Major Changes To The Malaysian Employment Act (1955) Come Into Effect On January 1 2023

Prior to the amendments, the Employment Act only applied to employees earning up to RM2,000 per month (US$444), with some exceptions applying to all employees (such as sexual harassment and maternity protections).  In the upcoming amendments, the Malaysian Government has reversed their approach.  All employees are now covered by the Act, but employees earning more than RM4,000 per month (US$888) are excluded from certain sections, such as overtime and termination provisions.

In addition to the vastly increased coverage for employees, the amendments will also include:

1. Working hours – the maximum weekly working hours will be reduced from 48 hours to 45 hours.
2. Changes to parental leave provisions – Maternity Leave increased from 60 to 98 days; introduction of 7 consecutive days of Paternity Leave for married male employees.
3. Termination of pregnant employees: pregnant employees cannot be terminated unless other grounds for dismissal exist such as redundancy or misconduct.
4. Gig workers: there is to be a presumption of employment in the absence of a written contract, unless proven otherwise.
5. Flexible working arrangements: employees may make a written application to request a flexible working arrangement, such as a variation in hours, days or place of work. Employers must respond within 60 days.
6. Display of a notice regarding sexual harassment: employers must display a notice in the workplace raising awareness on sexual harassment.
7. Discrimination protection: the Director General of Labour is empowered to inquire and make orders on discrimination disputes between employers and employees – a failure to comply with order could result in fines.        
8. Approval for Foreign workers: prior approval is to be obtained from the Director General of Labour before hiring a foreign employee. Failure to do so could result in fines and/or imprisonment.

Outlook for Employers: The government delayed the implementation of the changes to allow employers more time to prepare; companies were particularly concerned about the reduction in working hours while Covid related staff shortages continue.  Employers will be required to review their existing policies and employment contracts to ensure compliance with the new terms of the Employment Act effective January 1 2023.