Malaysia | Labour

A. Brief Introduction of Labour Laws and Regulations

The main legislation governing labour matters in West Malaysia and the Federal Territories is the Employment  ct 1955(Employment Act), which protects employees who fall within the categories defined under the FirstSchedule of the Employment Act (EA Employees

The Employment Act provides the minimum terms and conditions of employment in respect of EA Employees  As for non-EA Employees, it is advisable, but not mandatory for employers to accord the minimum benefits asprovided for under the Employment Act.  Apart from the Employment Act, the following are a number of non-exhaustive employment related legislation

nent to most employment scenarios

Children and Young  (Employment)Act  (only applies to the States of Peninsular Malaysia)  's Pn  Factories and Machinery Act 1967  Employee's Social Security Act 1969(SOCso)Industrial Relations Act 1967  Income Tax Act 1967

Minimum Retirement Age Act 2012

Occupational Safety and Health Act 1994  National Wages Consultative Council Act 2001

Private Employment Agencies Act 1981Workmen Compensation Act 1952  Weekly Holidays Ad 1970

B Requirements of Employing Foreign Employees

a Work Permit

a) Foreign Employees

The following are general requirements for a permit to be issued to foreign workers:  () Foreign workers are only permitted to work in certain sectors, such as manufacturing, construction,  plantation, agriculture and services

() Quota of foreign workers must be obtained by employers/companies from the Ministry of Home Affairs  One Stop Centre (OSC)

(iv)Certified PASS for Immigration Security Clearance(ISC)at the source countr

() Certified as fit and healthy by the approved medical centre in the source countries

(vi)Foreign workers must come from approved source countries

b) Expatriates

The requirements in paragraphs(u)to (vi) above are appicable for a permit to be issued to an expatriateb Application Procedure

a)Application for Foreign Workers

The process differs between the Peninsular and East Malaysia where each State is governed by its ownrespective state legislature/procedures  The process in Peninsular Malaysia is divided into two phases, being firstly the pre-arrival stage where the  prospective employer need get hold of the PASS Immigration Security Clearance(IsC) at the ISC centre in the  nust also apply to the Immigration Department for a Visa

R) approval before employing foreign workers. Foreign workers must remain in their respective countries  while pending VDR approval from the Immigration Department.  The second or post-arrival phase is when the for  workers are permitted entry at authorised entry pointsusing the VDR issued by the Immigration Department and entry visa issued by the Malaysian Attaches Office in  ountry of origin. A medical examination by the Foreign Workers Med  FOMEMA) will have to be taken before the worker can be issued a visit Pass (Temporary Employment)

b)Application for Expatriates

To obtain an employment pass it entails a process for the issuanc  relevant documents to expatriates who have been approved by the Expatriate Committee or the relevantAn expatriate must submit a completed application form(DP10)attached to the original employment contract  which must be stamped with a revenue stamp. The sponsoring company must submit an undertaking letter which  that the company will pay salaries and tax revenues based on the expatriate employment contract. The

would also  conditions set by the regulatory  For follow-up

r is required to submit the application form(DP10), together wit

expatriate,s income tax receipts.

c Social Insurance

Social insurance (locally terms as "sOCso") is covered by the Employment Injury Insurance So  the Invalidity Insurance Scheme which covers industrial accidents, occupational diseases, accidents,  death. The body i

Matayirangn workers aro provided protecton under the workers compensaton Act 195-2 while socso cserThe Employees Provident Fund Act 1991 establishes the Employment Provident Fund CEPF) that provides  a system for pension funds and financial security of the elderly. EPF savings involves mandatory contribution fromto retirement is stll permitted under certain circumstances and subject to conditions set by the EPF  For a foreign worker employed and staying in Malaysia, a notice of election can be submitted to the EPF(and  copied to the employer) for the said worker to contribute to and benefit from the EPF.

C. Exit and Entry

a Visa Types

The Malaysian Govemment issues(subject to the fulfilment of conditions) three types of visas to foreign  nationals: ()the Single Entry Visa. valid for a period of 3 months from the date of issue: (n) the Multiple Entry Visa.  valid for a perod within 3 months to 12 months from the date of issue; and (il)the Transit Visa(not applicable to or  required by foreign nationals on transit who do not leave the airport premises and are on a continuous journey to  the next destination with the same flight)

b. Restriction on Entry and Exit

c Chargeability of Income Tax for Foreigners

ysia must give notice of tax chargeability to the Non- Resident Branch or the  nearest tax office within 2 months of his/her arrival in Malaysia  Income tax is imposed at progressive rates of up to 28% for resident individuals. Non-resident individuals are  taxed at a flat rate of 28%

D. Trade Union and Labour Organisations

There are two statutes that govem the conduct and affairs of trade unions, namely the Industrial Relations Act  1967 and the Trade Unions Act 1959. These statutes and its related regulations contain the mechanism to regulate  the conduct and affairs of trade unions. its members, officers and affiliates, and include provisions dealing with  strikes, picketing and lockouts

are generally two different types of unions recognised in Malaysia  In-house unions that represent  employees in a particular company and national unions which comprise of workmen from many companies wi  share the common trade, industry or profession that the national union is competent to represent No one workman  may become a member of two trade unions. A workman can only have membership in one trade union which he is  qualified to join.

E Labour Disputes

A contract of employment can come to an end under a myriad of circumstances including but not limited  to resignation, retirement, breach by employer, breach by employee, dismissal by employer; redundancy.  retrenchment and change of ownership of business

conducting a domestic inquiry in instances of misconduct or following the Code of Conduct for Industrial harmony.  Last In First Out principle where a retrenchment exercise is undertaken  Complaints for wrongful dismissal are to be made in writing to the Director General of Industrial Relations  (,)within 60 days of dismissal. Reconciliation meetings can be called by the DGIR for the employer and  employee to attempt settlement, but where that fails, the complaint is then referred to the Industrial Court for  hearing of the claim for unfair dismissal, and the Court can order reinstatement of the employee, or where that is

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