THE MALAYSIAN THE MALAYSIAN LEGAL ENVIRONMENTLEGAL ENVIRONMENT

THE LEGAL ENVIRONMENTTHE LEGAL ENVIRONMENT The employment act 1955The employment act 1955 The children and young persons (employment) act 1966The children and young persons (employment) act 1966 The wages council act 1947The wages council act 1947 The employees provident fund act 1991The employees provident fund act 1991 The workman’s compensation act 1952The workman’s compensation act 1952 The employees social security act 1969The employees social security act 1969 The occupational safety and health act 1994The occupational safety and health act 1994

The factories and machinery act 1967The factories and machinery act 1967

The trade unions act 1959The trade unions act 1959 The industrial relations act1967The industrial relations act1967 The employment (restriction) act 1968The employment (restriction) act 1968 Pembangunan sumber Manusia Bhd Act 2001Pembangunan sumber Manusia Bhd Act 2001

The Employment Act 1955The Employment Act 1955

Enforced by the Labor DepartmentEnforced by the Labor Department Sets minimum labor standards for workers Sets minimum labor standards for workers

and seek to protect them from exploitationand seek to protect them from exploitation Apply to Peninsular Malaysia and the Apply to Peninsular Malaysia and the

Federal Territory of Labuan only Federal Territory of Labuan only The employees in East Malaysia is covered The employees in East Malaysia is covered

under under The Sabah and Sarawak Labor The Sabah and Sarawak Labor OrdinancesOrdinances

CoversCovers Employees in the private sector earning not more Employees in the private sector earning not more

than RM1500 per monththan RM1500 per month those who work as manual labors, supervise those who work as manual labors, supervise

manual labors, operate or maintain machinesmanual labors, operate or maintain machines

Areas coveredAreas covered Contracts of service, Contracts of service, payment of wages, payment of wages, employment of employment of

women, women, working hours and working hours and

holidays, holidays, registers, returns, registers, returns,

complaints and complaints and inquiriesinquiries

Contract of ServiceContract of Service

An agreement whereby one person agrees An agreement whereby one person agrees to employ another as an employee and to employ another as an employee and that the other agrees to serve his that the other agrees to serve his employer as an employeeemployer as an employee

Such agreement can be oral, in writing, Such agreement can be oral, in writing, express or impliedexpress or implied

Payment of wagesPayment of wages

Every employer shall Every employer shall pay to each of his pay to each of his employees not later employees not later than the seventh day than the seventh day after the last day of after the last day of any wage period the any wage period the wages, less lawful wages, less lawful deductions deductions

Employment of WomenEmployment of Women

no employer shall require any female employee no employer shall require any female employee to work in any industrial or agricultural to work in any industrial or agricultural undertaking between the hours often o'clock in undertaking between the hours often o'clock in the evening and five o'clock in the morning the evening and five o'clock in the morning

nor commence work for the day without having nor commence work for the day without having had a period of eleven consecutive hours free had a period of eleven consecutive hours free from such work from such work

No female employee shall be employed in any No female employee shall be employed in any underground working underground working

Maternity ProtectionMaternity Protection

Every female employee shall be entitled to Every female employee shall be entitled to maternity leave for a period of not less than sixty maternity leave for a period of not less than sixty consecutive days consecutive days

A female employee shall be entitled to receive A female employee shall be entitled to receive maternity allowance for the eligible period from maternity allowance for the eligible period from her employer if:her employer if: she has been employed by the employer at any time she has been employed by the employer at any time

in the four months immediately before her in the four months immediately before her confinement; and confinement; and

she has been employed by the employer for a period she has been employed by the employer for a period of, or periods amounting in the aggregate to, not less of, or periods amounting in the aggregate to, not less than ninety days during the nine months immediately than ninety days during the nine months immediately before her confinement. before her confinement.

Working Hours and HolidaysWorking Hours and Holidays

Rest dayRest day Every employee shall be allowed in each week a rest Every employee shall be allowed in each week a rest

day of one whole day day of one whole day

Hours of workHours of work an employee shall not be required under his contract an employee shall not be required under his contract

of service to work:of service to work: more than five consecutive hours without a period of leisure more than five consecutive hours without a period of leisure

of not less than thirty minutes duration; of not less than thirty minutes duration; more than eight hours in one day; more than eight hours in one day; in excess of a spread over period of ten hours in one day; in excess of a spread over period of ten hours in one day; more than forty-eight hours in one weekmore than forty-eight hours in one week

Working Hours and HolidaysWorking Hours and Holidays

Working on..Working on.. Pay ratePay rate Overtime PayOvertime Pay

Work day Normal rate 1.5 x normal rate

Rest dayRest day 1 x normal rate (for < ½ his normal hours of work ) 2 x normal rate (for > ½ his normal hours of work )

Public Public holidaysholidays

2 x normal rate 3 x normal rate

Working Hours and HolidaysWorking Hours and Holidays

Holidays, annual leave and sick leaveHolidays, annual leave and sick leave

Years of Years of ServiceService

Public HolidaysPublic Holidays Annual Annual LeaveLeave

Medical Medical LeaveLeave

< 2 YEARS< 2 YEARS 10 days including:10 days including:the National Daythe National Day

8 days8 days 14 days*14 days*

2 – 5 YEARS2 – 5 YEARS the Birthday of the Yang di-the Birthday of the Yang di-

Pertuan AgongPertuan Agong 12 days12 days 18 days*18 days*

>> 5 YEARS 5 YEARS the Birthday of the Ruler or the Birthday of the Ruler or

the Yang di-Pertua Negerithe Yang di-Pertua Negeri the Workers' Daythe Workers' Day

16 days16 days 22 days*22 days*

* 60 days if hospitalized

The children and young The children and young persons (employment) act persons (employment) act

19661966 To prevent the exploitation of child laborTo prevent the exploitation of child labor

Under 14 yrs – only light work in family’s Under 14 yrs – only light work in family’s businessbusiness

14-16 yrs14-16 yrs In light work that does not involve the use of In light work that does not involve the use of

machinery; andmachinery; and A maximum of 7 hrs per dayA maximum of 7 hrs per day May not work between 8pm – 6amMay not work between 8pm – 6am

The Wages Council Act The Wages Council Act 19471947

Enforced by the Labor DepartmentEnforced by the Labor Department Employees are not organized into unionsEmployees are not organized into unions Covers 4 sectorsCovers 4 sectors

Shop assistantsShop assistantsHotel and catering industry workersHotel and catering industry workersPort of Penang stevedoresPort of Penang stevedoresCinema workersCinema workers

The Employees Provident The Employees Provident Fund Act 1991Fund Act 1991

Administered by the Employees Provident Administered by the Employees Provident Fund BoardFund Board

To ensure workers have funds available To ensure workers have funds available on their retirementon their retirement

Covers:Covers: All employees in Malaysia (16 years old and All employees in Malaysia (16 years old and

above)above) Before 1 August 1998: Expatriats and foreign Before 1 August 1998: Expatriats and foreign

workers are not required to contribute (but can workers are not required to contribute (but can choose to contribute)choose to contribute)

After 1 August 1998: Expatriats and foreign After 1 August 1998: Expatriats and foreign workers earning less than RM2,500 are required workers earning less than RM2,500 are required to contribute.to contribute.

Those who are exempted from making the Those who are exempted from making the compulsory contribution arecompulsory contribution are employees or workers holding Employment Pass or employees or workers holding Employment Pass or

expatriates holding Visit Pass (Temporary expatriates holding Visit Pass (Temporary Employment) whose monthly wages is not less than Employment) whose monthly wages is not less than RM2,500 RM2,500

Thai workers who enter Malaysia with a Territorial Thai workers who enter Malaysia with a Territorial Pass Pass

Seamen Seamen Foreign domestic maids Foreign domestic maids Self-employed persons Self-employed persons Out-workers who do cleaning and alteration repair Out-workers who do cleaning and alteration repair

works works Persons detained in custody, in prison, Henry Gurney Persons detained in custody, in prison, Henry Gurney

School and mental hospital School and mental hospital Pensioners Pensioners

ContributionsContributions

% of contribution

Employer Employee

All employees except expatriates and foreign workers

12 11

Expatriates and foreign workers (except for those excluded)

RM5/per person

11

Members’ Account: 3 separate accountsMembers’ Account: 3 separate accounts Account 1 (60%): for pensionAccount 1 (60%): for pension Account 2 (30%): for purchase of house and Account 2 (30%): for purchase of house and

computer computer Account 3 (10%): for medical costsAccount 3 (10%): for medical costs

The Employees Social The Employees Social Security Act 1969Security Act 1969

Enforced by the Social Security OrganizationEnforced by the Social Security Organization To provide protection to workers who may be To provide protection to workers who may be

involved in an accident at work or who contract involved in an accident at work or who contract some occupational diseasesome occupational disease

For employees in the private sector who earns For employees in the private sector who earns less than RM3000 per monthless than RM3000 per month

An employee must be registered with the An employee must be registered with the SOCSO irrespective of the age. SOCSO irrespective of the age.

The principle “ once in, always in”The principle “ once in, always in”

Nevertheless, SOCSO does not cover the Nevertheless, SOCSO does not cover the following categories of persons :following categories of persons : A person whose wages exceed RM3,000 a month A person whose wages exceed RM3,000 a month

and has never been covered before. and has never been covered before. Government employees. Government employees. Domestic servants employed to work in a private Domestic servants employed to work in a private

dwelling house which includes a cook, gardeners, dwelling house which includes a cook, gardeners, house servants, watchman, washer woman and house servants, watchman, washer woman and driver. driver.

Employees who have attained the age of 55 only for Employees who have attained the age of 55 only for purposes of invalidity but if they continue to work they purposes of invalidity but if they continue to work they should be covered under the Employment Injuries should be covered under the Employment Injuries Scheme. Scheme.

Self-employed persons. Self-employed persons. Foreign workers.Foreign workers.

An insured person or dependants will be entitled An insured person or dependants will be entitled to the following benefits :to the following benefits : Periodical payments in the case of invalidity Periodical payments in the case of invalidity Periodical payments in the case of disablement Periodical payments in the case of disablement

suffered as a result of an employment injury suffered as a result of an employment injury Periodical payments to the dependants of an insured Periodical payments to the dependants of an insured

person who dies as a result of an employment injury person who dies as a result of an employment injury Payments for funeral benefit or expense on the death Payments for funeral benefit or expense on the death

of an insured person as a result of an employment of an insured person as a result of an employment injury injury

Periodical payments to an insured person who is in Periodical payments to an insured person who is in receipt of invalidity pension or disablement benefit receipt of invalidity pension or disablement benefit and is so severely incapacitated or disabled as to and is so severely incapacitated or disabled as to require the personal attendance of another person require the personal attendance of another person

Medical treatments for the attendance on insured Medical treatments for the attendance on insured persons suffering from disablement persons suffering from disablement

Periodical payments to dependants of an insured Periodical payments to dependants of an insured person who dies while in receipt of invalidity pensionperson who dies while in receipt of invalidity pension

SOCSO provides coverage to eligible employees SOCSO provides coverage to eligible employees through 2 schemes namelythrough 2 schemes namely Employment Injury Insurance Scheme Employment Injury Insurance Scheme Invalidity Pension Scheme. Invalidity Pension Scheme.

These schemes are classified into 2 categories :These schemes are classified into 2 categories : First Category - Employment Injury Insurance Scheme and First Category - Employment Injury Insurance Scheme and

Invalidity Pension Scheme. The contribution payment is made by Invalidity Pension Scheme. The contribution payment is made by both the employer and employee both the employer and employee

Second Category - Employment Injury Insurance Scheme Only. Second Category - Employment Injury Insurance Scheme Only. The contribution is paid by the employer only. An employee who The contribution is paid by the employer only. An employee who is not eligible for coverage under the Invalidity Pension Scheme is not eligible for coverage under the Invalidity Pension Scheme is protected under this category. is protected under this category.

These schemes provide the benefits of invalidity These schemes provide the benefits of invalidity pension, invalidity grant, survivors pension, pension, invalidity grant, survivors pension, rehabilitation, funeral benefit, constant attendance rehabilitation, funeral benefit, constant attendance allowance and educational loan.allowance and educational loan.

The Workman’s The Workman’s Compensation ActCompensation Act

Enforced by the Labor DepartmentEnforced by the Labor Department To provide compensation to workers who To provide compensation to workers who

have accidents at work or who contract have accidents at work or who contract employment-related diseases.employment-related diseases.

Covers:Covers: Foreign workers earning less than RM 500 Foreign workers earning less than RM 500

per monthper month

Employers must take out an insurance Employers must take out an insurance policy to cover liability under the act.policy to cover liability under the act.

The Occupational Safety The Occupational Safety and Health Act 1994and Health Act 1994

Gazetted on the 25 February 1994 by the Gazetted on the 25 February 1994 by the Malaysian Parliament. Malaysian Parliament.

Enforced by the Department of Enforced by the Department of Occupational Safety and HealthOccupational Safety and Health

To ensure safety at the workplaceTo ensure safety at the workplace Carry out inspections at workplacesCarry out inspections at workplaces Organize promotional activitiesOrganize promotional activities Assist government departments with technical Assist government departments with technical

expertiseexpertise Carry out activities aimed at improving safety Carry out activities aimed at improving safety

and healthand health

Applied to the following sectorsApplied to the following sectors Manufacturing Manufacturing Mining and Quarrying Mining and Quarrying Construction Construction Agriculture, Forestry and Fishing Agriculture, Forestry and Fishing Utilities: Utilities:

Electricity; Electricity; Gas; Gas; Water; and Water; and Sanitary Services Sanitary Services

Transport, Storage and Communication Transport, Storage and Communication Wholesale and Retail Trades Wholesale and Retail Trades Hotel and Restaurants Hotel and Restaurants Finance, Insurance, Real Estate and Business Finance, Insurance, Real Estate and Business

Services Services Public Services and Statutory Authorities Public Services and Statutory Authorities

General duties of employers and self-employed persons to General duties of employers and self-employed persons to their employeestheir employees the provision and maintenance of plant and systems of work that are, the provision and maintenance of plant and systems of work that are,

so far as is practicable, safe and without risks to health; so far as is practicable, safe and without risks to health; the making of arrangements for ensuring, so far as is practicable, the making of arrangements for ensuring, so far as is practicable,

safety and absence of risks to health in connection with the use or safety and absence of risks to health in connection with the use or operation, handling, storage and transport of plant and substances; operation, handling, storage and transport of plant and substances;

the provision of such information, instruction, training and supervision the provision of such information, instruction, training and supervision as is necessary to ensure, so far as is practicable, the safety and as is necessary to ensure, so far as is practicable, the safety and health at work of his employees; health at work of his employees;

so far as is practicable, as regards and place of work under the so far as is practicable, as regards and place of work under the control of the employer or self-employed person, the maintenance of control of the employer or self-employed person, the maintenance of it in a condition that is safe and without risks to health and the it in a condition that is safe and without risks to health and the provision and maintenance of the means of access to and egress provision and maintenance of the means of access to and egress from it that are safe and without such risks; from it that are safe and without such risks;

the provision and maintenance of a working environment for his the provision and maintenance of a working environment for his employees that is, so far as is practicable, safe, without risks to employees that is, so far as is practicable, safe, without risks to health, and adequate as regards facilities for their welfare at work. health, and adequate as regards facilities for their welfare at work.

General duties of employees at work General duties of employees at work to take reasonable care for the safety and health of to take reasonable care for the safety and health of

himself and of other persons who may be affected by himself and of other persons who may be affected by his acts or omissions at work;his acts or omissions at work;

to co-operate with his employer or any other person in to co-operate with his employer or any other person in the discharge of any duty or requirement imposed on the discharge of any duty or requirement imposed on the employer or that other person by this Act or any the employer or that other person by this Act or any regulation made thereunder;regulation made thereunder;

to wear or use at all times any protective equipment to wear or use at all times any protective equipment or clothing provided by the employer for the purpose or clothing provided by the employer for the purpose of preventing risks to his safety and health; andof preventing risks to his safety and health; and

to comply with any instruction or measure on to comply with any instruction or measure on occupational safety and health instituted by his occupational safety and health instituted by his employer or any other person by or under this Act or employer or any other person by or under this Act or any regulation made thereunder.any regulation made thereunder.

The Factories and The Factories and Machinery Act 1967Machinery Act 1967

Gives protection in terms of health and Gives protection in terms of health and safety for all workers working in factories safety for all workers working in factories regardless of sex regardless of sex

The jurisdiction of the act covers all The jurisdiction of the act covers all factories factories

The Trade Unions Act The Trade Unions Act 19591959

Administered by the Trade Unions Administered by the Trade Unions DepartmentDepartment

Permitting workers to form and join trade Permitting workers to form and join trade unions provided these are registered unions provided these are registered organizationsorganizations

Provides:Provides: The procedures for applying for registration, The procedures for applying for registration,

the use of union funds, the rights and the use of union funds, the rights and liabilities of unions, and other matters relating liabilities of unions, and other matters relating to the constitution of unionsto the constitution of unions

The Industrial Relations Act The Industrial Relations Act 19671967

Enforced by the Industrial Relations DepartmentEnforced by the Industrial Relations Department To provide systems which will encourage To provide systems which will encourage

industrial harmonyindustrial harmony Is applicable throughout Malaysia and provides Is applicable throughout Malaysia and provides

for the regulation of relations between for the regulation of relations between employers and workmen or employee and their employers and workmen or employee and their trade union and the prevention and settlement of trade union and the prevention and settlement of trade disputes. trade disputes.

Emphasizes on direct negotiation between Emphasizes on direct negotiation between employers and workmen or employees and their employers and workmen or employees and their trade unions to settle their differences and to trade unions to settle their differences and to regulate their collective relationship regulate their collective relationship

The Industrial Relations Act 1967 The Industrial Relations Act 1967 Protects the legitimate rights of employers and Protects the legitimate rights of employers and

workmen or employees and their trade unions. workmen or employees and their trade unions. provides the procedure relating to submissions of provides the procedure relating to submissions of

claims for recognition and scope and representation claims for recognition and scope and representation of trade union and collective bargaining of trade union and collective bargaining

Does not allow matters relating to promotion, Does not allow matters relating to promotion, recruitment, dismissal, transfer, retrenchment, recruitment, dismissal, transfer, retrenchment, reinstatement and allocation of duties and prohibition reinstatement and allocation of duties and prohibition of strikes and lockouts over any of these matters to of strikes and lockouts over any of these matters to be included in the proposal for collective bargaining be included in the proposal for collective bargaining

provides for speedy and just settlement of trade provides for speedy and just settlement of trade disputes by conciliation or arbitration where direct disputes by conciliation or arbitration where direct negotiation failsnegotiation fails

provides the power to the Ministry of Human provides the power to the Ministry of Human Resources to intervene and to refer at any stage any Resources to intervene and to refer at any stage any trade dispute to the Industrial Court for arbitration trade dispute to the Industrial Court for arbitration

The employment (restriction) act The employment (restriction) act 19681968

Non-Malaysian Non-Malaysian citizens are required citizens are required to obtain a valid work to obtain a valid work permit before they permit before they can be employed can be employed locally.locally.

Human Resources Human Resources Development Bhd Act 2001Development Bhd Act 2001

To ensure employers conduct training for To ensure employers conduct training for their workers so as to upgrade their skills their workers so as to upgrade their skills and abilitiesand abilities

Enforced in January 1993 Enforced in January 1993 Led to the establishment of the Human Led to the establishment of the Human

Resources Development Fund (HRDF)Resources Development Fund (HRDF) Administered by the Human Resources Administered by the Human Resources

Development Council (HRDC). Development Council (HRDC).

Currently, the categories of employers Currently, the categories of employers covered under the Act are as follows covered under the Act are as follows Employers with 50 employees and above in Employers with 50 employees and above in

the manufacturing sector the manufacturing sector Employers with 10 to 49 employees and a Employers with 10 to 49 employees and a

paid-up capital of RM2.5 million and above in paid-up capital of RM2.5 million and above in the manufacturing sector the manufacturing sector

Employers with 10 employees and above in 20 Employers with 10 employees and above in 20 selected industries in the services sector, namely, the selected industries in the services sector, namely, the hotel industry, tour operating business (in-bound tour hotel industry, tour operating business (in-bound tour only), shipping, air transport, telecommunication, only), shipping, air transport, telecommunication, computer services, advertising, postal & courier computer services, advertising, postal & courier services and freight forwarding (w.e.f. 1 January services and freight forwarding (w.e.f. 1 January 1995); private higher education, training and the 1995); private higher education, training and the energy sector (w.e.f. 17 February 2000); and direct energy sector (w.e.f. 17 February 2000); and direct selling, port services, engineering support & selling, port services, engineering support & maintenance services, research & development, maintenance services, research & development, warehousing services, security services, private warehousing services, security services, private hospital services and hypermarkets, supermarkets & hospital services and hypermarkets, supermarkets & departmental stores.For hypermarkets, supermarkets departmental stores.For hypermarkets, supermarkets and departmental stores, only employers with 50 and departmental stores, only employers with 50 employees and above are required to register employees and above are required to register

Employers in the manufacturing sector with 10 to 49 Employers in the manufacturing sector with 10 to 49 employees and a paid-up capital of less than RM2.5 employees and a paid-up capital of less than RM2.5 million are given the option to register with PSMB million are given the option to register with PSMB

Manufacturing companies contribute as follows:

Companies that employ 50 employees and above

(Effective from 1 January 1993)

1% of employees' monthly wages

Companies that employ less than 50 to a minimum of 10 employees, with a paid-up capital of RM2.5 million or more

(Effective from 1 January 1995)

1% of employees' monthly wages

Companies that employ less than 50 to a minimum of 10 employees, with a paid-up capital of less than RM2.5 million are given the option to register with PSMB.

(Effective from 2 August 1996)

0.5% of employees' monthly wages