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Asia-Pacific employment law bulletin 2022


Developments in the light of COVID-19

As of early January 2022, approximately 78.5% of Malaysia’s population has been fully vaccinated. There is currently no strict requirement for employees to be vaccinated before returning to the workplace, although some employers have taken it upon themselves to impose these on their workforce. Standard operating procedures such as social distancing and the use of contact-tracing application remain in force. Such application began life as a contact tracing platform but has since morphed into a critical must-have with information on vaccination and risk status.

Other developments

Long awaited changes to the Employment Act 1955

The beginning of 2021 saw the coming into force of amendments to the Industrial Relations Act 1967 which basically amongst other things, allowed for all cases of unjust dismissals to be adjudicated in the Industrial Court as long as they were not settled. Any discretion to reject undeserving cases were removed by the amendments.

On 25 October 2021, the Human Resources Minister tabled the Employment (Amendment) Bill 2021 (the “Bill”) to amend the Employment Act 1955 (the “Act”). The proposed amendments, among others, are to bring the Act in line with the standards and practices required by the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan and the International Labour Organisation. The proposed amendments are long overdue and contain very critical changes to what is considered one of the main pieces of employment legislation in Malaysia. At the time of writing, the Bill is at the second reading stage at the House of Representatives.

Set out below are some of the key changes introduced by the Bill.

Prior approval from the Director General of Labour to hire foreign employees

The Bill introduces a new requirement for the prior approval of the Director General of Labour (the “DGL”) in order to hire foreign employees. Previously, there was only a requirement to furnish particulars of foreign employees to the DGL.

The employer’s application for approval is subject to the following conditions:

  • there is no outstanding matter relating to any decision, order, or directive issued under the Act;
  • there is no outstanding matter or case relating to any conviction of offence under the Act and other specified legislation; and
  • the employer has not been convicted for any offence under any written law in relation to anti-trafficking in persons and forced labour.

Failure to obtain the prior approval of the DGL can attract a fine up to RM100,000 (c.USD 24,000) or to imprisonment for a term up to five years or to both.

The Bill also provides that where a foreign employee has been terminated (either by the employer, expiry of employment pass, or repatriated or deported), the employer has to inform the DGL within 30 days of the termination. Where the foreign employee terminates or absconds, the employer has 14 days from the date of the termination or absence to inform the DGL.

Creation of a new offence of “forced labour”

The Bill aims to create a new offence of “forced labour”. “Forced labour”, as provided in the Bill, is where any employer threatens, deceives, or forces an employee to do any activity, service or work and prevents the employee from leaving before the activity, service or work is done. The offence carries a penalty of a fine up to RM100,000 (c.USD 24,000) or to imprisonment for a term not exceeding two years or both.

Extension of DGL’s power to decide on discrimination in employment

The newly introduced Section 69F aims to extend the power of the DGL to inquire and decide on any dispute relating to employment discrimination, and to make an order where necessary. Failure to comply with the DGL’s order is an offence and can result in a fine up to RM50,000 (c.USD 12,000), and a daily fine of up to RM1,000 (c.USD 240) for continuing offences.

There is however, no clear definition of what constitutes discrimination, or what protected characteristics are in the Bill or the Act, or whether discrimination in employment is actually considered as an offence. The provision simply provides that failure to comply with the DGL’s order is an offence.

Although the new provision allows the DGL to make an “order”, there is little or no indication of what such an order could be.

With such wide powers being given to the DGL and little to discuss what may constitute discrimination and what are protected characteristics, there would be inevitable concerns over the opening of floodgates to claims. Based on the Bill, as it is currently, so long as discrimination is raised in a dispute, it would appear that the DGL will need to carry out an inquiry and make an order. This could inevitably involve the DGL making orders relating to matters that would customarily have been in the hands of the management, such as promotions and transfers etc.

While the section on discrimination is certainly welcomed, greater clarity is needed.

Reduction of maximum weekly working hours and enhancement of sick leave

The Bill proposes to reduce the maximum working hours from 48 hours to 45 hours in a week.

Sick leave entitlement is also to be amended by removing the proviso where the aggregate of sick leave inclusive of any period of hospitalisation is 60 days. This will entitle employees to 60 days sick leave if hospitalisation is necessary without affecting the employee’s normal sick leave entitlement.

Flexible working arrangements framework

In light of the pandemic and many businesses shifting to flexible work arrangements, the Bill has introduced provisions on a flexible working arrangement framework. An employee may apply to an employer in writing for flexible work arrangements including to vary hours of work, days of work or place of work.

The provides that an employer has 60 days, from the date the application is received, to reject or approve the application. If the application is refused, the ground(s) of refusal must be provided.

Enhancement of maternity leave and introduction of paternity leave

Maternity leave has been extended from 60 days to 90 days, in line with that for civil servants. Where a female employee who is entitled to maternity leave requests to commence work within the maternity leave period, she has to be certified to be fit to resume work by a registered medical practitioner. Further, exceptions to restriction on termination of pregnant employees has been expanded to include wilful breach of a condition of the contract of service, misconduct and closure. Previously, the only permitted exception was closure.

Another introduction is the inclusion of paternity leave. A male employee is entitled to paid paternity leave for a period of three consecutive days for each confinement. Nonetheless, this is restricted to five confinements irrespective of the number of spouses. The conditions for paid paternity leave are that the married employee:

  • has been employed by the same employer for at least 12 months; and
  • has notified the employer of the pregnancy at least 30 days from the expected confinement, or as early as possible after the birth.

It is interesting to note that the Bill proposes to delete section 44A, which provides that maternity protection, under Part IX of the Act, applies to all female employees irrespective of their wages. This means that the current protection afforded under the Act, extended to cover those that do not fall under the scope of the Act, i.e. female employees earning more than RM2,000 (c.USD 478) a month, would be removed. According to the explanatory statement, the rationale behind the deletion is that it is a consequence of the extension of scope of the Act. However, the proposed removal of Section 44A appears to be incongruent with an extension of scope.

Requirement to exhibit notices on sexual harassment

The Bill introduces a requirement for employers to exhibit conspicuously a notice to raise awareness on sexual harassment (similar to health and safety notices). While this is requirement is a positive one, the Bill leaves it open to the employers to determine what should go into the notice.

A puzzling change is the proposed deletion of section 81G, which allows for sexual harassment complaints to be made by any employee irrespective of their wages. The amendments to the requirements for sexual harassment complaints appear to have taken one step forward and two steps back.


ZICO: Yong Hon Cheong