It has been reported in the Star today that workers in the private sector who have been laid off will be provided financial assistance under the new Employment Insurance Scheme (“EIS“) that will be introduced in 2015.  While this is technically good news for workers, there have been no specifics given about how the EIS will actually work. Some questions currently remained unanswered, such ash:

  • What is the mechanism for the EIS?
  • Does this overlap with existing statutory retrenchment benefits?
  • What is the frequency / quantity of contributions required to be made by both employer and employee?
  • How is the EIS being funded?

When it was first announced in the 2015 Budget, the EIS faced strong resistance from many parties including the Federation of Malaysian Manufacturers and the Associated Chinese Chambers of Commerce and Industry of Malaysia. Concerns raised primarily center on the additional costs to businesses and employers. While the EIS is technically “good news” for workers, the additional costs involved (specifics of which have yet to be provided) could make it counter-productive as employers may try to downsize their workforce in order to cut costs.

Source: The Star

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