Note: This article is current as of the date of publication and may not take into account changes or developments that occur after this date.

On 21 March 2022, the Employment (Amendment) Bill 2021 (“Bill”) was passed by Dewan Rakyat after second reading. The amendments under the Bill are not in force yet (it still has to go through Senate approval and obtain royal assent). However, if the Bill comes into force in its current form, it will have some material implications on employers and employees in Malaysia.

We previously wrote about the Bill when it was tabled for first reading in December 2021 (you can read our commentary here).  The Bill that was passed by Dewan Rakyat is substantially similar to the Bill that was presented in December 2021, save that maternity leave was increased to 98 days (14 weeks) and paternity leave was increased to 7 days.

Which employees are affected by the amendments?

The Employment Act 1955 (“EA”), with some exceptions, only applies to employees mentioned in the First Schedule of the EA – typically employees whose wages do not exceed RM2,000 a month and/or employees involved in manual labour. Maternity protection and sexual harassment provisions under the EA apply regardless of the employee’s salary range.

When the Bill was passed, confusion arose as to whether employees who are earning above RM2,000 a month will still receive their maternity protection under the EA, or if the EA will be expanded to cover all employees.

The confusion is because the Bill deletes some sections under the EA:

  • Section 44A: that provides that maternity protection provisions apply to all female employees regardless of salary; and
  • Section 81G: that provides that the sexual harassment provisions apply to all employees regardless of salary,

but does not make any amendments to the First Schedule.

This means, on a plain reading of the Bill, employees who are earning above RM2,000 a month will not be entitled to maternity leave, or be covered under the sexual harassment provisions.

However, when the Bill was presented for second reading, the Ministry of Human Resources assured that all employees, regardless of wages, will be afforded protection under the EA subject to certain conditions. The amendments to the First Schedule will instead be done by way of a Minister’s Order.

At the time of writing, no details have been given about this Minister’s Order, what it contains, and what are the conditions that will be imposed.

So, are employees earning above RM2,000 a month entitled to maternity leave?

For now, all female employees are entitled to 60 days maternity leave (subject to the conditions in the EA), until the Bill comes into force.

When the Bill comes into force, eligible female employees will be entitled to 98 days maternity leave. However, the scope of eligibility will depend on the Minister’s Order.

If the Minister’s Order is not in force by the time the Bill comes into effect, on a strict reading of the Bill, women who are earning above RM2,000 a month will not be entitled to any paid maternity leave, until such time the Minister’s Order is in force or until the EA is further amended to say so.

Why is the First Schedule being amended through a Minister’s Order?

The approach of amending the First Schedule through a Minister’s Order has caused a lot of uncertainty. By not amending the First Schedule through the Bill itself, it also means that the expansion of the EA was not debated before the Dewan Rakyat before the Bill was passed. Without having sight of the Minister’s Order, it will be difficult to assess which employees will be impacted and how.

Previously, when the salary cap for EA employees was raised or proposed to be raised, it was usually reflected in the amendment bill (eg: from RM750 a month to RM1,000 a month in 1985; RM1,000 a month to RM1,250 a month in 1989, or the 2018 proposal to increase the range from RM2,000 to RM4,000 which did not end up being tabled before Parliament).  Since an amendment bill with other changes to the EA was already being tabled, it is puzzling why the widening of the EA is not being dealt with simultaneously in the bill itself.

If the Ministry of Human Resources is saying that the EA will apply to all employees, does this apply to all rights and protection under the EA?

As the proposal to widen the scope of EA was not reflected in the Bill, again, this will depend on the content of the Minister’s Order.

If the Minister’s Order extends the coverage of the EA to all employees without limitation, this could result in some wide-ranging consequences. For example, highly paid C-Suite officers and managers could be statutorily entitled to overtime, which is unlikely to be Parliament’s intention.

Therefore, it’s highly possible that the Minister’s Order will include some limitations. Again, without details on the Minister’s Order, it will remain to be a “wait and see” approach.

As an employee, can I ask that my employer give me 98 days of maternity leave now? Or as a company, should I give my employees 98 days of maternity leave?

Currently, there is no legal obligation to offer 98 days of maternity leave. This only needs to be done when the Bill comes into force. However, employers can start relooking at their maternity leave benefits and prepare for the necessary changes, in anticipation.

There are employment discrimination provisions in the Bill. Can an employer get in trouble for placing racist job advertisements?

Unfortunately, the employment discrimination provisions only cover “discrimination in employment” disputes between an employer and employee. As there is no employment relationship between job seekers and employers, these provisions will not apply to protect job seekers from discrimination.

Can I demand that my employer grant me flexible working arrangements?

Under the Bill, an employee can make an application for “flexible working arrangements”. However, there is no legal obligation on the employer to grant this request. The only obligation on the employer is to approve or refuse the application within 60 days, and if the application is refused, the employer has to provide grounds for refusal.

How do the presumptions of employment under the Bill protect me? Are they applicable to gig workers?

The Bill states that if certain factors are present, these will be the presumption of an employment relationship (in the absence of a written contract):

  • Where his work or hours of work is subject to the control and direction of another person;
  • Where he is equipped with tools, materials or equipment by another person to execute work;
  • Where his work constitutes an integral part of another person’s business;
  • Where his work is performed solely for the benefit of another person; or
  • Where payment is made to him in return for work done at regular intervals and such payment constitutes the majority of his income

The drafting of this provision leaves much to be desired since this section could be interpreted in a variety of ways. It is quite possible that gig workers could end up being presumed as employees, even though it would not have been the intention of both parties at the time the arrangement is made.

This also goes against the position of authorities like SOCSO (who claim that gig workers are “self-employed” and are covered under their own contribution fund) and the government themselves who have been saying that gig workers would be regulated under a different, new legislation.

This provision may therefore create complications for companies who rely heavily on gig work as an alternative workforce.

***

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, 2020, 2021 and 2022, 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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