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• “place of employment” means
any place where work is carried on for an
employer by an employee;
• “employee” means
any person or class of persons—
(a) included in any category in the First Schedule to
the extent specified therein; or
(b) in respect of whom the Minister makes an order
under subsection (3) or section 2A;
EMPLOYMENT ACT 1955
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EMPLOYMENT SENARIO Place
of employment
• Types of EMPLOYERS
• Types of WORKERS
• Types of CONTRACTS
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Types of EMPLOYERS
• “employer” means any person who has entered
into a contract of service to employ any other
person as an employee and includes the agent,
manager or factor of such first mentioned person,
and the word “employ”, with its grammatical
variations and cognate expressions, shall be
construed accordingly;
EMPLOYMENT ACT 1955
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• “Principal” means any person who in the course of
or for the purposes of his trade or business
contracts with a contractor for the execution by or
under the contractor of the whole or any part of
any work undertaken by the principal;
• “Contractor” means any person who contracts
with a principal to carry out the whole or any part
of any work undertaken by the principal in the
course of or for the purposes of the principal’s
trade or business;
EMPLOYMENT ACT 1955
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• “Sub-contractor” means any person who contracts with a
contractor for the execution by or under the sub-contractor of
the whole or any part of any work undertaken by the
contractor for his principal, and includes any person who
contracts with a sub-contractor to carry out the whole or any
part of any work undertaken by the subcontractor for a
contractor;
• “Sub-contractor for labour” means any person who contracts
with a contractor or sub-contractor to supply the labour
required for the execution of the whole or any part of any
work which a contractor or sub-contractor has contracted to
carry out for a principal or contractor, as the case may be;
EMPLOYMENT ACT 1955
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LOCAL Workers seeking employment
Local
WORKERS
Direct
Application
(or walk-in)
Job Malaysia
MOHR JTK
Private
Employment
Agency
PRIVATE EMPLOYMENT AGENCY ACT 1981
PLACEMENT
20% commission of 1st Month’s
wage charged on placement. Paid
either by employer or the worker.
FACTORY
(Principle Employer)
Temporary
(FIX TERM)
contract
PROBATION
followed by
PERMANENT
Contract
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Migrant
WORKERS
MIGRANT Workers employment
EMPLOYMENT (RESTRICTION) ACT 1968
Non-citizen shall not be
employed unless there has
been issued valid
employment permit.
Contract of Service/
Temporary
(FIX TERM)
contract
FACTORY
(Principle Employer)
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MIGRANT Workers employment
Migrant
WORKERS
NOW….LOCAL Workers also
follow the same flow!
Contract of Service/
Contract for Service
Temporary
(FIX TERM)
contract
No Law to regulate?
Outsourcing License No.,
Recruitment No. KHEDN.
TODAY
FACTORY
(Principle Employer)
Labour Contractors
(Outsource Labour
Company)
Contractors
(Outsource
Company)
Labour
Contractors
(Outsource Company)
TOMORROW
FACTORY
(Principle Employer)
FACTORY
(Principle Employer)
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THE DAY AFTER9
Workers seeking employment in Malaysia
Local
WORKERS
Migrant
WORKERS
Direct
application
Job Malaysia
MOHR JTR
Private
Employment
Agency
Temporary
(FIX TERM)
contract
RM $ wages
Contract of Service/
Contract for Service
RM $ wages
Placement
CONTRACTOR
(Outsource Company)
FACTORY
(Principle Employer)
TODAY
FACTORY
(Principle
Employer)
TOMORROW
PROBATION
followed by
PERMANENT
Contract
Temporary
(FIX TERM)
contract
FACTORY
(Principle Employer)
FACTORY
(Principle Employer) THE DAY AFTER
Types of WORKERS
Employed directly by Employer or Principal :
1. Permanent workers
2. Local contract workers (Fix-term)
3. Foreign contract workers (Fix-term)
------------------------------------------------------------------------------------------------------------------------------
Supplied by Labour Contractors but work for Principal
employer PAID BY Labour Contractor:
4. Local contract workers (Fix-term)
5. Foreign contract workers (Fix-term)
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Types of CONTRACTS
1. Employment Contract is a CONTRACT OF
SERVICE
(Kontrak Perkhidmatan)
2. Service Contract is a
CONTRACT FOR SERVICE
(Kontrak untuk Perkhidmatan)
(not an employment contract)
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Contract OF Service
(Kontrak Perkhidmatan)
• Any agreement between two parties – an employer and
an employee, where by:
• The employer agrees to employ another as an
employee; and the employee
– agrees to undertake certain duties under the
direction and control of the employer.
– agrees, in return for a specified wage or salary and
benefits under a terms & conditions of employment
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13
Terms and Conditions of Employment
• The employer cannot change the terms and
conditions of employment unless employee agrees
to it.
• Any terms and conditions, in a contract of service,
that is less favourable than the relevant provision
under the Employment Act (1955) is illegal, null and
void.
• Provision in the Act will take precedence over a
particular contractual term that is less favourable.
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• An apprenticeship contract or agreement is also
considered a contract of service
• Agreement, whether oral or in writing and
whether express or implied.
Oral contract in writing? How?
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Employment Act in 1955
• With the introduction of the EA, the then British Administration
effectively abolished the indenture labour, bonded labour and the
“kanggani” system in Malaya, as it was known then.
• The totality of the Employment Act 1955 established two very
important principles of law.
• They are:
– Security of tenure – ensuring permanence of job and
– Proprietary right to the job – where termination of worker, shall
be with just cause and excuse & by due process.
• These principles are trite law and are considered sacrosanct.
• MUST be protected at all cost!
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Types of
Contract OF Service
(Kontrak Perkhidmatan)
• Permanent Contract (permanent workers)
Direct hire (Company workers)
- local workers
• Fixed Term Contract (temporary or contract workers)
Direct hire (Company workers)
Locals & Foreign workers
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contract FOR service
(not an employment contract)
(Kontrak untuk Perkhidmatan)
• engaged as an independent contractor
(such as a self-employed person or vendor) .
• engaged for a fee to carry out an assignment, duty or a
project for the company.
• there is no employer- employee relationship, therefore,
NOT covered by the Employment Act
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TERMS & CONDITIONS of work
for CONTRACT workers
• Hours of Work: 1 Shift – 12Hours
• Wages: basic RM 400 – RM 450
• Overtime: fixed amount, does not follow rates for
normal days, rest days & public holidays OR none.
• Annual leave, Public holidays pay, Sick leave, Maternity
leave - Not mandatory.
• No payment for legally mandated breaks.
• Pay cut for absent or late for work or on sick leave or on
annual leave.
• Toilet breaks monitored – 2x for 12 hour shift
• Accommodation & Transport provided FoC.
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Types of
contract FOR service
(Kontrak untuk Perkhidmatan)
• Fixed Term Contract (temporary or contract workers)
workers hired by Outsourced Company to work in
the principle company.
- Locals & Foreign workers
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There is no single conclusive test to distinguish a contract of employment from a contract
for services. Some of the factors to be considered in identifying a contract of
employment include:
•
•
•
•
i) Control
Who decides on the recruitment and dismissal of employees?
Who pays for the employees' wages and in what ways?
Who determines the production process, timing and method of production?
Who is responsible for the provision of work?
• ii) Ownership of Factors of Production
• Who provides the tools and equipment?
• Who provides the working place and materials?
•
•
•
•
iii) Economic Considerations
Does he carry on business on his own account or carry on the business for the employer?
Does he involve in any prospect of profit or is he liable to any risk of loss?
How are his earnings calculated and profits derived?
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Essential Clauses of Contract of Service :
•
•
•
•
•
•
Commencement of employment;
Appointment – job title and job scope;
Hours of work;
Probation period, if any;
Remuneration;
Employee's benefits (e.g. sick leave, annual leave,
maternity leave);
• Termination of contract – notice period; and
• Code of conduct (e.g. punctuality, no fighting at work).
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LAWS ON PROTECTION OF
RIGHTS OF WORKERS
•
•
•
•
•
•
•
STATUTE
Employment Act 1955
Industrial Relations Act 1969
Trade Unions Act 1959
Workmen’s Compensation Act 1952
Occupational Safety and Health Act 1994
Social Security Act 1969
Immigration Act 1959/63
Contract of Employment
The contract of employment stipulates terms and conditions on duration,
wages, work shift, days off, sick leave, medical fees, payment of levy, visa,
medical and travel.
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Modus operandi
in getting permit for foreign workers.
1. Companies advertise job vacancies in front of their
factory gates.
2. Company’s own Human Resource officer – interviews
and identify potential candidates.
3. Identified candidates - sent to sign a contract with an
outsource company, usually without receiving a copy.
• Is the contract a contract for service or
contract of service?
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The “successful” candidate –
4.
Handed over to company Human
Resource officer.
5. Provided with the company badge with a
unique Number to denote “contract workers”.
6.
One week orientation and work
process training.
7. Successful candidates sent to the Assembly
line supervisor to start work as contract
labour.
Workers not aware of the type of contract!
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Not wanting to be exploited..
Locals QUIT…in PROTEST!
(albeit SILENTLY !)
Applying for PERMIT
• Due to the high attrition of contract labour.
company applies to the government agencies (MOHR &
KDN) for permit to bring in foreign workers.
The reasons often cited
–
–
•
local workers are not keen on menial jobs,
that they are pampered and like to “lepak”.
TREATEN to relocate operation to third country
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Sikap Pekerja Tempatan
•
•
•
•
Tidak berminat berkerja lebih masa dan syif
Terlalu memilih kerja
Minat ganjaran yang tidak setimpal dengan produktiviti
Tidak bersedia belajar kemahiran baru dan kerja pelbagai
tugas
• Sukar menerima sistem kerja baru
• Mementingkan masa untuk riadah dan keluarga
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Facts not mentioned are:
• that the wages and benefits are intentional made
unattractive,
• with unfair and archaic terms and conditions of
service (Pre-Employment Act era).
• The silent protest.
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Breakdown
Breakdown of
of types
types of
of Employment
Employment contract
contract in
in an
an American
American Semiconductor
Semiconductor Assembly
Assembly
Plant
Plant of
of semi-skilled
semi-skilled workers
workers and
and Production
Production Operators
Operators in
in Dec
Dec 2007
2007
Company
Employment
Agency
Permanent Contract of Service
for local workers
1028
48 %
Temporary Contract of Service
for local workers
(3 to 6 months renewable)
110
5%
Temporary Contract of Service
for foreign workers
(2 years renewable)
810
38 %
Local contract workers
210
10 %
2158
100 %
TOTAL
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Cost Comparison - Local vs Migrant worker/per month (RM)
Local worker
Migrant worker
Basic Salary (as at end-2007)
503
503
SRA
47
47
Contractual Bonus (1 mth)
42
42
Performance Incentive (1 mth)
42
42
Shift Allowance
76
76
Life Insurance
3
3
Medical coverage
64
64
Transportation
215
193
EPF
89
nil
Levy & Visa
nil
110
Recruitment Fee
nil
30
Medical (Fomema)
nil
16
Hostel accommodation
nil
230
Workman Compensation
nil
6
Air fare
nil
40
1,081
1,402
100%
130%
Cost Components
Total (RM)
Percentage
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PURPOSE OF COMPANY
•
to make profit.
•
Corporate headquarters sets target – that
labour cost should not exceed 6% of the
manufacturing cost.
•
Hiring foreign workers will escalate cost of
labour by 30%.
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Local Management to achieve the target –
Wages & benefits are controlled :
• to subsidise the 30% additional labour cost in
hiring foreign labour.
• maintain the 6% labour cost.
• without affecting the company’s bottom line
profit.
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Leading to current reality…..
 wages & benefits of the local workers are depressed
artificially.
 type of employment contracts have deteriorated
progressively
replace local permanent contract
with foreign contract labour.
substitute with local contract labour
 Standard of living deteriorates while cost of living
escalates.
Race to the Bottom…unabated
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Company achieves:








Low wage cost.
Disposable labour - hire & fire.
Flexi-labour – Multi-skilling/Multi-tasking.
Plug & play workers. (minimal training)
No union (No negotiation powers)
Subservient workforce.
Convert workers wages into profits.
Huge wages & bonus payout- Top Mgmt
Perlumbaan menuju ke dasar …….
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• High contract labour % improves NAV
(Net Asset Value) of company.
– by transferring labour cost to overhead /
operation cost putting Company’s stock
price looking good to shareholders.
–Creative accounting.
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Problem solving technique.
INVESTIGATE (Past):
 How did the problem start?
 Who started the problem?
 When did the problem start?
 Why did the problem start?
 Where did the problem start?
------------------------------------------------------------PLAN OF ACTION (Future):
 How to overcome the problem?
 Who overcome the problem?
 When to overcome the problem?
 Why should we overcome the problem?
 Where to begin the change?
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HOW IT ALL STARTED?
It always starts small…….
and grows ….. and grows………
finally accepted as NORMAL
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PEKERJA ASING (PA)
LATAR BELAKANG
1992 -
Kerajaan meluluskan PA daripada
ASEAN, Bangladesh, India dan Sri Lanka
untuk sektor pembinaan dan perladangan.
• 2000 - Diperluaskan kepada sektor perkilangan
dan perkhidmatan (hotel dan restoran).
• 2002 -
Meliputi semua sector
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian
PA Di M’sia - 5-Apr 2007 ISMK - KSM
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OUTSOURCING
(MEMBEKAL & MENGURUS)
• 2005 –
Mesyuarat Jawatankuasa Kabinet mengenai
Pekerja Asing (JKK-PA) ke-33 Bil. 2/2005 pada
5 Julai 2005 telah BERSETUJU untuk
menggaji PA melalui konsep
OUTSOURCING.
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian
PA Di M’sia - 5-Apr 2007 ISMK - KSM
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• Outsourcing concept:
Outsourcing is a concept where the management and supply services are
undertaken by companies selected by the government. The government
shall select and supervise these companies who are reliable to be
responsible to recruit, supervise and manage foreign workers and present
the workers to customers who need them under the outsourcing concept.
• Aim:
The implementation of outsourcing aims to assist to overcome the problems of
shortage of workers and small companies who do not have the resources to
manage foreign workers full time will save cost. It will also help
companies/management who needs large workforce from time to time
especially to fulfill additional increase in contractual obligations, for peak
seasonal collection of harvest and so on.
• Management:
The management of foreign workers shall be managed in an orderly and
systematic manner. Accommodation, transportation, payment of wages of
RM400, medical examination including insurance coverage shall be under
the outsourcing company.
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di M’sia - 5-Apr 2007 ISMK -41KSM
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• 2006 – Terdapat jumlah 1,800,000 PA
Negara sumber utama:
• Indonesia 1,174,000 (63%)
• Nepal
214,000 (11%)
• India
138,000 ( 7%)
• Myanmar 109,000 ( 6%)
• Vietnam
106,000 ( 6%)
• Bangladesh 63,000 ( 3%)
• Lain-lain
64,000 ( 4%)
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Pembahagian PA mengikut sektor
• Pembuatan
- 646,000
• Perladangan
- 354,000
• Pembantu Rumah - 311,000
• Pembinaan
- 268,000
• Perkhidmatan
- 167,000
• Pertanian
- 123,000
(35%)
(19%)
(17%)
(14%)
( 9%)
( 7%)
Jumlah PA = 1,800,000 (100%)
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IMPAK Pekeja Asing
• Dari Segi Ekonomi:
Kesan Positif:
• Menyumbang RM 17b (5.1%) kepada KDNK
• RM 8.3b (5.2%) kepada perbelanjaan persendirian
• RM 1.2b levi kepada hasil kerajaan (2004)
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian
PA Di M’sia - 5-Apr 2007 ISMK - KSM
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Kesan Negatif:
• Remit RM 5-7b setahun ke negara asal
• Kos perkhidmatan kesihatan RM117j
• Kemunculan semula penyakit tibi, malaria dan
untut serta membawa penyakit baru seperti kala
azar (Leishmaniasis).
• Mengurangkan tekanan kepada majikan bagi
memperkenalkan automasi dan mekanisasi
• Mengurangkan tekanan ke atas kenaikan gaji
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM
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• Dari Segi Sosial:
• Kesatuan sekerja terancam
• Mengekang kadar upah dan jejas peningkatan
taraf hidup rakyat
• Menjejaskan kerukunan sosial
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian
PA Di M’sia - 5-Apr 2007 ISMK - KSM
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Keselamatan Negara:
• Peningkatan kes jenayah dari 1333 (1992) kepada
3113 (2002) – 133%
• Kos menjaga PA di penjara dan pusat tahanan
• Kos menghantar pulang PA
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM
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Demographics (Dept. of Statistics, 2006)
• POPULATION
26.63m
- Women
13.07m
- Men
13.56m
• EMPLOYMENT
10.9m
- Private sector
5.2m
- Public sector
1.1m
- Informal sector
4.6m
• Labour Participation rate:
- Women
46% 4.0m
- Men
86% 6.9m
• UNEMPLOYMENT
3.5%
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• Percentage of Foreign Workers against
Private sector employees:
1.8m/5.2m = 34.6%
Sumber: Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM
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NOW it grows… to
take over…
employment from
locals!
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Malaysian Trades Union Congress
LABOUR BULLETIN July 2008
New Straits Time - July 20, 2008
interview with Datuk Ishak Mohamed,
Enforcement Director Immigration Department
Q:
A:
Should foreign labour outsourcing be banned?
Outsourcing is the best solution for the government
to manage foreign workers.
Q:
Why?
A:
There are two scenarios
• One is that as companies get bigger, they will need more
manpower and with outsourcing they can get workers in a
more organized way.
•Two, outsourcing is good as it will attract foreign direct
investment. Investors will not want unions to be formed in
their establishments.
Through outsourcing, it would be difficult for unions to be
formed as outsourcing company, and not the factory, would be
the employer.
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Monday, September 21, 2009, 02.03 PM
Labour director-general Datuk Ismail Abdul Rahim
said yesterday.
We have introduced a quota system, where for
• the manufacturing sector dealing in exports it is two
foreigners to one local and
• one local to one foreigner for all other
sectors," he said.
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Cabinet Committee on Foreign Workers
and Illegal Workers.
Deputy PM: Tan Sri Muhyiddin Yassin.
• “The Laboratory*, had been directed to put
outsourcing companies under the microscope to
ensure that they stick to their role as providers of
workers and NOT as EMPLOYERS”.
• 277 registered outsourcing companies.
• Laboratory – 8 ministries and 15 agencies.
The Star Tue 23-Feb 2010
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Malaysian Labour Markets
Labour Market :
•
•
•
•
Regulated by Employment laws.
Employer to submit returns (S62 EA) – statistics
Do not include outsource / contract workers
Transparent.
Labour Black Market :
•
•
•
•
•
Not sanctioned by law.
Statistics not available.
Involves outsource / contract workers.
Existing parallel to Labour Market
Underground – illegal?
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Statement by
THE HONOURABLE DATUK DR.S.SUBRAMANIAM
MINISTER OF HUMAN RESOURCES, MALAYSIA
AT THE 98TH SESSION OF
THE INTERNATIONAL LABOUR CONFERENCE GENEVA.
THURSDAY, 11 JUNE 2009.
-----------------------------------------------------------------------------It is imperative that we take this crisis (Global Economic Crisis) as an
opportunity to reaffirm our commitment to the principles of Decent
Work and through such commitment the dignity and the rights of
workers, as enshrined in the principles of Decent Work should continue
to form the basis of the national agenda for our respective
governments.
In Malaysia, we have instituted high ranking tripartite monitoring
mechanisms very much early in the crisis to ensure that the economic
consequences of this crisis does not step on the rights of our workers
as prescribed in the Constitution and in the laws of the country.
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Principles of Decent Work
Decent work is captured in four strategic objectives:
 fundamental principles and rights at work and
international labour standards;
 employment and income opportunities;
 social protection and social security; and
 social dialogue and tripartism.
• Decent work is central to efforts to reduce poverty, and is
a means for achieving equitable, inclusive and sustainable
development.
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Principles of Decent Work
• Decent work sums up the aspirations of people in their
working lives. It involves
 opportunities for work that is productive and delivers a
fair income,
 security in the workplace and social protection for
families,
 better prospects for personal development and social
integration,
 freedom for people to express their concerns, organize
and participate in the decisions that affect their lives and
 equality of opportunity and treatment for all women and
men.
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CONTRACT LABOUR SYSTEM
is AGAINST Decent work agenda.
DOES NOT provide opportunities for
work that is productive.
DOES NOT deliver a fair income.
NO security in the workplace and social
protection for families.
NO prospects for personal development
and social integration.
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Employment Act in 1955
• With the introduction of the EA, the then British Administration
effectively abolished the indenture labour, bonded labour and the
“kanggani” system in Malaya, as it was known then.
• The totality of the Employment Act 1955 established two very
important principles of law.
• They are:
– Security of tenure – ensuring permanence of job and
– Proprietary right to the job – where termination of worker, shall
be with just cause and excuse & by due process.
• These principles are trite law and are considered sacrosanct.
• MUST be protected at all cost!
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Selamat berjuang
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