3 Main Changes in Malaysia Employment Law 2020

July 16, 20203:29 pm6272 views
3 Main Changes in Malaysia Employment Law 2020
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Malaysia Human Resources Ministry tightened its regulations in 2019 by creating changes to the existing Employment Rules and Laws. HR Minister M. Kulasegaran said that the changes will amend the labour law to further safeguard the rights of workers. The proposed amendments and changes would involve seven pieces of labour-related legislation that can be summarised into three aspects, as follows:

1- Revised minimum wage rates 

New minimum wage rates have been gazetted and come into force from 1 February 2020. The minimum wage rate will depend on the employee’s place of work, with those working within 56 identified city and municipal council areas being entitled to a minimum wage of RM1,200 monthly or RM5.77 daily. The minimum wage for those outside the identified areas is RM1,100 monthly or RM5.29 hourly.

See also: Majority Workers in Malaysia Keen to Continue Working from Home: Survey

2- Amendments to the dispute resolution process  

The Industrial Relations (Amendment) Bill 2019 (“IR Bill”) was passed by Parliament in December 2019 and will come into force in 2020. The IR Bill makes numerous amendments to the Industrial Relations Act 1967, with the main changes affecting the dispute resolution process in relation to unfair dismissal claims and union disputes. 

One significant change that will affect employers is the removal of the Minister’s discretion to refer to unfair dismissal representations to the Industrial Court. The IR Bill moves the referral power to the Director General of Industrial Relations (“DGIR”). This is to say that overall policy for nearly every representation of DGIR will be referred to the Industrial Court. The DGIR is also obliged to refer the representations directly to the Industrial Court if they are satisfied with the representations being settled. This will have a major impact on how employers handle dismissals and will affect the negotiating power of the parties when discussing severance compensation or mutual separation agreements. 

There are a host of other changes, and the aim of the changes introduced by the IR Bill is to expedite the dispute resolution process.

3- Increase in paid maternity leave 

The Government has announced that it proposes to increase paid maternity leave to 90 consecutive days (from the current 60 consecutive days) by 2021, along with the above changes.

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