Find a common ground for stakeholders on the Employment Act amendments

2023 is forecast to be very challenging economically the world over, and Malaysia will be no exception.

EMPLOYERS should have been given more time to re-consolidate and recover their businesses before the amendments to the Employment Act 1955 are implemented, says Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman.

Many were severely impacted by the Movement Control Order implemented in 2020 and 2021 to contain the Covid-19 pandemic, while 2023 is forecast to be very challenging economically the world over, and Malaysia will be no exception, he points out.

That is why while they agree with some of the amendments, many business and industry associations, including MEF, are of the view that the government should reconsider the implementation of these amendments, says Syed Hussain.

The Malaysia Employment (Amendment) Act 2022 comes into effect today, despite attempts by employers to persuade the government to postpone it again.

The amendments to the Act were made to allow for, among others, the extension of maternity leave from 60 days to 98 days, a seven- day paternity leave for married men, and reduced weekly working hours from 48 to 45 hours.

According to Syed Hussain, it is estimated that the major changes via the amendments will burden employers with additional costs to the tune of about RM111bil a year.

As reported, the MEF derived the additional RM110.99bil costs from the following: increase in overtime costs to RM4,000 a month from RM2,000 (RM80.87bil); reduction of hours of work to 45 hours a week from 48 hours (RM26.88bil); increase of maternity leave to 98 days from 60 days (RM2.97bil) and paternity leave of seven continuous days per birth (RM275mil).

Besides the additional costs, employers will have to contend with other amendments such as flexible working arrangements (FWA), 60 days of hospitalisation leave a year on top of non-hospitalisation sick leave, and new procedures in applying to hire foreign workers, which include obtaining prior approval from the Labour Department’s director-general.

The extra costs will be challenging, says Syed Hussain, especially at a time of uncertainty and a volatile global market due to supply chain issues arising from Covid-19 and the geopolitical conflict between Russia and Ukraine.

“Implementing the amendments to the Act will be a big burden to the employers especially with the threshold entitlement to overtime being raised to RM4,000 from the current RM2,000,” he says.

Apart from the amendments to the Act, Syed Hussain points out that since May 1 last year, employers throughout the nation have had to shoulder an estimated additional wage costs of RM14bil a year when the minimum wage rates were reviewed from RM1,200 a month to RM1,500 a month.

“Some employers are still struggling to fully implement the new minimum wage while others were reported to not be able to comply with it.

“Employers generally strive to comply with statutory requirements but there were situations where they resigned to the fact that they do not have the financial capacity to do so,” he says.

Employers are also being faced with the possible amendments to the Trade Unions Act that will introduce a multiplicity of unions in workplaces compared with single unions, he notes.

“MEF is of the view that there are too many changes taking place affecting businesses during this challenging period, and we appeal to the government to give more time to businesses to transition to new requirements.

“We strongly support some of the changes but the timing of implementation has proven to be an issue.”

Syed Hussain: 'There are too many changes taking place affecting businesses during this challenging period, and we appeal to the government to give more time to businesses to transition to new requirements.'

Common ground

The government should provide a better view of the direction of global developments for industry stakeholders to find a common ground regarding the amendment of the Employment Act 1955, says Universiti Utara Malaysia professor of economics Dr K. Kuperan Viswanathan.

“For industry players to get on the same page, the government will need to provide stakeholders with an idea of which direction global developments are heading towards,” he says.

Prof Kuperan notes that the government must also make it clear to all industry players that this move is a much needed one and is in tune with global developments.

“Such a move will prove beneficial in attracting responsible investors into this country,” he says.

He also suggests that there needs to be better emphasis on the benefits these amendments have for families and parents in regards to maintaining a healthy worklife balance.

“Our government should also put out greater support for employers for adopting a more humane and socially-responsible employment policy.

“We need to let employers know that there will be greater economic growth when our employees are happy and content with their work,” Prof Kuperan says, stressing that the narrow argument about costs and profits should not be used to counter what is essentially a morally and socially responsible policy on employment.