Minimum Wages Order 2016

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Hi readers,

With effect July 2016, the Minimum Wages Order 2016 will come into play. This means that apart from the rates being increased from RM900 to RM1000 for Peninsular Malaysia, you need to be aware of the following other changes:

  1. In 2012, domestic servants and apprentices were excluded from the application of minimum wage but now in 2016, only domestic servants are excluded.
  2. In 2012, employees can be paid  a reduced minimum wage of up to 30% during their first six months of if they are on probation. Employers were then obliged to move it up to the minimum wage after 6 months whether the employee is confirmed or otherwise. This reduction is no longer permitted from July 2016 onwards.
  3. The 2016 order does not specifically mention rules for restructuring into a clean wage – this could mean 2 things, firstly that restructuring of wages is no longer permitted or secondly, restructuring of wages is now allowed without restrictions imposed in 2012.

I believe these slight changes would not affect you big time but please reach out if help is needed.

Cheers

Public Holiday – JDT wins FA Cup

Dear readers,

The State Government of Johor announced 15th May 2016 as a public holiday for Johor to celebrate JDT’s victory in the FA Cup.

IS IT A COMPULSORY HOLIDAY?

Through this announcement, employers in Johor who observe only specific public holidays in a year and NOT ALL public holidays will not be obliged to observe 15th May 2016 as a public holiday.

However, for employers who in their handbook/policies have stated that they observe ALL public holidays in a year will have to observe 15th May 2016 as an additional public holiday. If that is the case, then:

For employees who are scheduled to work on Sunday, 15th May 2016, the following 2 options may be applicable:

  1. Declare 15th May 2016 as a public holiday; or
  2. Treat 15th May 2016 as a normal working day and replace the holiday to another day. S60D(1A) of the Employment Act 1955 provides for this right to replace.

For employees who are on their rest day on Sunday 15th May 2016, the Employment Act 1955 provides that the working day immediately after a public holiday shall be recognised as the substituted public holiday. This will mean that Monday 16th May 2016 will be the paid holiday in substitution for Sunday. In that case, the following 2 options may be applicable:

  1. Declare Monday 16th May 2016 as a public holiday; or
  2. Treat Monday 16th May 2016 as a normal working day and replace the holiday to another day. S60D(1A) of the Employment Act 1955 provides for this right to replace.

By virtue of s60D(2) of the Employment Act 1955, if the employee is absent without leave or without reasonable excuse either today or the next working day after tomorrow, he forfeits his entitlement to the holiday pay which means he will not be paid for the day he is absent and for tomorrow.

Receiving updates as per the above is one of the many benefits of joining MECA as a member. Please contact me at 07-2357208 / 012-6536262 or at victor@meca.com.my to find out more. 

 

Temporary shut down / forced annual leave

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In view of the current economic landscape, I’ve been receiving questions on temporary shut downs more frequently than ever. The big question here is can employers force employees to go on annual leave?

Here are a two common scenarios where this could happen:

  1. Company has a 6 day work week but because production is predicted to go down in the next 2 months, employees are requested to go on leave for 1 day per week (over 2 months) – total force leave = 8 days
  2. Festivals (say Chinese New Year or Hari Raya) falls on 2 working days per week. Company would like to save some cost because nothing much could be done in that week. Employees are forced to go on leave for the entire week – total for leave = 4 days

Ever wonder what goes through an employee’s mind if any one of the above declaration is made? (none of their business if the Company wants to shut down right?)

The legal position

Annual leave has always been considered a right of an employee. Harun Hashim J commented in Dunlop Malaysian Industries Bhd v DMIB Employees Union [1982] 1 ILR 161

Annual leave is usually taken for personal reasons. It is intended for leisure, enjoyment and travel. It should not be enforced on the employee merely to suit the company’s convenience.

In Viking Askim s/b v Nat Union of Companies Manufacturing Rubber Products [1991] 3 CLJ 195, the Court held the following:

If an employee is ready to perform his services during the period covered by his employment contract, he is entitled to wages even though his employer has no work for him.

In applying both the above cases, it appears that employers should not force employees to go on leave nor can they declare unpaid leave for a period of temporary shut down. In a more recent case involving Kesatuan Pekerja-Pekerja Continental Tyre PJ Malaysia Sdn Bhd v Continental Tyre PJ Malaysia [2015] 3 ILR 462, the Company declared a plant shut down in a week where there were 2 public holidays. The Court decided that the days where the employees were forced to go on leave should be paid back to them (or alternatively, 2 days of AL should be granted to them from the date of the decision).

Despite the above, I wouldn’t conclude that there is no possible way out of this predicament. I will be sharing the many practical methods available to an employer in a course entitling ‘Reducing Manpower Cost’ this 4 – 5 April 2016 in Kuala Lumpur. You can contact my colleague, Mr. Alvin Lai at alvin@meca.com.my for further information.

If you are unable to make it for this program and you need urgent assistance, I recommend that you write to me at victor@meca.com.my for further information.

Cheers

Reducing Manpower Cost

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Hi readers!

Most companies are now facing tough times and you, as a HR person are always required to be on top of your game when it comes to reducing manpower cost. The team of Consultants at MECA has carefully crafted interesting, relevant and practical topics to get you all set in this economical situation.

Get yourself equipped with strategies on retrenchment, voluntary separation schemes, mutual separation schemes, lay-offs, pay cuts, wage freeze, forced leave, reduction of working days, etc.

Our methodology – case studies and practical experiences

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Are drivers entitled to overtime (OT) payments? 

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Recently, I’ve been receiving this question over and over again. Do you pay your drivers (company or personal) overtime payments – or even if you do, have you ever wondered whether you are legally obligated to do so?


Think about it, the Employment Act 1955 clearly specifies that the normal hours of work of an employee should not exceed 8 hours per day. The maximum permitted hours, including overtime is capped at 12 hours per day. Now, assuming your driver starts his day at 7am and continues until after dinner, say at 9pm, (or say he travels outstation with you) he would’ve worked beyond 12 hours that day. If you are having this as your normal practice, would you be in breach of the laws?
To get you thinking, I’ve constructed a few questions:

  1. Would a driver be protected by the Employment Act 1955 even if his salary exceeds RM2000 per month?
  2. Can a driver fall within he meaning of a ‘domestic servant’ under s2 of the Employment Act?
  3. Is your driver constantly on standby mode – or does he have in between functions?
  4. If you are paying your driver OT, are you paying based on his ‘wages x 1.5’ for a normal day’s OT or are you capping it at a certain fixed amount?

Still don’t have a clue?

If you have a burning desire to find out my way of interpreting this, drop me a note at victor@meca.com.my

Happy reading!

Amendments to the Employment Act – coming soon?

EA Book

Hello readers,

Of late, this topic has been hitting the press and if you are a reader of theStar, you would’ve realized that an article on the Employment Act / or matters concerning misconduct has been appearing for the past few Sundays. This is certainly an indication that the amendments are now looked at on a ‘very serious’ basis and as employers, you should start to be prepared from now.

I’ve had the privilege of understanding some of the proposed changes that has been put forth. You may be wondering – how do I prepare if I don’t know what he change entails? Well, take my word for this – The best way for you to handle this change is to be understand 100% the provisions of this current Act. 

For those of you who haven’t familiarized yourself (because you always think that it’s not that important especially since it does not cover all employees) now is the time for you to brush up and refresh!

All the best!