Malaysia Labor Management QA

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Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
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LRC – Malaysia Labor Regulations

LRC-MA-20.10
What must be included in the contents of a labor contract in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), SS 6-10.
The Employment Act does not specify provisions that must be included in a contract for an indefinite term.

LRC-MA-20.11
Do Malaysia arrange labor contract in fixed term?
What should be the length of the labor contract in Malaysia?

Evershine RD:
Yes.
Fixed-term contracts for more than 1 month must be in writing and include how either party may terminate the contract.

LRC-MA-20.20
What is the minimum age for hiring new employees in Malaysia?

Evershine RD:

It states that a youth under the age of 16 may be employed only in light work in a family business, in public entertainment, as an approved apprentice or in work sponsored by the government.
A youth 14 or 15 years old may in addition be employed as a domestic servant, in any office or shop, or in an industrial undertaking appropriate to his or her capacity.
No girl under 16 years of age may work in a hotel, bar, or restaurant unless the establishment is under the management of a parent or guardian, or approval is given by the director general of labor.

LRC-MA-20.40
Is it a requirement for employer in Malaysia to conduct a pre-employment background check?

Evershine RD:
Background checks are not addressed in the labor code.

LRC-MA-20.50
Is the Non-Competition indemnity clause in a labor contract in Malaysia has legal effect?

Evershine RD:
The labor code generally prohibits post-termination agreements that restrict employees from being involved in a business or profession.
However, employees can be asked to sign agreements that prohibit them from:

•   using confidential information gained from employment and
•   interfering with the business of the ex-employer.

LRC-MA-40.05
What are the regulations on Gender Discrimination in employment specifically for female workers in Malaysia?

Evershine RD:
According to Constitution of Malaysia, 1958 (as amended), art. 8.
The Federal Constitution bars discrimination in employment based on gender.
Under the Employment Act, a sexual harassment complaint may be made by an employee against another employee, by an employee against an employer, or by an employer against an employee.
Whenever an employer receives a complaint of sexual harassment, it is required to inquire into the complaint and take disciplinary action against the person concerned if he or she is found guilty.
This provision is also applicable to all employees, irrespective of their salary.

LRC-MA-50.10
Can the employer in Malaysia collect, or process data transmitted by employees over the internet?

Evershine RD:
According to Personal Data Protection Law, No. 709 of 2010, S6.
When processing personal information, employers must ensure that the data are:

• processed lawfully and fairly
• collected and recorded for specific, explicit, and legitimate purposes
• accurate and kept up to date
• relevant, complete, and not excessive in relation to the purposes for which the data are collected or subsequently processed and
• kept in a form that permits identification of the employee for no longer than is necessary.

Employers must take steps to protect the personal data during its processing from any loss, misuse, modification, unauthorized or accidental access or disclosure, alteration, or destruction.
Employees whose data are being processed have the right to:

•  access their data
•  correct their data
•  withdraw their consent to process personal data
•  prevent processing likely to cause damage or distress
•  prevent processing for direct marketing.

Employers cannot transfer employees’ personal data outside Malaysia except to countries that have been approved by the Malaysian government.
According to Personal Data Protection Law, No. 709 of 2010, S 6.
The primary purpose of video monitoring at the workplace is for crime detection and prevention, and hence it “cannot be misused for other purposes such as staff monitoring.”

LRC-MA-60.10
What are the regulations on working hours in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), S 60A.
Regular work hours may not exceed 8 in a day or 48 in a week.

LRC-MA-60.30
What are the regulations on overtime hours in Malaysia?
What is the overtime premium rate in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), S 60A and Employment (Limitation of Overtime Work) Regulations, 1980.
An employee may be required to work overtime if:

•   the employer needs work done that is essential to the community or to national defense or security
•   there has been a workplace-related accident, or a potential accident is feared
•   urgent work needs to be done on the workplace building or the equipment or
•   there was an unforeseeable interruption of work.

LRC-MA-60.50
Is it common to pay 13^th month’s salary in Malaysia?

Evershine RD:
Employers are required to pay employees an annual bonus if provided for in the employment contract.
Otherwise, there are no laws governing payment of bonuses and doing so is entirely at the discretion of the employer.

LRC-MA-70.10
What are the regulations on general leave policy for employee in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), S 60E.
Employees are entitled to paid annual leave as follows:

Employees who do not complete 12 months with the employer get a proportion of the full annual leave based on the number of months of service.
Leave may be accumulated and carried over only to the next 12 months after it is earned.
An employee may voluntarily accept payment in lieu of leave.

LRC-MA-70.20
What are the public holidays in Malaysia?
What is the overtime premium rate during public holiday in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), S 60D and Holidays Act, 1951 (as amended) SS 3-7.
Malaysian law specifies the following 12 or 13 (depending on state) paid public holidays:

•  Chinese New Year
•  Birthday of the Prophet Muhammad
•  Wesak Day
•  Hari Raya Puasa Day (two days)
•  Hari Raya Haji (two days in Kedah, Kelantan, Perlis, and Terengganu states, one day in all other states)
•  Deepavali
•  Aug. 31: National Day
•  June 1: Birthday of Yang di-pertuan Agong
•  May 1: Labor Day
•  Sept. 16: Malaysia Day
•  Dec. 25: Christmas Day

Additional paid holidays are mandated by individual states.
Employees required to work on a public holiday must be paid 3 times their normal wage.

LRC-MA-70.30
What is the maternity leave policy for female employee in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), SS 37-42.
Women are entitled to 90 consecutive days of paid maternity leave for each child, starting as early as 22 weeks’ gestation and no later than the day after the birth.
In cases where a doctor certifies that the employee cannot perform her duties due to advanced pregnancy, the employer can require that she begin maternity leave up to 14 days before the due date.

To be eligible for paid leave, the pregnant employee must have worked for the employer at some time during the 4 months preceding her due date and for at least 90 days out of the 9 months before her due date.
She is not eligible if she already has 5 or more surviving children of any age.
The employee must notify her employer within 60 days of the date she intends to begin leave.

LRC-MA-70.40
What is the paternity leave policy for male employees in Malaysia?

Evershine RD:
Male employees are eligible for 2 days paid leave for the birth of a child.

LRC-MA-70.50
What are the provisions on sick leave, bereavement leave and personal leave for employees in Malaysia?

Evershine RD:

Sick Leave
According to Employment Act, 1955 (as amended), S 60F.
In cases in which no hospitalization is necessary, an employee is entitled to the following number of days of paid sick leave per calendar year:

If hospitalization is necessary, an employee is entitled to 60 days of paid sick leave per calendar year.
A medical practitioner must certify an illness.

Bereavement Leave
This is generally unpaid and subject to approval by the employers.
It is usually granted for 1-3 days.

Personal Leave

Other leave such as study leave, and marriage leave are not compulsory. Unpaid marriage leaves usually granted for 1-3 days and subject to employers’ approval.

LRC-MA-70.60
What are the regulations on pension benefits and social security insurance benefits for employees in Malaysia?

Evershine RD:
Social security benefits—covering such things as retirement, disability, survivors’ benefits, and medical payments—are provided under the Employees Provident Fund and the Social Security Organization.
The EIS provides employees with unemployment benefits and re-employment placement programs in the event of loss of employment.
Participation is mandatory for employers and most employees throughout Malaysia, including part-time, temporary, and probationary employees.
Retirement: Both men and women may retire at age 60.
Participants who have reached age 75 are encouraged to make a full withdrawal from their account.
If a participant has not made a full withdrawal by age 80, the fund will transfer the remainder of the account to the Registrar of Unclaimed Monies.
Voluntary retirement plans may be established by the employer or others.

LRC-MA-70.70
What are the regulations on Workers’ Compensation for employees in Malaysia?

Evershine RD:
Benefits for an occupational injury or illness and for non-work-related disability are paid under the Employees’ Social Security Act, which applies to all of Malaysia and to most employees in the private sector except domestic servants, self-employed persons, foreign workers and the owners of sole proprietorships and their spouses.
An employee is younger than 60 years old requires both employers and employees to contribute for workers’ compensation and the disability pension scheme.
For workers older than 55 and those who first contributed to the social security system at age 50 or older, contributions are made by the employer only and only for workers’ compensation.
The fund provides compensation for an insured employee’s occupational injury or accident or non-work-related disability that prevents the insured from working.
Benefits are paid for both temporary and permanent disabilities, as a survivors’ pension for dependents and as a funeral grant.
If an insured person needs constant care, medical treatment and a supplement are also provided.

LRC-MA-80.05
Can the employee in Malaysia join labor union?

Evershine RD:
According to Constitution of Malaysia, 1958 (as amended), art. 10 and Industrial Relations Act, 1967 (as amended), S 4.
The Act guarantees workers the right to form, assist in forming, join and participate in a trade union.

LRC-MA-80.06
How to handle labor dispute in Malaysia?

Evershine RD:
According to Industrial Relations Act, 1967 (as amended), SS 18-21.
An employer or a trade union may report a dispute to the government’s director general for industrial relations for conciliation.
If the dispute cannot be settled, the director-general notifies the minister of human resources, who may refer the matter to the Industrial Court.
The court has the power to make a binding decision. An appeal may be made to the High Court on a question of law.

LRC-MA-90.10
What are the regulations on workplace safety and health for employees in Malaysia?

Evershine RD:
According to the Occupational Safety and Health Act, No. 514 of 1994, arts. 15, 30.
An employer with 40 or more employees must establish a safety and health committee to review workplace safety and health measures and investigate any workplace condition that might pose a risk to health or safety.
The committee’s functions include reviewing workplace safety and health measures, investigating any workplace condition that a committee member or employee considers a risk to health or safety, and attempting to resolve any matter that is investigated or, if the attempt fails, requesting that the government’s director general of occupational safety and health conduct an inspection of the workplace.

LRC-MA-100.10
What are the circumstances that an employer can terminate an employee in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), SS 11-15.
Employment contracts must include a provision setting out the manner in which the contract may be terminated by either party.
Malaysia does not have an “at-will employment” system.
Employers cannot just hire and fire “at-will”.
They can, however, terminate an employees’ services if it is justified, done in good faith, and is procedurally fair.
In a case of misconduct, employers can dismiss the employee without notice, demote the employee, suspend the employee for up to two weeks without pay or impose a lesser punishment.
The employer cannot take this action, however, without first engaging in “due inquiry.”
Misconduct is not defined in the statutes beyond the phrase “misconduct inconsistent with the fulfillment of the express or implied conditions” of the employee’s service, as stated in the Employment Act.

LRC-MA-100.11
What is the notification period for terminating an employee in Malaysia?
How much is the severance pay?

Evershine RD:

Notification period
Either party may give notice of intention to terminate at any time.
Notification periods for termination of a contract are the same for employers and employees, whether those periods are specified in the employment contract or not.
If there is no such specification in the contract, the required notification period is as follows:

In lieu of providing the requisite notice, employers may make a payment equivalent to the amount of wages that would have been paid during the notice period.
In a case of misconduct, employers can dismiss the employee without notice, demote the employee, suspend the employee for up to two weeks without pay or impose a lesser punishment.
The employer cannot take this action, however, without first engaging in “due inquiry.”
During the inquiry into the alleged misconduct, the employer may suspend the employee for up to two weeks with at least half pay.
If the inquiry finds that no misconduct was involved, however, the employer must pay the employee the amount of wages withheld.

Severance Pay

The Employment (Termination and Lay-Off Benefits) Regulations 1980 provide for severance pay as follows:

For partial years of service, severance is determined on a pro rate basis.

The severance pays regulations do not apply to dismissal for misconduct, termination due to the employee reaching retirement age or voluntary termination of the contract by the employee.

LRC-MA-100.12
What is the reporting requirement for employer in Malaysia to notify the termination of employees to the competent authority?

Evershine RD:
Every employer shall prepare and keep one or more registers containing such information as may be prescribed by regulations made under the Act.

LRC-MA-100.20
What are the regulations on mass layoffs in Malaysia?

Evershine RD:
According to Employment Act, 1955 (as amended), S 60N.
Employees must be given written notice of termination of the contract of employment if the employer intends to close or move the business or phase out certain types of work or if the business is sold or undergoes a change of ownership.
The notice period is the same as for the dismissal of an individual employee.
In the case of mass dismissals, an employer may not terminate Malaysians unless all foreign employees have first been terminated.

LRC-MA-100.30
What is the time limit for employer in Malaysia to pay employees upon termination?

Evershine RD:
The wages, less lawful deductions, earned by but not yet paid to an employee whose contract of service terminates in accordance with section 11 (1) or of section 12 of Employment Act 1955, shall be paid to such employee not later than the day on which such contract of service so terminates.

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or
Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
Skype ID: vivianyeeql;Wechat ID: vivianyeeql

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