THE statement by Defence Minister Datuk Seri Ismail Sabri that all private sector employers must pay their workers’ salary during the two weeks of the movement control order (MCO) has no force of law, says the Malaysian Employers Federation (MEF).
“There is the question of whether employers are legally obliged to pay salaries throughout the fourteen-day MCO. This is a situation of force majeure, a frustration of contract, an event that is beyond the reasonable control of either employer or employee. In this kind of situation, either party has the right to nullify the contract, ” MEF executive director Datuk Shamsuddin Bardan tells Sunday Star.
While some companies have introduced work from home policies, other businesses have completely shut over the MCO but are still bearing overhead costs such as wages and rent.
Ismail reportedly said on Friday that employers should not force their employees to take unpaid leave and action will be taken against employers who do not comply.
“If we are not careful and insist for employers to bear all the cost, a lot of retrenchment may happen, ” says Shamsuddin, acknowledging the current difficult economic situation.
Nevertheless, the MEF says that it wishes to maintain employment for as long as possible, beyond the 14 days MCO.
It has been reported that up to one million Malaysians could lose their jobs if 10% of small and medium enterprises (SMEs) in the country go bust in the coming months.
SME Association of Malaysia president Datuk Michael Kang told an English language daily on Friday that many companies are not well-prepared to face the crisis, and are unlikely to survive should the situation see no drastic improvement in the coming weeks.
According to MEF, it has proposed for flexibility with unpaid leave at a meeting with Human Resources Minister Datuk Seri M. Saravanan before the weekend.
“We suggested that employees be given the option to apply for unpaid leave, or to take annual leave during the MCO, ” Shamsuddin says.
“In the situation that employees do not want to take annual or unpaid leave, and their employers do not wish to pay salaries during the MCO, the Employee Retention Programme (ERP) under the Employment Insurance System should come in, and paid on a prorated basis if the unpaid leave period is less than 30 days, ” he adds.
This ERP refers to a section in the revised stimulus package announced on March 16 where a RM600 monthly financial assistance is provided between a period of one to six months for employees with monthly wages of RM 4,000 and below who are forced to take unpaid leave beginning March 1.
The MCO is enforced from March 18 to March 31.
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