MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 1 of 38
By Jean Mary O. Auto
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS
By Jean Mary Auto
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 2 of 38
By Jean Mary O. Auto
TABLE OF CONTENTS
Chapter I:
Malaysian Labor and Industrial Relations ………… …………. 4
Country Profile
Religion
Population Size
Form of Government
Labor Force
GDP Per Capita
Source of Labor Law
Chapter II:
International Labour Conventions (ILO) ………………………..
6
Fundamental Conventions
Governance (Priority) Conventions
Technical Conventions
Up-to-date Conventions
Chapter III:
Fundamental Framework of Employment
Protection and Legislation ………………………
Fixed Term Contract
Definition of Employment
Probationary Period and Employment
Due Process
Separation Pay
12
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 3 of 38
By Jean Mary O. Auto
Chapter IV:
Compensation and Benefits …………………
18
Working Hours
Holidays
Wages
Leaves
Premium Pay for Holiday, Overtime and Night
Shift Differential
Chapter V:
Analysis ………………………………………
30
Chapter VI:
Recommendation …………………………….
36
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By Jean Mary O. Auto
I.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS
Malaysia is a founding member of the Association of Southeast Asian Nations, the East
Asia Summit and the Organisation of Islamic Cooperation, and a member of Asia-Pacific
Economic Cooperation, the Commonwealth of Nations, and the Non-Aligned Movement.
The country gained its independence from the United Kingdom in 1957. It is comprised
of thirteen large states and three different federal territories.
Its area is about 329,847
square kilometers. The Malaysian land is divided into two parts, namely Malaysian
Borneo and Peninsular Malaysia, between which the South China Sea flows.
In the World Population Review conducted and released by the United Nations in 6
December 2013, the current population of Malaysia in total is 29,791,949. Of this
number, 50.7% (or 15,106,780) is the male population, and the remaining 49.3% (which
is 14,685,169) is female population. This year the number of births taking place in
Malaysia is 330,910 while deaths are recorded at 77,390.1
Labor force participation rate in Malaysia decreased to 67.90 percent in December of
2013 from 69.10 percent in November of 2013.2 This labor force participation rate in
Malaysia is reported by the Department of Statistics Malaysia. It is averaged at
65.15 percent from 2010 until 2013, reaching an all time high of 69.60 percent in
September of 2013 and a record low of 62.30 percent in November of 2010.
In line with Malaysia’s significant resource capacity, technical cooperation is
implemented through direct trust funds rooted in the employment-related provisions of
the Malaysian Government’s “New Economic Model”.3 In 2010, the Ministry of Human
Resources requested ILO assistance in the reformation of its national labour laws and
policies, especially those relating to minimum wages and social security schemes
1
http://worldpopulationreview.com/countries/malaysia-population/ (Accessed 27 February 2014)
2
http://www.tradingeconomics.com/malaysia/labor-force-participation-rate (Accessed 08 March 2014)
3
http://www.ilo.org/asia/countries/malaysia/lang--en/index.htm (Accessed: 14 March 2014)
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 5 of 38
By Jean Mary O. Auto
(actuarial review and unemployment insurance).4 Since then, trust fund technical
cooperation initiatives have been developed.
Malaysia is multi-ethnic and multi-cultural, which plays a large role in politics.5
The constitution declares Islam the state religion. The national, or official, language is
Malay which is the mother tongue of the majority Malay ethnic group. When it comes to
government and politics, it is a federal constitutional monarchy.6 Malaysia is closely
modeled on the Westminster parliamentary system.
This is so because it is a former
Crown colony. The head of state is the king, known as the Yang di-Pertuan Agong. He is
an elected monarch chosen from the hereditary rulers of the nine Malay states every five
years. However, the King’s role has been largely ceremonial. The head of government is
the Prime Minister.
Malaysia is mainly based on the common law legal system. The Constitution of Malaysia
is the supreme law of the land which has a unique dual justice system that is secular laws
and sharia laws. Federal laws are enacted by the Parliament of Malaysia which applies
throughout the country. State laws are enacted by the State Legislative Assemblies to
apply in a particular state.
Since its independence in 1957, Malaysia has had one of the best economic records in
Asia, with GDP growing an average 6.5% for almost 50 years.7
Indeed, Malaysia’s
newly industrialized market economy is ranked third largest in Southeast Asia and 29th
largest in the world.
II.
INTERNATIONAL LABOUR CONVENTIONS (ILO)
4
Ibidem.
5
http://en.wikipedia.org/wiki/Malaysia (Accessed: February 22, 2014)
6
Ibidem.
7
Ibidem.
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Malaysia has been a member of the ILO since 1957. As Malaysia is a high middleincome country, the ILO’s technical engagement focuses on building the capacity of
social partners and government, facilitating dialogue, providing technical advice and
promoting international labour standards.8
According to the data provided by
NORMLEX (Information System on International Labour Standards) of the International
Labour Organization, Malaysia has ratified seventeen (17) ILO Conventions of which
sixteen (16) are in force and one (1) has been ratified in the past twelve (12) months.9
In 1990, the Government denounced C.105, one of the ILO’s eight core conventions
(Abolition of Forced Labour).10
There are six (6) of eight (8) Fundamental Conventions:
Fundamental Conventions
Date
Status
11 November 1957
In Force
05 June 1961
In Force
09 September 1997
In Force
C105 – Abolition of Forced Labor
Convention, 1957 (No. 105)
13 October 1958
Not In Force/Denounced
C138 – Minimum Age Convention,
1973 (No. 138); Minimum age
specified: 15 years
09 September 1997
In Force
Fundamental Conventions
Date
Status
CO29 – Forced Labour
Convention, 1930 (No. 29)
CO98 – Right to Organize and
Collective Bargaining Convention,
1949 (No.98)
C100 – Equal Remuneration
Convention, 1951 (No. 100)
8
Idem, at 3.
9
http://www.ilo.org/dyn/normlex/en/f?p=1000:11200:0::NO:11200:P11200_COUNTRY_ID:102960
(Accessed 21 February 2014)
10
Idem, at 3.
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C182 - Worst Forms of Child
Labor Convention, 1999 (No. 182)
10 November 2000
In Force
Malaysia has two (2) Governance Conventions (priority) out of four:
Governance (Priority) Conventions
Date
Status
C081 – Labour Inspection
Convention, 1947 (No. 81)
01 July 1963
In Force
C144 – Tripartite Consultation
(International Labour Standards)
Convention, 1976 (No. 144)
14 June 2002
In Force
Nine (9) out of one hundred seventy-seven (177) Technical Conventions was ratified:
Technical Conventions
Date
Status
C050 - Recruiting of Indigenous
Workers Convention, 1936 (No. 50)
11 November 1957
Not in Force
C064 – Contracts of Employment
(Indigenous Workers) Convention,
1939 (No. 64)
11 November 1957
Not in Force
C065 – Penal Sanctions (Indigenous
Workers) Convention, 1939
(No. 65)
11 November 1957
Not in Force
C088 – Employment Service
Convention, 1948 (No. 88)
06 June 1974
In Force
C095 – Protection of Wages
Convention, 1949 (No. 95)
17 November 1961
In Force
Date
Status
06 June 1974
In Force
Technical Conventions
C119 – Guarding of Machinery
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Convention, 1963 (No. 119)
C123 – Minimum Age
(Underground Work) Convention,
1965 (No. 123)
06 June 1974
In Force
07 June 2012
In Force
Minimum age specified: 16 years
C187 – Promotional Framework
for Occupational Safety and Health
Convention, 2006 (No. 187)
The up-to-date Conventions not ratified by Malaysia totaled sixty-six (66):
C087 – Freedom of Association and Protection of the Right to Organise Conventions,
1948 (No. 87)
C111 – Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
C122 – Employment Policy Convention, 1964 (No. 122)
C129 – Labour Inspection (Agriculture) Convention, 1969 (No. 129)
C014 – Weekly Rest (Industry) Convention, 1921 (No. 14)
C077 – Medical Examination of Young Persons (Industry) Convention, 1946 (No.77)
C078 – Medical Examination of Young Persons, (Non-Industrial Occupations)
Convention, 1946 (No.78)
C094 – Labour Clauses (Public Contracts) Convention, 1949 (No. 94)
C097 – Migration for Employment Convention (Revised), 1949 (No. 97)
C102 – Social Security (Minimum Standards) Conventions, 1952 (No. 102)
C106 – Weekly Rest (Commerce and Offices) Convention, 1957 (No. 106)
C110 – Plantations Conventions, 1958 (No. 110)
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C115 - Radiation Protection Convention, 1960 (No. 115)
C118 – Equality of Treatment (Social Security) Convention, 1962 (No. 118)
C120 – Hygiene (Commerce and Offices) Convention, 1964 (No. 120)
C121 – Employment Injury Benefits Convention, 1964 [Schedule I amended in 1980]
(No. 121)
C124 – Medical Examination of Young Persons (Underground Work) Convention, 1965
(No. 124)
C128 – Invalidity, Old-Age and Survivors’ Benefits Convention, 1967 (No. 128)
C130 – Medical Care and Sickness Benefits Convention, 1969 (No. 130)
C131- Minimum Wage Fixing Convention, 1970 (No. 131)
C135 – Workers’ Representatives Convention, 1971 (No.135)
C139 – Occupational Cancer Convention, 1974 (No. 139)
C140 – Paid Educational Leave Convention, 1974 (No. 140)
C141 – Rural Workers’ Organisations Convention, 1975 (No. 141)
C142 – Human Resources Development Convention, 1975 (No. 142)
C143 – Migrant Workers (Supplementary Provisions) Convention, 1975 (No. 143)
C145 – Continuity of Employment (Seafarers) Convention, 1976 (No. 146)
C146 – Seafarers’ Annual Leave with Pay Convention, 1976 (No. 146)
C147 – Merchant Shipping (Minimum Standards) Convention, 1976 (No. 147)
C148 – Working Environment (Air Pollution, Noise and Vibration) Convention, 1977
(No. 148)
C149 – Nursing Personnel Convention, 1977 (No. 149)
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C150 – Labour Administration Convention, 1978 (No. 150)
C51 – Labour Relations (Public Service) Convention, 1978 (No.151
C152 – Occupational Safety and Health (Dock Work) Convention, 1979 (No. 152)
C154 – Collective Bargaining Convention, 1981 (No. 154)
C155 – Occupational Safety and Health Convention, 1981 (No. 155)
C156 – Workers with Family Responsibilities Convention, 1981 (No. 156)
C157 – Maintenance of Social Security Rights Convention, 1982 (No. 157)
C159 – Vocational Rehabilitation and Employment (Disabled Persons) Convention, 1983
(No. 159)
C160 – Labour Statistics Conventions, 1985 (No. 160)
C161 – Occupational Health Services Convention, 1985 (No. 161)
C162 – Asbestos Convention, 1986 (No.162)
C163 – Seafarers’ Welfare Convention, 1987 (No. 163)
C164 – Health Protection and Medical Care (Seafarers) Convention, 1987 (No.164)
C165 – Social Security (Seafarers) Convention (Revised), 1987 (No.165)
C166 – Repatriation of Seafarers Convention (Revised), 1987 (No. 166)
C167 – Safety and Health in Construction Convention, 1988 (No. 167)
C168 – Employment Promotion and Protection against Unemployment Convention, 1988
(No. 168)
C169 – Indigenous and Tribal Peoples Convention, 1989 (No. 169)
C170 – Chemicals Convention, 1990 (No. 170)
C171 – Night Work Convention, 1990 (No. 171)
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C172 – Working Conditions (Hotels and Restaurants) Convention 1991 (No.172)
C173 – Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (173)
C174 – Prevention of Major Industrial Accidents Convention, 1993 (No. 174)
C175 – Part- Time Work Convention, 1994 (No. 175)
C176 – Safety and Health in Mines Convention, 1955 (No.176)
C177 – Home Work Convention, 1996 (No. 178)
C178 – Labour Inspection (Seafarers) Convention, 1996 (No. 178)
C179 – Recruitment and Placement of Seafarers Convention, 1996 (No. 179)
C180 – Seafarers’ Hours of Work and the Manning of Ships Convention, 1996 (No. 180)
C181 – Private Employment Agencies Convention, 1997 (No. 181)
C183 – Maternity Protection Convention, 2000 (No. 183)
C184 – Safety and Health in Agriculture Convention, 2001 (No.184)
C185 – Seafarers’ Identity Documents Convention (Revised), 2003 (No. 185)
C188 – Work in Fishing Convention, 2007 (No.188)
C189 – Domestic Workers Convention, 2011 (No. 189)
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III.
FUNDAMENTAL FRAMEWORK OF EMPLOYMENT
PROTECTION AND LEGISLATION
There are three major cornerstones of Malaysian labor law. They are the Employment
Act of 1955, the Trade Unions Act of 1959, and the Industrial Relations Act of 1967
which aims to provide the minimum terms of employment, regulate union activity, and to
regulate relations between employers and workers.11
Unemployment rate as reported by the Department of Statistics of Malaysia decreased to
3 percent in December of 2013 from 3.40 percent in November of 2013. According to
Trading Economics, unemployment rate in Malaysia averaged 3.31 percent from 1998
until 2013, reaching an all time high of 4.50 percent in March of 1999 and a record low
of 2.70 percent in August of 2012.12 In Malaysia, the unemployment rate measures the
number of people actively looking for a job as a percentage of the labour force.
The principal legislation governing the labor market and employment relationship in
Malaysia is the Employment Act 1955. But the succeeding discussion is lifted in toto
from the three major cornerstones of Malaysian labor law which seeks to highlight the
country’s labor standards.
It is a must to start with the important definitions.13
Employment Law is the law which regulates the operation of the labour market in general
and the employment relationship between employers and employees in particular.
Examples include hiring process, suspension from work, maternity rights, layoff and
wages.
11
http://www.ehow.com/about_6617374_malaysia-labor-law.html (Date accessed: February 26, 2014)
12
http://www.tradingeconomics.com/malaysia/unemployment-rate (Accessed 27 February 2014)
13
http://www.lawyerment.com.my/librarydoc/empl/10000000-2.-shtml (Accessed 27 February 2014)
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Wages means basic wages and all other payments in cash payable to an employee for
work done in respect of his contract of service but does not include any payment by way
of commission, subsistence and other overtime payment.
The obligations and rights of an employment contract are covered by the Employment
law.
When an offer for employment is made by an employer to an employee, the law
governing the relationship between an employee and an employer begins.
Another important term is employment. It means work or service performed by an
individual to the task at hand for another person or entity in exchange for wages or other
remuneration.
The basic terms used to describe the employment relationship revolves around the
definition of employer, contract of service, and employee.
Employer in relation to an employee or a workman, means a person by whom the
employee or workman is employed. An employer obtains the services of another to
perform work and has direct control of the way in which the work is to be done.
An employer shall provide the means through which the services will be performed such
as providing a place where the work is to be performed and tools required to get the job
done.
On the other hand, contract of service means any agreement, whether express or implied,
and if express, whether oral or in writing where the employer agrees to employ and the
employee agrees to be employed and includes an apprenticeship contract.
In general, an employee means a person who has entered into or works under a contract
of employment. There are different interpretations for the term, employee, in different
Acts governing the labor market in Malaysia. Those interpretations will determine
whether you are an employee protected under the scope of an Act.
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Where an employee begins employment with an employer and for a period of more than
one month, such employee must be given a written contract of employment with
particulars of the terms and conditions of employment including the notice period
required to terminate the contract of employment.
The Employment Act of 1955 provided the reason for probationary employment.
Probationary period is for the employer to test the suitability of the employee for the job
assigned to him. The employer may test the aptitude, attitude, ability or adaptability of
the employee for the job. He may also take into consideration other factors like behavior,
conduct, co-operation, and responsibility of the employee. If the employee is found to be
lacking in a few of the above attributes, it is advisable for the employer in a cordial
manner, with a view to improving him.
An employer may extend the initial probationary period to a further period of 1-3 months.
In such an event, the employee should be informed, in writing, before the end of the
probationary period that his probationary period is being extended. He should also be
informed of the specific areas where improvement is expected.
The employer could terminate the services of an employee on probation, if the employee
does not measure up to the employer’s satisfaction. But the satisfaction must be
reasonable. If an employee on probation has reasons to believe that termination of his
service was mala fide, he may seek reinstatement under Section 20 of the Industrial
Relations Act.
An employee may also quit the job if he dissatisfies with the job, even without waiting
for the end of the probationary period.
Some of the reasons for termination by the employer are:
1.
Willful breach by the employee as regards the terms and the conditions of the
contract of employment.
2.
Misconduct on the part of the employee.
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3.
Where the employee has been continuously absent from work for more than two
(2) consecutive working days either –
a.
Without prior leave from his employer or
b.
Without informing or attempting to inform his employer of such an excuse
prior to or at the earliest opportunity during such absence.
4.
Where an employer is employed for a specific piece of work for a specific period
under a contract of service, his services can be terminated when in the expiry of
the period or upon the specified piece of work is completed.
Section 14 (1) IRA – misconduct. For the employee govern by the IRA 1967, the
5.
Act recognizes the management’s prerogative to employ, terminate for reasons of
redundancy or reorganization or dismiss an employee with proper cause or
excuse. However, the Industrial Court also has “the right to interfere into any
management prerogatives and strike down any unfair labour practice or
victimization”. But the Court will not interfere with the bona fide exercise of
power which is given to the management by the common law and by the contract
of service which is inherent in the management.
Retirement14
6.
In the absence of a provision for period of notice made in the contract, the period of
notice of termination shall be based on the provision of the Employment Act as follows:
a.
Less than two (2) years, at least four (4) weeks
b.
Two (2) years or more, at least six (6) weeks
c.
Five (5) years or more, at least eight (8) weeks
d. The Industrial and Employment Relations Department of the ILO provided
information regarding severance pay and redundancy payment of employees in
Malaysia.15
14
http:www.lawnet.com.my/lawnetpublic/Legal Information/Legal Awareness/A Guide to Malaysian
Labour Laws Part 1 of 2/tabid/69/Default.aspx (Date accessed: 27 February 2014)
15
http://www.ilo.org/dyn/eplex/termdisplay.severancePay?p_lang=en&p_country=MY&p_all_years=Y
(Accessed: 14 March 2014)
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A.
Severance Pay:
The Employment (Termination and Lay-off Benefits) Regulations 1980 provides for
statutory severance pay in the event of termination, on the following scale (Section 6 (1):
ten (10) days' wages for each completed year of service of less than two (2) years;
- Fifteen (15) days wages for each year of two to five years service;
- Twenty (20) days wages for each year of service exceeding five (5) years.
These Regulations apply to employees with more than one year service (Section 3(1) and
do not apply to dismissals for misconduct, after due inquiry (Section 4) :

tenure ≥ 6 months
:
0 day(s)

tenure ≥ 9 months
:
0 day(s)

tenure ≥ 1 year
:
0 day(s)

tenure ≥ 2 years
:
30 day(s)

tenure ≥ 4 years
:
60 day(s)

tenure ≥ 5 years
:
100 day(s)

tenure ≥ 10 years
:
200 day(s)

tenure ≥ 20 years
:
400 day(s)
B.
Redundancy Payment:
 Same as severance pay under Section 6 (1) of the Employment (Termination and
Lay-off Benefits) Regulations 1980.
 tenure ≥ 6 months: 0 day(s)
 tenure ≥ 9 months: 0 day(s)
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IV.
COMPENSATION AND BENEFITS
We come now to the important labor standards as regards to conditions of employment
which are the following provisions16:
16
Idem, at 13.
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1.
Hours of Work
An employee shall not be required under his contract of service to work –
a.
More than five (5) consecutive hours without a period of leisure of not less
than thirty (30) minutes duration.
2.
3.
b.
More than eight (8) hours in one (1) day.
c.
In excess of a spread over a period of ten (10) hours in one day.
d.
More than forty eight (48) hours in one (1) week with certain provisos.
Emergency Work Allowed Only
a.
In case of accident, actual or threatened.
b.
Urgent work to be done to machinery or plant.
c.
An interruption of work impossible to foresee.
Public Holidays
Every employee is entitled to ten (10) out of any of the following gazetted public
holidays and any day declared as a public holiday by the Federal or State Government
under Section 8 of the Holidays Act 1951 in any one calendar year:
A.
Federal Public Holidays (11)

Hari Raya Puasa

Chinese New Year

Workers’ Day

Wesak Day

Birthday of YDPA

Hari Raya Haji

Awal Muharram

National Day

Birthday of Prophet Muhammad
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 19 of 38
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B.
C.

Depavali

Christmas Day
State Public Holidays (9)

New Year’s Day

Federal Territory Day

Thaipusam

Israk & Mikraj

Nuzul Quran

Good Friday

Pesta Keamatan

Hari Dayak

Birthday of State’s Sultans/Rulers
Compulsory Gazetted Public Holiday (4)

National Day

The King’s Birthday

Birthday of Sultans/ Head of State or Federal Territory Day

Workers’ Day
If any of the ten chosen gazetted public holidays falls within the period during which the
employee is absent due to sick leave, annual leave, temporary disablement under the Workmen’s
Compensation Act 1952 or under the Employees’ Social Securities Act 1969 or maternity leave,
the employee is entitled to another day as a paid holiday in substitution for such public holiday.
4.
Minimum Wage
Pursuant to the amendments to the Employment Act in April 2012, minimum wage
standards were implemented as follows: national minimum wage will be Malaysian
Ringgit (MYR) 900 per month for employees in the peninsular Malaysia, and MTR800
per
month
for
employees
in
Sabah,
Sarawak,
and
the
Labuan
Federal
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 20 of 38
By Jean Mary O. Auto
Territory. Employers must ensure that they are paying wages in compliance with the
newly introduced minimum wage laws.17
5.
Entitlement of Annual Leave
An employee shall be entitled to paid annual leave as follows:
a.
Eight (8) days for every twelve (12) months of continuous service if he
has been employed by the same employer for a period of less than two (2)
years.
b.
Twelve (12) days for every twelve (12) months of continuous service if he
has been employed by the same employer for a period of two (2) years or
more but less than five (5) years.
c.
Sixteen (16) days for every twelve (12) months of continuous service if he
has been employed by the same employer for a period of five (5) years or
more where an employee has not completed twelve (12) months of
continuous service with the same employer, his entitlement to paid annual
leave shall be proportioned to the number of completed months of service.
6.
Entitlement of Sick Leave
An employee is entitled to paid sick leave (where no hospitalization is necessary) a.
Total of fourteen (14) days per year where employee has been employed
for less than two (2) years.
b.
Eighteen (18) days in a year if the employee has been employed for two
(2) years or more but less than five (5) years.
17
http://hrboss.com/blog/your-global-workforce-malaysia (Accessed:27 February 2014)
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 21 of 38
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c.
Twenty two (22) days in a year if the employee has been employed for
five (5) years or more.
d.
Sixty (60) days in each calendar year if hospitalization is necessary as
certified by a registered medical practitioner.
7.
Maternity Leave
a.
Every female employee shall be entitled to maternity leave for a period of
not less than sixty (60) consecutive days in respect of each confinement.
b.
Maternity leave shall not commence earlier than thirty (30) days
immediately preceding the confinement or later than the day immediately
following the confinement.
c.
The female employee shall also be eligible for maternity allowance upon
prescribed rates and qualifications under the Employment Act.
d.
Maternity allowance is payable to a female employee by the employer for
each day of the eligible period at her ordinary rate of pay for one day or at
the rate prescribed by the Minister. A female employee employed on a
monthly rate shall be deemed to have received her maternity allowance if
she continues to receive her monthly wages during her absence from work
during the eligible period.
8.
Work on Rest Day/Overtime
Under Employment Act of 1955, “overtime” means the number of hours of work carried
out in excess of the normal hours of work per day.
“Normal hours of work” means the number of hours work as agreed between the
employer and employee in the contract of service.
“Ordinary rate of pay” means wages as defined which an employee is entitled to receive
under his contract of service for the normal hours of work but does not include overtime
payment on a rest day or a public holiday.
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As a rule, no employee shall be compelled to work on a rest day. Exemption is when the
employee is engaged to work in shifts.
In such case the following rules shall be observed:
a.
If the employee works on a rest day and is employed on a daily, hourly or
other similar rate of pay he shall be paid for the period of work
If the work does not exceed half his normal hours of work, he shall
be paid one day’s wages at the ordinary rate of pay.

If he works more than half but does not exceed his normal hours of
work, two (2) days wages at the ordinary rate of pay.
b.
In the case of employee employed on a monthly rate of pay who works on
a rest day, he shall be paid for work –

If it does not exceed half his normal hours of work, wages
equivalent to half the ordinary rate of pay for work done on that
day.

If it is more than half but does not exceed his normal hours of
work, one day wages at the ordinary rate of pay for work done on
that day.
c.
For any work carried out in excess of normal hours of work, the employee
shall be paid at a rate which is not less than two (2) times his hourly rate
of pay.
d.
In the case any employee employed on piece rates who work on a rest day,
he shall be paid twice his ordinary rate per piece.
9.
Rest Day
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 23 of 38
By Jean Mary O. Auto
a.
Every employee shall be allowed in each week a rest day of one whole day
as may be determined by the employer.
b.
The employer shall prepare a roster for the rest days of its employees so
that the employee is informed of his rest day.
Interestingly, there are no legal requirements in Malaysia for an employer to establish
work rules.18 As explained in detail by Alice Wang in her 13 March 2013 HRBoss Blog,
it means that an employer may choose to formulate work rules, company policies,
employee handbooks, and similar documents, or an employer may choose not to do
so. Despite this lack of legal requirement, many companies establish work rules for best
business practice purposes. If a company establishes work rules and policies, an
employer should be careful that the work rules and policies do not become a part of the
employee contract of employment for the following reasons: if a company decides to
allow its work rules and policies to become a part of the employee contract, then the
employee’s consent may be required to amend such rules and policies. Therefore, it is
best business practice to establish and implement work rules, policies, procedures,
employee handbooks, and other documents that expressly and specifically state that they
do not form a contract of employment and are not a part of any employee contract of
employment.
Further, there are no specific regulations governing probationary periods in Malaysia
(Wang, 2013). She advised that in Malaysia, it is best business practice to utilize a
three-month period for non-executive and non-management employees and a six-month
period for executive and management employees. The purpose of instituting a
probationary period is to protect your company in the event an employee covered on the
Employment Act brings a complaint of dismissal “without just cause or excuse.” In
recent years, the ability for employees to lodge a complaint of dismissal “without just
cause or excuse” has led to a body of case law regarding circumstances in which
termination of employment is legally justified. Examples include: termination for
misconduct and termination for redundancy. However, courts will examine the genuine
18
Ibidem.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 24 of 38
By Jean Mary O. Auto
nature of redundancy dismissals and seriousness of misconduct (e.g. habitual neglect of
duties, dishonesty, fraud) with a high degree of scrutiny. Hence, for best business
practice, employers should properly document misconduct and be able to support
dismissals prior to any termination decisions.
Additionally, there are also specific statutory restrictions on the termination of any
employee on the basis of: (1) trade union membership or activities; (2) certain
occupational health and safety activities (such as making a complaint about a safety
concern); (3) disclosures to government agency in accordance with the Whistleblower
Protection Act of 2010; and (4) maternity leave.19 Employers must be mindful that
effective April 1, 2012, maternity leave entitlements and benefits are required by law and
extended to all female employees regardless of the amount of salary earned. Further,
dismissal of an employee on maternity leave is strictly prohibited by law and considered
an offense to the Employment Act with respect to all female employees regarding of the
amount of salary earned.
10.
Foreign Employment
According to the Malaysian Online Legal Resources, the country is open to employment
only of foreign workers from Cambodia, Indonesia, Philippines, Sri Lanka, Thailand,
Bangladesh and Pakistan to work in the agricultural and manufacturing sectors effective
01 August 1998.20
Moreover, an employer in Sabah is only permitted to employ foreign workers from
Indonesia and Philippines. In Federal Territory of Labuan, only foreign workers from
Indonesia, Philippines, Thailand, Bangladesh and Pakistan are permitted to be employed.
19
Ibidem.
20
http://www.lawyerment.com.my/library/doc/empl/hr/1000000-8.shtml (Accessed 17 March 2014).
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 25 of 38
By Jean Mary O. Auto
On the other hand, applications to employ foreign workers to work in sectors other than
manufacturing and plantation have been withheld except for domestic servant. That in
such case, only nationals from Indonesia, Philippines, Thailand and Cambodia are
permitted to be employed as domestic servant. Provided further, one is only permitted to
employ a foreign worker as domestic servant from Sri Lanka and Philippines if his/her
monthly income exceed RM10,000. Where the monthly income is more than RM3,000
he/she is permitted to employ a foreign worker as domestic servant from Indonesia,
Cambodia and Thailand.
Where the employment of a foreign worker is for the manufacturing sector, only
manufacturer of "Export Oriented Industries" is eligible to submit their application for
approval. As for the agricultural sector, only the main commodities estate owners such as
rubber, palm oil and cocoa and for farming such as aquaculture, live-stocks, vegetables,
fruits and nursery are permitted to submit application for employment of foreign worker.
Where a foreign worker has been employed prior to 01 August 1998, only those in the
hotel industry, cleaning, aquaculture and vegetable farming are permitted to renew their
work pass. Those in the manufacturing sector are allowed to renew their work pass unless
the factory is downsizing or being wound up. Workers in the construction sector are also
permitted to renew their work pass provided their employer has proof that their project is
still in proceeding.
Other foreign workers who do not fall under the above categories must be sent back to
their country of origin upon the expiry of their work pass or be transferred to the
manufacturing and agricultural sectors depending on the nature of their jobs.
There is no labor market test in Malaysia.
The law only provides the following
guidelines applicable for employment of foreign worker other than Indonesian worker:21
In Peninsular Malaysia, the Ministry of Home Affairs is the approving authority for the
employment of foreign workers of skilled, semi-skilled and unskilled categories.
21
Ibidem.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 26 of 38
By Jean Mary O. Auto
Subject to conditions that will be determined from time to time, the approval will be
based on the merits of each case. Only after efforts to get qualified local citizens and
permanent residents have failed, an employer's application to employ foreign workers
will be considered.
Before the employment of foreign workers, you must first obtain approval from the
Ministry of Home Affairs by submitting five (5) copies of the KDN/PA.1/98 (Pin.1) form
for manufacturing sector and KDN/PA.2/98 (Pin.4) form for agricultural sector. These
forms must be sent to the Ministry of Home Affairs in Kuala Lumpur. If no reply is
received within five (5) weeks after submission, then is mandatory to contact the Ministry
of Home Affairs.
After approval has been obtained, the applicant has to proceed to the Immigration
Department to apply for Visit pass (Temporary Employment) or Pass Lawatan Kerja
Sementara (PLKS).
To apply for Visit Pass (Temporary Employment), applicant must submit the following:
 Letter of approval from Ministry of Home Affairs
 List of foreign worker's name
 Photostat copy of Identity Card of employer or officer of company
 Payment form
 Passport and travel document
 Photograph (Black and White) measuring 3.5 cm x 5.0 cm
 Detail of employer's form
 Companies registration
 Detail of foreign workers and their dependents
 Form Imm. 12 (1 copy)
 Form Imm. 38 (1 copy) if applicable
 Bank guarantee
 Medical report of worker from home country. (Approved health centers by the
Ministry of Health, Malaysia)
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 27 of 38
By Jean Mary O. Auto
 For domestic servant the following documents are to be submitted :
 Covering letter from the employer
 Form Imm. 12 (2 copies)
 Photograph of employer measuring 3.5 cm x 5.0 cm (4 copies)
 Photograph of intending maid measuring 3.5 cm x 5.0 cm (4 copies)
 Personal Bond duty stamped
 Contract of agreement between employer and employee duly stamped
 Photostat copy of Passport or travel document of intending domestic servant
 Photostat copy of Identity Card of employer (husband and wife)
 Photostat copy of Marriage Certificate or Children's Birth Certificate
 Latest Income Tax return of employer (Form J)
 Medical report of domestic servant from home country. (Approved health centers
by the Ministry of Health, Malaysia)
 Form DBA 2 (amendment) PRA 1
Upon successful application, the Immigration Department will inform the Embassy of
home country of the worker. The Embassy will then issue a VDR to the foreign worker.
After entering Malaysia, the worker is required to carry out a medical examination during
a period of 1 to 2 months using the format issued by the Immigration Department and
must be carried out at FOMEMA. The Immigration Department will then issue a Visit
Pass (Temporary Employment) to the employer.
In Sabah, Sarawak and Federal Territory of Labuan, approval need not be obtained from
the Ministry of Home Affairs but a license and approval quota to employ foreign workers
must be obtained from the Department of Labour and Committee of Foreign Workers
respectively.
Once the license and recruitment quota have been obtained, the employer is required to
apply for Visit Pass (Temporary Employment) at the nearest Immigration Department.
The documents required to submit such application are the same for application of Visit
Pass (Temporary Employment) in Peninsular Malaysia.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 28 of 38
By Jean Mary O. Auto
An annual levy on foreign worker will be imposed to ensure that foreign worker is
employed only when essential. The rates of levy on foreign worker involved in the
agricultural sector and domestic servant are RM360 per year or RM30 per month and
workers in the other sectors is RM50 per month. There will be a processing fee of RM10
for agricultural sector and domestic servant and RM50 for other sectors.
For renewal of the Visit Pass (Temporary Employment) for foreign workers, the
following documents must be submitted to the nearest state Immigration Department :

Covering letter

Payment form

Medical check up by FOMEMA

Bank draft

Bank guarantee

Passport and Travel document
For domestic servant the following documents are to be submitted for renewal of the
Visit Pass (Temporary Employment) :

Payment form

Bank draft

Medical check up by FOMEMA

Personal bond

Passport and Travel document
Social Security Organization (SOCSO) only covers Malaysian workers and permanent
resident, thus employer and foreign workers need not contribute to SOCSO. Foreign
workers are covered by the Workmen's Compensation Act 1952.
Effective from 1st August 1998, all foreign workers earning less than RM2,500 per
month are required to contribute 11% of their monthly wages to the Employees Provident
Fund while the employers are required to contribute RM5 per employee per month.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 29 of 38
By Jean Mary O. Auto
However, domestic servants who are employed to work in or connected with work in a
private residence, including a gardener and valet and who are paid from the private
account of the employer are exempted from making the compulsory contribution.
V.
ANALYSIS
Divergence and convergence in different Industrial Relations policies are largely due to
many factors.
Relevant to this is the present age of internationalism, economic
globalization and democratization.
The political and civil laws of each nation play a major role in the matter of convergence
and divergence. According to Montesquieu, they should be adapted in such a manner to
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 30 of 38
By Jean Mary O. Auto
the people for whom they are framed that it should be a great chance if those of one
nation suit another.22
The laws should be in relation to the nature and principle of each government: whether
they form it, as may be said of politic laws; or whether they support it, as in the case of
civil institutions. They should be in relation to the climate of each country, to the quality
of its soil, to its situation and extent, to the principal occupation of the natives. They
should have relation to the degree of liberty which the constitution will bear and to the
religion of the inhabitants, to their inclinations, riches, numbers, commerce, manners, and
customs. (Montesquieu, 1948)
Relative to the approach just cited is the study conducted by the author on Malaysian
labor laws, standards and employment as compared to that of the Philippines.
Highlighted in the table below is the convergence and divergence in IR policies and
practices of these two magnificent countries:
I.
CONVERGENCE
IR POLICIES and
PHILIPPINES
MALAYSIA
PRACTICES
Hours of Work
IR POLICIES and
PRACTICES
Normal Work Days
22
Not to exceed eight (8)
hours a day
Not more than eight (8)
hours in one (1) day
PHILIPPINES
MALAYSIA
Six (6) consecutive normal
work days
forty eight (48) hours in one
(1) week
http://en.wikipedia.org/wiki/Comparative_law (Accessed 18 March 2014).
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 31 of 38
By Jean Mary O. Auto
Right to Weekly Rest
Day
Not less than twenty-four
(24) consecutive hours after
every six (6) consecutive
normal work days
One (1) whole day in each
week
Minimum Wages
Per region (NCR,CAR,
ARMM and Regions I to
XIII)
Per Territory (Peninsular
Malaysia vs. Sabah,
Sarawak, and the Labuan
Federal Territory)
Due Process
Unlawful to terminate
without observance of
procedural and substantive
due process
Unlawful to terminate
without just cause or excuse
II.
DIVERGENCE:
IR POLICIES and
PRACTICES
PHILIPPINES
MALAYSIA
Probationary Period
Six (6) months from the
date the employee started
working
No specific regulations
governing probationary
periods
Pay In Lieu of Notice
Not recognized by law
Recognized by law
IR POLICIES and
PRACTICES
PHILIPPINES
MALAYSIA
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 32 of 38
By Jean Mary O. Auto
Separation Pay
One (1) month pay or one
(1) month pay for every
year of service, whichever
is higher, in case of
termination due to
redundancy, installation of
labor saving devices.
Fifteen (15) days wages for
each year of two to five
years of service;
Twenty (20) days wages for
each year of service
exceeding five (5) years
One (1) month pay or to at
least one-half (1/2) month
pay for every year of
service, whichever is higher
in case of retrenchment,
closures or cessation of
operations.
Premium Pay
(Holiday/Overtime/Night
Shift Differential)
Additional compensation is
paid
Additional compensation is
paid
Holidays
Eighteen (18) holidays –
regular and special
nonworking holidays
Eleven (11) Federal Public
Holidays;
Nine (9) State Public
Holidays;
Four (4) Compulsory
Gazetted Public holidays.
IR POLICIES and
PRACTICES
Leaves
PHILIPPINES
Service Incentive Leave for
an employee who has
rendered at least one (1)
MALAYSIA
Annual Leave:
Eight (8) days for every
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 33 of 38
By Jean Mary O. Auto
year of service
twelve (12) months of
continuous service if he has
been employed by the same
employer for a period of
less than two (2) years;
Twelve (12) days for every
twelve (12) months of
continuous service if he has
been employed by the same
employer for a period of
two (2) years or more but
less than five (5) years;
Sixteen (16) days for every
twelve (12) months of
continuous service if he has
been employed by the same
employer for a period of
five (5) years or more
where an employee has not
completed twelve (12)
months of continuous
service with the same
employer, his entitlement to
paid annual leave shall be
proportioned to the number
of completed months of
service.
Sick Leave
Total of fourteen (14) days
per year where employee
has been employed for less
than two (2) years;
Eighteen (18) days in a year
if the employee has been
employed for two (2) years
or more but less than five
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By Jean Mary O. Auto
(5) years;
Twenty two (22) days in a
year if the employee has
been employed for five (5)
years or more;
Sixty (60) days in each
calendar year if
hospitalization is necessary
as certified by a registered
medical practitioner.
Meal Periods
Not less than 60 minutes
time-off for their regular
meals
Period of leisure of not less
than thirty (30) minutes
duration
Night Shift Differential
Work performed between
ten o’ clock (10:00) in the
evening and six o’ clock
(6:00) in the morning
Work performed between
ten o’ clock (10:00) in the
evening and five o’ clock
(5:00) in the morning
Maternity Leave
Sixty (60) days for normal
delivery; Seventy-eight
days in case of caesarian
delivery.
Sixty (60) consecutive days
in case of confinement
Given the similarities and differences, it can be said that divergence in IR policies and
practices is more dominant. Despite sharing a “noodle culture” with Malaysia and other
ASEAN countries, it will take much more time (or never) to reach a point of
convergence. There are certain conditions that can be negotiated but some are absolutely
non-negotiable like religion and system of government. Diversity is a reality we just have
to accept and live with at the moment.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 35 of 38
By Jean Mary O. Auto
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 36 of 38
By Jean Mary O. Auto
VI.
RECOMMENDATION
The challenges of globalization have made international labor standards more relevant
than ever. The benefits that each country provides to their labor force are very essential in
ensuring their dignity and importance. Indeed, the ILO is correct in saying that, “labor is
not like an apple or a television set, an inanimate product that can be negotiated for the
highest profit or the lowest price.”23
Labor standards are the result of painstaking discussions among government, employers
and workers regarding creation of jobs and working conditions in which people can work
in freedom, safety and dignity.24 Sharing of best practices can benefit not only a
particular country but the whole world in terms of uplifting humanity and providing for
their well-being and development.
In short, economic development is not undertaken for its own sake but to improve the
lives of human beings; international labor standards are there to ensure that it remains
focused on improving human life and dignity.25
In this regard, the ILO plays a great influence to its member countries. It is known in its
role in advocating for international labor standards based on minimum standards adopted
by governments and the social partners. According to this international body, it is in
everyone's interest to see these rules applied across the board, so that those who do not
put them into practice do not undermine the efforts of those who do.26
Gaps can be filled adequately and properly if there is strengthening of ties between these
two countries and active participation/mutual support as member of the ASEAN
community. Moreover, strong adherence to the ILO’s guidelines by Malaysia and the
Philippines with serious consideration as regards to the benefits of having international
23
http://www.ilo.org/global/standards/introduction-to-international-labour-standards/the-benefits-ofinternational-labour-standards/lang--en/index.htm (Accessed: 14 March 2014)
24
Ibidem.
25
Ibidem.
26
Ibidem.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 37 of 38
By Jean Mary O. Auto
labor standards will create a manageable and healthy labor environment. Among such
benefits discussed are:
1. A path to decent work;
2. An international legal framework for fair and stable globalization;
3. A level playing field;
4. A means of improving economic performance;
5. A safety net in times of economic crises;
6. A strategy for reducing poverty; and
7. The sum of international experience and practice
According to the ILO, this brings about greater integration of the international
community.
MALAYSIAN LABOR AND INDUSTRIAL RELATIONS I Page 38 of 38
By Jean Mary O. Auto
WORKS CITED:
http://worldpopulationreview.com/countries/malaysia-population/
http://www.tradingeconomics.com/malaysia/labor-force-participation-rate
http://www.ilo.org/asia/countries/malaysia/lang--en/index.htm
http://en.wikipedia.org/wiki/Malaysia (Accessed: February 22, 2014)
http://www.ilo.org/dyn/normlex/en/f?p=1000:11200:0::NO:11200:P11200_COUNTRY_
ID:102960
http://www.ehow.com/about_6617374_malaysia-labor-law.html
http://www.tradingeconomics.com/malaysia/unemployment-rate
http://www.lawyerment.com.my/librarydoc/empl/10000000-2.-shtml
http:www.lawnet.com.my/lawnetpublic/Legal Information/Legal Awareness/A Guide to
Malaysian Labour Laws Part 1 of 2/tabid/69/Default.aspx
http://www.ilo.org/dyn/eplex/termdisplay.severancePay?p_lang=en&p_country=MY&p_
all_years=Y
http://hrboss.com/blog/your-global-workforce-malaysia
http://www.lawyerment.com.my/library/doc/empl/hr/1000000-8.shtml
http://en.wikipedia.org/wiki/Comparative_law
http://www.ilo.org/global/standards/introduction-to-international-labour-standards/thebenefits-of-international-labour-standards/lang--en/index.htm