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Developments in labour, employment law
Published on: Sunday, September 11, 2022
By: S Vanugopal
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Credit: truedigitalpark.com
This is reflected in the Ministerial Orders on Minimum Wages every two years since 2018, the amendments to the Industrial Relations Act 1967 in 2020 and the Employment Act 1955 in 2022.
The amendments to the Employment Act 1955 which initially were to come into effect as of 1st September 2022 is now deferred to 1st January 2023.
Identical and corresponding amendments to the Sabah Labour Ordinance (“SLO”) by Parliament are being awaited.
The recent years have also been a period of judicial activism in the field of employment law, anchoring the right to employment on a constitutional foundation.
Employees’ rights have also been interpreted by the Courts in the light of International Conventions on Labour to which Malaysia is a party.
In this brief article the likely amendments to the important provisions in the Sabah Labour Ordinance, following the 2022 amendments to the Employment Act 1955, the 2020 amendments to the Industrial Relations Act 1967 and the Minimum Wages Order 2022 are highlighted.
Selected recent Court decisions on employment related matters are also noted.
A. Likely amendments to Sabah Labour Ordinance (“SLO”)
Following the 2022 amendments to the Employment Act the amendments to the SLO are likely to be as follows:
1. Coverage
The SLO currently only applies to employees as described in the Schedule, i.e. those whose monthly wages do not exceed RM2,500.00 and irrespective of wage level, those employed as manual labourers, supervisors of manual labourers or those engaged in recruiting employees or employed in vessels or as domestic servants.
Under the amendment the coverage would be expanded to include employees who have entered into a contract of service and those whose wages exceed RM4,000.00 a month.
The Minister by an Order similar to the Order dated 12th August 2022 made under the Employment Act 1955 would accordingly amend the Schedule on the categories of employees.
By a further Order the Minister would also exclude the application of certain provisions in the SLO to employees whose wages exceed RM4,000.00 a month.
Such provisions that would be excluded would be overtime payment and termination and lay-off benefits.
2. Maternity leave
The amendment would increase the paid maternity leave from the present 60 days to 98 days thereby keeping in tandem with the entitlement of 90 paid maternity leave in the public sector.
The amendment also keeps in tandem with the International Labour Organization (“ILO”) Maternity Protection Convention 2000 (No. 183) recommendation of not less than 14 weeks maternity leave for every child birth.
3. Paternity leave
The male employee under the amendment would enjoy 7 consecutive days of paternity leave for each confinement subject to a maximum of 5 confinements but this right shall be conditional upon the male employee being employed at least 12 months immediately before the commencement of the leave and the employee having notified the employer of his spouse’s pregnancy at least 30 days from the date of expected confinement.
4. Working hours
With the amendment the employee’s weekly working hours would be reduced from 48 hours to 45 hours.
This reduction in the working hours is in compliance with the 1962 ILO’s Reduction of Hours of Work Recommendation (No. 116) to 40 hours progressively.
Employers who fail to comply with the provision are liable to a penalty up to a maximum of RM50,000.00 upon conviction.
5. Flexible working arrangement
An employee may under the amendment submit a written application for flexible working arrangement in respect of his hours, days or place of work and his employer is required to approve or reject the application within 60 days from receipt of the request.
If the application is rejected the employer must give reasons thereof.
6. Notice of sexual harassment
Employers under the amendment would now be required to display conspicuous notice at the workplace to raise awareness on sexual harassment.
Parliament on 20th July 2022 has also passed the long awaited Anti-Sexual Harassment Act 2022 to raise awareness and to protect sexual harassment.
7. Protection against discrimination
All forms of discrimination in the workplace between employees, save as provided under the law, would be prohibited under the amendment.
The Director of Labour shall have the power to inquire and make the appropriate orders and which orders the employer must comply with.
Failure to comply thereof would render the employer liable upon conviction to a fine not exceeding RM50,000.00 and in the case of continuing offence, to a daily fine of not more than RM1,000.00.
8. Restriction on termination of pregnant employees
Pregnant employees, with the amendment, would be better protected against termination on grounds of pregnancy-related illness.
A pregnant employee may however be terminated for reasons of wilful violation of a condition of contract of service, misconduct or upon cessation of operations of the employer.
9. Sick leave
With the amendment, the employee’s entitlement to 60 days of paid sick leave in a year, where hospitalization is required, would be in addition to the annual paid sick leave entitlement where no hospitalization is required (that ranges from 14 days to 22 days based on length of service).
At present the aggregate paid sick leave entitlement in a year is 60 days.
10. Presumption of employment
The amendment would introduce the presumption of employment of an individual by a company in the absence of a written contract of service unless the contrary is proven.
This presumption however is only applicable in respect of employees as defined in the Schedule and who do not have a written contract of service.
11. Employee status
The amendment would provide guidelines in deciding the perennial problem whether a person is an “employee” under the SLO or is an independent contractor.
In the absence of a written employment contract the amendment sets out the following factors for the presumption of an employer-employee relationship:
(a) where the hours of work of the person is subject to the control and direction of another;
(b) where the person is provided with tools equipment and materials to execute the work;
(c) where the person’s work is an integral part of another person’s business;
(d) where payment is made at regular intervals.
In Ekajaya (M) Sdn Bhd v. Ahmad Mahad & Ors [2014] 3 ILR 457 the High Court discussed the application of the various tests namely the “control test”, “integration test” and the “multiple test” to unravel the true nature of the relationship between the company and its employees.
12. Increase in penalties
The general penalty for any person who commits any offence under the SLO or any rule, order or subsidiary legislation made thereunder in respect of which no penalty has been provided would on conviction be liable to a fine not exceeding RM50,000.00, which is a fivefold increase from the current penalty of RM10,000.00.
B. Highlights on 2020 amendments to Industrial Relations Act 1967
The Industrial Relations (Amendment) Act 2020 has introduced several major amendments to the Industrial Relations Act 1967.
The amendments came into effect on 1st January 2021. The key amendments are as follows:
1. Reference of unfair dismissals for Award by Director General
The discretion to refer to the Industrial Court for an Award on complaints of unfair dismissal from employment is now vested in the Director General of Industrial Relations and no longer with the Minister [Section 20(3)].
2. Continuation of claim for reinstatement by next-of-kin
A workman’s claim for unfair dismissal under Section 20(1), consonant with the common law principle, actio personalis moritur cum persona, abates upon his death.
This principle was followed in Thien Tham Sang v The United States Army Medical Research Unit & Anor [1983] CLJ Rep. 417, though inroads have since been made after this decision.
With the amendment the deceased employee’s next-of-kin may continue with proceedings brought by the deceased.
The Industrial Court also now has the power to award backwages or compensation in lieu of reinstatement/or both to the next-of-kin.
The Court however is unlikely to exercise its power to make an award of reinstatement to the next-of-kin. [Sections 29(e a); 30(6B); 32(1)(e)].
3. Interest on Awards
Monetary Awards in lieu of reinstatement would now carry interest at the rate of eight per centum per annum, commencing from the thirty-first day of the date of the Award until full payment [Section 30(1A)].
4. Retrospective effect of Awards
With deletion of the proviso to Section 30(7) the Court may now make an Award retrospectively earlier than six months from the date of reference of the dispute to the Court.
The proviso had limited the retrospective effect to not earlier than six months, save in limited cases.
5. Appeals against Awards
A person dissatisfied with an award of the Court under Section 30 may now only appeal to the High Court within 14 days from the date of receipt of the Award and the procedure in the Rules of Court 2012 for an appeal from Sessions Court, with such modication as circumstances may require, shall apply.
The provision on the right to refer to the High Court on a question of law in respect of an Award pursuant to a reference under Section 20(3) on unfair dismissal is now deleted. [Sections 33A; 33B and 33C]
The right of judicial review of the Award would also be no longer available in view of the recent Court of Appeal decision in Iskander Coast Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2019] 7 CLJ 143 and the earlier Supreme Court decision in Government of Malaysia & Anor v. Jagdish Singh [1987] 1 CLJ 451 which held that judicial review may be denied if the right of appeal is statutorily provided for.
C. Recent Court decisions
Recent Court decisions have interpretted the law to advance the protection of employees in the following areas:
1. Employment of foreign employees
The Courts will not allow in employment matters any form of discrimination between a local and a foreign employee.
The Courts will readily invoke Article 8(1) of the Federal Constitution that all persons are equal before the law and entitled to its equal protection and hold that citizenship of an employee shall have no bearing in deciding whether an employee was in permanent employment or in employment under a fixed term. [See Ahmad Zahri Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd [2002] 6 CLJ 557 (FC)]
2. Recognition of International Labour Organization Conventions
Now Courts give due regards to the purpose and intention of International Labour Organization Conventions to which Malaysia is a signatory and where domestic laws are in place.
3. Security of tenure
3.1 The International Labour Organization Convention on Termination of Employment 1982 (No. 158) promotes and encourages member countries to give effect to security of tenure in employment in the private sector.
Our Courts have accordingly given effect to this protection when examining dismissal cases under Section 20(1) of the Industrial Relations Act 1967 whether an employee’s dismissal was with just cause or excuse. [See Heng Leong Equipment Sdn Bhd v Liew Fook Chuan & Other Appeals [1997] 1 CLJ 665; Ang Beng Teik v Pan Global Textile Bhd, Penang [1996] 4 CLJ 313].
New impetus to this doctrine was given by the Federal Court in Ahmad Zahri Mirza’s case (supra).
After reviewing earlier decisions the Court distinguished a fixed term employment from an employment that is permanent in nature but dressed up as several fixed term contracts and provided the following guidelines in determining the true nature of a fixed term contract of employment:
(a) the intention of the parties;
(b) employer’s subsequent conduct during the course of employment;
(c) nature of the employee’s business and the nature of work of the employee.
3.2 The Federal Court in Ahmad Zahri Mirza (supra) also noted that the total duration or length of service with an employer is also a factor to be considered.
A contract of employment which is renewed successively without application by the employee and without any intermittent breaks in between would likely be treated as permanent employment.
3.3 The Court also revisited the seminal Federal Court decision in Assunta Hospital v. Dr. A. Dutt [1981] 1 MLJ 115 and noted that where the employment of a person required a work permit or pass from the Authority, whether the employee can obtain the work permit or not, would be an irrelevant factor in considering the renewal of the employment contract.
4. Right to transfer
It had always been considered that it is the employer’s prerogative to transfer an employee to another entity within the same group of companies.
This right however was recently challenged in Aspaliza Bt. Tawal & Ors v. Autoair Industries Sdn Bhd [2020] MLJU 1918.
The High Court drew attention to the prohibition of all forms of forced labour under Article 6(2) of the Federal Constitution save as provided under the law.
After noting that the Employment Act 1955 is a piece of beneficent social legislation aimed at affording the employee protection, the Court held that a transfer of an employee without his consent from one entity to another would be unconstitutional vis-à-vis Article 6(2) of the Federal Constitution, even if such entity is within the same group of companies and even if the terms and conditions of employment provide for such transfer.
D. Minimum Wages Order 2022
1. The Minister has pursuant to Section 23 of the National Wages Consultative Council Act 2011 made the Minimum Wages Order 2022, revising the minimum monthly wage rate from RM1,200.00 under the Minimum Wages Order 2020 to RM1,500.00.
The Minimum Wages Order 2022 came into effect on 1st May 2022. An employee who is not paid a basic wage but is paid a wage based on piece rate, tonnage, task, trip or commission the aggregate sum payable as wage shall not be less than RM1,500.00 monthly.
2. Employers who tend to engage in ingenuous ways to overcome the payment of the minimum wages should pay attention to the Federal Court decision in Crystal Crown Hotel & Resort Sdn Bhd v. Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia [2021] 4 CLJ 775.
In this case the Court was asked to decide whether service charges collected from hotel guests can be used to top up the basic wages to meet the minimum wage levels.
The Court noted that the National Wages Consultative Council Act 2011, under which the Minimum Wages Orders are made is an anti-poverty device to alleviate the working poor by enhancing their purchasing power and thereby raising their living standards and that the minimum wages under the Minimum Wages Orders are the bare minimum sum payable for work done under a contract of service for all employees.
The Court accordingly decided that no part of the service charges collected by hotels can be utilized to top up the basic wage to meet the statutory minimum wage and that service charges are to be treated as monies collected by the hotel in trust for the hotel employees and are to be paid to the eligible employees in terms of the contract of employment.
Following this decision, commissions or subsistence allowance or such other payments payable under the contract of service as well as overtime payments cannot be included to top up the statutory minimum wages.
- Vanugopal is a lawyer whose interest is in labour and constitutional issues.
- The views expressed here are the views of the writer Vanugopal and do not necessarily reflect those of the Daily Express.
- If you have something to share, write to us at: [email protected]
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