Overview
Since 1 January 2023, the Employment (Amendment) Act 2022 (referred to as the "Amendment Act") and the Employment (Amendment of First Schedule) Order 2022 (referred to as the "Amendment Order") have been implemented. The Amendment Act and the Amendment Order have introduced significant modifications to the Employment Act 1955 (referred to as the "Act"). Here are some notable changes made through these amendments:
Amendment to the First Schedule
Previously, the First Schedule of the Act only applied to specific categories of employees, referred to as "EA Employees," which included:
a) Employees earning a monthly salary not exceeding RM2,000.
b) Employees engaged in manual labor, regardless of salary.
c) Employees involved in the operation or maintenance of motor vehicles.
d) Employees supervising or overseeing other employees engaged in manual labor.
e) Employees working on a vessel (subject to certain conditions).
f) Employees working as domestic servants.
However, the Amendment Order has revised the First Schedule to extend the Act's coverage to any person who has a valid employment contract. Nevertheless, certain sections of the Act, namely sections 60(3), 60A(3), 60C(2A), 60D(3), 60D(4), and 60(J) (referred to as the "Excluded Sections"), will not apply to employees whose wages exceed RM4,000 per month, unless these employees fall within the definition of EA Employees.
The Excluded Sections specifically pertain to matters such as working on a rest day, overtime payments, entitlement to shift allowances, working on a public holiday, and statutory entitlement to termination and lay-off benefits.
Calculation of wages for an incomplete month
A new formula has been implemented to determine the wages of an employee who works for a duration less than a complete month:
Monthly Wages
--------------------------- X Number of Days Eligible in Wage Period Number of days in
Particular period
The Amendment Act does not provide specific guidelines on the calculation method for determining the "number of days in the particular period." Currently, under the Act, monthly wages are calculated based on a denominator of 26 days, representing the standard number of working days in a month for an employee.
Working hours
The maximum working hours for employees have been capped to 45 hours per week from the previous 48 hours per week.
Pregnancy and maternity protection
The Amendment Act has implemented the following changes regarding pregnancy and maternity protection for employees:
a) The duration of paid maternity leave has been extended from 60 days to 98 days.
b) A female employee, upon obtaining consent from her employer, can choose to resume work at any time during her maternity leave if she has been medically certified as fit to do so by a registered medical practitioner. This is applicable regardless of whether she is eligible to receive maternity allowance.
c) It is prohibited for an employer to terminate the employment of a pregnant female employee or issue a notice of termination of employment unless there are legitimate grounds, such as:
i) willful breach of a condition of the contract of service;
ii) misconduct; or
iii) closure of the employer’s business.
If a pregnant female employee is terminated on the aforementioned grounds, the burden of proof lies with the employer to demonstrate that the termination is unrelated to her pregnancy or any pregnancy-related illness.
The Amendment Act does not provide a specific definition for the term "illness resulting from her pregnancy" nor does it clarify whether the illness is limited to physical conditions.
Paternity Leave
Under the Amendment Act, a married male employee is granted the right to take up to seven consecutive days of paid paternity leave for each childbirth, regardless of the number of spouses. The entitlement to paternity leave is subject to the following conditions:
a) The male employee must have been employed by the same employer for a minimum of 12 months prior to the commencement of paternity leave.
b) The employee must inform his employer of his spouse's pregnancy at least 30 days before the anticipated childbirth or as soon as possible after the birth.
Sick Leave and Hospitalization Leave
As per the Amendment Act, employees are now eligible for 60 days of paid sick leave when hospitalization is required. Additionally, they are entitled to 14 to 22 days (depending on their length of service) of paid sick leave when hospitalization is not necessary.
Flexible working arrangements
Employees have the option to submit a written request to their employer, seeking a flexible working arrangement that involves changes to their work hours, workdays, or work location. Upon receiving such a request, the employer is obligated to respond in writing within 60 days, indicating their approval or denial of the application.
If the employer rejects the request, they must provide a clear reason for the refusal. However, the Amendment Act does not explicitly address whether the employee has the right to challenge the employer's decision.
Employment of foreign employees
Previously, employers were only obligated to provide the Director General with details of foreign employees within 14 days of their employment, without the need for prior approval of the appointment. However, there has been a change in the requirements. Now, employers must obtain the prior approval of the Director General before hiring a foreign employee. Once the Director General grants approval, the employer must submit the particulars of the foreign employee within 14 days to the Director General.
Failure to comply with these requirements is considered an offense. If convicted, the employer may face a fine of up to RM 100,000, imprisonment for a maximum term of five years, or both.
Terminating a foreign employee
In the event that the service of a foreign employee is terminated based on the following grounds:
a) Termination by the employer;
b) Expiration of the employment pass issued by the Immigration Department of Malaysia, or
c) Repatriation or deportation of the employee,
the employer is required to notify the Director General of such termination within 30 days of its occurrence.
If the foreign employee voluntarily terminates their service or absconds from their place of employment, the employer must inform the Director General within 14 days of the termination or after the foreign employee's absence.
Discrimination
The Act now includes a new provision granting authority to the Director General to investigate and resolve disputes between employees and employers regarding employment-related discrimination. Following the Director General's decision, an order may be issued.
Non-compliance with any order from the Director General is considered an offense. Upon conviction, an employer may face a fine not exceeding RM50,000. In the case of a continuous offense, the employer may be subject to a daily fine not exceeding RM1,000 for each day the offense persists after conviction.
It is important to note that these amendments solely pertain to discrimination occurring within the employment relationship and do not address discrimination as grounds for refusal of employment or non-employment.
Offences relating to Sexual Harassment
The amendments mandate that employers must prominently display a notice at the workplace to raise awareness about sexual harassment at all times.
The penalty for an employer's failure to, among other things, investigate complaints of sexual harassment will be raised from RM10,000 to RM50,000.
General penalty
The overall fine for violating the Act or any subsidiary legislation enacted under the Act, for which no specific penalty is stated, has been raised from RM10,000 to RM50,000.
Presumption as to Employer-Employee relationship
In the absence of a written employment contract for a specific category of employee listed in the First Schedule of the Act, any legal proceedings for an offense under the Act will presume that a person is an employee if the following conditions are met:
a) The person's work is subject to the control or direction of another individual.
b) The person's working hours are under the control or direction of another individual.
c) The person is provided with tools, materials, or equipment by another individual to carry out their work.
d) The person's work is an integral part of another person's business.
e) The person's work is performed exclusively for the benefit of another person.
f) The person receives regular payments for their work, and such payments constitute the majority of their income.
Jurisdiction of Director General
Previously, the Director General had the authority to inquire into complaints between employees and employers, but this was only applicable if the employees' wages did not exceed RM5,000. Following the revisions made to the First Schedule of the Act (as mentioned earlier), the Director General is now empowered to investigate and resolve disputes between employees and employers without any salary cap limitation.
Conclusion
In the past, employees who were not covered by the First Schedule of the Act had limited provisions applicable to them, and their employment terms and conditions were primarily governed by their employment contract. However, with the expanded scope of the First Schedule, all employees, irrespective of their salary or job type, will now benefit from enhanced legal protection.
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