Employment Act to apply to all employees from 1 January 2023, some sections subject to increased salary threshold of RM4,000/month

Employment Act to apply to all employees from 1 January 2023, some sections subject to increased salary threshold of RM4,000/month

[Note: When this article was first published on 16 August 2022, the amendments to the Employment Act were scheduled to come into force on 1 September 2022. In late August 2022, the government announced that the implementation date would be deferred to 1 January 2023. This article has been edited to reflect the new implementation date, with any new text in red.]

When the Work (Amendment) Act 2022 (“the Amendment Act”) was gazetted previously this yr, there was a lot confusion regarding what the scope of the Employment Act (“EA”) would be when the Modification Act arrived into force. This confusion was fuelled by the authorities not amending the Initial Routine at the exact same time the Amendment Act was passed, and also frequently stating that the EA’s scope would be expanded so that all personnel irrespective of income would be entitled to the EA benefits and protections, with many market authorities sharing the see that these types of a blanket growth would be impractical for numerous explanations.

With the gazetting of the Work (Modification of 1st Agenda) Buy 2022 (“First Plan Amendment Order”) on 15 August 2022, there ultimately is clarity on the scope of the EA from 1 September 2022 1 January 2023.

EA salary threshold enhanced from RM2,000 to RM4,000

Prior to the new amendments, the broad bulk of the EA only utilized to staff members earning up to RM2,000/month, or to specified teams of staff members irrespective of wages (e.g. people engaged in or supervising manual labour, and quite a few other teams). The existing EA established out particular provisions to permit non-EA workers to also be provided in the sections of the EA concerning maternity protection (Aspect IX) and sexual harassment (Part XVA).

Adhering to the Initial Plan Modification Get which will occur into force on 1 September 2022 1 January 2023, the way the EA scope is described has been reversed. Even though it previously only applied to personnel earning up to RM2,000/thirty day period with some distinct sections applying to all workforce, it will now use to all workforce irrespective of wages, with some certain sections not applying to employees earning a lot more than RM4,000/month. Right here are the particulars:

  1. The EA will now use to “any human being who has entered into a contract of service”.
  2. Even so, the sections of the EA in relation to time beyond regulation payments and termination gains will not apply to personnel whose wages exceed RM4,000/thirty day period (the whole record of excluded EA provisions is shown below).
  3. The record of EA provisions which do not implement to domestic employees (earlier recognised as domestic servants) has also been expanded.

This is the full record of EA provisions which will not apply to workers earning extra than RM4,000/thirty day period:

  • Subsection 60(3): Time beyond regulation for do the job on relaxation times.
  • Subsection 60A(3): Time beyond regulation for work outside of usual functioning hours.
  • Subsection 60C(2A): Shift get the job done allowance.
  • Subsection 60D(3): Overtime and allowance for perform on general public vacations.
  • Subsection 60D(4): Extra time for operate on holiday seasons on fifty percent doing the job times.
  • Subsection 60J: Termination, lay-off, and retirement positive aspects.

What employers want to do

All employers will have to have to evaluate their present employment contracts and procedures to be certain that they comply with the EA. It must be observed that Portion 7 of the EA states that any phrases or ailments which are fewer favourable to an staff than all those provided less than the EA will be void and of no result. This features contracts which were being entered into before 1 September 2022 1 January 2023.

(For a far more in depth search at the adjustments underneath the Modification Act, study my previously write-up: “Malaysia Work Act amendments: 7 essential improvements for companies to note”)