Amendments To The Employment Act 1955 - What Employers Need To Know

Law FirmLee Hishammuddin Allen & Gledhill
Subject MatterEmployment and HR, Contract of Employment, Employee Benefits & Compensation
AuthorMr Amardeep Singh Toor and Ashreyna Kaur Bhatia
Published date09 January 2023

The amendments to the Employment Act 1955 (EA 1955) came into force effective 1.1.2023. A summary of the amendments and practical tips for employers, is seen below:

Entitlement/ Protection Pre-Amendment Post-Amendment
Applicability of the Act

The Act was only applicable to two categories of employees:

  1. regardless of occupation, employees not earning more than RM2,000 a month; and
  2. regardless of wages, employees carrying on certain occupation such as manual workers, supervisors of manual workers employees operating mechanically propelled vehicles, etc.

The Act shall apply to any person who has entered a contract of service / employment contract. Provisions in the EA 1955 which shall now apply to all employees include, among others:

  1. Requirement to furnish to every employee a certified copy of the details of their terms and conditions of employment, including but not limited to: occupation, wage rates, allowances overtime rate, other benefits, agreed normal hours of work, notice period, entitlement to public holidays and annual leave and duration of wage period;
  2. Requirements on the issuance of monthly payslips to all employees, and the contents of the said payslips;
  3. Provisions on minimum entitlement(s) to annual, sick and hospitalization leave including carry forward and encashment of annual leave;
  4. Restrictions on the type of deductions which can be made from an employee's wages. All other deductions not within the list of lawful deductions under the EA 1955 would require the Director General of Labour's (Director General) approval, such as reimbursement for loss of or damage to the company's asset(s), deductions for benefits provided by an employer etc;
  5. Restrictions on advances which can be made to employees, such as company loans;
  6. Requirement to display a list of public holidays and collective agreements (if applicable) on notice boards before the commencement of the calendar year;
  7. Restrictions on dismissing local employees over foreign employees;
  8. Provisions on wage period, time of payment of wages and system of payment of wages; and
  9. Maintenance of employee registers and preparation of annual returns.

Certain provisions, however, shall only apply to a select group of employees earning RM4,000 and below, such as payment for work done on rest days and public holidays, overtime payments, and termination/ lay-off benefits.

Manual workers, supervisors of manual workers, employees operating mechanically propelled vehicles, etc. shall continue to be...

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