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90-Day Maternity Leave Policy to Cost Firms RM1.5b Annually: MEF

February 13, 2018

Malaysian companies running in private sector could be hit with an additional of up to RM1.5 billion for additional expenses in a year, said Malaysian Employers Federation (MEF) president Tan Sri Azman Shah Haron. The statement is made in response to recent mandatory policy that expands the maternity leave for female employees from 60 days to 90 days.

Speaking at the the Inland Revenue Board-MEF Seminar 2018 in Subang Jaya on Tuesday (Feb 6), Mr Azman Shah said the association had conducted a cost-impact study related to the additional one-month maternity leave on related stakeholders.

When an employee takes a maternity leave, he said that additional cost to employers is estimated to rise at about RM747 million a year. However, it should be noted that employers will need to pay for replacement cost, which would also amount to about RM747 million.

“Thus, the total increase will be about RM1.5 billion per year,” he said in a speech which was read by MEF VP Dr Michael Chiam Tow Hui.

Earlier, Malaysian government proposed a 90-day maternity leave for the private sector during the tabling of Budget 2018 last year. The government sector is already implementing the same policy of 90 days of maternity leave to its female employees. Employers have been warned that disciplinary actions can be taken if companies dismissed their female staff for taking the 90-day maternity leave option.

See: Malaysia’s Economic Growth Matches Strongly with Job Creation: KPKT

However, there is no specific clause related to the leave. As for now, the law states that employers in private sector are required to pay full wages for 60 days of maternity leave, The Malaysian Reserve reports.

Mr Azman Shah stated that employers are already saddled with the increase of minimum salary rate set by the government. The minimum wage for Peninsular Malaysia has increased 11 percent to RM1,000. Meanwhile, employers in East Malaysia (Sabah, Sarawak and Labuan) need to pay 15 percent increase or about RM920.

Additionally, he added that companies are also burdened by the new foreign levy policy which took effect last month, where employers are required to pay their foreign workers’ levy. He said, “Businesses would struggle as employers stand to lose about RM3 billion to RM4 billion working capital with this move (to pay the levy).”

Employers had to follow the new Employment Insurance Scheme under the Social Security Organisation since last month. The 0.2 percent monthly contribution by employers is meant to assist retrenched workers, if they are retrenched. Because of the new policy, Mr Azman Shah claimed that employers had to tighten their operational cost, including resorting to lay-offs or adopting new technology and automation to press the rising expenditure.

Read also: More than Half Professionals in Singapore Willing to Accept Contract Jobs

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