Malaysia Labor Law Changes

Over the past decade, the Malaysian government has introduced a number of legislative measures and Acts to strengthen the labor market in the country further. The Personal Data Protection Act, the Minimum Wage Act 2018, and the Minimum retirement age act have all brought additional stability. In this article, we look at Malaysian labor law changes in 2020.

Minimum Wage Increment
The minimum wage increment in Malaysia has been on the horizon for quite a while. In fact, the Pakatan Harapan political coalition has pledged to increase the minimum wage to RM1500 within five years, and the 2020 update is the first step to their goal. Effective as of 1st February 2020, the minimum wage in Malaysia is now RM 1200 per month, which is an RM 100 increase from the previous minimum wage.

The minimum hourly rate across Malaysia will be RM 5.77, and the weekly minimum wage will depend upon the hours worked.

Increased Maternity Leaves
Besides the wage increment, the government has also proposed an increase in maternity leaves. As per the new proposal, the government is pressing to increase maternity leave from 60 days to 90 days. However, since the act is still under consideration, there is no available information regarding whether the leaves will be paid or unpaid.

Under the employee Act of 1955, all female employees are eligible for maternity leaves regardless of their contract type, job description, or designation. Once the changes to maternity leaves come into play at the start of 2021, all employers must adhere to the law regardless of the current status of their female employees.

Employee Provident Fund and Self Employment and Social Security Scheme
As per Budget 2020, the Malaysian government has also increased the scope for Employee Provident Fund (EPF) Coverage. All employees hired on a contractual basis are now eligible for EPF. Initially, this is to be a voluntary service, especially for those in the arts industry. However, it is expected to become an obligation in the future.

The government has also increased the scope of the Self-Employment Social Security Scheme. Now employees employed in fishing and farming industries are also eligible to receive social security compensation.

The Malaysian government is also reviewing multiple other acts as the Employment Act 1955. It is currently under review to introduce multiple other measures, including anti-discriminatory laws. Revisions to eligibility for overtime and anti-harassment laws are also on the horizon.

The Ministry of Human resources of Malaysia is undergoing multiple other reviews to introduce multiple other anti-corruption measures to create a fairer work environment in the country. The proposed and approved changes apply to 56 cities in Malaysia and are massive in scope. With Malaysian labor law changes in 2020, the government aims to bring stability to the country’s job market.

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