Stimulus package to encourage employee retention

HERE’S more information on the wage subsidy programme announced by Prime Minister Tan Sri Muhyiddin Yassin as part of several initiatives through the Prihatin Rakyat Economic Stimulus package to help those affected by the Covid-19 outbreak. Under the programme to encourage employee retention, a subsidy of RM600 is channelled to employers for every employee who earns RM4,000 and below (limited to 100 employees) for three months.

Q: Do employers have to make a new application every month to get the wage subsidy payment?

A: Employers need to only apply once. However, employers need to update Social Security Organisation (Socso) on matters such as changes in profits and changes to the list of employees (listed for the wage subsidy). Failure to do so will result in legal action against the employers.

Q: What should the employers do after their application for wage subsidy is approved?

A: i. Employers can claim the wage subsidy assistance from Socso if they have paid the full salary of their employees.

ii. Employers must still continue to pay the monthly contributions for employees’ Socso and Employment Insurance System payments based on an employee’s actual salary amount.

Q: Can employers apply for both the Employment Retention Programme (ERP) and the wage subsidy programme at the same time?

A: Employers whose application for ERP has been approved can also apply for the wage subsidy programme if their companies meet the wage subsidy guidelines. However, the employers cannot apply for ERP and wage subsidy for the same employee for the same month – they can only apply wage subsidy for a different employee.

Q: Do employers still need to pay their employees their full salary if they have been approved for wage subsidy?

A: Yes, employers still need to pay their employees (whose names were submitted for the wage subsidy programme) their full salary.

Q: If an employer did not apply for wage subsidy, can the employer fire employees at any time?

A: Employers are still bound under the guidelines and labour laws in the country such as the Employment Act 1955 and the Industrial Relations Act 1967.

Q: If an employer has been approved for wage subsidy for three months – April, May, and June – can the employer terminate the service of its employees after June?

A: No. Employers who have received wage subsidy should not terminate the service of their employees for the three months that they are receiving the wage subsidy and the three months following the end of the wage subsidy payments.

Q: What is the interpretation of the salary of RM4,000 and below as stipulated under the wage subsidy programme?

A: It is according to the interpretation under the Employment Insurance System Act 2017.

Q: If there is an understanding between an employer and staff to deduct his or her annual leave, to reduce salary, or to take unpaid leave, can the employer still apply for wage subsidy so the business can still operate?

A: No. This is not allowed under the requirements needed to apply for the wage subsidy.