The Employment Act 1955 to apply to ALL employees!

August 19, 2022

In a very important and critical change, the First Schedule to the Employment Act 1955 (“EA”) has been amended by way of Ministerial Order on 12 August 2022. The change now means that…

The EA now applies to all

The salary threshold to limit applicability of the EA has been removed. The EA now applies to:

“1. Any person who has entered into a contract of service.”

There are exceptions

However, there are certain provisions that have been carved out from being applicable across the board.

The table below sets out the items that are only applicable to the following (Non-Exempt Employees):

  • those who earn a monthly wage of RM4,000 or less per month; or
  • those who, regardless of how much they earn, are covered by section 2 of the First Schedule, e.g. employees who are, engaged in or who supervise manual labour; operate or maintain vehicles; engaged to work on Malaysian registered vessels; and domestic employees.
Not applicable to those earning a monthly wage of more than RM4,000 (unless the employee is a Non-Exempt Employee)
Sub-Sections Particulars
60(3) Payment for work on rest days
Overtime payments for work in excess of the normal hours of work
60C(2A) Any regulations that the Minister may make relating to entitlement of allowance during shift work
60D(3) Payment for work carried out on a public holiday
60D(4) Deeming provision for holidays on half work days – ordinary rate of pay payable will be a full day’s pay
60J Termination and lay-off benefits regulations

With these amendments in place slated to be effective from 1 September 2022, alongside the amendments made under the Employment (Amendment) Act 2022, it is certainly critical for employers to take note of the changes and implement policies and procedures to ensure compliance with the requirements of the Act.

Anticipated Changes to the EA

In a previous article, we have touched on the changes that were passed by Parliament earlier this year.

In short, based on the revisions to the First Schedule, employers must be ready to meet the requirements of the EA in areas that include but are not limited to the following:

  • maternity leave;
  • paternity leave;
  • maximum work hours per day/per week (must at least be reflected in the employment contract to be within EA limits even though overtime may not be payable);
  • minimum annual leave entitlement;
  • minimum sick leave entitlement (with a standalone 60 days leave if hospitalisation is required);
  • flexible work arrangements;
  • discrimination complaints;
  • ensuring conduct does not constitute “forced labour”;
  • application to the DGL for approval before hiring foreign employees;
  • creating contracts with a 3rd party if there is an arrangement for the supply of labour to such 3rd party as a Contractor for Labour; and
  • notice to raise awareness on sexual harassment.

Whilst the date for roll out of these changes have been set for 1 September 2022, there still remain areas of uncertainty, such as the types of orders that the Director General of Labour can make in disputes on discrimination, whether there is any test as to when flexible work arrangements ought to be granted or rejected and what circumstances can constitute forced labour.

Certainly a good time for employers to revisit and review their employee handbooks and policies!

If you have any questions or require any additional information, please contact Yong Hon Cheong or the Zaid Ibrahim & Co partner you usually deal with.

Changes to Malaysia's Employment Act: now applies to all, regardless of salary. Employers need to comply or face penalties.