Previously we published an article The Employment (Amendment) Act 2021: Key changes to the Employment Act 1955 when the Employment (Amendment) Act 2021 (“the Bill”) that was tabled for its first reading. The Bill has since been passed and has been gazetted.
This article aims to list out the key changes made to the Employment Act 1955 (“the Act”) through the Employment (Amendment) Act 2022 (“the Amendment Act”) that would soon take effect on the 1st September 2022.
Amendments and Additions to the Employment Act 1955
(1) Calculation of wages for incomplete month’s work
The Amendment Act introduced a new section 18A with the formula for the calculation of wages where an employee has not completed a whole month of service:
(2) Employment of women
The Amendment Act removed Part VIII which used to prohibit an employer to require any female employee do night work (work in any industrial or agricultural undertaking between 10pm and 5am or commence work for the day without 11 hours of rest), and employ females in any underground work. This would essentially allow females to engage in night work as a source of income.
(3) Pregnancy and maternity protection
The Amendment Act has:
increased the maternity leave period from 60 days to 98 days; and
made it an offence to terminate female employees who are pregnant or ill arising out of her pregnancy unless on grounds of breach of contract of service, misconduct or closure of business. The burden of proving that the termination is not due to the employee’s pregnancy or illness will rest on the employer.
(4) Paternity leave
The Amendment Act introduced paid paternity leave for married male employees for a period of 7 consecutive days, limited to 5 confinements regardless of the number of spouses.
Married male employees are eligible if they have been employed by the same employer for at least 12 months before the commencement of such paternity leave and if 30 days notice is given to the employer from the date of expected confinement or as early as possible after birth.
(5) “Servants” to “Employees”
The Amendment Act adopts a less draconic terminology, by replacing the term “domestic servants” to “domestic employees”.
(6) Reduction of maximum working hours
The maximum number of working hours per week is reduced from 48 hours to 45 hours.
(7) Flexible working arrangement
The Amendment Act introduced new provisions for flexible working arrangements between an employer and their employee. Employees may apply to their employers in writing to vary their hours of work, days of work or place of work.
The employer has 60 days to approve or refuse the application, and should the application be refused, the employer shall inform the employee in writing, the decision and reasons for refusal.
(8) Foreign employee
The Amendment Act includes a new addition whereby the employers must obtain prior approval from the Director General of Labour in hiring foreign employees. As usual, one must furnish the relevant details within 14 days in the prescribed form and manner.
Failure to do so will risk an increased penalty of fine up to RM100,000 or imprisonment up to 5 years.
Likewise, employers shall inform the Director General within 30 days of a termination of service of a foreign employee by his employer, by expiry of employment pass or by repatriation or deportation.
Should the foreign employee’s service be terminated due to them absconding from their place of employment, the employer shall inform the Director General of the termination of service within 14 days of the foreign employee’s absence.
(9) Discrimination in employment
The previous Section 60L of the Act providing that the Director General may inquire into complaints with regards to discrimination is deleted and essentially replaced with Section 69F which provides that the Director General may inquire into and decide any dispute between an employer and an employee regarding discrimination in employment.
The Amendment Act now makes it an offence if an employer fails to comply with any order made by the Director General. On conviction, the employer shall be liable to a fine of RM50,000 (maximum) and in the case of a continuing offence after conviction, be liable to a daily fine of RM1,000 per day.
(10) Sexual harassment
The Amendment Act has increased the fine for failure of employers to inquire into complaints of sexual harassment from RM10,000 to RM50,000 and makes it a requirement for employers to, at all times, conspicuously exhibit a notice to raise awareness on sexual harassment at the place of employment.
(11) Court order for payments due to Employees
The Amendment Act allows the Court to order employers to make any payment due to the employee in relation to a conviction by the Court. If the employer fails to comply with the order made by the Court, the employee may apply to the Court to issue a warrant to levy the employer’s property for payments due and owing to them by way of distress and sale of property or by way of a fine provided under the Criminal Procedure Code.
(12) Forced labour
The Amendment Act creates an offence for any employer to threaten, deceive or force an employee into doing any work and prevents them from leaving the place of work. Employers guilty of this will be liable to a maximum fine of RM100,000 or a maximum 2 years imprisonment or both.
(13) General Penalty
The Amendment Act increases the general penalty from RM10,000 to RM50,000.
(14) Presumptions as to who is an Employer and Employee
Where there is no written contract of service relating to any category of employee under the First Schedule, one is presumed to be an employee:
(a) where his manner of work is subject to the control or direction of another person;
(b) where his hours of work are subject to the control or direction of another person;
(c) where he is provided with tools, materials or equipments by another person to execute work;
(d) where his work constitutes an integral part of another person’s business;
(e) where his work is performed solely for the benefit of another person; or
(f) where payment is made to him in return for work done by him at regular intervals and such payment constitutes the majority of his income.
On the contrary, one is presumed to be the employer where the roles are reversed.
(15) Paid Sick Leave
The Amendment Act removes a proviso which used to provide that the total number of sick leave is 60 days including any hospitalisation. This essentially means that employees are entitled to their 60 days sick leave if they are hospitalised, without touching on their regular sick leave benefits.
(16) Paying wages via Approved Issuers of Designated Payment Instrument
The Amendment Act substitutes the word ‘bank’ with ‘financial institution’ which includes approved issuer of designated payment instrument such as e-wallets for the purpose of payment of wages.
(17) Extension to all employees regardless of salary
The Amendments shall apply to all employees regardless of salary to entitle them to receive the minimum benefits and protection. Previously, the Act only applies to categories of employees in the First Schedule.
For the avoidance of doubt, the Minister will soon issue an order modifying the First Schedule.
(18) Contractor for labour
In addition to the requirement to register a contractor for labour, such contracts must be made in writing and documents must be available for inspection. Otherwise, one would risk an increased penalty of RM 50,000.
(19) Apprenticeship Contracts
Contracts between 6 to 24 months are now recognised as apprenticeship contracts, where previously it must be more than 2 years. Such contracts fall within the definition of a contract of service.
Conclusion
In conclusion, the newly proposed amendments have taken into consideration the recent Covid-19 Pandemic and the Anti-Sexual Harassment Bill. The proposed amendments to introduce flexible working arrangements, take into account hospitalised sick leave and reduce working hours provide better rights and privileges to employees. This in all would result in a more humane working environment to protect more vulnerable employees. Employers should take note and adopt these changes, particularly in working hours, to ensure legal compliance.
For further information, please contact:
Richard Wee, Managing Partner, Richard Wee
