NB: This article is updated as of 20 March 2020. As this situation is novel and the government’s response to the outbreak is continuously developing, this article may not necessarily include updates or developments after this date.
On 16 March 2020, the Malaysian government announced a movement control order that will take effect from 18 – 31 March 2020, as an attempt to curb the spread of the COVID-19 virus. Among other things, the movement control order imposes a travel ban and requires government and private business premises to close, except those dealing with essential services.
Since the announcement, our firm has been inundated with queries from employers as to how to manage their workforce during the movement control period. As this situation is novel and still developing, there is no specific legal precedent on the correct approach to be taken.
We have prepared the FAQ below that may hopefully give some guidance to employers.
Can employers request employees to work from home during the movement control period?
Employers can request their employees to work from home from 18 to 31 March 2020, if it’s possible for employees to do so. Employees should be paid their salary as normal if they are working from home.
Can employers deduct the movement control period from annual leave?
If employees are working from home, their annual leave should not be deducted since they are still working, just from a different location.
For employees who are unable to work from home – the Ministry of Human Resources had previously issued guidelines to state that employers should not deduct annual leave if employees are unable to attend work due to a quarantine order or home surveillance order. However, these guidelines are not legally binding and were previously issued in respect of a quarantine order (and not a movement control order).
The FAQ issued by the Ministry of Human Resources on 19 March 2020 has stated that annual leave should not be deducted during the movement control period.
Can employers treat the employees as being on unpaid leave during the movement control period?
We understand that many employers are facing economic difficulties due to the COVID-19 situation, and the movement control period may impose further hardship on businesses. It is therefore a legitimate concern of some businesses as to whether they can opt to put their employees on unpaid leave during this period, given that the employees will not be working and the business may be facing financial difficulties.
Unpaid leave, reduction in salary and / or reduction in working hours is generally allowed if it is done in good faith and is part of the employer’s last resort to avert or prevent retrenchment.
The government has also announced that employees who are forced to take unpaid leave will receive cash assistance of RM600 a month, which is a tacit recognition that it is expected to be common for employers to put their workers on unpaid leave. However, the Ministry of Human Resources has clarified that this incentive only applies if the worker is on unpaid leave for a minimum period of 1 month. As such, this incentive may not be applicable to employees who are put on unpaid leave only during the movement control order period.
In any event, forced unpaid leave carries a risk of claims by employees for breach of contract or unfair dismissal, so managing employee expectations and communication is crucial.
Can employees be dismissed or retrenched due to COVID-19 outbreak?
Employers are allowed to retrench employees if there is a genuine redundancy in their workforce – i.e if the employees are surplus to the needs of the organisation. This could be due to various factors such as challenging economic situations or poor financial performance of the business, whether due to COVID-19 or otherwise. However, employers are advised to use retrenchment only as a last resort, and after other steps to avert retrenchment have been taken, such as limiting the hours of work, or bona fide salary reductions across the board.
Note: This article is not intended to act as legal advice, and is intended to present and overall view on the employment law issues arising from the movement control order and the COVID-19 outbreak. Employers are responsible to navigate the upcoming uncharted waters carefully by weighing their commercial considerations with the legal risks involved.
This article was written by Donovan Cheah. Donovan has been named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific 2017, 2018, 2019 and 2020, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work.
Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory. Have a question? Please contact us.