Employment (Amendment) Act 2022 comes into force on 1 January 2023

The Employment (Amendment) Act 2022 (“the Amendment Act”) and the Employment (Amendment of First Schedule) Order 2022 (“Amendment Order”) are slated to come into force on 1 January 2023. Employer group’s hopes that the implementation date will once again be deferred were dashed when Human Resources Minister V. Sivakumar announced on 21 December 2022 that the amendments will come into operation on 1 January 2023 as previously planned.
Some of the salient changes made to the Employment Act 1955 (“the Act”) through the Amendment Act and the Amendment Order include the following: 
  1. Apprenticeship 

    An “apprenticeship contract”, previously defined as a written contract for a period of not less than two years, is amended to impose a minimum duration of six months and a maximum duration of 24 months for such contract. 
  1. Calculation of wages for incomplete month’s work 

    The following formula is to be applied to calculate wages for an employee who works for less than a whole month (i.e. where he commenced employment after the first day of the month, or where his employment was terminated before the end of the month, or where he took unpaid leave or leave to comply with written law relating to national service):
    Monthly wages X Number of days eligible in the wage period
    Number of days of the particular period

    There is no explanation on how the number of days of the particular period is to be calculated. Under the Act, monthly wages are currently calculated by using a denominator of 26 days to represent the number of days which an employee is required to work in any given month. 
  1. Contractor for labour 

    A contractor for labour who supplies any employee to a principal, contractor or sub-contractor is required to enter into a contract in writing (presumably with the recipient of employees’ services) and to make such contract or any other document relating to such contract available for inspection (presumably by the Director General). Failure to make such documents available for inspection is an offence and, on conviction, the contractor of labour shall be liable to a fine not exceeding RM50,000. 
  1. Pregnancy and maternity 

    The Act provides the following in relation to pregnancy and maternity: 
  • Paid maternity leave period of 98 days (previously 60 days);
  • A female employee may, with the consent of her employer, commence work at any time during the maternity leave if she has been certified fit to resume work by a registered medical practitioner, regardless of whether she is entitled to receive maternity allowance; and
  • Where a female employee is pregnant or is suffering from an illness arising out of her pregnancy, her employer is prohibited from terminating her employment or giving her a notice of termination of employment except on the grounds of: (a) wilful breach of a condition of the contract of service; (b) misconduct; or (c) closure of the employer’s business. The employer bears the burden of proving that the female employee’s termination from employment was not premised on the grounds of her pregnancy or an illness arising out of her pregnancy. The amendments do not elaborate on or define what illness arising out of her pregnancy is. There is also no further explanation on whether such an illness is limited to only a physical one or also extends to mental health disorders arising out of pregnancy. 
  1. Working hours 

    The maximum working hours for employees are capped at 45 hours per week compared to the previous cap of 48 hours per week. 
  1. Paternity leave 

    A married male employee will be entitled to seven consecutive days of paid paternity leave for each confinement, up to five confinements (irrespective of the number of spouses).
    The entitlement is subject to the male employee being employed by the same employer for at least a 12 month period immediately preceding the commencement of paternity leave, and having notified his employer of his spouse’s pregnancy at least 30 days from the expected confinement or as early as possible after the birth. 
  1. Sick Leave and Hospitalisation Leave 

    The deletion of the proviso to Section 60F of the Act has the effect of entitling employees to 60 days of paid sick leave if hospitalisation is necessary in addition to 14 to 22 days of paid sick leave (depending on length of service) if hospitalisation is not necessary. The proviso originally limited paid sick leave if hospitalisation is necessary to 60 days, provided that the total number of days of paid sick leave (i.e. in both cases of hospitalisation and non-hospitalisation) in a calendar year to which an employee is entitled to does not exceed 60 days in the aggregate. 
  1. Employment of foreign employee 

    An employer is required to 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 not exceeding RM 100,000 or to imprisonment for a term not exceeding five years, or to both. Previously, the Act only required employers to furnish the Director General with particulars of the foreign employee within 14 days of his employment. 
  1. Flexible working arrangement  

    An employee may apply in writing to his employer for a flexible working arrangement to vary his hours, days or place of work. The employer is required to inform the employee in writing of his approval or refusal of the application within 60 days from its receipt the application. An employer who refuses the application is required to state the ground of such refusal. There is, however, no provision to challenge the employer’s refusal or the grounds on which the decision is made. 
  1. Discrimination 

    The Director General may inquire into and decide any dispute between an employee and his employer in respect of any matter relating to discrimination in employment and may also, pursuant to such decision, make an order. An employer who fails to comply with any order of the Director General commits an offence, and shall, on conviction, be liable to a fine not exceeding RM50,000. In the case of continuing offence, the employer shall be liable to a daily fine not exceeding RM1,000 for each day the offence continues after conviction.
    However, “discrimination” is neither defined nor made an offence. The amendments also do not provide any specific remedy that the Director General may afford if the Director General finds that a dispute between employer and employee relates to discrimination in employment. It is pertinent to note that the amendments only extend to discrimination once the employment relationship is entered into and do not address discrimination as a basis for refusal of employment or non-employment. 
  1. Offences in relation to complaints of sexual harassment 

    The fine which an employer is liable to pay for failure to, amongst others, inquire into complaints of sexual harassment is increased from RM10,000 to RM50,000.
    The amendments also require an employer to, at all times, exhibit conspicuously at the place of employment, a notice to raise awareness on sexual harassment. There is as yet no prescriptive language for the notice. 
  1. Court order for payments due to employee 

    Where an employer is 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.
    Failure to comply with such order empowers the court, on the application of the employee, to 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 provided under the Criminal Procedure Code. 
  1. Forced labour 

    Forced or bonded labour is outlawed by making it an offence for an employer to threaten, deceive or force an employee to do any activity, service or work and prevent that employee from proceeding beyond the place or area where such activity, service or work is done. Upon conviction, the employer shall be liable to a fine not exceeding RM100,000 or to imprisonment for a term not exceeding two years, or to both. /li>
  1. General penalty under the Act  

    The general penalty for a contravention of the Act or any subsidiary legislation made under the Act in respect of which no penalty is provided, has been increased from a fine of RM10,000 to RM50,000. 
  1. Presumption as to who is an employee and employer 

    A new provision provides that in any proceeding for an offence under the Act, in the absence of a written contract of service relating to any category of employee under the First Schedule of the Act, it shall be presumed that a person is an employee: 
  • Where his manner of work is subject to the control or direction of another person;
  • Where his hours of work are subject to the control or direction of another person;
  • Where he is provided 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 by him at regular intervals and such payment constitutes the majority of his income. 
  1. Jurisdiction of the Director General 

    The amendments have the effect of allowing the Director General to inquire into and decide any dispute between an employee and employer without the limitation of a salary cap. Prior to the amendments, the Director General may only inquire into complaints between employees and employers provided that the employees’ wages do not exceed RM5,000.
Amendment to the First Schedule
Prior to the amendments, the First Schedule of the Act had limited the scope of application of the Act to the following categories of employees:- 
  • employees who earn RM 2,000 and below; or
  • regardless of salary earned, employees who are engaged in manual labour, supervision of manual labour, in the operation of mechanically propelled vehicles, in certain capacities onboard a vessel registered in Malaysia and as domestic employees (domestic servants) (“Covered Employees”). 
The Amendment Order amends the First Schedule to expand the scope of application of the Act to any person who has entered into a contract of service. However, sections 60(3), 60A(3), 60C(2A), 60D(3) and 60D(4) and 60(J) of the Act (“Excluded Sections”) will not apply to employees whose wages exceed RM 4,000 a month unless these employees fall within the ambit of Covered Employees. The Excluded Sections relate to working on a rest day, overtime payments, statutory entitlement to shift allowances, working on a public holiday and statutory entitlement to termination and lay-off benefits.
The impact of the amendments to the First Schedule is significant. With the expansion of the First Schedule, all employees regardless of salary earned or type of work performed will enjoy added protection under law, particularly the minimum terms and conditions of employment as prescribed by the Act. It will be prudent for employers to undertake a review of terms and conditions of employment as contained in employment contracts and Handbooks as well as the introduction of new policies to ensure compliance with the Act.
This commentary is prepared by Selvamalar Alagaratnam (Head) of the Employment Law Practice of Skrine.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.