Employment Act 1955: Must-Know 2023 Amendments for HR Managers in Malaysia

December 29, 2022
Nicholas K

Disclaimer: This article should not be considered to be legal advice, and altHR is not liable for any actions taken based on this article. Updated as of 29 December 2022.

If you’re a regular visitor to the altHR Resources blog — and/or you’re a practitioner in the field of human resources — you’ll know that the Employment Act 1955 is one of the governing authorities when it comes to employment law in Malaysia. 

However, the EA 1955 is an Act that has been due for an update for quite some time now. Taking into account natural changes in cost of living, currency valuation, and other developments, the Employment (Amendment) Bill 2021 was passed over a year ago with a view to improving protection offered to employees in Malaysia. 

The Minister of Human Resources, Datuk Seri Saravanan Murugan has just announced that the Employment (Amendment) Act 2022 will come into effect on the 1st of January 2023— along with some key changes to the First Schedule which defines employees who will be covered by EA 1955. 

Here are some key changes HR managers in Malaysia must take note of: 

1. EA 1955 now covers ALL employees irrespective of wages

Up till now, the Employment Act 1955 only covered employees who received monthly salaries of RM2,000 and below (as well as other specified categories of workers). This section of the Act has arguably been long overdue for change, and now, amendments to the First Schedule of the Act mean that all employees are covered — no matter how much they are paid. 

There is a caveat to this, however, those earning above RM4,000 per month exempted from certain provisions in the Act, including: 

  • Section 60(3) - Overtime rates for employees working on rest days 
  • Section 60A(3) - Overtime rates outside working hours 
  • Section 60C(2A) - Allowance for shift-based work 
  • Section 60D(3) - Overtime on public holidays
  • Section 60D(4) - Overtime for half working days on holidays
  • Section 60J - Termination, lay-off, retirement benefits 

This finally means that employees who were previously not covered by the Act (such as those earning above RM2,000 per month) can now rely on the statutory law. Previously, this category of employees had to rely solely on the terms of their employment contracts — which led to a certain degree of confusion for both employers and employees. 

2. Flexible working arrangements are now provided for in the Act

The amended Employment Act now includes Part XIIC — a crucial section that provides for flexible working arrangements. This is particularly important for the post-pandemic business landscape, with flexible work arrangements and other modern work models now becoming more commonplace. 

Under Section 60P and 60Q, employees can now apply in writing for flexible work arrangements from employers. Then, employers must respond with a decision within 60 days, and in cases of rejection, reasons must be given to employees. 

3. Change in maximum working hours for workers

Previously, workers in Malaysia had a maximum number of weekly working hours of 48 hours — which roughly equates to around 8 hours per day, 6 days a week. 

However, from 1st January 2023, this maximum number has now been reduced to 45 hours per week (excluding meal time), with Deputy Human Resources Minister Datuk Awang Hashim explaining that this will help to safeguard the welfare of workers in line with the International Labour Organisation (ILO) Convention

If you’re wondering how you can track these hours, altHR offers a powerful time-tracking tool to ensure that you never run afoul of the new rules — find out more here

4. Increased (paid) maternity leave for mothers

Another change that should be seen as a welcome update is the increased entitlement of paid maternity leave for working mothers who are recovering post-delivery. Previously, the EA 1955 provided for just 60 days, but now, the 2022 amendment will see new mothers entitled to 98 days to recuperate. 

Again, you can track all leave entitlements securely and accurately with the Leaves module on altHR, Malaysia’s best HRMS. 

5. The introduction of (paid) paternity leave

In line with that, the 2022 amendment will now see (for the first time) a provision for paid paternity leave. This is a landmark moment for employment law in Malaysia, one that will see working fathers entitled to 7 days of consecutive, paid paternity leave under Subsection 60FA. 

Some conditions, however:

  • The male employee must be married to the mother in question 
  • He must have been employed by the same employer for at least 12 months 
  • He must notify the employer at least 30 days from expected confinement (or as early as possible)

6. Protection for pregnant mothers against termination 

The 2022 amendments also include more protection for pregnant female employees, as well as those suffering from pregnancy-related illnesses. From 1st January 2023, it will now be an offence under the Employment Act 1955 for employers to terminate (or give notice of termination) to this category of employees, except: 

  • Breach of contraction 
  • Misconduct 
  • Closure of business

7. Gig workers are now protected

A new section has now been added to the Act that covers the presumption of employment — even if there isn’t a written contract. Once the following conditions have been met, an individual should be considered to be an employee under law if: 

  1. Their manner  of  work  is  subject  to  the  control  or  direction  of  another  person;     
  2. Their hours  of  work  are  subject  to  the  control  or  direction  of  another  person
  3. They are  provided  with  tools,  materials  or  equipments  by  another  person  to  execute  work
  4. Their  work  constitutes  an  integral  part  of  another  person’s  business
  5. Their work is performed solely for the benefit of another  person;  or      
  6. where  payment  is  made  to  them  in  return  for  work  done by them at regular intervals and such 

This effectively means that gig workers, such as those delivery partners and for-hire drivers can now rely on the updated Employment Act 1955 for protection against employers.  

8. More awareness for sexual harassment 

A new section that purportedly looks to raise awareness on sexual harassment in the workplace is Section 81H. Now, employers are required to display a notice to raise awareness on sexual harassment in the workplace. This notice must be placed in a conspicuous location, and it must be displayed at all times. 

9. Employment of foreign workers 

Changes have also been made to Section 60K, which covers the employment of foreign workers. Previously, employers who hire foreign employees were required to inform the Director-General of new foreign employees along with details within 14 days of employment.

With the 2022 amendment, however, employers are now required to obtain prior approval from the Director-General in order to hire foreign employees. Meanwhile, employers must also notify the Director-General within 30 days if/when foreign employees are terminated.

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altHR: Taking care of employees and employers

Our long-term aim here at altHR is to enable Malaysian businesses to be awesome at doing what they do with Digi’s super app, altHR. With that in mind, we’ve compiled a huge resource of HR-related guides and content, including guides such as this, and even podcasts and webinars on recruiting. 

Manually keeping track of HR processes like leave entitlements and even performance reviews for employees can be a challenging process for employers and HR professionals — but it doesn’t have to be. 

altHR can help with this. The Leaves module (one of the most popular features on the app) is a comprehensive tool that helps to keep track of your employees leave allocations, requests, and policies. 

You’ll even be able to handle the more complex aspects of leave policies, such as the different entitlements for different groups of employees based on tenure with the company, marital status, levels, carry-forward balances, replacement leave policy, and even leave reports. There are even options for automatic carry-forward leave balances, or custom limits you can set. 

And of course, all of that works seamlessly with the other modules in the new normal, such as Highlights,  Documents and Expenses.

HR professionals are often faced with daunting, often tedious tasks on a daily basis — tasks that have become even more difficult to handle in today’s fast-moving digital world. 

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