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As part of the government’s PRIHATIN economic stimulus package, the Employment Retention Programme (“ERP”) was introduced as an immediate financial assistance for employees who have been instructed to take unpaid leave due to the COVID-19 pandemic.

Here are some frequently asked questions about the ERP.

 

Since the ERP is for employees who are put on unpaid leave – does this mean that the government supports putting employees on unpaid leave? Will the ERP encourage more employers to put employees on unpaid leave?

In its FAQ, PERKESO has stated that the purpose of the ERP is to assist employers who are facing short term financial difficulties due to unexpected economic conditions beyond their control, without having to dismiss employees. The ERP programme is intended to allow employers to continue to operate, without having to dismiss and then re-train workers once the situation approves.

The legal position about putting employees on unpaid leave remains the same – employers are advised to obtain employees’ consent prior to putting them on unpaid leave.

What are the benefits under the ERP?

Under the ERP, each eligible employee will receive RM 600.00 a month from PERKESO throughout the period they are put on unpaid leave (up to a maximum of 6 months).

Who is eligible for the ERP? What are the requirements?

All private sector employees (including part time employees) who have been registered with the Employment Insurance System are eligible for the ERP.  The requirements to be eligible for ERP are as follows:

  • Employees whose wages do not exceed RM 4,000 a month; and
  • Employees who have been given a notice from their employer to be placed on unpaid leave for a minimum period of 1 month, from 1 March 2020

Who does not qualify for the ERP?

The ERP would not be eligible to the following employees:

  • Employees who are not registered with the Employment Insurance System;
  • Employees who are earning above RM 4,000 a month;
  • Employees who have already been dismissed from the company;
  • Civil servants or employees of statutory bodies and local authorities;
  • Freelancers or those who are self-employed; and
  • Foreign employees and trade officers.

How do I apply for the ERP?

All ERP applications would have to be submitted by the employers on behalf of their employees through the Prihatin PERKESO website.

What supporting documents are required to apply for the ERP?

  1. ERP C-19 Application Form;
  2. Employer’s bank account statement (front page only);
  3. Notice of unpaid leave from the employer; and
  4. List of affected employees (in an Excel format).

How long is the period for ERP assistance?

The period of assistance is between one to six months, depending on the unpaid leave notice issued by employers.

Can employers apply for both ERP and the wage subsidy programme both at the same time?

An employer cannot apply for ERP and the wage subsidy programme for the same employee for the same months.

How does the employee receive the ERP payment?

The ERP payment of RM 600 will be credited to the employers’ account.  Employers are required to credit the payment directly to the affected employees’ accounts within 7 days upon receipt of payment from PERKESO. Employers who fail to do so will be subject to legal action.

Does an employer have to apply for the ERP every month?

No, the ERP application only has to be submitted once.

What happens if an employee is terminated after the notice of unpaid leave has ended? Do they still receive the ERP?

Employees who have been terminated after the notice of unpaid leave has ended are no longer be entitled to ERP. However, these employees can apply to PERKESO for benefits under the Employment Insurance System.

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This article was written by Donovan Cheah and Natalie Ng. Donovan has been named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific 2017, 2018 and 2019, 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.

 

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