The Akta Kerja 1955, known as the Employment Act 1955 (No. 265) in Malaysia, is a legislation concerning employment conditions. It outlines the rights and responsibilities of employers and employees, aiming to ensure fair treatment and a conducive working environment.
Employee refers to this Act to find information about annual leave, overtime work, maternity leave, notice of termination, regulation of labour contracts, wage management, women’s employment and maternity protection, etc.
1. Annual Leave (Cuti Tahunan)
Under the Employment Act 1955, all employees in Malaysia are entitled to annual leave. The entitlement to annual leave is as follows: 8 days per year if employed for 1–2 years, 12 days per year if employed for 2–5 years, and 16 days per year if employed for longer than 5 years. This entitlement increases based on years of service with the company. All employees, irrespective of their wages or occupation, are covered by the Act, except domestic servants and employees earning above RM4,000 per month who are exempted from certain provisions.
Every 12 months of continuous service:
- 8 days – if working less than 2 years
- 12 days – if working 2 years but less than 5 years
- 16 days – if working 5 years and above
- Leave entitlement does not include rest days and paid public holidays.
2. Overtime Work (Kerja Lebih Masa)
Employers are required to pay overtime wages at a rate of not less than one and a half times the employee’s ordinary rate of pay for overtime work on weekdays, and double the ordinary rate of pay for overtime work on rest days or public holidays. Overtime hours are limited to 104 hours per month, and a permit from the Department of Labour is required for any overtime above 104 hours per month. The minimum daily rate of pay for overtime calculations should be the monthly wages divided by 26, but employers are allowed to choose any other calculation basis which is more favorable to the employee.
3. Maternity Leave (Cuti Bersalin)
Female employees who give birth on or after 1 January 2023 are entitled to 98 days of maternity leave if they meet certain conditions. The maternity protection and conditions are discussed in Section 9 of the Employment Act 1955, from Section 37 to 44, which talks about the minimum benefits for female workers to obtain maternity leave and allowances from their employers.
- 98 continuous days including rest days and paid public holidays.
- At least 22 weeks of pregnancy with a living or stillborn child.
Eligible for maternity leave payment if:
- Working at least 90 days within 9 months before giving birth
- Working at least 1 day within 4 months before giving birth
- Having no more than 5 surviving children
4. Notice of Termination (Notis Berhenti Kerja)
The Employment Act 1955 stipulates that any party wishing to terminate an employment contract must give notice in advance. The notice period should be the same length for both the employer and employee and should be stated in writing in the contract. If it’s not stated in the contract, the provisions of the Employment Act 1955 apply.
The Act specifies the notice periods as follows: four weeks notice if the employee has been employed for less than two years, six weeks’ notice if employed for two or more years but less than five years, and eight weeks’ notice if employed for five years or more. Termination notices can be given at any time and are typically provided by the employee to the employer, as employers usually do not give notice unless in cases of misconduct where the offence has been proven.
5. Medical Leave
- 11 paid medical leave days each calendar year.
- 5 of these days are designated (cannot be replaced):
- National Day
- Yang di-Pertuan Agong’s Birthday
- State Monarch’s Birthday/ Federal Territory Day
- Workers’ Day
- Malaysia Day
- 6 other public holidays are to be agreed upon.
- Additional public holidays granted by the Federal Government.
6. Sick Leave
Sick leave every calendar year after medical examination or spending on treatment:
- 14 days – if working less than 2 years
- 18 days – if working 2 years but less than 5 years
- 22 days – if working 5 years and above
- Includes dental sick leave.
- Hospitalization – 60 continuous days excluding sick leave.
- Not entitled to sick leave during maternity leave payment and work accident leave.
7. Paternity Leave
- 7 consecutive days including rest days and paid public holidays.
- Maximum of 5 surviving children regardless of the number of wives (effective from a specified date).
- Legally married
- Have been working for at least 12 months with the same employer
- Have informed the employer about the wife’s pregnancy at least 30 days before the expected paternity leave date or as soon as possible after childbirth.
Main Objectives of Akta Kerja 1955
The Employment Act 1955 in Malaysia is a framework encompassing various employment-related areas. It standardises the formation, execution, and termination of labour contracts between employers and employees, ensuring a formalised and fair employment relationship. The Act mandates timely wages, ensuring employees are remunerated fairly for their labour. One exploitative practice it seeks to eliminate is the truck system, where employees are compensated with goods or vouchers instead of monetary wages.
A significant aspect of the Act is its focus on the equitable employment of women, providing them with equal opportunities and maternity benefits, thus promoting gender equality in the workplace. It governs employment conditions by stipulating the guidelines for rest days, working hours, sick leave, and annual leave, fostering a balanced work-life environment for employees. In scenarios of termination or layoffs, the Act provides a structured legal framework to ensure that such processes are conducted fairly and with due notice. It establishes mechanisms for conducting inspections of employment practices, handling employment-related complaints and inquiries, and stipulating penalties for offences, thereby promoting adherence to employment laws and regulations and ensuring a just and transparent employment ecosystem.
- Labor Contracts: The Act sets the legal framework for the formation, execution, and termination of labor contracts between employers and employees.
- Payment of Wages: It regulates the timely payment of wages to employees, ensuring they are fairly compensated for their work.
- Prohibition of Truck System: The Act prohibits the truck system, which is an exploitative practice where employees are paid in goods or vouchers instead of monetary wages.
- Employment of Women and Maternity Protection: It lays down the guidelines for the employment of women, ensuring they have equal opportunities and are provided with maternity benefits and protection.
- Employment Conditions: The Act sets forth employment conditions such as rest days, working hours, sick leave, and annual leave to ensure a balanced work-life environment for employees.
- Termination and Layoff: It provides the legal framework for termination and layoff procedures, ensuring they are conducted fairly and in accordance with the law.
- Inspections, Complaints, and Inquiries: The Act establishes mechanisms for the inspection of employment practices, handling of employment-related complaints, and conducting inquiries into employment issues.
- Penalties for Offences: It stipulates penalties for violations of the Act to ensure compliance with employment laws and regulations.
Amendment (Pindaan Akta Kerja 1955)
Over the years, the Act has seen several amendments, also called “Pindaan, ” to align with changing labour conditions and international standards. Notable amendments include the Employment (Amendment) Act 2012, Employment (Amendment) Act 2011, and Employment (Amendment) Act 2000, among others. Some of the amendments include:
- 2022 Amendment: A notable recent amendment, the Akta Kerja 1955 (Pindaan) 2022 to enhance the protection and welfare of the workforce in Malaysia. This ensures that labour laws align with international standards the International Labour Organization sets. This amendment will come into effect on January 1, 2023.
- 2012 Amendment (Act A1419): Introduced new provisions or revised existing ones to further protect the rights of employees.
- 2011 Amendment: Aimed at enhancing the legal framework surrounding employment, although the specific changes were not detailed.
- 2000 Amendment: Brought about changes to further align the Act with contemporary employment practices and international standards.
These amendments reflect Malaysia’s efforts to continuously improve its employment legislation to meet the evolving needs of the labor market and adhere to international labor standards.
Akta Kerja 1955 Pindaan 2022
Employment Act 1955 has been rolled-out on January 1, 2023. These amendments in the Akta Kerja 1955 (Pindaan) 2022 is the government commitment to uplift the working conditions and rights of its labour force, aligning with international labour standards.
Objectives of the Amendments
The primary objectives of these amendments are three-fold:
- Enhance and improve the protection and welfare of the workforce in Malaysia.
- Ensure that the labor law provisions in Malaysia are in sync with the international standards outlined by the International Labour Organization.
- Facilitate Malaysia in negotiating trade agreements which often include clauses related to minimum labor standards as one of the terms to be adhered to.
Key Highlights of the Amendments:
The amendments bring forth a plethora of changes aimed at covering a broader spectrum of the workforce and improving the working conditions:
- Extended Coverage: The amendments extend the coverage of the act to all workers regardless of their salary threshold.
- Enhanced Maternity Leave: The maternity leave has been increased from 60 days to 98 days.
- Introduction of Paternity Leave: A provision of 7-day paternity leave has been introduced.
- Reduced Working Hours: The working hours have been reduced to 45 hours per week.
- Segregation of Hospitalization Leave: The amendments have segregated hospitalization leave.
- Flexible Work Arrangements: Provisions for flexible work arrangements have been made.
- Prohibition of Discrimination: Discrimination in employment has been prohibited.
- Prohibition of Forced Labor: The amendments prohibit forced labor.
- Mandatory Approval for Hiring Foreign Workers: Employers are required to obtain prior approval from the Director General of JTKSM before employing foreign workers.
- Prohibition of Terminating Pregnant Women: Employers are prohibited from terminating women during pregnancy.
- Mandatory Wage Payment through Financial Institutions: Employers are required to pay wages through financial institutions.
- Requirement to Display Sexual Harassment Prevention Notices: The amendments necessitate the display of notices regarding the prevention of sexual harassment.
- Mandatory Written Contracts for Labor Contractors: Labor contractors are required to provide written contracts.
- Establishment of Salary Calculation Formula for Incomplete Month Work: A formula for salary calculation for incomplete month work has been established.
The amendments in the Employment Act 1955 (2022) are a significant move towards creating a more inclusive and fair working environment in Malaysia. By aligning with international labour standards and addressing key areas of employment, Malaysia takes a step forward in ensuring the rights and welfare of its workforce. For more information, you can read the FAQs here.
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