Amendments to the Employment Act

This is a re-print of Meca’s Circular dated 20th October 2011.

Dear Members,

RE: Employment (Amendment) Act 2011

On the 6th of October 2011, the Parliament of Malaysia passed the Employment (Amendment) Bill 2011 after its Second Reading. This Act will be referred to as Employment (Amendment) Act 2011 and will only come into operation after it is gazetted on a date to be appointed by the Human Resource Minister. The following are among some significant changes found under the new Act:

PART 1 – PRELIMINARY

Section 2

a)      The definition of “confinement” has been changed to parturition after at least twenty-two weeks instead of the previous twenty-eight weeks.

b)      New definition  of “contractor for labour”:

“contractor for labour” means a person who contracts with a principal, contractor or sub-contractor to supply the labour required for the execution of the whole or any part of any work which a contractor or sub-contractor has contracted to be carry out for a principal or contractor, as the case may be”

c)      New definition of “part-time employee”:

“part-time employee” means a person included in the First Schedule whose average hours of work per week as agreed between him and his employer are more than thirty per centum but do not exceed seventy per centum of the normal hours of work per week of a full-time employee employed in a similar capacity in the same enterprise”

For example, a designer in Company A works for 48 hours in a week. If Company A is looking for part-time employees, the hours of work in a week for the part-time employee should not be more than 33.6 hours in a week (70%) and less than 14.4 hours in a week (30%). If the normal hours of work exceeds 33.6 hours in a week, the employee will be known as a full-time employee and if it is below 14.4 hours in a week, the employee should be appointed as a casual worker.

d)     New definition of “sexual harassment”:

“sexual harassment” means any unwanted conduct of a sexual nature, whether verbal, non-verbal, visual, gestural or physical, directed at a person which is offensive or humiliating or is a threat to his well-being, arising out of and in the course of his employment”

 PART III – PAYMENT OF WAGES

Section 19

There is a significant change under section 19. The previous Act requires the employer to pay each of his employees’ wages not later than the seventh day after the last day of any wage period. As the definition of ‘wage’ included overtime, many companies found it hard to calculate overtime payments in time to meet the 7th day requirement. As such, the new amendments under s.19(2) allows wages for work done on a rest day, gazetted public holiday and overtime to be paid not later than the last day of the next wage period. This means that the employer can pay his employees their wages for the month by the 7th of the following month and make payment for work done on a rest day, public holiday and overtime with the following month’s wages.

Section 22

 This section provides that no employer shall make to an employee an advance which is more than a month’s salary unless the advances are for specific purposes stated under the para (a) – (de) of the Act. This amendment saw the deletion of para (c) which permitted advances of more than a month’s wage to purchase livestock. Several new inclusions are as follows:

(db) to enable him to purchase a computer;

(dc) to enable him to pay for medical expenses for himself or his immediate family members;

(dd) to enable him to pay for daily expenses pending receipt of any periodical payments for temporary disablement under the Employee’ Social Security Act 1969;

(de) to enable him to pay for educational expenses for himself or for his immediate family members.

Under this section, “immediate family members” means the employees’ parents, children, siblings or any other person under the employee’s guardianship.

PART V – SYSTEM OF PAYMENT OF WAGES

Section 25

Under this amendment, the employer should pay his employees’ wages through a bank account in the name of the employee or an account in the name of the employee jointly with one or more persons as stipulated by the employee. The employer may, upon a written request by the employee pay wages in legal tender or by cheque made payable to the employee. The consent given by the employee may be revoked at any time but the effect of such notice shall only take effect four weeks from the day notice was given.

PART VII – CONTRACTORS, PRINCIPALS AND CONTRACTORS FOR LABOURS

Section 33A

 This is a new provision introduced under the Amendments. This new section requires a contractor for labour to register with the Director General of Labour 14 days before supplying any labour. It further requires the contractor for labour to keep a register of each and every employee supplied by him and shall make such register available for any inspection. Failure to adhere to the above 2 provisions will render the contractor for labour guilty of an offence and shall, on conviction, be liable to a fine not exceeding ten thousand ringgit.

PART IX – MATERNITY PROTECTION 

Section 44A

 The new Act under Section 44A extends the scope of maternity protection to all female employees who are employed under a contract of service irrespective of wages. This is a significant change to the Act. Under the old Act, a female employee who is not within the scope of the Employment Act 1955 was not entitled to maternity protection unless the contract of service stipulates otherwise.

PART XI – DOMESTIC SERVANTS

 Section 57A

 This is a new provision introduced under the Amendments. It requires an employer who employs a domestic servant to notify the DG of such employment within 30 days of the commencement of the employment. The section goes on to state that that any employer who contravenes this section shall, on conviction be liable to a fine not exceeding ten thousand ringgit.

Section 57B

 This is a new provision introduced under the Amendments. It requires an employer to inform the DG of any termination of employment within 30 days of the termination. For this section, termination includes:

a)      Termination by the employer;

b)      Termination by the domestic servant;

c)      Termination upon the expiry of employment pass issued by the Immigration Department of Malaysia to the foreign domestic servant;

d)     Termination by repatriation or deportation of the domestic servant.

For the purposes of s.57B, termination of employment includes the act of the foreign domestic servant absconding from his place of employment.

The section goes on to state that any employer who contravenes this section shall, on conviction be liable to a fine not exceeding ten thousand ringgit. 

PART XII – REST DAYS, HOURS OF WORK, HOLIDAYS AND OTHER CONDITIONS OF SERVICE

Section 60D

 The Amendments provides that every employee shall be entitled to a paid holiday for eleven (11) public holidays instead of ten (10) days as per the old Act, with the addition of Malaysia Day as a compulsory holiday under s60D(a)(v).

The Amendments further provide that if any of the public holiday falls on a rest day or a public holiday, the working day immediately after the rest day or public holiday shall be a paid holiday in substitution.

PART XIIB – EMPLOYMENT OF FOREIGN EMPLOYEES

Section 60K

 This is a new provision introduced under the Amendments. It requires an employer to furnish the DG with the particulars of any foreign employee within 14 days of the commencement of employment.

Subsection (3) then state that an employer must inform the DG of any termination of employment within 30 days of the termination. For this section, termination includes:

a)      Termination by the employer;

b)      Termination by the foreign employee;

c)      Termination upon the expiry of employment pass issued by the Immigration Department of Malaysia to the foreign foreign employee;

d)     Termination by repatriation or deportation of the foreign employee.

For the purposes of s.60K, termination of employment includes the act of the foreign employee absconding from his place of employment.

The section goes on to state that any employer who contravenes this section shall, on conviction be liable to a fine not exceeding ten thousand ringgit.

PART XV – COMPLAINTS AND INQUIRIES

Section 69B

 The new s.69B provides that the power of the Director General to hear cases pertaining to any term of the contract of service between an employer and employee shall be extended to employees whose wages per month exceed 2,000 ringgit but does not exceed 5,000 ringgit.

The introduction of this amendment implies that the Employment Act will be applicable to an employee, irrespective of his occupation, who has entered into a contract of service with an employer under which his wages does not exceed two thousand ringgit a month.

PART XVA – SEXUAL HARASSMENT

This is a new part introduced in the Amendments. This part specifies that a sexual harassment claim can be made by any party to an employment relationship.

Upon receiving a complaint, the employer shall inquire into the complaint. However, should the employer chose not to inquire into the complaint, the employer must within 30 days write to the DG informing him of such refusal. The employer may refuse to inquire a complaint under 2 grounds:

a)      The complaint of sexual harassment has previously been inquired into and no sexual harassment has been proven; or

b)      The employer is of the opinion that the complaint of sexual harassment is frivolous, vexatious or is not made in good faith.

If the employer chooses to conduct and is satisfied that the sexual harassment is proven, the employer can punish the harasser by way of dismissal, demotion or any other punishment which he deems fit. However, the employer is not allowed to punish the harasser by suspending him for more than a period of two (2) weeks without pay. Any suspension that is not more than a period of two (2) weeks without pay is fine.

If the alleged complaint is made against a person who is not an employee of the company, the company may recommend that that the person be brought before an appropriate disciplinary authority which he is subjected to. This will be his company.

Alternatively, a complaint of sexual harassment can be made to the DG of Labour and if the complaint is against a sole proprietor, the DG shall inquire into the complaint himself. However, should the DG chose not to inquire into the complaint, the DG must within 30 days inform the complainant in writing the reasons of the refusal. The DG may refuse to inquire a complaint under 2 grounds:

a)      The complaint of sexual harassment has previously been inquired into and no sexual harassment has been proven; or

b)      The employer is of the opinion that the complaint of sexual harassment is frivolous, vexatious or is not made in good faith.

If the DG chooses to conduct an inquiry and is satisfied that the sexual harassment is proven, the complainant may terminate his or her contract of service without notice and the complainant will be awarded wages as if the complainant has given the notice along with termination benefits and indemnity.

This section will apply all employees who are employed under a contract of service irrespective of his or her wages.

The above are the main amendments. It is important to understand that these amendments from a practical point of view. MECA will be conducting public courses on this in English and Bahasa Malaysia. The English courses will be conducted my Mr. Dharmen Sivalingam and the Bahasa Malaysia courses will be conducted by Tn Hj Arip. Mohd on the following dates:

Date (2011) Location Speaker
8th – 9th November (English) Traders Hotel, Penang Mr. Dharmen Sivalingam
14th – 15th November (BM) The Royale Chulan Hotel (KL) Tn Hj Arip b. Mohd
16th – 17th November (English) Hilton, Petaling Jaya Mr. Dharmen Sivalingam
7th – 8th December (English) Hilton, Petaling Jaya Mr. Dharmen Sivalingam
12th – 13th December (BM) Traders Hotel, Penang Tn Hj Arip b. Mohd

Kindly contact our Head of Sales and Marketing, Ms. Norliza Abdul Aziz at norliza@meca.com.my to signify your interest.

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