In any workplace, the relationship between employer and employee is crucial for maintaining a productive, safe, and harmonious environment. In Malaysia, the role of the employer extends far beyond merely providing work; employers are legally obligated to uphold various responsibilities that safeguard the welfare and rights of their employees. These duties span across wages, working conditions, occupational safety, and employee welfare.
The legal framework governing employer responsibilities in Malaysia includes several key statutes and regulations, including the Employment Act 1955 (EA 1955), the Occupational Safety and Health Act 1994 (OSHA 1994), and the Industrial Relations Act 1967 (IRA 1967). These laws, along with other relevant regulations, form the backbone of employer obligations to protect the rights of employees.
This blog post aims to provide a detailed analysis of the core responsibilities of employers in Malaysia, delving into the legal, ethical, and practical aspects of their obligations.
1. Providing a Written Employment Contract
A fundamental responsibility of an employer in Malaysia is to ensure that every employee has a written contract of employment. According to the Employment Act 1955, employers must provide employees with a formal agreement that outlines the terms and conditions of their employment. This contract should be in writing and signed by both parties.
The written employment contract serves as a legal document that details various aspects of the employment relationship, such as:
- Job title and responsibilities
- Duration of employment (if applicable)
- Salary and payment structure
- Working hours and leave entitlements
- Termination clauses
Failure to provide a written contract can lead to disputes and may leave the employer vulnerable legally if conflicts arise.
2. Complying with the Minimum Wage Law
Effective February 1, 2025, Malaysia’s minimum monthly wage increased from RM1,500 to RM1,700. This adjustment aims to enhance the purchasing power of Malaysian workers and support economic growth by increasing household incomes.
The implementation of the new minimum wage occurs in two stages:
- February 1, 2025: The RM1,700 minimum wage applies to employers with five or more employees and to employers categorized under professional activities, regardless of their workforce size.
- August 1, 2025: The RM1,700 minimum wage will extend to all employers, irrespective of the number of employees they have.
Employers must ensure compliance with these new wage standards to avoid potential penalties for non-compliance, as stipulated under the National Wages Consultative Council Act 2011 (Act 732).
Other than that, employers must also ensure compliance with other wage-related legal requirements, including:
- Deductions: Any wage deductions must adhere to the law, and deductions can only be made for purposes such as income tax or loan repayments. Arbitrary deductions are prohibited.
- Payment of Wages: Employers must ensure that wages are paid on time, typically on a monthly basis, and in the agreed manner (e.g., cash, cheque, bank transfer).
It’s crucial for employers to stay informed about these changes and adjust their payroll systems accordingly to ensure fair compensation and adherence to legal requirements.
3. Ensuring Health and Safety in the Workplace
One of the most critical responsibilities of an employer is ensuring that the workplace is safe and conducive to employees’ health. The Occupational Safety and Health Act 1994 (OSHA 1994) mandates employers to take necessary steps to protect workers from accidents, injuries, and exposure to harmful conditions.
Key OSHA obligations include:
- Risk Assessments: Employers must regularly conduct risk assessments to identify potential hazards in the workplace, including physical, chemical, and ergonomic risks.
- Safety Measures: Employers must provide adequate safety equipment and protective gear to employees, particularly in high-risk industries like construction and manufacturing.
- Training: Employers are responsible for providing safety training to employees, ensuring they are aware of how to use equipment safely and follow emergency procedures.
- Accident Reporting: Employers must report any workplace accidents to the Department of Occupational Safety and Health (DOSH) within a specified timeframe.
- Maintenance: Employers must ensure that machinery, equipment, and the workplace environment are well-maintained and free from hazards.
Failure to meet health and safety obligations could lead to accidents, legal repercussions, and reputational damage.
4. Providing Employee Benefits
Employers are legally obligated to extend certain benefits to their employees, which include:
- Annual Leave: Employees are entitled to paid annual leave, with the duration depending on their length of service. Under the Employment Act 1955, employees with less than two years of service are entitled to a minimum of 8 days of annual leave, increasing to 16 days for employees with more than 5 years of service.
- Sick Leave: Employees who fall ill are entitled to paid sick leave. The duration varies with the employee’s tenure, with those employed less than two years entitled to 14 days, while those with over five years of service are entitled to 22 days.
- Public Holidays: Employees are entitled to paid leave on public holidays, and if they are required to work on these days, they are typically entitled to double the normal daily wage.
- Maternity Leave: Female employees who have worked for at least 90 days are entitled to 60 days of paid maternity leave.
Employers may also provide additional perks such as medical benefits, bonuses, and other welfare programs to enhance employee satisfaction.
5. Adhering to Anti-Discrimination and Equal Opportunity Laws
Malaysian labor laws mandate equality and prohibit discrimination based on factors like gender, age, race, religion, and disability. Employers must ensure compliance with these principles when hiring, promoting, or terminating employees.
For example, under the Employment Act 1955, employers must not discriminate against employees based on:
- Gender or marital status
- Race or ethnicity
- Religion or religious beliefs
- Disability
- Pregnancy or maternity status
Employers must also ensure equal opportunities for all employees, providing training and career development opportunities regardless of these factors.
6. Maintaining Proper Employment Records
Employers must maintain accurate and up-to-date records for each employee, including:
- Personal details (e.g., name, address, identification number)
- Employment history
- Wage and payment records
- Leave and absence records
- Disciplinary actions or warnings issued
These records are essential for ensuring compliance with labor laws and for resolving potential disputes or claims. Proper documentation also serves as evidence in case of legal issues related to employment termination, wage disputes, or accidents.
7. Handling Termination and Dismissal
Employers must ensure that the termination or dismissal of an employee is carried out according to the Employment Act 1955 and in a fair and just manner. Key guidelines include:
- Notice Period: Employers must provide written notice of termination as specified in the employment contract or the Employment Act 1955. The notice period length depends on the employee’s duration of service.
- Just Cause for Dismissal: Employers must ensure there is just cause for dismissal, such as misconduct, poor performance, or redundancy.
- Severance Pay: In cases of unfair dismissal or redundancy, employers may be required to offer severance pay or compensation.
Employers must also adhere to a fair procedure when disciplining employees, ensuring that employees have the right to be heard and defend themselves.
8. Ensuring Compliance with Trade Union Laws
Employers must respect employees’ rights to form and join trade unions. The Industrial Relations Act 1967 grants employees the right to form and participate in trade unions without fear of discrimination or retaliation.
Employers must refrain from interfering with union activities and engage in collective bargaining in good faith. Non-compliance with union rights can lead to disputes and legal penalties.
Conclusion
The responsibilities of employers in Malaysia are extensive and multifaceted. By adhering to legal requirements related to wages, safety, benefits, and employee welfare, employers can cultivate a fair and productive workplace. Moreover, fostering a positive relationship with employees through compliance with labor laws can enhance business reputation, reduce legal disputes, and improve overall organizational performance.
