Updated: Apr 4, 2020
We have received many enquires on the confusion as to why the Government is paying RM600 each month for a maximum period of 6 months, to employees that are forced to take unpaid leave but employers are told that they are not allowed to force employees to take unpaid leave?
Our Prime Minister has made an announcement on March 16, 2020 that Employees who are forced to take unpaid leave would receive financial assistance under the Employee Retention Program. Many people had thought that such financial assistance would mean that employers are allowed to force employees to take unpaid leave during the Movement Control Order period, which has been extended to April 14,2020, but this is not the case. (For more information about Employers Obligations During Covid-19 Outbreak, click here).
When an Employer may put employees on unpaid leave?
The Employee Retention Program allows employers to put employees on unpaid leave as a step prior to retrenchment to reduce operation costs due to the Covid-19 outbreak, as many businesses are struggling to survive during this period. However, putting employees on unpaid leave can only be taken if there is a genuine impact on the business. This action would have a temporary effect of putting employees on a temporary break, in which they are to resume their duties after the employers manage to recover their financial difficulties.
Why is ERP introduced to allow Employees to be placed on Unpaid Leave?
If such program is not introduced, then many businesses would have no choice but to exercise retrenchment and hence would have caused many employees to have lost their jobs contributing directly to an increase in the unemployment rate.
As such, the financial assistance under the Employee Retention Program (ERP) does not mean that employers are allowed to place employees under unpaid leave during the Movement Control Order period. In fact, employers are not allowed to place employees on unpaid leave during MCO period only. If it is necessary to cut down the operation of the business due to the outbreak of the Covid-19, then the employer may place its employees under Unpaid Leave and the employees may be eligibile for the financial assistance in accordance to the FAQ provided in the link below.
Click here to read about How To Apply for Financial Assistance under Employee Retention Program? (ERP)