Employment Act Amendment: Who Is an "Employee"?

When the Employment (Amendment) Act 2022 was gazetted earlier this year, there was considerable uncertainty about the scope of the Employment Act once the Amendment took effect. 

With the publication of the Employment (Amendment of First Schedule) Order 2022 on August 15 2022, the scope of the Employment Act is now clear.

 

The salary threshold raised to RM4,000

Before the latest revisions, the vast bulk of the Employment Act only applied to employees earning less than RM2,000 per month or to specific groups of employees regardless of income (for instance, those who are engaged in or supervising manual labour and other groups). 

The existing Employment Act contains provisions that allow non-Employment Act employees to be included in the sections of the Employment Act dealing with maternity protection (Part IX) and sexual harassment (Part XVA).

The way the Employment Act scope is described has been reversed due to the First Schedule Amendment Order, which will take effect on January 1, 2023. Previously, it only applied to employees earning up to RM2,000 per month, with certain specific sections applying to all employees. 

However, it will now apply to all employees, regardless of wage, with a few specific sections not applying to employees who earn more than RM4,000 per month. These are the specifics:

1. The Employment Act will now apply to "any person who has entered into a contract of service".

2. But, the portions of the Employment Act concerning overtime compensation and termination benefits would not apply to employees who earn over RM4,000 per month.

3. Domestic employees, formerly known as domestic servants, are now excluded from even more Employment Act provisions.

 

The following is the complete list of Employment Act provisions that will not apply to employees earning more than RM4,000 per month:

• Overtime for work on rest days under Section 60(3).

• Overtime for work performed outside of regular working hours under Section 60A(3).

• Allowance for shift work under Subsection 60C(2A).

• Overtime and compensatory time for working on public holidays, Subsection 60D(3).

• Overtime for employment on half-day holidays, Subsection 60D(4).

• Dismissal, layoff, and retirement benefits under Section 60J.

 

All companies must assess their existing employment contracts and procedures to ensure compliance with the Employment Act. It should be emphasised that Section 7 of the Employment Act says that any terms or circumstances less favourable to an employee than those established by the Employment Act are null and void. Contracts entered into before January 1, 2023, are also included.

Source: The Malaysian Lawyer