Key changes to the Employment Act 1955
It has been widely reported that various amendments to the Employment Act 1955 (“EA”) will come into force on the 1st of September 2022.
Following the passing of the Employment (Amendment) Act 2022 (“2022 Amendment”) in parliament early this year, the Minister gazetted the Employment (Amendment Of First Schedule) Order 2022 on 15 August 2022, effectively widened the scope of the employees protected under the EA. Previously, the EA generally applies only to employees earning a monthly salary of RM2,000 or below and certain categories of employee engaging in manual labor work. Now, the EA will apply to all employee irrespective of wages and occupations. This makes the EA more significant than ever.
Overall, it is certainly a good news to most of the employees. Meanwhile, the employers must take note of these changes will need to review their existing employment contracts and policies to ensure that they comply with the EA.
In this article, we summarize the key changes under the 2022 Amendment as follows:-
| Protection / Benefits | Previously | After Amendment |
| Applicability of the Act | Most of the sections under EA only applied to employees earning not more than RM2,000 a month or to specified categories of employees mainly those who engaged in manual labour.
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The EA will apply to “any person who has entered into a contract of service”.
However, certain sections of the EA in relation to overtime payments and termination benefits will ONLY apply to employees earning monthly RM4,000 and below.
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| Maximum working hours per week | 48 hours per week | 45 hours per week |
| Sick leave & hospitalization leave | Prior to the amendment, an employee is entitle to normal sick leaves between 14 to 22 days in a year depending on years of service. Where hospitalization is required, the total number of days of paid sick leave in a year shall be not more than 60 days in the aggregate including all any hospitalization leave.
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Employee is now entitled to 60 days of paid hospilization leave in addition to the normal sick leave of 14 to 22 days depending on length of service. |
| Maternity leave | 60 days
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98 days |
| Restriction on termination of pregnant female employee | Only under s.37(4) where employer is prohibited from terminating a female employee during maternity leave except on the ground of closure of business. | The employer is prohibited from terminating a female employee who is pregnant or is suffering from illness arising out of her pregnancy, except on the ground of wilful breach of the contract of service, misconduct or closure of the employer’s business.
The employer bears the burden of proving such termination is not on grounds of pregnancy or illness.
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| Paternity Leave | None | A married male employee is entitled to 7 consecutive days of paid paternity leave, provided that the employee has worked for the employer for at least 12 months. |
| Flexible working arrangements | None | Employee may apply to an employer for a flexible working arrangement to vary the hours of work, days of work or place of work in relation to his employment.
Such application by the employee must be made in writing and in the form and manner as may be determined by the Director General. Upon application made, the employer must either approve and refuse within 60 days. Reasons must be provided in writing if the application is rejected. |
| Notice on sexual harassment | None | An employer shall exhibit conspicuously a notice to raise awareness on sexual harassment at the place of employment.
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| Approval for Employment of foreign employee | Only required employers to furnish the Director General with particulars of the foreign employee within 14 days of his employment. | Employer shall obtain the prior approval of the Director General before employing a foreign employee. Failure to do so is an offence and on conviction, the employer shall be liable to a fine up to RM 100,000 or to imprisonment for a term up to 5 years, or to both.
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| Prohibition of forced labour | None | Forced labour is defined as any act of an employer who threatens, deceives, or forces an employee to do any activity, service or work and prevents that employee from proceeding beyond the place or area where such activity, service or work is done. Forced labour is an offence punishable by a fine not exceeding RM100,000.00 or imprisonment up to 2 years or both. |
| Power of Director General to inquire into discrimination in employment | Only limited to complaint from a local employee that he is being discriminated against in relation to a foreign employee, vice versa. Under. S.60L.
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The Director General can now inquire and make orders on any dispute between employee and employer of matter relating to discrimination in employment. Employers that fail to comply with any such orders could be subject to fines up to RM50,000.
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| Court order for payments due to employee | No specific provision | Where an employer has been convicted of an offence relating to the payment of wages or any other payments payable to an employee under the Act, the court (before which he is convicted) may order the employer to pay any payment due to the employee in relation to that offence.
If the employer fails to comply with such order, the court shall, on application of the employee, issue a warrant to levy the employer’s property for such payment due by way of distress and sale of property, or by way of a fine.
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| Presumption of employment relationship | No specific provision. There were only factors to be considered in case laws. | In the absence of written employment contract, a person can now be presumed to be employee (unless proven contrary) in a list of circumstances.
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| General penalty for failure to comply with provisions of the Act | Fine up to RM10,000.00 | Fine up to RM50,000.00 |
With the expansion to coverage of the EA, the EA shall now apply across all income level of employees, irrespective of occupation. This would include provisions such as annual leave, sick leave, lawful deductions, wage period, time of payment of wages, system of payment of wages etc. As such, employers should review their existing employment contracts, handbook and policies to ensure due compliance.
It should be noted that Section 7 of the EA states that any terms or conditions which are less favourable to an employee than those provided under the EA will be void and of no effect. This includes contracts which were entered into before 1 September 2022.
The above list is not exhaustive. Exceptions may apply to some of the sections. Please engage legal professionals for advice before taking their next course of action.
Patrick Tan, Partner of Tang & Hong
**The contents of this article do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. If you are facing legal problems, please speak to a lawyer. You are welcome to contact us, we provide wide range of legal services including matters relating to strata management law.