Employment (Amendment) Bill 2021

Employment (Amendment) Bill 2021
The Employment (Amendment) Bill 2021 (“the Bill”) was tabled for its first reading on 25 October 2021. Some of the salient changes proposed to the Employment Act 1955 (“the Act”) through the Bill include the following:-

  1. Apprenticeship  

    Currently, under the Act, an “apprentice contract” is defined as a written contract for a period of not less than 2 years.  The Bill proposes to limit the duration of an apprentice contract to 24 months and imposes a minimum duration of 6 months.
  1. Calculation of wages for incomplete month’s work  

    The Bill proposes a formula 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). The formula proposed is:
    Monthly wages X Number of days eligible in the wage period
    Number of days of the particular period
    There is no further 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

    The Bill proposes that a contractor for labour who supplies any employee to a principal, contractor or sub-contractor shall enter into a contract in writing (presumably with the recipient of employees’ services) and shall 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 following changes in relation to pregnancy and maternity protection for employees are proposed:-

    • Paid maternity leave period to be extended from 60 days to 90 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 may not terminate her employment or give her 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 Bill does not elaborate on or define what illness arising out of her pregnancy is. There is 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.    

    Interestingly, the Bill also proposes to axe Section 44A of the Act, which specifically extends the application of maternity protection under the Act to all female employees regardless of whether they fall within the definition of employee under the First Schedule. In the Explanatory Statement to the Bill, this is said to be as a consequence of the extension of the scope of the Act. However, without any proposed amendments to the First Schedule of the Act which lays down the ambit of the Act’s application, this proposal may have the converse effect of abolishing maternity protection for female employees who fall outside the scope of the Act.
  1. Working hours

    The maximum working hours for employees is proposed to be reduced from 48 hours to 45 hours.
  1. Paternity leave

    The Bill proposes that a married male employee shall be entitled to 3 consecutive days of paid paternity leave for each confinement, up to 5 confinements (irrespective of the number of spouses).
    Such 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. Employment of foreign employee

    The Bill proposes that prior approval from the Director General must be obtained for an employer to employ a foreign employee. Failure to do so would be 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 5 years, or to both. Currently, the Act only requires employers to furnish the Director General with particulars of the foreign employee within 14 days of his employment.
  1. Flexible working arrangement

    The Bill proposes that an employee may apply in writing to his employer for a flexible working arrangement to vary his hours, days or place of work. Upon 60 days from the date such application is received, the employer shall inform the employee in writing of his approval or refusal of the application. In the case of a refusal, the employer shall state the ground of such refusal. There is no provision to challenge the employer’s refusal or the grounds on which the decision is made.
  1. Discrimination

    Under the Bill, it is proposed that 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.
    Under the Bill, “discrimination” is neither defined nor made an offence. The Bill also does not set out 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 Bill only extends to discrimination once the employment relationship is entered into and does not address discrimination as a basis for refusal of employment or non-employment.
  1. Offences in relation to complaints of sexual harassment

    The Bill proposes to increase the fine which an employer is liable to pay for failure to, amongst others, inquire into complaints of sexual harassment from RM10,000 to RM50,000.
    On a relevant note, the Bill also proposes that an employer shall at all times exhibit conspicuously at the place of employment, a notice to raise awareness on sexual harassment.
    The Bill also proposes to axe Section 81G of the Act, which like Section 44A of the Act, extends the sexual harassment provisions of the Act to all employees regardless of whether they fall within the definition of employee under the First Schedule.
  1. Court order for payments due to employee

    The Bill proposes that 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.
    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

    The Bill proposes to outlaw forced or bonded labour by providing that it would be 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 2 years, or to both.
  1. General penalty under the Act

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

    The Bill proposes 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 equipments 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 Bill proposes to delete sections 69B to 69E of the Act.
    While this amendment appears to remove the salary cap of employees who are eligible to bring a dispute before the Director General (currently, the Director General may only inquire into complaints between employees and employers provided that the employees’ wages do not exceed RM5,000) in line with the expressed intention to extend the scope of the Act, this proposed amendment actually has the opposite effect of effectively limiting the Director General’s jurisdiction to disputes involving the categories of employees stated under the First Schedule of the Act.
The Bill contains some positive proposals. However, without any amendments to the definition of employee under the First Schedule or under section 2 of the Act or any meaningful proposals to expand select provisions of the Act to all employees regardless of salary earned or scope of work, the proposed amendments appear to further restrict application of the Act to statutorily eligible employees only. Regretfully, the proposed amendments will result in the erosion of protection for some employees.>

This commentary is prepared by Siva Kumar Kanagasabai (skk@skrine.com), Selvamalar Alagaratnam (sa@skrine.com), Foo Siew Li (foo.siewli@skrine.com) and Sara Lau (sara.lau@skrine.com).

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.