Malaysia's Employment Act: Important Changes Effective from January 1, 2023

If you are an HR professional or just someone interested in Malaysian labour laws, you are likely familiar with the Employment Act 1955, which governs employment regulations in the country. However, this act was overdue for an update to better protect employees and address modern workplace dynamics. 

The Employment (Amendment) Bill 2021 was passed to introduce significant changes, and as of January 1, 2023, the new Employment (Amendment) Act 2022 will take effect. Here are the key changes you need to know:

Expanded Employee Coverage

Previously, the Employment Act primarily protected employees earning monthly salaries of RM2,000 or less. However, the new amendments bring a fundamental change by extending protection to all employees, regardless of their salary. 

This shift ensures that even those earning more than RM2,000 monthly now enjoy statutory protections. While some exemptions exist for higher earners, this change offers clarity and consistency for both employers and employees.

Reduced Maximum Working Hours

Effective from January 1, 2023, the maximum number of weekly working hours will decrease from 48 hours to 45 hours, excluding meal times. This change aims to enhance the well-being of workers and aligns with international labour standards.

Flexible Working Arrangements

In recognition of evolving work practices, the amended Employment Act introduces provisions for flexible working arrangements. This is a crucial addition in a post-pandemic world, where remote work and flexible schedules have become more common. 

Employees can now formally request flexible work arrangements from their employers, who are required to respond within 60 days, providing reasons if they reject the request.

Protection for Gig Workers

The amended Act now provides protection for gig workers, such as delivery partners and for-hire drivers, even in the absence of a written contract. This offers much-needed security to gig economy workers in Malaysia.

Extended Maternity Leave

An essential update in the amended Act is the extension of paid maternity leave for working mothers. The previous entitlement of 60 days has now been extended to 98 days, offering new mothers more time to recover and care for their newborns.

Enhanced Protection for Pregnant Mothers

The amendments provide increased protection for pregnant female employees and those experiencing pregnancy-related illnesses. Employers are now prohibited from terminating employment or issuing notices of termination to these employees, except for specific reasons, which they must prove.

Introduction of Paid Paternity Leave

For the first time, the 2022 amendment introduces paid paternity leave. Under Subsection 60FA, married male employees are entitled to seven consecutive days of paid paternity leave. Conditions include being married to the mother, having 12 months of employment with the same employer, and notifying the employer at least 30 days before the expected confinement.

Changes in Employing Foreign Workers

Section 60K, which relates to the employment of foreign workers, has been significantly revised. Employers must now obtain prior approval from the Director-General to hire foreign employees and notify the Director-General within 30 days of a foreign employee's termination.

Awareness of Sexual Harassment

Employers are now required to display a notice raising awareness of sexual harassment in the workplace. This notice must be prominently placed and visible at all times.

Enhanced Legal Protections

The amendments introduce stronger legal protection against forced labour, with substantial fines and imprisonment for employers who engage in threatening, deceiving, or forcing employees. General penalties for non-compliance have also increased.

Presumption as to Who is an Employee

In the absence of a written contract, the Act presumes an individual is an employee under specific conditions, bringing clarity to employment status determinations.

Changes to the First Schedule

The Amendment Order expands the Act's coverage to include any person who has entered into a contract of service, offering broader protection. However, specific sections won't apply to higher-earning employees, except for those categorized as EA Employees.

Director General's Jurisdiction

With changes to the First Schedule, the Director General has extended powers to investigate and decide disputes between employers and employees without any salary limitations, ensuring comprehensive oversight.

In Summary 

The amendments to Malaysia's Employment Act represent a significant step toward enhancing employee protections and aligning the country's labour laws with international standards. Employers are encouraged to review and update their employment governance to provide a safe and fair working environment for all employees.

These changes will impact employers and employees alike, making it important for everyone to understand and adapt to the new regulations. Malaysia's workforce is poised for a more equitable and secure future with these amendments coming into effect on January 1, 2023.

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