The Employment (Amendment) Act 2022 (the Amendment Act), which proposes amendments to the Employment Act 1955 (EA 1955), was presented to the Malaysian Parliament on 25 October 2021.
The Amendment Act were set to go into effect on 1 September 2022, but the Human Resources Ministry has decided to delay implementation until 1 January 2023.
This is to give employers more time to implement the changes mandated by the Amendment Act. The decision was made following discussions with industry players and employers. As a result of the amendments, the Employment Act will undergo major changes.
Key changes to the Employment Act
Pregnancy and maternity leave
Maternity leave increases from 60 to 98 days in order to follow the international labour standard. When a female employee is pregnant or suffering from an illness related to her pregnancy, her employer may not terminate her employment or give her notice of termination unless there is (a) a wilful breach of a condition of the contract of service; (b) misconduct; or (c) the company is no longer in business.
Introduction of paternity leave
Married males will have the right to 7 days of paid paternity leave per birth. Eligibility for the leave will be limited to just 5 births, regardless of the number of spouses, and will begin on the day of the birth. See s 60FA.
Notice of sexual harassment
Under new s 81H, companies must prominently display a notice to educate employees about sexual harassment in the workplace. The laws against sexual harassment are still seen as frail and limited. When the Anti Sexual Harassment Bill 2021 is enacted, new guidelines will be provided to supplement existing legislation.
Amending the First Schedule
To avoid uncertainty or misleading employees about which types of employees are covered by the amendments, the long-awaited Employment (Amendment of First Schedule) Order 2022 (2022 Order) was gazetted on 15 August 2022, and it will take effect on 1 January 2023.
2022 Order
The EA 1955 will now be expanded to cover all employees, regardless of monthly wage, with the 2022 Order, as follows:
- "1. Any person who has entered into a contract of service.
- 1A. Notwithstanding paragraph 1, the person whose wages exceeds four thousand ringgit a month."
However, the following provisions will not apply to employees whose monthly wages exceed RM4,000:
- s 60(3): Overtime for work on rest days
- s 60A (3): Overtime for work performed outside of normal working hours
- s 60C(2A): Shift work allowance
- s 60D(3): Overtime and allowance for work on public holidays
- S 60D(4): Overtime for work on holidays on half working days
- S 60J: Termination, lay-off, and retirement benefts.
Reduced maximum weekly hours and revised sick leave policies
The weekly maximum number of hours that can be worked is lowered from 48 to 45. Overtime rates (at least 1.5 times the employee’s hourly rate) will consequently be charged for any hours in excess of the newly suggested 45 per week.
In relation to sick leave, it is proposed to remove the provision that currently requires that total sick leave includes up to 60 days spent in hospital under s 60F. As a result of the removal, employees will no longer be required to use any of their regular sick leave benefits when using the 60 days of hospitalisation.
Flexible working arrangements
The Amendment Act adds a new Part XIIc allowing employees to apply for flexible work arrangements with their employers. The application may involve changing the work schedule, days of the week or location of the work. Upon receiving such an application, employers may accept or reject it in writing. In the event of a rejection, the employer is required to give the employee written notice of the reasons for the refusal.
Foreign employees
Before employing foreign workers, employers must obtain the Director-General of Labour’s consent. Employers could face up to a RM100,000 fine and/or 5 years in prison if they fail to acquire such approval, as failure to obtain approval is considered an offence.
Next steps
As the implementation and effective date of the amendments are around the corner, employers are strongly encouraged to revisit their employment governance, in particular their employee handbooks and employment contracts, to ensure compliance with the much-awaited amendments.
Once the above comes into effect, it will be updated in the CCH Asia Pacific Employment Law subscription and other relevant Malaysian subscriptions.
