal commitments.
Under the new provision, employers must consider any written requests for flexible working arrangements submitted by employees in a reasonable manner. They must then respond with a decision within 60 days. In cases of rejection, reasons must be given to employees.
The introduction of flexible working arrangements is a positive move for both employers and employees. It allows employers to attract and retain talented employees, while also giving employees more control over their work-life balance. This is a win-win situation for all involved, and is a great example of how the Employment Act 1955 is being updated to reflect the changing needs of the modern workforce.
6. Protection and coverage of gig workers
(Applicable section: Section 101C of the Employment Act)
With the rise of gig working trend, the government recognises the importance of protecting the rights of those who make a living through gigs. Gig workers are normally engaged for their services on a projects basis and often do not have a written contract of service in place. This amendment to the Employment Act 1955 now considers an individual to be an employee until it is proven otherwise.
The Act further clarifies that a person is considered an employer (until the contrary is proven):
- where he controls or directs the manner of work of another person;
- where he controls or directs the hours of work of another person;
- where he provides tools, materials or equipments to another person to execute work;
- where the work of another person constitutes an integral part of his business;
- where another person performs work solely for his benefit; or
- whether or not payment is made by him in return for work done for him by another person
7. Maximum working hours is reduced to 45 hours per week
(Applicable section: Section 60A of the Employment Act)
To further promote the agenda of work-life balance, we see that this amendment to the Employment Act reduces the maximum number of hours that an employee can work in a week from 48 hours to 45 hours (excluding meal time). Any hours worked in excess of 45 hours must be paid as overtime. This provision is designed to ensure that employees are not overworked and that their health and safety is not compromised.
Deputy Human Resources Minister Datuk Awang Hashim said the amendments serve to safeguard the welfare of workers and provide flexibility in working hours, in line with the International Labour Organisation (ILO) Convention.
8. Clarity provided for calculation of wages for incomplete month's work
(Applicable section: Section 18A of the Employment Act)
The amendment to the Employment Act now provides clarity on calculation of wages for incomplete month's work. This calculation applies in scenarios where:
- An new employee commenced employment after the first day of the month;
- An exiting employee's employment was terminated before the end of the month;
- An employee takes leave of absence without pay for one or more days of the month; or
- An employee takes leave of absence due to reasons related to National Service
The formula to calculate wages for incomplete month's work is as follows:
"Monthly wages" ÷ "number of days worked" × "number of days eligible in the wage period"
9. Sick Leave and Hospitalisation Leave are now decoupled
(Applicable section: Section 60F of the Employment Act)
Under the Employment Act 1955 previously, an employee is entitled to 60 days combined of Sick Leave and Hospitalisation Leave. With the amendment to the Employment Act, Sick Leave and Hospitalisation Leave are not decoupled.
Minimum paid Hospitalisation Leave: Minimum 60 days
Minimum paid Sick Leave:
- Up to 2 years of employment: Minimum 14 days
- 2 to 5 years employment: Minimum 18 days
- More than 5 years of employment: Minimum 22 days
10. Changes to employment and termination of foreign employees
(Applicable section: Section 60K & 60KA of the Employment Act)
Previously, employers who hire foreign employees were required to inform the Director-General of the particular employees within 14 days of employment. However, employers are now required to obtain prior approval from the Director-General to before hiring foreign employees with this amendment.
A new section (S60KA) is inserted into the Employment Act to provide further clarity for employers when terminating a foreign employee. Employers need to notify the Director-General within 30 days of the termination of employment if the termination is due to: termination by employer; expiry of employment pass; or repatriation or deportation of the employee.
On the other hand Employers need to notify the Director-General within 14 days of the termination of employment if the employment is terminated by the employee or due to abscondment by the employee.
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Related blog post: The Employers & HR Managers' Guide to Preparing Form EA for the Year 2022
