The Items to Be Included in Company S Hr Handbook Labour Department Persepective

THE ITEMS TO BE INCLUDED IN COMPANY’S HR HANDBOOK – LABOUR DEPARTMENT PERSEPECTIVE

1. /

OBJECTIVES

To set minimum standards of Employment:

a)

To ensure that employees are granted certain minimum benefits.

b)

To ensure that employees are given sufficient protection against exploitation.

To provide redress to employees who are not granted the minimum benefits, and

To provide for punitive measures in the event of non-compliance.

2. /

SCOPE

The act covers all persons who are employed under a Contract of Service whereby :

Such person’s wages do not exceed RM1250.00 a month.

Such person, regardless of wages, is employed in manual labour, including skilled labour.

Such person is employed in the operation or maintenance of any mechanically propelled vehicle.

Such person is employed to supervise or oversea other employees engaged in manual labour.

Such person is engaged in any vessel registered in Malaysia, and, who

Is not officer certificated under the Merchant Shipping Acts of U.K.

ii)

Is not the holder of a local certificate under the Merchant Shipping Ordinance 1952

iii)

Has not entered into an agreement under the Merchant Shipping Ordinance 1952.

Such person is engaged as a domestic servant

(1st Schedule)

The Minister for Human Resources may by order declare the provisions of Act to be applicable to any group or class of persons, or exempt or exclude persons from the application of this Act.

(Sec.2(3), 2A & 2B)

3. /

CONTRACT OF SERVICE

An agreement, whether oral or in writing whether express or implied whereby one person agrees to employ another as an employee and that other agrees to serve his employer.

(Sec.2(1))

Contracts of Service that must be in writing :

Contract for a specified period of time exceeding 1 month.

ii)

Contract for the performance of a specified piece of work which will take more than 1 month to complete.

(Sec.10)

Provisions of Contract of Service must be in writing

Rates of wages

ii)

Allowances payable and rates

iii)

Rate for overtime work

iv)

Other benefits

Agreed normal hours of work per day

vi)

Agreed period of notice of termination

vii)

Entitlement to paid public holidays and annual leave

viii)

Duration of wage period

Regulation 8

Employment Regulations 1957

Restrictions on Contract of Service

Conditions of contract cannot be less favourable than that stipulated in the Act.

(Sec. 7 & 7A)

iii)

Cannot restrict the right of an employee to join, participate in the activities of or organise a trade union.

(Sec. 8)

Termination of Contract of Service

NORMAL TERMIMATION

Contracts for a specified period terminate at the end of the period.

ii)

Contracts for specified performances terminate in completion of the performances.

(Sec. 11)

iii)

Other Contracts of Service can be terminated according to the written provision of the contract. If there is no such provision, or if the following circumstances prevail, notice as below must be given :

The employer has ceased or intends to cease to carry on business

The employer has ceased or intends to cease to carry on business at the place the employees was contracted to work

The requirements of that business for that employee to carry out work have ceased or diminished

The employee has refused to accept a transfer to a different place, if there is no such requirement in the contract.

A change has occurred in the ownership of a business or part of a business

For an employee with less than 2 years service

- 4 weeks notice

For an employee with 2 to 5 years service

- 6 weeks notice

For an employee with 5 years service or more

- 8 weeks notice

(Sec. 12)

No notice of termination is required if the party terminating the contract pays to the other party a sum equal to the wages that would have accrued during the period of the notice, or in the event of a wilful breach of a condition in the contract by the other party.

(Sec. 13)

TERMINATION FOR SPECIAL REASONS

If the employee commits misconduct the employer may terminate him without notice after due inquiry.

(Sec. 14(1))

ii)

If the employee or his dependants are threatened by danger of violence or disease he can terminate his service without notice.

(Sec. 14(1))

BREACH OF CONTRACT

By Employer -

if he fails to pay wages within 7 days of the end of the wage period or such later date that the Director General may approve.

(Sec. 15(1))

or if fails to provide work or wages in accordance with Section 16(1).

ii)

By Employee -

Being absent for more than two consecutive working days without leave or reasonable excuse and without informing or attempting to inform the employer.

(Sec. 15(2))

4. /

WAGES

Wages means all basic wages and all other payments in cash payable for work done in respect of the Contract of Service (with certain exclusions).

Payments of Wages

Wages Period – cannot exceed 1 month.

(Sec. 18)

ii)

Wages must be paid within 7 days after the end of wage period, but the Director General can grant approval to pay later.

(Sec. 19)

iii)

On normal termination or where employer terminates the Contracts of Service without notice wages must be paid on the date of termination.

(Sec. 20 & 21(!))

iv)

If the employee terminates the contract without notice, wages due must be paid before the 3rd. day of such termination.

(Sec. 22(2))

Advances :

Not to exceed the amount of wages earned during the preceding month, unless it is

To purchase or build or improve a house

To purchase land

To purchase livestock

To purchase bicycle, motorcycle or car

Any purpose for the benefit of the employee approved by the Director General or such purpose specified by the Minister in the gazette.

(Sec. 22)

Deduction from wages

At the written request of the employee

Payment to trade unions / cooperative societies

Payment to cooperative shop

ii)

At the written request of the employee and written approval of the Director General

Payment to superannuation, welfare or thrift scheme

Payment to third parties

Repayments of advances where interest is levied

Cost of accommodation, food, services, supplied to the employee

Any other payment which the Director General is satisfied for the benefit of employee

iii)

Without request or consent

Deductions authorized by law e.g. EPF, SOCSO

Deductions of any over payments by mistakes during preceding 3 months

Deductions for indemnity due

Deductions of advance where no interest is levied

iv)

Total deductions cannot exceed 50% of wages or with special approval of Director General, 75%

(Sec.24)

Wages must be paid in legal tender except if the employee consents it may be paid by cheque or through a bank.

(Sec.25/25A)

Restrictions on payment of wages

Employers cannot require employees to expend their wages in any particular manner, at any particular place or with any person.

(Sec.26)

ii)

Employers cannot receive any discount or interest in respect of advances that do not exceed a month’s wages.

(Sec.27)

iii)

Wages cannot be paid at taverns, amusement centres or retail outlets for foods, except in the case of employees employed therein.

(Sec.28)

iv)

In addition to wages an employer may provide the employee with food, house accommodation, fuel, light, water, medical services or any approved amenity of service.

(Sec.29)

An employer may, with approval from the Director General establish a shop for the sale of foodstuff etc. to his employees.

(Sec.30)

Priority of Wages

If the property of an employer or person liable to pay wages is sold by an order of a court, or if money due to such person is attached, the court shall first ensure that employees involved are paid at least 4 months’ wages.

(Sec.31)

Liability of contractors and principals to pay wages

A principal, contractor and sub-contractor (not being the employer) is liable to pay wages due to any employee for any one month.

(Sec.33)

5. /

WAGES

Female employees in agricultural and industrial undertakings cannot be required to work:

Between 10.00 pm and 5.00 am. Except with the approval of the Director General.

Without having had a period of 11 hours free from such work.

(Sec.34)

ii)

Females employees cannot be engaged in working underground.

(Sec.35)

iii)

A female employee shall be entitled to 60 days maternity leave and allowance if :

She has been in employment for 90 days during the 9 months or during the months preceding her confinement.

She does not have 5 surviving natural children.

(Sec.37)

She has notified he employer.

(Sec.40)

iv)

Maternity leave may commence not earlier than 30 days preceding confinement and not later than the day following confinement, but on being certified by a medical practitioner the employee may be required to commence maternity leave during the 14 days preceding confinement.

(Sec.37(1)(b))

A female employee who is pregnant and who persistently fails to or refuses to submit herself to free medical treatment offered by her employer can be penalized by forfeiture of up to 7 days maternity allowance.

(Sec.40(4))

vi)

A female employee cannot be dismissed while on maternity leave or during a period of 90 days after maternity if she is suffering from any illness arising out of he pregnancy/confinement.

(Sec.40(3) & (42)

vii)

A female employee can appoint a nominee to receive he maternity allowance. If she dies during confinement or maternity leave, the allowance due to he from the day her death, shall be paid to her nominee or legal personal representative.

(Sec.39 & 41)

viii)

The rate of maternity allowance shall be her normal wages or RM6.00 per day whichever is more and shall be paid as wages due. An employee on a monthly rate of pay shall be deemed to have received her maternity allowance if she has been paid her monthly wages without abatement.

6. /

BENEFITS

Rest Day

One whole day in each week. *

Does not apply when employee is on maternity leave, sick leave or on leave following an accident arising out of and in the course of employment.

ii)

Where 2 off days are given the second day shall be the rest day.

iii)

In the case of employee on shift work, rest day must be not less than 30 hours.

iv)

Employer must prepared roster of rest days before the beginning of each month. If the rest day is the same for all employees then a notice must be displayed.

(Sec.59)

Hours of Work

/ Employees cannot be required to work :*
a) / More than 5 consecutive hours without a break of least 30 minutes, but in the case of employees in work that must be carried on continuously and continually they can be given a total of 45 minutes rest within the 8 hours.
b) / More than 8 hours a day, but where an employee works less than 8 hours on any days he can be required to work up 9 hours on other days.
c) / In excess of a spread over period of 10 hours in one day.
d) / More than 48 hours in one week.
(Sec.60A(1))

ii)

/ Work in excess of above is overtime. No employee can be allowed to work more than 12 hours a day or overtime of more than 104 hours a month.
(Sec.60A(3),(4),(7))

iii)

/ Section 60A does not apply to those in inactive or standby employment.
(Sec.60A(8))

iv)

/ Payment by the amount of work done is allowed.
(Sec.60B)

/ Employees on shift work can be required to work more than 8 hours a day or 48 hours a week, but the aggregate hours of work over 3 weeks cannot exceed 48 hours a week.
(Sec.60C)

* Note :

/ Employees can be compelled to work overtime and to work on rest day under the following circumstances :
a) / Accident – actual or threatened
b) / Work essential for the life of the community
c) / Work essential for defence/security of the country
d) / Urgent work to be done to machinery/plant
e) / Unforseen interruption of work
f) / Work in any industrial undertaking essential to economy or in any essential service defined in the Industrial Relations Act.
(Sec.60A(2) & 60A(7))

PAID Public Holidays

/ Every employee is entitled to a minimum of 10 paid holidays a year, including the following 4 compulsory holidays :
a) / National Day (31st. August)
b) / Birthday of The Yang Di Pertuan Agung
c) / Birthday of The Head Of State/Wilayah Day
d) / Workers’ Celebration Day (1st. May)

ii)

/ If a holiday falls on a weekly rest day, the next working day shall be observed as the holdiay.
(Sec.60D(1))

iii)

/ The employer must display a roster of the paid holidays at the beginning of each year.
(Sec.60D(1A))

iv)

/ An employee who is absent on the working day before or after a holiday shall not be entitled to paid holiday.
(Sec.60D(2))

Paid Annual Leave

/ Entitlement
Less than 2 years service / - / 8 days a year
2 to 5 years service / - / 12 days a year
More than 5 years service / - / 16 days a year

ii)

/ If an employee is absent on more than 10% of the working days he forfeits his leave.
(Sec.60E(1))

ii)

/ The employer must grant annual leave before the end of the 12 months following each year during which the leave accrues.
(Sec.60E(2))

iv)

/ Where the contract is terminated before the employee has taken his annual leave then he should be paid wages in lieu, unless he is dismissed under Section 14(1)(a).
(60E(3A))

Paid Sick Leave

/ Entitlement
Less than 2 years service / - / 14 days a year
2 to 5 years service / - / 18 days a year
More than 5 years service / - / 22 days a year
If hospitalized / - / 60 days a year including above
Provided the employee is certified unfit by the company doctor, or any other medical officer practitioner, under certain circumstances.
(Sec.60F(1))

ii)

/ Sick leave must be certified and the employee must inform this employer within 48 hours.
(Sec.60F(2))

iii)

/ Employees are not entitled to paid sick leave during maternity leave or leave following an accident at work.
(Sec.60F(4))

Ordinary Rate Of Pay (ORP) – Section 60 I

/ Ordinary Rate of Pay is what an employee is entitled to receive for a day of maternity leave, public holiday, annual leave and sick leave sand the basis on which payment for work on a public holiday, a rest day or for overtime works is to be calculated. However, ORP would not include the following :-
a) / All that which is excluded from items (a) to (f) under the definition of wages on Section 2(1) of the Employment Act 1955 ;
b) / Any payment for overtime work ;
c) / Payments for any work done on rest days and public holidays ;
d) / Bonus.
(Sec.37(2), 60(3), 60A(3),
60D(3), 60E(3), 60F(3)

ii)

/ The following illustrations indicate how ORP would be calculated in respect of monthly and daily rated employees :
a) /

Monthly rated employee

(who works 8 hours a day/48 hours a week)
Basic / : / RM260.00 a month
SRA / : / RM 26.00 a month
Shift Allowance / : / RM 52.00 a month
Incentive Allowance / : / RM 26.00 a month
TOTAL / : / RM364.00
ORP = RM364.00 = RM14.00 per day
26
Hourly rate of pay = RM14.00 = RM1.75 per hour
8
This employee would therefore have to be paid as follows for work done as shown below :
i) / For normal hours on a rest day : RM14.00
2 hours of overtime work on a rest day : RM1.75 x 2 (rate) x 2 (hours) = RM7.00
ii) / For normal hours on paid holiday :
RM14.00 x 2 = RM28.00
2 hours of overtime work of a paid holiday;
RM1.75 x 3 (rate) x 2 (hours) = RM10.50
iii) / For 2 hours overtime work on normal days of work :
RM1.75 x 1 ½ (rate) x 2 (hours) = RM5.25
However, it needs to be pointed out that in respect of a monthly rated employee the ORP is only used for payment for overtime work and for work done on rest days and pubic holidays. This is because the law specifically says that for maternity allowance, public holiday pay, annual leave pay and sick leave pay, a monthly rated employee is deemed to have been paid the benefits if he/she receives his/her monthly wages without abatement.
b) /

Daily rated employee

(who works 8 hours a day for 26 days a month)
Basic RM10.00 a day / : / RM10.00 per day
S.R.A RM30.00 a month (divide by 26) / : / RM 1.15 per day
Shift Allowance RM1.00 per day / : / RM 1.00 per day
Incentive Allowance RM30.00 a month / : / RM 1.15 a month
TOTAL / : / RM13.30
ORP – 26 days x RM13.30 = RM13.30
26
Hourly rate of pay – RM13.30 = RM1.66 per hour
8
ORP = /

Total wages earned during preceding wage period

Actual number of days worked during same wage period
Payments due for work done :
i) / Normal hours on a rest day :
RM13.30 x 2 (rate) / = / RM26.60
2 hours of overtime work on a rest day
RM1.66 x 2 (rates) x 2 (hours) / = / RM6.64
ii) / Normal hours on a public day :
RM13.30 x 2 (rate) / = / RM26.60
2 hours of overtime on a public holiday
RM1.66 x 3 (rate) x 2 (hours) / = / RM9.95
iii) / 2 hours overtime on a normal working day :
RM1.66 x 1 ½ (rate) x 2 (hours) / = / RM4.98
In this example, if the employee has worked on 26 days in a month, then he would have earned as follows.
Basic RM10.00 x 26 days / : / RM260.00
S.R.A / : / RM 30.00
Shift Allowance RM1.00 x 26 days / : / RM 26.00
Incentive Allowance / : / RM 30.00
TOTAL / : / RM346.00
However, if the same employee had worked only 18 days, and was on sick leave for 3 days, on annual leave for 3 days and off on 2 public holidays, then he would have earned as follows :
Basic RM10.00 x 18 days / : / RM180.00
S.R.A / : / RM 30.00
Shift Allowance / : / RM 18.00
Incentive Allowance / : / RM 30.00
Sick leave RM13.30 x 3 days / : / RM 39.90
Annual leave Pay RM13.30 x 3 days / : / RM 39.90
Public Holidays RM13.30 x 2 days / : / RM 26.60
TOTAL / : / RM364.00

Termination, Lay Off and Retirement Benefits

The Minister may make regulations for the payment of these benefits.

(Sec.60J)

Entitlement

Service 1 year but less than 2 years

10 days pay per year

Service 2 years but less than 5 years

15 days pay per year

Service 5 years and above

20 days pay per year

(Reg.6 – Employment (Termination & Lay-Off Benefits) Regulations 1980)

7. /

ADMINISTRATIVE PROVISIONS

Employer must keep Register of Employees.

(Sec.61 – Reg.5)

ii)

Minister may require employers to furnish statements of wages to employees.

(Sec.62)

iii)

Employers must give notice to the nearest office of the Director of Labour, regarding name, address and nature of business, name of manager or person in charge and number and types of employees within 90 days of commencement of business, changing of name, location of establishment.

(Sec.63A)

iv)

Places of employment outside local authority jurisdiction must display conspicuous sign boards.

(Sec.64)

Director General shall have power to enter at all times any place where he believes employees are engaged, with or without notice and put questions to any person therein and ask for the production of documents.

(Sec.65 & 67)

vi)

Take possession of documents and records.

(Sec.67)

vii)

Director General need not identify himself if it is expedient to refrain from doing so.

(Sec.66)

8. /

COMPLAINANT INQUIRIES AND PENALTIES

The Director General may inquire into and decide any dispute between :

An employee and his employer

An employee and any person liable to pay wages

Where such dispute arises :

Out of any term in the Contract Service, or