Understanding 9 Key Amendments of Malaysian Employment Act 1955

The Employment Act (EA) of 1955 is a federal legislation in Malaysia that serves as the foundational legal framework governing employment terms and conditions within the nation. In July 2022, the Employment (Amendment) Act 2022 came into effect, amending the Malaysian Employment Act 1955 to adapt the regulation to workers.

1. The Scope of “Employee” 

Pre-amendment, the Act only applied to two kinds of employees: 

• Regardless of occupation, those making less than RM2,000 per month. 
• Regardless of pay, workers that performed certain vocations, including manual labor, those who supervised manual laborers, and those who drove mechanically propelled vehicles. 

Following the enactment of the Employment (Amendment) Act 2022, the Act’s provisions will extend to individuals who have entered into an employment or service agreement. Nonetheless, certain aspects, such as compensation for work conducted on rest days and public holidays, overtime pay, termination procedures, layoff benefits, and others, will exclusively apply to a particular category of employees earning RM4,000 or less.

2. Flexible Working Arrangements (FWAs) 

Due to the revisions made to the Employment Act (EA), Malaysian employees wishing to pursue Flexible Work Arrangements (FWAs) can formally propose their preferences to their employers. 

These FWA requests should be in written form and can involve suggested changes to working hours, workdays, or the workplace. Subsequently, employers are obliged to furnish a written response to the employee’s request within a 60-day timeframe, and if applicable, provide reasons for any denials.

3. Maximum Working Hours 

In the past, employees in Malaysia were allowed to work up to 48 hours per week. However, starting from January 1, 2023, this upper limit has been reduced to 45 hours per week, excluding meal breaks. 

Deputy Human Resources Minister Datuk Awang Hashim explained that this adjustment was implemented to safeguard the well-being of workers in accordance with the standards set by the International Labour Organization (ILO) conventions.

4. Sick Leave 

Modifications to sick leave policies will include eliminating the provision that limits the combined duration of sick leave and hospital stays to 60 days. Consequently, employees will be entitled to a maximum of 60 days of sick leave specifically for hospitalization, in addition to their regular sick leave entitlement.

Read more: Type of Allowances for F&B Employees in Malaysia 

5. Maternity and Pregnancy Protection 

The duration of (paid) maternity leave has been extended from 60 days to 90 days. A female employee may, with the consent of her employer, commence work at any time during the maternity leave if she has been certified fit to resume work by a registered medical practitioner, regardless of whether she is entitled to receive maternity allowance.

Additionally, the amendment establishes legal protections preventing an employer from terminating a female employee due to her pregnancy or pregnancy-related illness. 

Exceptions to this protection apply in cases where the employee violated her employment contract, engaged in misconduct, or if the business is closing. However, in any circumstance, the employer must demonstrate that the termination is unrelated to the employee’s pregnancy or illness.

6. Paternity Leave 

The amendment introduces a significant change by introducing paid paternity leave, representing a notable development in the Malaysian Employment Act of 2023. Under this provision, working fathers will be eligible for 7 days of paid paternity leave, which must be taken as a continuous period.

To qualify for paternity leave, married male employees must meet certain criteria. They must have been employed by the same employer for a minimum of one year prior to the commencement of their paternity leave. Additionally, they are required to provide their employer with a notice period of 30 days from the expected due date of the pregnancy or as soon as possible after the birth.

Read more: How to Apply Foreign Worker Quota in Malaysia? 

7. Provision of Employment for No Contract of Service 

As per the Bill, if an employee does not possess a written employment contract, they will be considered an employee in any legal proceedings related to violations of the Act if the following conditions are met:

• They work under the supervision or control of another person regarding the manner of their work.
• Their working hours are determined and supervised by another person.
• They are provided with tools, supplies, or equipment by another individual to perform their tasks.
• Their work is an essential part of another person’s business or enterprise.
• Their labor primarily contributes to the profit of another person.

8. Sexual Harassment 

The amendment increases the penalty for employers who fail to investigate claims of sexual harassment from RM10,000 to RM50,000. Additionally, employers are now mandated to display a notice in the workplace to promote awareness about sexual harassment and its prevention.

9. Employment and Termination of Foreign Workers 

Previously, employers who hired foreign workers were required to notify the Director-General about their new hires and provide relevant details within a 14-day timeframe. 

However, with the recent amendment, employers seeking to employ foreign workers must now obtain prior approval from the Director-General.  Failure to secure this approval may result in penalties, including fines of up to RM 100,000, imprisonment for up to five years, or both.

Furthermore, employers are now obligated to promptly inform the Director-General within 30 days if they terminate the employment of a foreign worker, or in cases of employment pass expiry, repatriation, or deportation. 

In the event that a foreign employee absconds, meaning they leave their job without informing their employer, the employer is required to notify the Director-General within 14 days.