Malaysia: Amendments to the Employment Act 1955 – Employers, Get Ready!

The Malaysian Employment Act 1955 will undergo major changes: introducing longer maternity and paternity leave, enhanced protection from discrimination, a statutory right for employees to request a flexible working arrangement and much more.

The government has also confirmed that the Employment Act 1955 will now apply to all employees, whereas previously it only applied to those earning up to a certain monthly amount, or certain categories of employees.

With the implementation of these (many) changes just around the corner, employers need to get up to speed quickly and begin revising policies and processes to ensure compliance.

What’s new?

  • Amendments to the Malaysian Employment Act 1955 (“EA 1955“) will provide further protection and benefits to employees.
  • Previously, the EA 1955 only applied to employees who: (a) earn less than RM2000 (approx. USD500) per month; or (b) regardless of income, are employed as manual labourers or supervisors of manual labourers; or (c) fall within certain categories such as those working on sea vessels, domestic servants etc.
  • However, a Minister’s Order was gazetted on 15 August 2022, which confirms that the EA 1995 will soon apply to all employees irrespective of wages (subject to some specific sections not applying to certain employees (the “Excluded Sections“) – see further below).

When will the changes come into effect?

  • 1 January 2023 (the changes were previously due to come into effect on 1 September 2022, but the government has now extended the implementation date to give employers more time to prepare).

What are the key amendments to the EA 1955?

  1. Paid maternity leave: increased from 60 to 98 days;
  2. Introduction of paternity leave: 7 consecutive days for married male employees, subject to other conditions being met;
  3. Restriction on termination of pregnant employees: pregnant employees and those suffering from a pregnancy-related illness cannot be terminated unless other grounds for dismissal exist such as misconduct or redundancy;
  4. Working hours: maximum weekly working hours reduced from 48 to 45 hours;
  5. Foreign workers: employers must obtain prior approval from the Director General of Labour before hiring a foreign employee. Failure to do so could result in fines and/or imprisonment;
  6. Flexible working: employees may submit a written application to their employer for a flexible working arrangement to vary the hours, days or place of work. Employers must revert with their approval or rejection within 60 days from receipt of the request;
  7. Notice on sexual harassment: employers must display a notice in the workplace raising awareness on sexual harassment;
  8. Discrimination protection: the Director General of Labour is empowered to inquire and make orders on discrimination disputes between employers and employees. Employers that fail to comply with any such orders could be subject to fines; and
  9. Gig workers: presumption of employment in the absence of a written contract of service, unless proven otherwise.

What are the Excluded Sections?

For employees earning more than RM4,000 (approx. USD 1,000) per month (unless such employees still fall within a certain category e.g. manual labourers), note that the following provisions under the EA 1955 will not apply:

  1. Overtime for work done: i) on rest days; ii) outside of normal working hours; iii) on public holidays; and iv) on holidays on half working days;
  2. Shift allowance work; and
  3. Payment for termination, lay-off and retirement benefits.

So, what should employers do now?

  • Employers should begin reviewing the relevant contracts, policies and processes now to prepare for and ensure compliance once the changes come into effect.
  • Any existing terms or conditions in contracts or policies which are less favourable to an employee than those provided for under the EA will be void from 1 January 2023.

MDR ONE is here to keep you up to date on developments and support you, including reviewing your employee handbooks, policies and HR processes. Please get in touch and we would be happy to assist.

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