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January 15, 2021

By Ong Jian Nee, Low Jia Juan, Jian Nee and Wong Kah Hui 

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Modification to the Industrial Relations Act 1967

In light of the COVID-19 Pandemic, the Temporary Measures For Reducing The Impact Of Coronavirus Disease 2019 (Covid-2019) Act 2020 ("Covid Act"), was gazetted on 23 October 2020.

S. 39 and 40 of Covid Act, which is treated as having come into operation on 18 March 2020, provides for a modification to the Industrial Relations Act 1967 ("IRA 1967").

The provision extends the statutory periods set out in the IRA 1967 by excluding the period from 18 March 2020 to 9 June 2020 in the calculation of statutory limitation periods.

The relevant limitation periods affected are:

  • Section 9(3) of the IRA 1967: the 21-day period for an employer or a trade union of employers to accord recognition or notify the trade union of workmen concerned in writing of the grounds for not according such recognition.
  • Section 9(4) of the IRA 1967: 14-day period for a trade union of workmen to make any report of non-recognition or non-compliance to the Director General for Industrial Relations ("DGIR").
  • Section 20(1A) of the IRA 1967: 60-day period for any aggrieved employee to file his unfair dismissal claim to the DGIR.


Modification to the Private Employment Agencies Act 1981

Sections 41 and 42 of the Covid Act which is treated as having come into operation on 18 March 2020 provides for a modification to the Private Employment Agencies Act 1981 ("PEAA").

Under the PEAA, a private employment agency requires a valid license to carry on recruiting activity, and the period for an application to renew the said license is "at least sixty (60) days before the expiry date." The private employment agency commits an offence under the PEAA if it operates without a valid license under the act.

The modification excludes the period from 18 March 2020 to 9 June 2020 from the calculation of the period for an application to renew a license. This in effect allows private employment agencies more time for renewal applications.


New rules for Employees' Minimum Standards of Housing Accommodations and Amenities

The Employees' Minimum Standards of Housing Accommodations And Amenities (Accommodation And Centralized Accommodation) Regulations 2020 was gazetted on 28 August 2020, and came into force on 1 September 2020.

Kindly refer to the link (due to the length of the regulations) for the specification of the employee's accommodation which is to be complied with by the Employer and/or the accommodation provider from 1 September 2020:


These new rules were introduced by the Human Resources Ministry following the COVID-19 outbreak, as a measure to reduce the spread of the virus in cramped and congested accommodation.


Maximum rental or charges for accommodation provided by employer

The Standards of Housing Accommodations And Amenities (Maximum Rental Or Charges For Accommodation) Regulations 2020 was gazetted on 28 August 2020, and came into force on 1 September 2020.

The regulations provide for a maximum rent or charges for accommodation that may be collected under Subsection 24G(1) of the Standards of Housing Accommodations And Amenities Act 2020 by an employer from an employee, being RM100.00.




The passing of Industrial Relations (Amendment) Bill

The Industrial Relations (Amendment) Bill 2019 ("Bill") was passed on 19 December 2019. The Bill is still awaiting royal assent at the time of writing and will then be gazetted and come into operation on a date appointed by the Minister of Human Resources ("Minister").

Key takeaways from the Bill include the following:

  • Representation during conciliation for unfair dismissal: The amendment allows for the appointment of a person other than an advocate and solicitor to represent the employer and/or workman in reconciliation meetings in the event of an unfair dismissal claim, subject to approval by the Director General of the Industrial Relations.
  • Referral of unfair dismissal claims to Court: The amendment provides that the Director General of the Industrial Relations ("DGIR") will replace the Minister of Human Resources in referring unfair dismissal claims to the Industrial Court where the DGIR is satisfied that there is no prospect of settlement.
  • Sole bargaining rights: The Bill introduced sole bargaining rights, allowing employees to decide which trade union (if there is more than one) is granted the right to represent employees in negotiations with the employer. An application in writing is made to Director General of Industrial Relations to determine which trade union is given the sole bargaining rights in the event no agreement is reached amongst employees. The sole bargaining rights granted is valid for three (3) years unless the relevant trade union ceases to exist.


Minimum Wages Order 2020

The Minimum Wages Order 2020 ("Order") was implemented on 1 February 2020. Key takeaways from the Order are as follows:

  • the minimum wage rate in the area specified in the Schedule of the Order is RM1,200.00 per calendar month;
  • the minimum wage rates in areas that are not specified in the Schedule of the Order is RM1,100.00 per calendar month; and
  • the Order has no application to a domestic servant as defined under relevant law.


Minimum standards of housing and amenities for workers of all industries

The Worker's Minimum Standards of Housing and Amenities (Amendment) Act 2019 ("Act") was gazetted on 23 September 2019 and came into force on 1 June 2020.

Prior to the enactment of the Act, the minimum standard for housing and amenities prescribed in The Worker's Minimum Standards of Housing and Amenities Act 1990 only applied to the agricultural and mining industries.

A key takeaway from the Act is that it extends the application of the minimum standards for housing and amenities to all industries if employers wish to provide accommodation for their employees. If so, employers or centralised accommodation providers must apply for a Certificate for Accommodation before providing accommodation to employees.


Malaysia Budget 2020

With a view to providing better benefits and protections for employees, the following proposals were put forward by the Government during the delivery of the Malaysia Budget 2020:

  • to increase maternity leave from 60 days to 90 days from 2021;
  • to extend the eligibility for overtime allowance from those with an income of less than RM 2,000.00 to those with an income of less than RM 4,000.00 per calendar month; and
  • to improve protection and procedures for the handling of sexual harassment complaints in the workplace.


Prioritisation of local workforce to reduce unemployment

With the advent of COVID-19 and rising unemployment rates, the Minister of Human Resources has announced that employers must advertise all vacancies on the JobsMalaysia Portal for at least 30 days before hiring a foreign worker or expatriate. This is to provide enough time for the Department/Agency under the Ministry of Human Resources to match the job against and prioritise local jobseekers. The Minister of Human Resources has emphasised that where there is a potential retrenchment, the 'foreign worker first out' approach should be taken.

With thanks to Ong Jian Nee, Low Jia Juan and Wong Kah Hui of Messrs KH Wong & Co. for their invaluable collaboration on this update.




New minimum wage to be implemented

On 20 July 2018, the Ministry of Human Resource announced that the Minimum Wage Order has been gazetted which will mean that the minimum wage increment to RM 1,500.00 will be standardised nationwide.

The implementation of the new rate is to be carried out in stages.

Under the Employment Act 1955, and the Sabah Labour Ordinance as well as the Sarawak Labour Ordinance there ought to be differentiation based on nationalities or discrimination based on local verses foreign workers.


Proposed amendments to the Employment Act 1955

On 4 October 2018, the Ministry of Human Resources announced proposed changes to the Employment Act 1955. The proposed amendments have not been tabled in Parliament but the key amendments are as follows:

  • the definition of an employee will be amended and references to “domestic servants” will be changed to “domestic employees”;
  • employers will be prohibited from discriminating against job seekers or employees on the grounds of gender, religion, race, disability, language, marital status and pregnancy when determining who should be offered employment (including advertisement of the vacancy) or in the terms or conditions on which an offer is made;
  • pregnant employees will be entitled to 98 days of paid maternity leave and protected from termination during maternity leave;
  • employees will be allowed to request “flexible working arrangements" and employers can only refuse the request on certain grounds;
  • employers must investigate any complaint of sexual harassment, and cannot refuse on the basis that a prior inquiry found no sexual harassment, or the employer is of the opinion that the complaint of sexual harassment is frivolous, vexatious, or is not made in good faith;
  • a written code on the prevention of sexual harassment is to be prepared by the employer and placed in an open area at the place of work;
  • the Director General is to grant approval, for a job fair or carnival to be organised. The penalty for failing to have approval is a fine of up to RM10,000.00;
  • principals may be liable to pay the wages of contractors/subcontractors in certain situations; and
  • female employees will be permitted to be employed in any underground working, industrial or agricultural undertaking with no restrictions as to set times as to when female employees can work.




Employment Insurance System Bill 2017

Under Employment Insurance System (EIS) Bill, from 1 January 2018 employers and employees must each contribute 0.2% to the scheme. Employees who are retrenched will be given a portion of the insured salary from the 0.4% monthly contribution. All organisations and companies with 1 or more employees must comply with this new rule. Failing this, employers may be fined a penalty not exceeding RM10,000 or imprisonment for a term no more than 2 years, or both, upon conviction.

Retrenched workers will also be entitled to job training for re-employment. EIS covers employees who lose their job from voluntary or mandatory retrenchment, or those whose jobs become redundant due to business restructuring, downsizing or closure.


Private Employment Agencies (Amendment) Bill 2017

The Private Employment Agencies (Amendment) Bill 2017 will amend the Private Employment Agencies Act 1981, spelling out in more detail the license application procedure, the conditions and fees imposed and other related matters.

Among the amendments are a higher licence fee of RM500 from RM25 currently; and the introduction of a series of processing fees that ranges between RM50 and RM300 for procedures like application, licence renewal, branch licence application, and licence replacement.


Self-Employment Social Security Bill 2017

The Self Employment Social Security Bill 2017 which seeks to provide social security organisation (“Socso”) protection to self-employed persons was passed April 2017.

Socso protection will be provided to self-employed taxi drivers and e-hailing service providers before being extended to other sectors that are predominantly self-employed.




Consequential changes to labour laws from trade agreement

The Malaysian government has stated that it is looking to amend and complete domestic ratification of legal procedures for the Trans-Pacific Partnership Agreement by mid-2017. There will be amendments to labour laws (on eight pieces of legislations), policies and practices as a consequence.




Mandatory social security contributions for all employees

Social security contributions became mandatory for all employees regardless of salary. However, contributions will be capped at the monthly remuneration of RM4,000.


Increase in minimum wage

The Minimum Wages Order 2016 came into effect on 1 July 2016 and affects all private sector employees (except domestic helpers) with rates set at: RM1,000 per month or RM4.81 per hour for Peninsular Malaysia, and RM920 per month or RM4.42 per hour for Sabah, Sarawak, and Labuan.


Exemption of certain employers to minimum retirement age laws

Under the Minimum Retirement Age (Exemption) Order 2016, the Minister of Human Resources has issued several orders to exempt certain employers from legislation which would otherwise provide a minimum retirement age of 60 years. This also excludes those employed on a fixed term service contract for over 24 months and less than 60 months with a basic wage of RM20,000 per month or more.


Reduction in employees’ contribution towards retirement benefit scheme

There has been a reduction in the statutory contribution rate under the Employee Provident Fund (retirement benefit scheme) for employees (i) from 11% to 8% for employees below the age 60, and (ii) from 5.5% to 4% for employees above the age of 60, from March 2016 until December 2017. The contribution rate for employers, however, remains at the current rate.

With thanks to Jian Nee and Wong Kah Hui of Kadir & Andri Partners for their invaluable collaboration on this update.


Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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