The Employment (Amendment) Act 2022 came into force on 1 January 2023. Here is a breakdown of the main changes which may affect your business.
Who is now covered under the Employment Act?
The most far-ranging changes to the Employment Act, which were actually enacted under the separate Employment (Amendment of First Schedule) Order 2022, concern the expansion of the scope of application of the Act to all employees in Peninsular Malaysia.
Before: The Employment Act covered employees receiving monthly wages up to RM2,000, as well as the following employees irrespective of wages: employees engaged in or supervising manual labour/employees operating or maintaining mechanically-propelled vehicles.
Now: All employees are covered under the Employment Act, except for the following provisions which only apply to the categories that were previously covered under the Employment Act, with the wages limit increased to RM4,000 instead of RM2,000: overtime pay for work on normal workday, rest day or public holiday; shift work allowance; termination, lay-off and retirement benefits.
*wages in the Employment Act are defined as:
basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but not including:
(a) the value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;
(b) any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;
(c) any travelling allowance or the value of any travelling concession;
(d) any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;
(e) any gratuity payable on discharge or retirement; or
(f) any annual bonus or any part of any annual bonus.
Working hours
Another prominent amendment which will affect many companies is the change in the maximum weekly working hours allowed under the Employment Act.
Before: Weekly working hours limited to 48 hours.
Now: Weekly working hours limited to 45 hours.
Leave entitlements
Various leave entitlements have been increased or introduced.
Maternity leave
Before: Maternity leave entitlement of 60 consecutive days.
Now: Maternity leave entitlement increased to 98 consecutive days.
Paternity leave
Before: No entitlement to paternity leave.
Now: Married male employees who have been employed for at least 12 months are entitled to 7 consecutive days of paid paternity leave at their ordinary rate of pay.
Sick leave
Before: Maximum combined entitlement of 60 days for medical and hospitalisation leaves.
Now: Hospitalisation leave entitlement of 60 days is in addition to the medical leave entitlement.
For more information regarding leave entitlements under the Employment Act, please read What are the leave entitlements under the Employment Act?
Calculation of wages for incomplete month’s work
The amendments also introduced a calculation basis for prorating salaries for new joiners or leavers and for unpaid leave.
Before: No basis or formula provided as the ordinary rate of pay calculation based on 26 days provided under the Act applies specifically only to overtime, leave and maternity pay.
Now: Wages due for incomplete month’s work are to be calculated as Monthly wages / Number of days of the particular wage period x number of days eligible in the wage period. According to our enquiries with the Labour Office, ‘number of days’ refers to calendar days.
Flexible working arrangements
Before: No provision for flexible working arrangements in the Employment Act.
Now: Employees may apply in writing to their employer for flexible working arrangements regarding their hours of work, days of work or place of work. Employers must inform the employee in writing of their approval or refusal of the application and state any grounds for refusal.
Presumption as to who is an employee and employer
Before: No presumption.as to who qualifies as an employee under the Employment Act in the absence of a contract of service.
Now: Presumption until proven otherwise that a person is an employee if a particular condition is satisfied, e.g. manner or hours of work controlled by employer, equipment provided by employer, or regular payments for work constituting the majority of the person’s income.
Employment of foreign employees
Before: Particulars of foreign employees to be furnished to the Director General of Labour within 14 days of the date of employment.
Now: In addition to furnishing the particulars of the employee as previously required, employers must obtain prior approval from the Director General to employ the foreign worker. Employers must also inform the Director General within 30 days if they terminate the foreign employee’s contract and 14 days if the employee terminates or absconds.
Restriction on termination of pregnant employee’s service
Before: Restriction on terminating the service of a female employee during her maternity leave (except on the ground of closure of the employer’s business).
Now: Additional restriction on terminating the service of a pregnant employee except on the ground of breach of contract, misconduct or closure of the employer’s business.
Notice on sexual harassment
Before: No provision for sexual harassment notice in the Employment Act.
Now: Requirement to exhibit conspicuously at all times at the place of employment a notice to raise awareness of sexual harassment.