CHAPTER 16 – THE EMPLOYMENT ACT AND SABAH AND SARAWAK LABOUR ORDINANCES

KEY CONCEPTS AND SKILLS Categories of employees covered by the Employment Act and the Sabah and Sarawak Labour Ordinances What is a contract of service and different ways a contract of service can be terminated Differences between a contract of service and a contract for service Provisions for the protection of women under the employment laws Minimum benefits provided for employees under the employment laws

CHAPTER OUTLINE Application of the laws Contract of service Termination of contract Termination due to misconduct Termination due to absence without prior leave Contract for service Probation Wages Payment of wages Advances and deduction of wages Employment of women Maternity protection Conditions of service

INTRODUCTION Employment Act, Sabah Labour Ordinance, and Sarawak Labour Ordinance Laws which provide for protection of employees in Malaysia Specify terms and conditions of service and provide details of minimum fringe benefit entitlements Employment Act covers employees in Peninsula Malaysia Sabah and Sarawak Labour Ordinances cover employees in Sabah and Sarawak respectively.

APPLICATION OF THE LAWS First Schedule of Employment Act specifies classes of people Sabah and Sarawak Labour Ordinances, specified in Subsection (2) of Section 2 of Schedule Employment Act covers all employees, irrespective of occupation or job title, whose wages do not exceed RM1,500 per month Sabah and Sarawak Labour Ordinances cover all employees whose wages do not exceed RM2,500 per month.

APPLICATION OF THE LAWS Employment Act also covers following classifications of employees, irrespective of wages 1. Those engaged in manual work. 2. Those engaged in the operation or maintenance of any mechanically propelled vehicle. This would include van and lorry drivers, and even pilots. 3. Those who supervise or oversee other employees engaged in manual labour employed by same employer in and throughout performance of their work 4. Those who are engaged in ships except certificated officers. 5. Those engaged as domestic servants.

APPLICATION OF THE LAWS Sabah and Sarawak Labour Ordinances cover following classifications of employees, irrespective of wages 1. Those engaged in manual work. 2. Those engaged in the operation or maintenance of any mechanically propelled vehicle. 3. Those who supervise or oversee other employees engaged in manual labour employed by the same employer in and throughout the performance of their work. 4. Those engaged in recruiting employees. 5. Those who are engaged in ships except certificated officers. 6. Those engaged as domestic servants.

APPLICATION OF THE LAWS Section 69B of Employment Act [Section 7C Sabah Labour Ordinance and Section 8C of Sarawak Labour Ordinance] grant additional powers to Director-General of Labour in Peninsula Malaysia and Director of Labour for Sabah or Sarawak to cover employees whose wages per month do not exceed RM5,000 Extended power limited to disputes in respect of wages or other payments in cash due to the employee under the contract of service.

APPLICATION OF THE LAWS Section 69C of Employment Act [Section 7D Sabah Labour Ordinance and Section 8D of Sarawak Labour Ordinance], Director-General of Labour or Director of Labour for Sabah or Sarawak may inquire into and decide claims for indemnity for termination of contract without notice

CONTRACT OF SERVICE An agreement, whether oral or in writing, and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve him. A contract of service for a specified period of time exceeding one month shall be in writing. Written contract of service shall also include a clause setting out manner in which such contract may be terminated by either party. Terms and conditions in a contract of service cannot be less favourable than those in the law

CONTRACT OF SERVICE Contract of service cannot restrict rights of any employee to join, participate or organise a trade union However, Section 5 (2) of Industrial Relations Act states that a person appointed or promoted to a managerial position can be required not to be a member of a trade union catering for workmen Also those employed in a confidential capacity in matters relating to staff relations

TERMINATION OF CONTRACT Notice period for termination of contract shall be same for both employer and employee and shall be in writing If no provisions in writing then notice period shall follow that specified in law Period can be less if written in contract of service YEARS OF SERVICE NOTICE less then two years' service 4 weeks two to five years' service 6 weeks more than five years' service 8 weeks If notice of termination due to reasons related to redundancy, then notice of termination shall not be less than what is in the law

Termination and Lay-Off Benefits Regulations Provides for following benefits in event of termination or lay-off: (a) ten days' wages for every year of employment under a continuous contract of service if he has been employed for a period of less than two years (b) fifteen days' wages for every year of employment if he has been employed for two years or more but less than five years; and (c) twenty days' wages for every year of employment if he has been employed for five years or more; and pro-rata as respect an incomplete year, calculated to the nearest month.

TERMINATION DUE TO MISCONDUCT An employer may dismiss an employee on grounds of misconduct after due inquiry In such a case, no notice period is required and employee may be dismissed immediately.

TERMINATION DUE TO ABSENCE WITHOUT PRIOR LEAVE An employee shall be deemed to have broken his contract of service with the employer if he has been continuously absent from work for more than two consecutive working days without prior leave from his employer, unless he has a reasonable excuse for such absence and has informed or attempted to inform his employer of such excuse prior to or at the earliest opportunity during such absence.

TERMINATION DUE TO ABSENCE WITHOUT PRIOR LEAVE An employee who is on medical leave but does not inform or attempt to inform his employer of such leave within forty-eight hours of the commencement thereof shall be deemed to absent himself from work without the permission of his employer and without reasonable excuse for the days on which he is so absent from work

CONTRACT FOR SERVICE Contract for service should not be confused with contract of service Contract for service defined as a contractual arrangement by which one person agrees to provide workplace services to another and neither is the employer or the employee

PROBATION No provision in Employment Act or Sabah or Sarawak Labour Ordinances for probation period Practice in most organisations that new employees employed initially on probation Probation means a trial period where new employee given opportunity to prove he is capable to satisfaction of employer before he can be considered for permanent employment.

PROBATION At end of probationary period employer can either confirm or not confirm employee, or give employee an extension of probationary period If no communication by employer, probationer will continue as probationer but employer cannot continue to extend his probationary period indefinitely Probationer still a workman under Industrial Relations Act and entitled to protection from unfair dismissal under law Except for misconduct, a probationer cannot be terminated before end of his probationary period.

WAGES Wages means basic wages and all other payments in cash payable Includes all allowances that employee is entitled Annual bonus not part of wages. Ordinary Rate of Pay Wages which an employee is entitled to receive for the normal hours of work for one day.

PAYMENT OF WAGES Wages shall be paid in legal tender (i.e. cash) With employee’s written consent, employer may pay wages into bank or by cheque Illegal for employer to impose condition as to place or manner or person wages paid to be spent No employer shall pay wages in taverns (pubs) or places of amusement or retail shops except in cases of employees employed in such places.

PAYMENT OF WAGES Wage periods may not exceed one month Wages shall be paid not later than seven days after last day of any wage period

ADVANCES AND DEDUCTION OF WAGES Except for certain specified advances or loans to employees not to exceed what employee has earned in previous month

ADVANCES AND DEDUCTION OF WAGES No deductions can be made from wages of an employee except for deductions to the extent of any overpayment of wages made during the immediately preceding three months from the month in which deductions are to be made, by the employer to the employee by the employer’s mistake deductions for the indemnity due to the employer by the employee deductions for the recovery of advances of wages made provided no interest is charged deductions authorized by any other written law.

ADVANCES AND DEDUCTION OF WAGES Following deductions shall only be made at request in writing of the employee: deductions in respect of the payments to a registered trade union or co-operative thrift and loan society of any sum of money due to the trade union or society by the employee on account of entrance fees, subscriptions, instalments and interest on loans, or other dues deductions in respect of payments for any shares of the employer’s business offered for sale by the employer and purchased by the employee.

ADVANCES AND DEDUCTION OF WAGES Following deductions shall not be made except at request in writing of employee and with prior permission of D G/Director of Labour: deductions in respect of payments into any superannuation scheme, provident fund, employer’s welfare scheme or insurance scheme deductions in respect of repayments of advances of wages where interest is levied deductions in respect of payments to a third party deductions in respect of payments for purchase of any goods of employer’s business offered for sale deductions in respect of rental for accommodation and cost of services, food and meals.

ADVANCES AND DEDUCTION OF WAGES Total deduction in any one month shall not exceed 50 % of employee’s wages except: cases of indemnity for termination of contract without notice deductions from final payment of wages If employee has housing loan, then 50 % limit may be raised to 75 % with prior written approval

EMPLOYMENT OF WOMEN Except with written approval of Labour, no female worker shall work in an industrial or agricultural undertaking between 10.00 p.m. and 5.00 a.m. Nor commence work for day without having had a period of 11 consecutive hours free from such work No female employee shall be employed in any underground working.

MATERNITY PROTECTION Every female employee shall be entitled to maternity leave of not less than 60 consecutive days for each confinement Except if at time of confinement she has five or more surviving children Employee on maternity leave who is given medical leave shall not be entitled to sick leave

MATERNITY PROTECTION Maternity leave not earlier than 30 days before confinement or later than day immediately following confinement Employer may with approval of a doctor require her to begin maternity leave at any time during a period of 14 days preceding her confinement Any employee who at any time during 4 months immediately preceding confinement was employed by an employer not less than 90 days during 9 months preceding confinement shall be entitled for maternity leave

MATERNITY PROTECTION A female employee who worked for more than one employer during 9 months preceding confinement entitled to maternity leave from last employer who is then entitled to claim as civil debt from other previous employers. If employee dies during maternity leave, her nominee or legal representative will receive payment up to day immediately preceding death. Employee cannot be dismissed during period in which she is entitled to maternity leave If after 60 days maternity leave still medically unfit for work, cannot be terminated until such absence exceeds 90 days after end of maternity leave.

CONDITIONS OF SERVICE Rest Days Rest day of one whole day in each week Will not apply if employee on maternity leave, sick leave, or temporary disablement leave under SOCSO or Workmen’s Compensation Act If company works five-day week, then second off day is official rest day. For shift work, rest day is any continuous period of not less than 30 hours free from work. No employee shall be compelled to work on a rest day unless engaged in work which needs to be carried on continuously or by succession of shifts Exceptions are when there is an emergency

CONDITIONS OF SERVICE Hours of Work No employee shall be required to work: (a) more than five consecutive hours without a period of leisure of not less than thirty minutes duration; (b) more than eight hours in one day; (c) in excess of a spread over period of ten hours in one day; (d) more than forty-eight hours in one week.

CONDITIONS OF SERVICE Overtime Overtime is number of hours of work carried out in excess of normal hours of work Work on rest days and public holidays not construed as overtime. Maximum hours of overtime allowed determined by Minister of Human Resources and current maximum is 104 hours per month No employer shall require any employee to work for more than 12 hours in any one day Only exception is during emergencies like accident or urgent work to machinery

CONDITIONS OF SERVICE Overtime For public holidays, an employee may be required to work on public holidays and be paid at prescribed rates

CONDITIONS OF SERVICE Holidays Employment Act = minimum of 10 paid public holidays in one calendar year Sabah Labour Ordinance = minimum of 14 days Sarawak Labour Ordinance = minimum of 16 days Four of the public holidays are specified as follows: 1. National Day 2. Birthday of Yang di Pertuan Agong 3. Birthday of State Ruler (or Federal Territory Day) 4. Workers’ Celebration Day.

CONDITIONS OF SERVICE Holidays Also paid public holiday on any day declared public holiday under Section 8 of Public Holidays Act 1951 If paid public holiday falls on rest day, then following day shall be substituted paid public holiday. By agreement between employer and employee, any other day or days may be substituted for one of the remaining paid public holidays. If sick leave on paid public holiday, employer shall grant another day as paid holiday in substitution. Any unexcused absence immediately before or after a public holiday will result in loss of holiday pay for employee

CONDITIONS OF SERVICE Annual Leave Employee shall be entitled to paid annual leave as follows: YEARS OF SERVICE LEAVE ENTITLEMENT less then two years' service 8 days two to five years' service 12 days more than five years' service 16 days If employee on annual leave given medical leave or maternity leave, then annual leave deemed to have not been taken

CONDITIONS OF SERVICE Sick Leave Sick leave after employee has been examined at expense of employer by registered medical practitioner appointed by employer Exception is if company does not appoint doctor or due to nature of illness, company doctor’s service not available within reasonable time or distance, then another doctor may be consulted Employee also entitled to paid sick leave after examination by a qualified dental surgeon

CONDITIONS OF SERVICE Sick Leave Sick leave entitlement where no hospitalisation is necessary is as follows: YEARS OF SERVICE LEAVE ENTITLEMENT less then two years' service 14 days two to five years' service 18 days more than five years' service 22 days If employee is hospitalised, then maximum number of days is 60 days less number of sick leave days taken If doctor certifies that employee is ill enough to need to be hospitalised but is not hospitalised, leave still considered hospitalisation leave.

CONDITIONS OF SERVICE Sick Leave Employee who absents himself on sick leave is not certified deemed to be absent without permission and without reasonable excuse. Even if sick leave obtained if employee does not inform or attempt to inform company within 48 hours, will be deemed to be absent without permission and without reasonable excuse.