Employment Act 1955: HR Guide to 2023 Amendments in Malaysia

What is The Malaysia Employment Act (1955)

The Employment Act 1955 (EA 1955) is the foundation of Malaysian employment law. It establishes the mandatory requirements for employee rights and employer obligations within the country.

The Act has undergone several crucial amendments to reflect the evolving workplace landscape.

Significance of the Employment Act 1955

The Employment Act plays a crucial role in ensuring fair treatment for Malaysian employees. It establishes clear guidelines for aspects like minimum wages, working hours, leave entitlements, and termination procedures.

This promotes a stable and balanced employer-employee relationship, contributing to a healthy work environment and a more productive workforce.

Key Amendments to the Malaysia Employment Act 1955

Effective January 1, 2023, the Employment (Amendment) Act 2022 has been implemented in Malaysia, introducing new regulations that impact HR practices and employee rights.

Here's a quick breakdown of some key changes HR managers in Malaysia should be aware of:

1. Expanded Coverage

   With the latest amendments to the First Schedule, all employees are now covered by the Act, regardless of their salary. Previously, it only covered those earning a monthly salary of RM2,000 or less, along with specific worker categories.

   However, there are certain provisions that don't apply to employees earning above RM4,000 per month, including:

   • Overtime rates for employees working on rest days
   • Overtime rates outside working hours
   • Allowance for shift-based work
   • Overtime on public holidays
   • Overtime for half working days on holidays
   • Termination, layoff, and retirement benefits

   This change is a positive step for workers previously excluded from the Act's protections. They can now rely on established legal guidelines and ensure they receive the benefits they deserve - instead of solely depending on their employment contracts, which could be unclear for both employers and employees.

2. Flexible Working Arrangements

   The Employment Act has also been amended to include provisions for greater flexibility in work arrangements, a significant development to adapt to the modern work environment where flexible schedules are becoming increasingly common.

   Employees now have the right to request flexible work arrangements to vary the hours of work, days of work or place of work in relation to his employment by submitting a written application to their employer.

   Employers are obligated to respond to these requests within 60 days. If the request is denied, the employer must provide a clear explanation to the employee.

3. Reduced Working Hours

   As of January 1st, 2023, the maximum workweek in Malaysia has been reduced to 45 hours, excluding meal breaks.

   Before this change, employees could work up to 48 hours per week, which translates to roughly 8 hours a day, 6 days a week.

   This amendment aims to improve worker well-being and align with International Labour Organisation (ILO) standards.

4. Enhanced Paid Maternity Leave

   The Employment Act (EA) 2022 amendment significantly increases paid maternity leave, allowing new mothers more time to recover after childbirth.

   Working mothers will now be entitled to a much more supportive 98 days of paid maternity leave. Previously, they only received 60 days to recover after childbirth.

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5. Introduction of Paid Paternity Leave

   Effective 2023, working fathers can now take 7 days of paid leave to bond with their newborn babies. This is the first time Malaysia has offered statutory paternity leave, making it a big step forward for working families.

   There are a few things to keep in mind:

   • Must be married to the child's biological mother
   • Worked for the same company for at least 1 year
   • Notify employer least 30 days before the expected birth, or as soon as possible

6. Strengthened Protection for Pregnant Employees

   Expectant mothers can now receive stronger legal protection under the Employment Act 1955.

   Since January 1st, 2023, it's illegal for employers to terminate (or initiate termination) pregnant employees or those with pregnancy-related illnesses, except in limited circumstances, such as:

   • Serious breach of contract
   • Proven case of employee misconduct
   • Business closure

7. Inclusive Employee Rights in the Gig Economy

   Gig workers such as delivery partners and for-hire drivers can now benefit from protections under the updated Employment Act 1955.

   This amendment includes a presumption of employment, meaning someone can be considered an employee even without a formal contract.

   Under the new provision, an individual is presumed to be an employee if most of the following conditions are met:

   • Supervised Schedule: Their work manner and schedule are set and controlled by the employer.
   • Provided Resources: They use tools, materials, or equipment supplied by the employer to perform work duties.
   • Integral Role: They contribute directly to the company's core business operations.
   • Sole Beneficiary: They work exclusively for the benefit of the employer and don't benefit another company or their own business ventures.
   • Regular Payment: They receive regular payments (salary, hourly wage, or commission) for their work.

8. New Legal Guidelines on Preventing Sexual Harassment in the Workplace

   To ensure a safer work environment, a new regulation under the Employment Act has been established to strengthen protections against sexual harassment by raising awareness within workplaces.

   Employers are now obligated to display a clear and informative notice that outlines sexual harassment policies and resources available to employees. This notice should be placed in a highly visible location and remain on display at all times.

   This initiative promotes a culture of respect and empowers employees to recognize and report inappropriate behaviour.

9. Foreign Workers Employment

   Employers seeking to hire foreign workers now require prior approval from the Director-General. This replaces the previous system where only a report within 14 days was necessary.

   Additionally, employers must notify the Director-General within 30 days if a foreign employee's employment is terminated.

   When a foreign employee resigns or leaves their job without giving notice, the employer must notify the Director General within 14 days. The notification process will follow the Director General's instructions.

Beyond Standard Requirements

It's important to note that the Employment Act sets out the minimum standards. Employers are free to offer more generous benefits and terms exceeding the Act's stipulations.

This allows for a competitive job market and fosters a culture that prioritizes employee satisfaction.

Staying Informed

By staying up to date on the latest amendments, employers can foster a more harmonious working environment and protects the rights of all parties involved.

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