The Malaysian Employers Federation (MEF) has again called for the government to delay the implementation of recent amendments to the Employment Act 1955 (EA 1955) which was scheduled for 1 September 2022. “Employers should be given time to reconsolidate and recover their businesses which were severely impacted due to the MCOs implemented in 2020 and 2021 to contain the menace of Covid 19,” said MEF president Datuk Dr Syed Hussain Syed Husman.
The MEF expects the second half of the year to be tough on business who are in fact still recovering from the pandemic. “Whilst the recently announced GDP growth of 8.9 per cent for Q2 2022 was very encouraging, it was forecasted that the GDP growth for second half of 2022 will be challenging casted and was forecasted to be in the region of 5 per cent to 6 per cent.”
Previously, businesses had to adjust to higher wage costs after the minimum wage rate was increased to RM1,500/month (from RM1,100-RM1,200/month) beginning 1 May 2022. The MEF says that some business owners are still struggling to meet the new rates.
Amendments to the EA 1955 will further burden employers as demonstrated by an MEF estimation, below:
| Increase in cost of overtime per year due to increased coverage of EA from RM 2,000/month to RM 4,000/ month | RM80.87 bil/year |
| Reduction of hours of work from 48 hours/week to 45 hours/week | RM26.88 bil/year |
| Increase of maternity leave from 60 days to 98 days | RM2.97 bil/year |
| Paternity leave of 7 continuous days per birth | RM0.275 bil/year |
| RM110.99 bil/year |
There are other amendments to the EA 1955 which — while may not have direct financial implications to the business — will still be a struggle to be implemented. This includes the allocation for Flexible Work Arrangements (FWA) despite lacking guidelines by the authorities on how it will be implemented. Other factors include the 60 days entitlement for hospitalization leave annually in addition to the non-hospitalization sick leave, and a new procedure for application of foreign workers where prior approval must be obtained from the director-general of Labour before applying.
On top of all this, employers will still need to deal with an amendment to the Trade Union Act that allows for multiplicities of unions at the workplace.
Dr Syed Hussain added that “There were too many changes taking place effecting business during the challenging periods. MEF appeals to the government to give more time to businesses to transition themselves to the new requirements There is a need to slow down a bit to allow businesses some space to breath. MEF supports some of the changes but it is about the timing issue. Now is not the right time to introduce changes that add costs of doing business.”
