Introduction
The Employment (Amendment) Act 2022, also known as Act 265, obtained Royal Assent on 26 April 2022 and was issued in the Federal Government Gazette on 10 May, following its passing in both Houses of Parliament. The revision to the First Schedule is to be enforced from 1 September 2022 onwards (Update on 26/8/2022: Enforcement date has been moved to 1 January 2023) .
1. EA salary threshold increased from RM2,000 to RM4,000
All employers will need to review their existing employment contracts and policies in order to ensure full compliance with EA. It should be noted that Section 7 of EA states that any terms or conditions which are less favourable to an employee than those provided under the EA will be void and of no effect. This is also applicable to contracts entered into before 1 January 2023.
2. Maternity leave extended from 60 to 98 days
3. 7 days paid paternity leave introduced
4. Employees can apply for flexible working arrangement
5. Reduce maximum weekly working hours from 48 to 45 for non-shift and shift employees
Scenario 1: Non-Shift Employees Working on an 8 hours per day (Excluding Break), 5 days per week.
- This is within the requirements of EA 1955, because the maximum 8 hours per day and correspondingly with total hours of work per week of 40 hours is within the limit of maximum working hours of 45 per week.
- Overtime limit remains at the maximum 4 hours per day on the working days.
Scenario 2: Non-Shift Employees working on 8 hours per day (Excluding Break), 6 days per week
- Whilst the 8-hour limit is adhered to for 5 days in the week, the Company can observe a further 5 hours on the 6th day, to ensure compliance to the maximum 45 working hours per week.
- Overtime limit remains at the maximum 4 hours per day on 5 working days.
Scenario 3: Non-Shift Employees working on a 9 Hours Per Day (Excluding Break) 5 Days per week
- By agreement under the employment contract, if the number of hours of work in one or more days is less than 8 hours, the limit of 8 hours may be extended to a maximum of 9 hours on the remaining days, subject always to the maximum limit of 45 hours per week.
Scenario 4: Shift Employees’ possible shift roster adjustment
“Shift work” is defined as “…work which by reason of its nature requires to be carried on continuously or continually, as the case may be, by two or more shifts.”
Employees engaged in shift work may be required to work for more than eight (8) hours per day, subject to the requirement or more than 45 hours per week. It is provided that the average number of hours worked over three (3) weeks does not exceed 45 hours per week.
Working hours may need to be adjusted to ensure compliance with the new amendments. This may include extending the lunch break, or what is termed as “period of leisure” in the EA 1955 so that the normal hours of work is 7.5 hours on six (6) working days a week. Companies will be liable to pay overtime if their working hours exceed 45 hours per week.
- Total working hours over 3 weeks: 60 hours + 60 hours + 15 hours = 135 hours.
- Average working hours per week: 135 hours/ 3 weeks = 45 hours.
- Referring to the table above and as a further explanation of paragraph above, although a shift worker’s hours of work is 12 hours, no overtime is payable.
6. Calculate overtime after change of 45 weekly working hours
Scenario 1: Non-Shift Employees Working on an 8 hours per day (Excluding Break), 5 days per week.
Employees working in excess of the 8 hours on their working days, and on their off day, i.e., the 6th day, will be paid overtime, calculated at the prevailing rate of 1.5 times the hourly rate of pay (H.R.P.). Employees working on a rest day or public holiday will continue to be paid on the ordinary rate of pay (O.R.P.).
Scenario 2: Non-Shift Employees working on 8 hours per day (Excluding Break), 6 days per week
Employees working in excess of the 8 hours on the 5 working days, and in excess of the 5 hours on the 6th day, will need to be paid overtime, calculated at the statutory rate of 1.5 times H.R.P.. Employees working on a rest day / public holiday will continue to be paid on the O.R.P..
Scenario 3: Non-Shift Employees working on a 9 Hours Per Day (Excluding Break) 5 Days per week
Assuming that a company works 9 hours per day, for 5 days per week from Monday to Friday, employees working in excess of the 9 hours on their working days, and on their off day, i.e., the 6th day, will have to be paid overtime, calculated at the prevailing rate of 1.5 times the H.R.P.. Employees working on a rest day / public holiday will continue to be paid on the O.R.P.
7. Calculating wages for incomplete month’s work
- where he commenced employment after the first day of the month;
- where his employment was terminated before the end of the month;
- where he took leave of absence without pay for one or more days of the month; or
- where he took leave of absence by reason of having been called up for national service
shall be paid wages due to him for that month calculated according to the following formula:
Monthly wages/Number of days of the particular wage period x Number of days eligible in the wage period
This amendment serves clarify the long-established practice in wage calculation for incomplete month’s work. It is advisable that employers refer to the stated formula when calculating wages for incomplete months.
8. Protection from discrimination
9. Exhibit Notice on sexual harassment awareness
10. Bonus: Socso Contribution maximum capped at RM5k
Employees’ Social Security (Amendment) Bill 2022 passed the the maximum monthly salary ceiling limit increase from RM4,000 to RM5,000 for contributions. This will give wider protection to employees earning more than RM4,000 to RM5,000 as the cost of living has now increased. It also involves temporary disability benefits, permanent disability benefits, disability pensions and retirement pension.
Conclusion: What employers need to do after new Employment Act amendments
All employers will need to review their existing employment contracts and policies to ensure compliance with EA. It should be noted that Section 7 of the EA states that any terms or conditions which are less favourable to an employee than those provided under the EA will be void and of no effect. This also applies to contracts entered into before 1 January 2022.
The same categories of employees in the states of Sabah and Sarawak are covered by separate Labor Ordinances that closely mirror the provisions of the EA.
Employers should continue to monitor developments to remain in compliance while reviewing the potential impact of the amendments on their policies and practices.
Reference:
- https://www.theedgemarkets.com/article/parliament-passes-employees-social-security-amendment-bill-2022
- https://www.theedgemarkets.com/article/my-say-women-might-pay-price-employment-progress
- https://hbr.org/2018/09/how-companies-can-ensure-maternity-leave-doesnt-hurt-womens-careers
- https://themalaysianlawyer.com/2022/08/09/flexible-working-arrangements-policy-recommended-documents/
- Employment_Amendment_Act_2022 Malaysian Employers Federation Circular: AG 15/2022 PUA 262 PUB 368 Employment Act 1955
- Malaysian Employers Federation Circular: AG 15/2022
- Employment Act 1955
- PUA 262
- PUB 368
Disclaimer: This article by Cheng & Co is for educational and informational purposes only, updated t as of the date of publication and may not take into account changes or developments that occur after this date. All information are of a general nature and does not address the specific circumstances of any particular individual or entity. By proceeding further and in exchange for the use of this document, you agree to this disclaimer and shall not to hold Cheng & Co, the authors and anyone associated with the preparation of this article liable for any damages, losses or claims arising from any decision you make based on the information or contents of this document. You are advised to seek guidance further guidance from the Labour Office (JTK).
If you liked this article, then please subscribe to our newsletter and share with your colleagues and friends via:
