Asian Legal Update First Quarter 2023 (January-March)

Authors: Daisuke Maeshiro (Nishimura & Asahi) and Wan May Leong (WM Leong & Co)

MALAYSIA

1. Amendments to the Employment Act

Significant amendments to the Employment Act 1955 (the “EA”) have been passed with effect from 1 January 2023.

It is pertinent to all employers to take note that the EA now applies to all employees (irrespective of wages) generally, with certain additional protections given to, among others, employees who earn no more than RM4,000 per month and manual labors (“Protected Employees”).

We set out below certain mandatory provisions under the EA which apply to all employees:

1. Maximum working hours: Reduced from 48 hours per week to 45 hours per week;
2. Paid maternity leave: Increased to no less than 98 days from 60 days for each confinement;
3. Paid paternity leave: Paid paternity leave of 7 consecutive days for each confinement;
4. Sick leave: The entitlement of paid sick leave and paid hospitalization leave are to be treated separately and will no longer be subject to a cap of 60 days in aggregate;
5. Notice on sexual harassment: To exhibit conspicuously a notice to raise awareness on sexual harassment. Also, employers are statutorily required to inquire into any complaint of sexual harassment; and
6. Restriction on termination of pregnant employee: The EA now makes it an offence for the employer to terminate the services of a female employee who is pregnant or is suffering from an illness arising out of pregnancy, unless such termination is made on the ground of wilful breach of a condition of the employment contract, misconduct or closure of business.

On the other hand, additional protections given to Protected Employees include:

1. Overtime payment for work carried out in excess of the normal hours of work;
2. Payment on rest days and paid holidays; and
3. Termination and lay-off benefits.

Further, the EA now requires the employers to obtain prior approval of the Director General of Labour before hiring foreign employees (including knowledge workers and domestic employees). Approval of the Director General of Labour may be granted if the following conditions have been satisfied by the employer:

1. there is no pending matter relating to any decision, order or directive issued under the EA;
2. there is no pending matter for any conviction of offence under the EA, the Employees’ Social Security Act, the Employees’ Minimum Standards of Housing, Accommodations and Amenities Act and the National Wages Consultative Council Act; and
3. it is not subject to any offences under any written law in relation to human trafficking and forced labour.

2. The Anti-Sexual Harassment Act 2022

The first sexual harassment legislation in Malaysia, which is not limited to the employment context only, was finally passed by the Parliament in the third quarter of 2022. The Anti-Sexual Harassment Act 2022 (the “ASHA”) seeks to raise awareness in the community and to prevent the occurrence of sexual harassment in all aspects of daily lives (including but not limited to sexual harassment in the workplace).

The 3 elements to constitute “sexual harassment” are set out below:

1. any unwanted conduct of a sexual nature, in any form, whether verbal, non-verbal, visual, gestural or physical;
2. directed at a person; and
3. it is reasonably offensive or humiliating or is a threat to his well-being.

At the time of writing, certain provisions under the ASHA relating to the functions and powers of the Minister of Women, Family and Community Development have come into effect. Other provisions of the ASHA relating to the tribunal and others will be implemented in phases.

Employers are recommended to take proactive measures and put in place adequate procedures to prevent workplace sexual harassment in view of the ASHA and the relevant provisions in the EA.

Date: 5 April 2023

• If you would like to know more about the legal updates in other jurisdictions, please click here.
• If you would like to read this article in Japanese, please click here.