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MoHR postpones implementing Employment Act amendment to Jan 1 2023

Updated: Dec 18, 2022


Announcement

The Ministry of Human Resources (MoHR) announced that it would be delaying the implementation of the Amendments to the Employment Act 1955 until January 1, 2023, rather than the previously scheduled September 1, 2022.


Minister Datuk Seri M Saravanan, who was in charge of making the decision, stated that it arrived after consultations with several different groups, such as the employers' association, the chambers of business, and the associations representing locals and foreigners.


Since the Minister has only made this announcement in an unofficial capacity, it will be necessary to have a gazetted order in place to postpone the date of operation from September 1, 2022, to January 1, 2023.


About the Employment (Amendment) Act 2022, you might be wondering why I keep harping on the fact that the government is rushing into this before it is completely ready.


This is because the Federation of Malaysia was formed following the merger of the Federation of Malaya, Sarawak, and North Borneo (Sabah) on 16 September 1963,


As a result, there are 3 separate pieces of legislation for Malaysian employees in Malaysia.

  • The Employment Act 1955 for Peninsular Malaysia;

  • Sabah Labour Ordinance 1950 for Sabah; and

  • Sarawak Labour Ordinance 1952 for Sarawak.

In the meantime, Malaysia also has three laws protecting part-time employees' rights.

  • Employment (Part-time Employees) Regulations of 2010.

  • The Labour (Part-Time Employees) (Sarawak) Rules 2013

  • The Labour (Part-Time Employees) (Sabah) Rules 2013

Specific concerns were not addressed in the Employment (Amendment) Act 2022.


How about Sabah and Sarawak

The Sabah Labour Ordinance 1950 and Sarawak Labour Ordinance 1952 are not revised concurrently at any point in time.


How about Part-Time Employees
  1. The working hours per week are reduced from 48 to 45 hours due to the Amendments; however, the regulations/rules governing part-time employees are not revised to reflect this reduction.

  2. As a consequence of this, when it is not possible to determine the normal working hours of a full-time employee, or there is no full-time employee employed in a similar capacity in the same organisation in a similar role, the normal working hours of a full-time employee shall be deemed to be 8 hours in 1 day or 48 hours in 1 week.

Flexible Working Arrangement

New Part XIIC – Flexible Working Arrangement is introduced into the Employment Act 1955; employees can request "flexible working arrangements" to change their working hours, days of the week, or place of employment.


Consequently, in my opinion, the definition of "ordinary rate of pay" and "hourly rate of pay" needed to be revised correspondingly to reflect this new norm.


Currently, the definition of:

  • The ordinary rate of pay: means wages as defined in section 2, whether calculated by the month, the week, the day, the hour, or by piece rate, or otherwise, which an employee is entitled to receive under the terms of his contract of service for the regular hours of work for one day, but does not include any payment made under an approved incentive payment scheme or any payment for work done on a rest day on any gazetted public holiday granted by the employer under the contract of service or any day substituted for the gazetted public holiday;

  • ORP = monthly rate of pay/26

  • The hourly rate of pay: means the ordinary rate of pay divided by the regular hours of work.

  • HRP = ORP/normal hours of work

On 12 August 2022, the Employment (Amendment of First Schedule) Order 2022 was gazetted and will come into force from 1 September 2022.


Under the Order, all employees who receive earnings of up to RM4,000 per month will be eligible for overtime pay.


The ORP and HRP calculations are pretty essential. Regarding calculating overtime pay, we are required to apply it.


For instance: an employee whose employment contract stipulates that she must work 7.5 hours per day, 6 days per week, and her monthly salary is RM3,120:

  • an ordinary rate of pay of RM120 (3120/26); and

  • an hourly rate of pay of RM16 (120/7.5).

Insufficient Time for Preparation

Even though the Employment (Amendment) Act 2022 was gazetted into law on May 10, 2022, the Employment (Amendment of First Schedule) Order 2022 was gazetted on August 12, 2022.


It left less than 20 days for businesses to prepare for it I commend the Minister of Human Resources for putting up this idea, even though this announcement came way too late to be considered timely.


Labour Law Reform Coalition (LLRC) - Submission Of Memorandum On Trade Union Bill, Sabah And Sarawak Labour Ordinances To MOHR


The Labour Law Reform Coalition (LLRC), comprised of 58 different trade unions and non-governmental organisations, delivered three memorandums to the Ministry of Human Resources in Putrajaya on July 15, 2022.


On behalf of the Minister's office, the memorandums are being received by Mr. Elvis, a member of the Bahagian Khidmat Pengurusan MOHR.


The full memorandums can be downloaded here:

143.1 Memo on Trade Union Act [2022-07-13]
.pdf
Download PDF • 129KB

143.2 Memo on Sarawak Labour Ordinance [2022-06-20]
.pdf
Download PDF • 85KB

143.3 Memo on Sabah Labour Ordinance [2022-06-22]
.pdf
Download PDF • 105KB

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