The Employment (Amendment) Bill 2021 (“the Bill”) to amend the current Employment Act 1955 (“the Act”) was tabled for its first reading on 25.10.2021.
According to the Explanatory Statement in the Bill, the amendment to the Act was seeks to comply with the international standards and practices as required by the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan and the International Labour Organization.
The “Malaysia – United States Labour Consistency Plan” was entered in 2015 and promised to take steps to reform labour laws to conform with International Labour Standards. However, the reform did not take place quickly. Until currently the Human Resources Minister came out with the Bill to amend the Act.
The Bill contains material amendments to the current Act and among others, is to provide for the protection against discrimination and forced labour, and to provide for maternity benefits. The key changes are as follows:-
Part XIIc - Flexible working arrangement (new)
Due to the pandemic and many businesses shifting from conventional working in the office to work from home and hybrid working model, the Bill introduce a new part XIIc. Where the employee may apply to the employer for a flexible working arrangement to vary hours of work, days of work 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. There is no obligation on the employer to approve every application. However, if the application is refuse, the employer must state the ground for refusal.
MATERNITY AND PATERNITY
S37 – Pregnancy and Maternity
The Bill seeks to increase the maternity leave from the original 60 days to 90 days (in line with government servant). However, the female employee can 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.
S41A - Restriction on termination of pregnant female employee (new)
The Bill also seeks to prohibit termination of the pregnant female employee except for breach, misconduct and close of business. Employer bears the burden to prove termination is not on the ground of her pregnancy or on the ground of illness arising out of her pregnancy.
S60FA – Paternity leave (new)
Under the Bill, the married male employee will be entitled to paid paternity leave for 3 days (up to 5 confinement).
S44A - Application of this Part irrespective of wages of female employee
However, under the Bill, the current section that the maternity protection applies to all female employees regardless of their wages will be deleted. This will have the effect of abolishing maternity protection for female employees who fall outside the definition of employee under the Act.
AWARENESS OF SEXUAL HARASSMENT
S81H – Notice on sexual harassment (new)
The Bill introduce the new section that an employer shall exhibit a notice to raise awareness on sexual harassment at the place of employment.
S81G - Application of this Part irrespective of wages of employee
Under the Bill, the current section that provides for the DG to inquire about sexual harassment to all employees regardless of their wages will be deleted. This will have the effect of abolishing the power of the DG to inquire about sexual harassment for employees who fall outside the definition of employee under the Act.
WORKING HOURS AND SICK LEAVE
S60A - Hours of work & 60C - Shift work
The Bill limit the maximum working hour for employees from 48 hours a week reduce to 45 hours a week.
S60F – Sick Leave
Under the Bill, the total number of days of paid sick leave of aggregate 60 days in a calendar year entitled by the employee will be deleted. As such there will be no limit of paid sick leave entitled by the employee.
Part VIII – Employment of woman
Delete the restrictions on the working hours for women working in industrial, agricultural and underground.
SUPPLY & HIRING OF EMPLOYEES
S33A – Information relating to supply of employees
Currently, under the Act, no written contract is required for supply of employees, the contractor for labour only need to register with DG in prescribed form before supplying the employees.
Under the Bill, 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.
S60K - Employment of foreign employee
Currently, the Act only requires employers who employ a foreign employee to furnish the DG with particulars of the foreign employee.
The Bill proposes that for the employer to employ a foreign employee, prior approval from the DG must be obtained.
JURISDICTION OF DIRECTOR GENERAL
S60L – Director General may inquire into complaint
The DG jurisdiction relating to discrimination against foreign employees will be deleted under the bill. The Bill will introduce a new general section for the jurisdiction of DG to inquire into complaints about discrimination under S69F.
S69B to 96E - DG power to inquire
The Bill proposes to delete sections 69B to 69E of the Act.
This amendment appears to remove the jurisdiction of the DG to inquire into complaints between employees and employers where the employees fall outside the definition of employee under the Act. (currently, under the Act, the DG may inquire into complaints between employees and employers provided that the employees’ wages do not exceed RM5,000).
S69F – Discrimination in employment (new)
The Bill introduce the power of DG to inquire into discrimination in employment. However, there is no clear definition for discrimination (whether the discrimination is related to hiring, during employment or dismissal).
S90B – Forced labour (new)
The Bill introduces a 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.
NO WRITTEN CONTRACT
S101C – presumption of employee even though no contract (new)
The Bill provides a new section for the presumption as to who is an employee and employer in the absence of a written contract of service, relating to any category of employee under the First Schedule as follows:-
A person is presumed to be an employee—
- where his manner of work or working hours is 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 or working hours 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.
These factors will be helpful for a determination of whether the employee bringing a complaint is an employee under a contract of service or an independent contractor.
The Bill limited the apprenticeship contract to a minimum of 6 months and a maximum of 24 months. Under the Bill, the apprentice and the employer will not be bound by indefinite terms but limited to a maximum term of 2 years.
S18A - Incomplete month of work calculation (new)
The Bill 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
Currently, in the Act there is no formula for calculating the wages of an incomplete month of work, the employer will use the formula of (monthly rate of pay / 26) to determine wages of a day. The Bill clear the doubt by fixing a specific formula for the calculation of employees’ wages for the service of the incomplete month.
S25A – Payment of wages through bank
Currently, under the Act, only domestic servants’ applications for payment of wages other than bank transfers need to get approval from DG. Under the Bill, 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 Bill, DG can further impose any condition when granting the approval.
87A – Court order for payments due to employee (new)
Under the Bill, the court can order an employer, who has been convicted for an offence relating to wages, 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 or by way of a fine as provided under section 283 of the Criminal Procedure Code.
99A - General penalty
General penalty increase from RM10,000 to RM50,000.
Even though the Bill proposes a welcoming change to the current Act, however, a certain section like DG power to inquire into the complaint of discrimination was drafted too widely that did not specifically spell out any the definition of discrimination or any particular situation shall the section come into application.
Further, even though the Explanatory Statement stated that some of the amendments were meant to extend the scope of the Act beyond the First Schedule. It was stated that the delete of sections 44B, 69B, 69C, 69D and 69E as a consequence of the extension of the scope of the Act and “This would allow an employee to bring any dispute before the Director General irrespective of the amount of wages he receives which under the current provisions is capped at five thousand ringgit.”
However, the Bill is shown to the contrary. Especially the deletion of S44A, S69B to S69E and S81G which will limit the application of those sections only to the employee who falls under the Act.
Without any amendment to the Bill to give the effect to the extension the scope of the Act, the delete of sections 44B, 69B to 69E and 81G of the Act will have the effect of abolishing the jurisdiction of DG to inquire into complaints of the employees who fall outside the definition of employee under the Act.