Malaysia
On 30 March 2022, the Malaysian Parliament passed Employment Bill 2021. The Bill introduced several amendments to the Employment Act of 1955, including the extension of maternity leave from 60 days to 98 days and the introduction of a seven-day employer-paid paternity leave. There is currently no indication as to when the new Bill will enter into effect.

Update: The Human Resources Minister of Malaysia recently announced that the Employment (Amendment) Act 2022 will come into force on 1 September 2022.


Background

The new Bill introduces several amendments to the primary law governing employment relations in Malaysia with the purpose of ensuring compliance with the country’s international treaties including the Trans-Pacific Partnership Agreement, the Malaysia-United States Labour Consistency Plan, and the International Labour Organization labor law standards.

Key details

The amendments to the Bill include the following.

Paternity leave

The Bill introduces seven consecutive days of employer-paid paternity leave. Eligibility is limited to married male employees with 12 months of service with their current employer. Qualifying employees may avail themselves of the leave for up to five births.  

Maternity leave

The Bill increases paid maternity leave from 60 to 98 calendar days. In addition, the Bill prohibits employers from dismissing an employee while pregnant, or following birth, if she experiences complications or illnesses arising from her pregnancy. Employers will be required to prove that the termination was based on misconduct or breach of the employee’s employment agreement and not as a result of the pregnancy.

Currently, maternity leave under the Employment Act (EA) applies only to employees earning less than MYS 2,000 per month or those engaged in designated occupations. However, when the Bill was presented for a second reading to the Malaysian parliament, the Ministry of Human Resources assured that all employees, regardless of wages, will be entitled to paid maternity leave and job protection during such leave. The extension of the scope of EA is not included in the Bill but is expected to be done separately by way of a Minister’s order. For the moment, there are no details on when the Minister’s order will be effective and what it will contain. If the Minister’s order does not enter into effect by the time the Bill becomes effective, female employees earning above MYS 2,000 per month will not be entitled to any paid maternity leave until the EA is further amended.

Statutory working hours

The Bill also reduces the statutory normal working hours from 48 to 45 hours per week. Overtime rates (at least 1.5 times the employee’s hourly rate) would therefore apply to the number of hours in excess of the newly proposed 45 hours per week.

Sick leave 

Currently, paid sick leave is provided for 14 to 22 days depending on the years of service. In case of hospitalization, employees are entitled to 60 days of paid leave per calendar year, including their sick leave. The Bill proposes to treat hospitalization leave and sick leave separately. Employees would therefore be entitled to a 60-day paid hospitalization leave in addition to their existing paid sick leave entitlement per calendar year. 

Flexible working arrangements

The Bill entitles employees to submit a written request for flexible work arrangements regarding their hours, days or place of work. Employers would be required to respond to such requests in writing within 60 days. Grounds of refusal will need to be stated in their response to their employees’ flexible working arrangement requests.

Foreign employees

Employers would be required to obtain prior approval from the Director-General of Labour before hiring foreign employees. Failure to obtain such approval is considered an offense and employers would be liable to a fine of up to MYR 100,000 and/or up to five years of imprisonment.

Presumption of employment

The Bill states that individuals are presumed to be employees of a company when all the following conditions are met:

  • They are provided with tools or equipment
  • They are providing substantial work under the control and solely for the business
  • They are receiving payments at regular intervals and such payments must constitute most of the individual’s income.

Next steps

Employers should monitor the implementation process of the Bill and prepare for compliance by reviewing and updating their internal policies.