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Amendments to Malaysia's Employment Act to be applicable from 1 Jan 2023


The implementation of the Employment (Amendment) Act 2022 which was earlier scheduled for 1st September 2022 was deferred to 1st January 2023. The postponement is to give more time to enable employers to rebuild and recover their businesses from the COVID-19 pandemic. The key changes that need to be taken note are as follows:-



1. EMPLOYEE


1.1 Scope of Employee

The Old or the New Act only applies to the employee who falls within the scope of the First Schedule of the Act. The Amendment of the First Schedule by the Employment (Amendment of First Schedule) Order 2022 has widened the scope of the employee to any person who has entered into a contract of service irrespective of wages. Having said that, all employees regardless of salary earned or type of work will now be protected under Act.


However, certain provisions in the Act, ie: Section 60(3) pay for work on the rest day, Section 60A(3) overtime payment, Section 60C(2A) allowance for shift work, Section 60D(3) & 60D(4) pay for working on public holiday and Section 60J entitlement to termination, lay-off and retirement benefits do not apply to the person whose wages exceeds RM4000 a month. Except for those engaged in manual labour, supervision of manual labour, in the operation or maintenance of mechanically propelled vehicles, engaged in any capacity in any vessel registered in Malaysia and domestic employees.


1.2 Apprenticeship

According to the interpretation in Section 2 of the Act, apprenticeship is governed under the Act as an Apprenticeship contract also regarded as a contract of service. Section 2 of the New Act has now limited the apprenticeship contract to a minimum of 6 months and a maximum of 24 months. Having said that, the apprentice and the employer will not be bound by indefinite terms but limited to a maximum term of 2 years.


1.3 Presumption of employee

Section 101C of the New Act provides a new section for the presumption as to who is an employee and employer in the absence of a written contract of service.


A person is presumed to be an employee:

- where his manner of work is subject to the control or direction of another person;

- where his hours of work are subject to the control or direction of another person;

- where he is provided 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 by him at regular intervals and such payment constitutes the majority of his income.


A person shall be presumed to be an employer:

- 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 equipment 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.



2. WOMEN EMPLOYEE


2.1 Prohibition of work

As prohibiting women’s work undermines women’s economic rights, under the New Act, Section 34 to Section 36 of the Old Act which prohibits female employees to perform night work, underground work or any employment prohibited by the Minister is now removed.


2.2 Pregnancy and maternity protection

Section 37 of the New Act extends maternity leave from 60 days to 98 days. However, a female employee may apply to resume work at any time during the maternity leave if she has been certified fit to resume work by a registered medical practitioner.


Section 41A of the New Act provides further protection to the pregnant female employee where the employer is prohibited from terminating the pregnant female employee except on the grounds of wilful breach of a condition of the contract of service; misconduct; or closure of the employer’s business. The employer bears the burden of proving the termination is not on the ground of her pregnancy or the ground of illness arising out of her pregnancy.


2.3 Paternity Leave

Under Section 60FA of the New Act, the married male employee will be entitled to paid paternity leave for 7 days for each confinement (up to 5 confinement)



3. FOREIGN EMPLOYEE

Under Section 60K of the New Act, the employers who want to employ a foreign employee shall first apply and obtain approval from the DG. An employer who contravenes this section commits an offence and shall, on conviction be liable to a fine not exceeding RM100,000 or to imprisonment for a term not exceeding 5 years or to both.


Under Section 60KA of the New Act, the employer shall within 30 days from termination of service of a foreign employee and within 14 days from the employee terminates his service or absconds from his place of employment inform the DG of the termination.



4. CONTRACT OF SUPPLY OF EMPLOYEE

Under Section 33A of the New Act, a contractor for labour shall enter into a contract in writing and shall make such contract or any other document relating to such contract available for inspection. Failure to make such contract or other documents available for inspection is an offence and shall, on conviction, be liable to a fine not exceeding RM50,000.



5. FLEXIBLE WORKING ARRANGEMENT

Due to the pandemic and many businesses shifting from conventional working in the office to working from home and hybrid working model, Part XIIc (Section 60P and 60Q) of the New Act introduce flexible working arrangement. Where the employee may apply to the employer for a flexible working arrangement to vary hours, days or place of work.


The employee may apply in writing and the employer shall reply in writing within 60 days whether the application is approved or refused. If the application is refused, the employer must state the ground of refusal.



6. WORKING HOURS

Under Section 60A of the New Act, the maximum working hours for employees will be reduced from 48 hours to 45 hours per week. Thus, working hours may need to be adjusted to ensure compliance with the new amendments. Companies will be liable to pay overtime if their working hours exceed 45 hours per week.



7. SICK LEAVE

Under the New Act, the proviso to Section 60F of the Old Act is deleted. As such, the limit of 60 days of paid sick leave in a year in the aggregate is removed. The employees are now is entitle to 60 days of paid sick leave if hospitalisation is necessary and in addition to 14 to 22 days of paid sick leave (depending on the length of service) if hospitalisation is not necessary.



8. CALCULATION OF WAGES FOR AN INCOMPLETE MONTH’S WORK

Section 18A of the New Act introduces a different formula for calculation of employee’s wages for the service of the incomplete month as follows:-


(Monthly wages / Number of days of the particular wage period) x Number of days eligible


The New Act clear the doubt by fixing a specific formula for the calculation of employees’ wages for the service of the incomplete month.



9. JURISDICTION OF DG


9.1 Director General may inquire into complaints of discrimination in relation to a foreign employee

Under Section 60L of the New Act, the DG jurisdiction relating to discrimination against foreign employees is deleted. The New Act will introduce a new general section for the jurisdiction of DG to inquire into complaints about discrimination under Section 69F.


9.2 Additional power of DG to inquire into complaint

The New Act delete sections 69B to 69E of the Old Act. As the New Act has widened the scope of employees covered under the New Act, these sections are now redundant.


9.3 Discrimination in employment

Section 69F of the New Act introduces the power of the DG to inquire into discrimination in employment and make an order. However, there is no clear definition for discrimination (whether the discrimination is related to hiring, during employment or dismissal).


An employer who fails to comply with any order of the DG commits an offence and shall, on conviction, be liable to a fine not exceeding RM50,000. In the case of a continuing offence, be liable to a daily fine not exceeding RM1,000 for each day the offence continues after conviction.



10. PAYMENT OF WAGES

Under Section 25A of the New Act, any employee’s application for payment of wages other than bank transfer will be subjected to DG approval where the employer will need to apply to DG. The DG can further impose any condition when granting the approval.



11. POWER OF COURT ORDER FOR PAYMENT DUE TO EMPLOYEE

Under Section 87A of the New Act, the Court can order an employer, who has been convicted for an offence relating to wages or any other payments to pay any payment that is due to the employee. Failure to comply, the Court can issue a warrant to levy the employer’s property by way of distress and sale of the employer’s property in accordance to the Rules of Court 2012 or by way of a fine as provided under section 283 of the Criminal Procedure Code.



12. AWARENESS OF SEXUAL HARASSMENT


Notice on sexual harassment

Section 81H of the New Act introduces the new requirement that an employer shall exhibit a notice to raise awareness of sexual harassment at the place of employment.


In conjunction with the awareness of sexual harassment, the parliament also passed the Anti-Sexual harassment Bill 2021 to establish a Tribunal for Anti-Sexual Harassment as an indication of the commitment of the government to prevent sexual harassment.


The fine that an employer is liable to pay for failure to, amongst others, inquire into complaints of sexual harassment is increased from RM10,000 to RM50,000.



13. FORCED LABOUR

Section 90B of the New Act introduces a new section that it will be an offence for any employer who threatens, deceives or forces an employee to do any work and prevents employees to leave their place of work.



14. GENERAL PENALTY

Under Section 99A of the New Act, the general penalty of the offence under the New Act will increase from RM10,000 to RM50,000.

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