Please read carefully

This is a blog that deals with employment laws in Malaysia.

The writer :-

1. heads the employment law department in a law firm;
2. is a practising lawyer of 21 years standing;
3. regularly speaks at HR/IR conventions and conducts public and in-house training on employment laws/industrial relations matters.

This blog is for information and educational purposes only. 

The writer regrets that he is unable to address any specific employment / IR / HR related questions on this blog.  To obtain personalised advice, please contact the writer at the address provided in this blog.  Please note that consultation fees will first be payable.

(Consider this- no-one goes to a clinic without having to pay for consultation, and the medication.  Ditto for legal advise. 

I trust this clears up any misunderstanding.)

Poor Performance

Termination of employment due to poor performance can only be successfully established if the employer is able to prove the following-

• That there is sufficient objective evidence of poor performance. Mere reliance on the subjective view of the supervisor/superior/manager is insufficient.
• The employer is warned about the gap between his/her performance and the company’s expectations. In that regard, it is useful to have a detailed job description;
• The employee is provided with sufficient time and opportunity to improve. In terms of time frame, it should be between 3-6 months;
• Despite the time and opportunity afforded to the employee to improve, the level of performance remains not up to standard.

All the above must be documented.  Failure to document the above will make the employer’s case that much more difficult to prove.

Additionally, bear in mind that misconduct and poor performance are different from each other.  When a misconduct is committed, the corrective measure to be taken is in the form of a punishment, which may include summary dismissal, downgrading, or any other punishments (including warning, withholding of increment, suspension, etc), whereas for poor performance, the corrective measure taken is aimed towards improving the level of performance that hopefully will have a lasting effect.

In that regard, for poor performance, there should always be a sequential, progressive corrective action taken before the ultimate decision to dismiss is undertaken.

• Informal discussion
• Counselling
• Verbal warning
• Formal written warning
• Punishments lesser than dismissal
• Dismissal

Courts look for:-

• Objective evidence. This is absolutely crucial.  While the supervisor/superior/manager can be asked to appear as a witness for the company to provide his/her opinion on the poor performance of the employee, courts have stated that their statements will NOT HAVE MUCH VALUE UNLESS IT IS SUPPORTED WITH OBJECTIVE EVIDENCE. The company must therefore be able to demonstrate and adduce objective of actual incompetency.
• The standard of skill to be expected of an employee is that the employee is competent to do the job he is employed to do, and no more than that. Eg let us use a football example.  A goalkeeper is expected to do no more than a goalkeeping function, to remain at goal and to try to prevent the opposition team from scoring goals, NO MORE THAN THAT.  One cannot expect the goalkeeper to play the role of a defender, midfielder and striker as well.  The courts have succinctly stated that

“..the true rule is that the employee must exhibit just that much skill and no more than that he has warranted he had. If he has proclaimed that he is an expert, he must exhibit expertise. If he boasts that he is a genius, his work must be brilliant. But the presumption is against any implied warranty of extraordinary talent.”

• That the company has carried out steps 2-4 above
• That the company has not been inconsistent with its treatment of the employee
• That the company did not victimize the employee
• That the company has not set unrealistic targets for the employee.
• That the company acted in good faith at all times

OTHER FACTORS

• If the company states that it will give the employee XXX months, then the full benefit of the XXX months should be given. If the company lacks the patience and say, dismisses the employee after 2 months despite informing the employee that his performance will be monitored for 6 months, the courts may hold the dismissal to be unfair.
• For probationers, the law relating to poor performance is less stringent. It was held in a case that monthly assessment reviews that are communicated to the employee are sufficient, but it is my opinion that it is still safer to err on the safe side and ensure that it is properly documented. Be objective about the evidence you have.  If there is insufficient documentation to properly justify the termination due to poor performance, the probation period should be extended so that the company ensures that the documentation is in place.

 

Retrenchment- legal obligations

So Grab has bought over Uber.  This link suggests that the employees were given a mere 2 hours notice to pack up their belongings to vacate the office.  Whilst details remain unclear in the context in which the employees were asked to leave (compensation, notice period etc), it is an opportune time to discuss the general law in Malaysia relating to retrenchment.

The following are the legal obligations that an employer must do in a retrenchment exercise.

LEGAL OBLIGATIONS OF THE EMPLOYER IN A RETRENCHMENT
1) Notice of termination must be served on the employees affected
2) Provision of reasonable notice
3) Payment of termination benefits
4) Written statement on termination benefits
5) PK form

1) Notice of termination
Employers MUST give notice to the affected employee.  This is done either due to contract (i.e. the employment contract) or due to the law.  The purpose of a notice is to informed the affected employee that the employer is terminating his services.  How would the employee otherwise know his position in the company if the employer does not provide the notice? A notice of termination also serves to consequently enable the employee to seek alternative employment as soon as possible.

For employees who are covered by the Employment Act 1955, section 12(3) is relevant.  It basically states that despite the notice period in the employment contract, employers must give at least the statutory notice.  Section 12 is reproduced:-

12. Notice of termination of contract
(1) Either party to a contract of service may at any time give to the other party notice of his intention to terminate such contract of service.

(2) The length of such notice shall be the same for both employer and employee and shall be determined by a provision made in writing for such notice in the terms of the contract of service, or, in the absence of such provision in writing, shall not be less than —
(a) four weeks’ notice if the employee has been so employed for less than two years on the date on which the notice is given;
(b) six weeks’ notice if he has been so employed for two years or more but less than five years on such date;
(c) eight weeks’ notice if he has been so employed for five years or more on such date:
Provided that this section shall not be taken to prevent either party from waiving his right to a notice under this subsection.

(3) Notwithstanding anything contained in subsection (2), where the termination of service of the employee is attributable wholly or mainly to the fact that–
(a) the employer has ceased, or intends to cease to carry on the business for the purposes of which the employee was employed;
(b) the employer has ceased or intends to cease to carry on the business in the place at which the employee was contracted to work;
…
the employee shall be entitled to, and the employer shall give to the employee, notice of termination of service, and the length of such notice shall not be less than that provided in paragraph (2)(a), (b) or (c) as the case may be, regardless of anything to the contrary contained in the contract of service.

2) Provision of reasonable notice
If the affected employee is OUTSIDE the scope of the EA, follow the contractual provision that is provided for in the employment contract.  If there is no contractual provision, then the principle of reasonable notice would apply.  What is “reasonable notice” will depend on the facts and circumstances of the case, taking into consideration various factors, including the position of the employee and the industry of the employer.

3) Termination Benefits
If the affected employee is within the Employment Act 1955, the Employment (Termination & Lay-Off Benefits) Regulations 1980 would apply.

To be entitled to the termination benefits, the employment of the affected employee has to be terminated for any reason other than attainment of the age of retirement, on grounds of misconduct or on a voluntary basis by the employee.

Additionally, to be entitled for such benefits, the employee must be employed under a continuous contract of employment for a period of not less than 12 months before the date of termination.

Entitlement and Calculation under the Employment (Termination & Lay-Off Benefits) Regulations 1980
< 2 years service = 10 days for every year
> 2, < 5 years service = 15 days for every year
5 or more years service = 20 days for every year
Based on average true days wages.

For the affected employees who do not fall within the Employment Act 1955, then it depends on whether the contract of employment provides for it. It may be express or implied, eg past practices of the company.

4) Written statement on termination benefits
This is specifically provided for in Regulation 12 of the Employment (Termination & Lay Off Benefits) Regulations 1980 – employer to issue written particulars or statement to the employee stating the amount of termination benefits and manner of calculation.

5) Submission of PK form
The employer fills up and completes a termination form known as the PK form.  This requirement was gazetted as P.U. (B) 430/2004 on 11 November 2004 and any employer who fails to comply is guilty of an offence under section 63 of the Employment Act 1955, and if found guilty could be fined not more than RM10,000.

Employers are required to report to the nearest Jabatan Tenaga Kerja Semenanjung Malaysia at least 30 days before any action is implemented by using Form PK.

The PK Form is applicable to: 1) retrenchment; 2) VSS; 3) Temporary Lay-Off; 4) Salary Reduction.

There are 6 parts in the PK Form and there are time limits for the submission of the different parts. So, for Parts I to IV, the form has to be submitted at least 30 days before the retrenchment takes place. Part V has to be submitted within 14 days after the retrenchment takes place; Part VI would need to be submitted within 30 days after the retrenchment takes place.

9 May 2018

The caretaker federal government declared 9th May 2018 as a public holiday so that Malaysians can vote in the upcoming 14th General Elections.

This holiday is a public, nationwide holiday.  That would mean that the declaration is made under s. 8 of the Holidays Act 1951.  Difference between s.8 and s.9? Section 9 is state holiday that is only for state, and section 8 is nationwide.  Also, this is a holiday that was declared at the last moment, and not a holiday that was already scheduled as a public holiday at the beginning of the year.

For those under the Employment Act 1955, the rights relating to holidays are found in section 60D.  This holiday is a compulsory public holiday under s. 60D(1)(b) of the Employment Act 1955.  As this is a “last minute” declared holiday, there is no need to seek the consent of the employee to substitute it.

If employees are still needed to work on 9th May 2018:-

• the company may grant another day as a paid holiday to substitute this holiday.  The consent of the employee to make the substitution for this holiday is not needed.
• If the company does not substitute the holiday, then the company must pay the public holiday rate to the employees who are working on that day.
• If the company substitutes the public holiday, then the company may pay the normal rate to the employees who are working on that day.

Despite the above, I would suggest companies to observe 9 May 2018 as a public holiday as it is an occasion that takes place once in every 5 years.  If for some reasons, the company still needs to operate on 9 May 2018 and the companies require their employees to work that day,  do remember that the law still applies- employers are to provide ‘reasonable’ period for voting.

Proposed amendments to Employment Act 1955

Let us get this out of the way:-

The Employment Act 1955 IS NOT AMENDED YET.  If the Employment Act 1955 is not amended yet, then, correspondingly, THERE IS NO 90 DAY MATERNITY, YET.

Read through the media report thoroughly.  Please also have a discerning attitude, in determining whether it is accurate news or otherwise.

If Companies wish to give a 90 day maternity leave on account of media reports, that is their prerogative.  But the fact remains that the Employment Act 1955 which provides maternity of 60 days, has not been amended yet to change it to 90 days.  Nor has there been any regulations, rules, orders etc passed to the effect that it is 90 days.

To amend the Employment Acts 1955, it must go through Parliament, be debated, voted upon and agreed .  At present, there has been no indication of that taking place.

Below are the proposed amendments to the Employment Act 1955:-

1. Proposal to increase Maternity Leave to 90 days.
2. Proposal to have a maximum of 360 days of paid maternity leave per lifetime of each employee.
3. Proposal to prohibit termination from employment due to pregnancy.
4. Proposal to introduce a new section to prohibit certain types discrimination at work.
5. Proposal that employee’s wages be remitted to the bank account and to remove payment by cheque.  Payment in cash may be allowed, if (a) employee requests for it and (b) the employer obtains approval of the Director General.
6. Guidelines for Solat prayers- employers to allow employees to perform the Solat prayers for 20 minutes each prayer time, and 1.5 hours for Friday prayers.

Until and unless this is passed in Parliament, it remains what it is- only a proposal.  Until then, it may be subject to further refinements / amendments / modifications.

25 April 2018

Well, was 24 April 2018 a holiday? See my post below.

There is no holiday on 24 April 2018

https://www.thestar.com.my/news/nation/2017/04/03/april-24-holiday-for-king-installation/

Click the link above.  Rumour has it that the above link was extensively circulated as the basis for a holiday on 24 April 2018.

1. The Malaysian Government publishes a list of holidays (national and public) every year.  There is nothing to indicate that 24 April 2018 is a national holiday.
2. Ok, so even if the government does not publish 24 April 2018 in the list of holidays, it is still possible to declare it with short notice (eg, the announcement of a public holiday after the SEA Games).   But please check all the local news portals, and google “24 April 2018”, and see if any of the news portals actually state 24 April 2018 to be a holiday.  I doubt so.
3. The article in The Star newspaper is dated 3 April 2017.  The holiday is only for the year 2017.
4. Logically speaking, a coronation should only take place one time.  A coronation is not a yearly event that is celebrated like a birthday, or a religious event.

 

Polling 9 May

Now that we are aware of the polling date being 9 May 2018 this year, let us delve into the law.

Election Offences Act 1954.

“(1) Every employer shall, on polling day allow to every elector in his employ a reasonable period for voting and no employer shall make any deductions from the pay or other remuneration of any such elector or impose upon or exact from him any penalty by reason of his absence during such period.

(3) Any employer who, directly or indirectly, refuses or by intimidation, undue influence, or in any other manner, interferes with the granting to any elector in his employ, of a reasonable period for voting, as in this section provided shall on summary conviction be liable to a fine or five thousand ringgit or imprisonment for one year.”

SUMMARY

Polling Day is not necessarily a public holiday.  It MAY BE declared by the State Government, but is not compulsory.   Check with your State Government to see if May 9 is declared as a public holiday.  This may vary from state to state, i.e. some states may declare it as a holiday, and other states may not.

Even if it is declared as a public holiday in the relevant states, whether the employer is compelled to observe it depends on whether the company observes all gazetted public holidays in a year.  Read the company policy.   If yes, the company observes all gazetted public holidays in a year, then YES- the company must observe it.  If no, then the company need not observe it.

If it is YES, i.e. the company does observe the public holidays, that doesn’t mean that the company must be closed for that day.  If the company has employees who fall under the Employment Act 1955, then the Company must pay them accordingly (Public Holiday rates plus overtime (where applicable); OR grant another day as replacement).

For employees outside the Employment Act, do check what is the company’s policy on this.  If there is no policy on this, the company has the discretion to do the necessary- this is however always subject to section 25 above, that the company must provide at minimum “reasonable period” to vote.

Differences between Labour Court vs Industrial Court

In summary, the Labour Court’s powers are more limited compared to the Industrial Court.

1. The Labour Court may may inquire into and either confirm or set aside any decision made by the employer under section 14 of the Employment Act 1955, and only on non-payment of wages or other payments.
2. The Industrial Court has far more powers, which may include the power to decide on trade disputes, trade union recognition, order reinstatement of the claimant to his former position, and awarding back-wages and/or compensation in lieu of reinstatement.

LABOUR COURT	VS	INDUSTRIAL COURT
Only has the power to hear complaints from 2 categories:- A) THOSE WHO COVERED BY THE EMPLOYMENT ACT 1955 (defined as “employees”) B) THOSE NOT COVERED BY THE EMPLOYMENT ACT- Section 69B– Power of the Labour Court to hear complaints from persons earning up to RM5,000.00 (excluding commission, subsistence allowance or overtime) This means that those outside the scope of EA can file a claim at the Labour Court with regard to non-payment of wages or any payment due to them under their contract of service.  It is to be noted that the power of the Labour Court is limited to what is provided for in the contract of service only and not to what is provided in EA or its regulations like o/t or termination benefits unless these are also provided in the contract of service.  Section 69C- Power to hear indemnity claims by either party (earning not more than RM5,000, indemnity in lieu of notice due from either party)		So long as the person is a “workman” as defined in section 2 of the Industrial Relations Act 1967, the Industrial Court has the power to hear complaints from the same. This includes- those covered by the Employment Act 1955 and those who fall within the definition of “workman” Independent contractors engaged on contract FOR service are excluded.
Has the power to inquire into any dismissal is only in relation to section 14(1)(a) of the EA.  It may inquire into and either confirm or set aside any decision made by the employer under section 14.  However for s14(1)(a), the power of the court is limited to payment of salary in lieu of notice and whatever other payments eg termination benefits that the employee might be entitled to. NO POWER TO ORDER REINSTATEMENT		Has the power to hear all industrial disputes, including unfair dismissal, trade union recognition, trade disputes; Has the power to order reinstatement of the employee; Has the power to penalize the companies, including but not limited to- backwages of up to 24 months; 1 month for every year of service (in lieu of reinstatement), other penalties / compensation
Labour Court is prohibited from setting aside any decision by the employer under s14(1)(c) i.e. any lesser punishment, if that punishment did not result in any loss of wages or other payments due to the employee under his contract of service. If the lesser punishment was suspension without pay, the Labour Court has the power to set it aside and order the employer to restore the full wages, if after hearing the case it is satisfied that there was no basis for the employer to have imposed that punishment.
The Labour Court is limited to complaints about non-payment of wages or other payments. The Labour Court has no jurisdiction to hear claims in respect of non-contractual cash payments or in respect of benefits in kind.

Section 69A Employment Act 1955– The Labour Court is prohibited from inquiring into, hearing or deciding on any despite which is pending in any proceeding under the IRA 1967 or has been decided upon by the Minister under s.20(3) IRA 1967.

This means that if there is any dispute that is pending before the Industrial Relations Department or a dismissal case that the Minister has already decided upon whether to refer the case, the Labour Court is prohibited from hearing the case. Eg it happens sometimes that a dismissed workman files a case with IRD under s. 20 IRA and at the same time files a claim before the Labour Court for termination benefits. In such a case, the employer can object to the Labour Court proceeding with the case.

Employment Insurance System Act 2017

Summary of Employment Insurance System Act 2017 (“EIS Act 2017”)

1) The EIS Act 2017 came into operation on 1st January 2018.

2) EIS is administered by the Social Security Organisation of Malaysia (“SOCSO”).

3) The EIS is to help employees who have lost their employment, by way of financial assistance.

4) EIS Act 2017 applies to all industries having one or more employee(s).

5) EIS excludes-
a) those employed on a casual basis;
b) spouse of the employer;
c) any employee of a local authority / statutory body;
d) domestic servants;
e) any persons detained in any prison, place of detention etc;
f) any employee who has not attained 18 years of age, or who has attained 60 years of age;
g) any person permitted to win minerals on the land of another in consideration for a portion;
h) any member of public service of the Federation or States;
i) employees who have attained 57 years of age before the EIS Act 2017 where no contributions were paid.

6) Contribution Rate– a total of 0.4% of the(comprising 0.2% by employer, PLUS 0.2% by the employee), subject to the contribution rate being capped on wages of RM4,000.00 per month. This rate may be revised every 3 years. Contribution is to be paid no later than the 15th of every month.

7) “Wages” is defined as “…all remuneration payable in money by an employer to an employee including any payment in respect of leave, holidays, overtime and extra work on holidays but does not include:–
* any statutory contributions (eg EPF);
* travelling allowance;
* any sum paid to employee for special expenses incurred as a result of employment;
*any gratuity on discharge or retirement;
* any annual bonus;
* any benefit provided by SOCSO;
* any other remuneration prescribed.”

8) Benefits
a) Job Search Allowance
A monthly payment to for a period of 3 to 6 consecutive months to assist an insured person who has lost employment during the period he is seeking for employment;

b) Early Re-employment Allowance
An incentive paid in lump sum to an insured person for accepting an offer of employment within the waiting period or the period of receiving the Job Search Allowance.

c) Reduced Income Allowance
A lump sum payment to an insured person who has 2 or more employments and has lost one or more of his employments.

d) Training Allowance and Training Fee
A monthly payment to an insured person for a period of not more than 6 months for attending any training in Malaysia provided by a training provider.

A training fee of up to RM4,000.00 will be payable to an approved training provider for up-skilling. There is also a training allowance provided for general expenses.

9) Entitlement- there must be a minimum contribution of 12 months for the 1st claim. If the affected employee has successfully made a first claim, and unluckily has lost his/her job again and needs to make a subsequent claim, the contribution from previous employment is NOT taken into account. There must be a minimum contribution period for EACH and EVERY new claim, and it increases exponentially. Eg for 2nd claim, there must be a minimum contribution of 16 months, and so on.