Employment Laws of Malaysia: [1] Employment Act 1955 (Act 265) [2] Industrial Relations Act 1967 (Act 177)

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asked on Mar 24, 2019 at 12:36
edited on Mar 24, 2019 at 12:54
by   jeff005
The Employment Act 1955, defines "employee"  based on amount of wages and on the type of occupation of the employee.

The Industrial Relations Act 1967, the word "workmen"  is used. "Workmen" simply means any person employed under a contract of employment without being restricted to the amount of wages or the type of occupation.

Beside the difference in definition, the two Acts also provide different benefits to workers. The Employment Act is more concerned with monetary benefits (e.g. annual leave with pay, sick leave with pay, maternity allowance, overtime and so on). The Act is of compelling nature in that failure to provide any of those benefits is an offence for which an employer can be prosecuted in court.

The Industrial Relations Act on the other hand is more of persuasive nature in that industrial problems are solved as far as possible through negotiation and conciliation.

A.  Employment Act 1955 Act 265 refers to The Principal Act (Schedule 1)
B.  Act 1419 Employment (Amendment) Act 2012  (Schedule 2)
1.  EA Employees
2.  Non EA Employees
3.  Part Time Employees
4.  Compulsory Deduction for EPF, SOCSO.
5.  Foreign Workers Employees
6. Termination of Employment Contract   [By service of Notice, Compensation in lieu of notice , termination benefits, layoff benefits, VSS (Voluntary Service Separation), Misconduct, Retrenchment, Resignation]
7.  Minimum Wages Order 2018 wef 01.01.2019 for Peninsular Malaysia 

[EPF = Employees' Provident Fund]
[SOCSO = Social Security Organization]
[The Minimum Wages Order (Amendment) 2018 came into effect on Jan 1, 2019, providing for a minimum wage set at RM1,100 per month or at RM5.29 per hour for workers paid at the hourly rate]

Difference between Retrenchment, VSS, & MSS
Although the end result is the same for retrenchments, VSS and MSS (i.e. the employee is no longer employed), there are differences.

This is dismissal of employees who are regarded as surplus to requirements. The company / department itself is not being closed, but rather a select group of employees are retrenched. Not all employees are retrenched.

Companies in carrying out retrenchment are required to abide the legal provisions of the Employment Act 1955 (where relevant) and the general rule of LIFO (Last In First Out).

Voluntary Separation Scheme. This arises when a company that is not officially retrenching but nonetheless wishes to get rid of employees.

In this scenario, the company will make an announcement that is addressed to the employees along the lines of 1) “Profit hasn’t been good” 2) “We have been making losses” 3) “The company is not dismissing anyone, but will welcome application from employees to be considered for VSS”.

It is like a job advertisement that invites applicants. The difference here is that it is not a job advertisement, but rather, an invitation by the company for application by the employees, to be considered for VSS.

Usually the company will also talk about the terms and conditions of the VSS (compensation terms, qualifications, requirements etc).

Because of the nature of VSS, it is usually more difficult for employees who have left the company on VSS to challenge this in the Malaysian courts.

Mutual Separation Scheme. This arises when both parties agree to terminate the employment relationship. The keyword is “mutual”, i.e. both parties agree to a settlement that is a win-win scenario for them.

A VSS is more difficult for the employee to argue unless it can be shown that the employee was coerced into it, or there existed the usual elements that may render the VSS void or voidable.

Section 20 IRA 1967
As is the case with all dismissals of employees, the employer has the burden of proving just cause or excuse in dismissing the employee(s).

If it is a retrenchment and the purported reason is e.g., losses for the preceding xx number of years, then the employer must be able to show the losses by way of the profit and loss account, etc.

The main provision is section 20 of IRA.
“Where a workman, irrespective of whether he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director General to be reinstated in his former employment; the representations may be filed at the office of the Director General nearest to the place of employment from which the workman was dismissed.”

 The Director General shall not entertain any representations … unless such representations are filed within sixty days of the dismissal.
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