The Employment (Amendment) Bill 2021 (“the Bill”) was tabled for its first reading on 25 October 2021, seeking to amend the Employment Act 1955 (“the Act”). In this update, Vijayan Venugopal, Grace Chai and Nur Najehah set out the key changes that the Bill proposes to introduce and analyse the potential impact of such proposed amendments.

1. Protections on pregnancy, maternity and paternity
2. Protection against discrimination
3. Sexual harassment
4. Flexible working arrangement
5. Access to the Labour Department
6. Apprenticeship
7. Hours of work
8. Calculation of wages for incomplete month’s work
9. Employment of foreign employees
10. Labour contractors to have contract in writing with the principals
11. Forced labour
12. Financial penalties
13. Court order for payment due to employees
14. Presumption as to who is an employer and employee
15. Deletion of provisions

1. Protections on pregnancy, maternity and paternity

The main changes envisaged by the Bill are arguably the amendments to the provisions relating to protection on pregnancy and maternity.

Restriction of termination of pregnant employees

Firstly, a new provision, section 41A is proposed, whereby terminating a female employee who is pregnant or is ill due to her pregnancy would be an offence under the law. The only exceptions to this general rule are dismissal on the grounds of wilful breach of the employment contract, misconduct, and closure of the employer’s business. The burden of proof is on the employer to prove that such termination is not related to the employee’s pregnancy.

As can be seen, termination for reasons such as medical, poor performance or redundancy would not be acceptable grounds for dismissal of a pregnant employee. This provision would provide increased protection to pregnant employees against dismissal from employment, since the protection under the current Act only covers the period of 90 days-post maternity leave for illnesses arising from pregnancy (under section 42 of the Act). This development is a welcome step forward in the development of anti-discrimination law in Malaysia.

Maternity leave

The Bill seeks to amend the statutory paid maternity leave entitlement by increasing the same from the current 60 days to 90 days. This is another welcome amendment, as it would bring the maternity protection for employees in the private sector to the same level as what is already accorded to the employees in the public sector. The proposed standard of protection would also be closer to the International Labour Organisation’s (ILO) recommendation of at least 14 weeks (equivalent to 98 days) of paid maternity leave.

However, the Bill also confusingly proposes to delete section 44A of the Act, which is the provision which affords maternity protection to all female employees irrespective of their monthly wages. With this amendment, it would mean that the 90-day entitlement to paid maternity leave will only be extended to a very limited scope of female employees (i.e. those who are under the purview of the Act), leaving the remaining female employees who are outside the scope of the Act completely unprotected by any law on maternity leave in Malaysia.

Paternity leave

Another main amendment proposed by the Bill is the introduction of paternity leave, whereby married male employees would be entitled to three consecutive days of paternity leave for up to five confinements, irrespective of the number of spouses. This is a long-awaited amendment as it also goes on to show the commitment in recognising paternal responsibilities as part of the caregivers. However, it is to be noted that the Bill only proposes to extend such paternity leave benefit to married employees who are currently under the purview of the Act.

2. Protection against discrimination

The Bill also seeks to introduce protection against discrimination, which is a new development in the laws of Malaysia, considering that anti-discrimination laws are sorely lacking in Malaysia. The Bill proposes that non-compliance of the employer with such orders of the Director General in this regard would constitute an offence on conviction. Nonetheless, the Bill is silent as to what constitutes “discrimination”, and it remains to be seen how far this provision would be applied to accord such protection to employees against discrimination.

3. Sexual harassment

It is encouraging to note that the Bill proposes to increase the fine on employers who fail to carry out their statutory duties in relation to dealing with workplace sexual harassment complaints. Further, the Bill also proposes a new duty on the employer to conspicuously exhibit notices at the workplace to raise awareness on this issue. It is hoped that with this amendment, the issue of workplace sexual harassment will be taken more seriously by employers.

However, the Bill again confusingly proposes to delete section 81G of the Act, which is the provision which affords sexual harassment protection to all employees irrespective of their monthly wages. With this amendment, it would mean that sexual harassment protection would only be extended to a limited scope of employees (i.e. those who are under the purview of the Act), leaving the remaining employees who are outside the purview of the Act completely unprotected by any statute against sexual harassment. It is envisaged this might be a deliberate step and that this apparent lacuna will be filled by the enactment of the long-delayed Sexual Harassment Bill.

4. Flexible working arrangement

One major change to the workplace environment since the pandemic is the normalisation of remote working pattern. It is exciting to note that the Bill is keeping up with the changing landscape of working habits and seeks to propose the right for an employee to apply for a flexible working arrangement. This will entail varying the hours, days and place of work. The employer would then decide whether the application is approved or refused, and in the event of refusal, provide his reasons for the same. However, it is unclear whether in the event of refusal, the employee would have the right to challenge the same, and it is equally unclear what are the criteria that employers can take into consideration when approving or refusing such applications.

5. Access to the Labour Department

Currently, employees earning not more than RM5,000 (including those outside the scope of the Act) can make a complaint to the Director General at the Labour Department on issues in respect of wages and other payments due under their contract of employment. However, the Bill now seeks to remove the RM5,000.00 cap.

It is unclear whether with the deletion of the provision on the cap, the effect of it would mean that all employees

(irrespective of their wages) can bring complaints to the Labour Department, or whether such right to file a complaint would then be restricted to only employees under the purview of the Act. Clarification in this regard is urged, as it is important to clarify the categories of employees who have access to the Labour Department.

6. Apprenticeship

Presently, an apprenticeship recognised under the Act is one that is for a period of not less than two years. The Bill seeks to amend the same to a period between six to 24 months. This would mean that any apprentice arrangement of lesser than six months or more than 24 months would therefore fall outside the purview of the Act.

7. Hours of work

The weekly maximum hours of work under section 60A of the Act is proposed to be reduced from 48 hours to 45 hours. This would mean that any additional hours of work beyond 45 hours would now be subject to overtime pay. This would be a significant amendment to businesses which currently practice a 48-hour workweek. Such businesses would have to either revise the hours of work downwards or be prepared to pay significant sums in overtime payments.

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