New Laws needed to ensure justice for workers in Malaysia

Recently, it was reported that the retrenched workers of Nikko Electronics Bhd protested outside Penang State Assembly.(Star, 2/12/2009), seeking the State government's assistance to get their benefits and compensations. These were amongst the 1,000 odd workers that were retrenched suddenly without notice by their employer in July 2008. Apparently, their plea to the Minister, the Federal and State government have not been successful to date. If there was a National Retrenchment Scheme, as proposed by MTUC in 1998, in place, they could have resorted to this to get some compensation. Malaysian laws also need to be amended to ensure justice for all workers, especially those who lose their jobs and source of income.

There must be a new law that provides for compensation to workers in Malaysia that are terminated, retrenched or laid off by the employers as the current Employment (Termination And Lay-Off Benefits) Regulations 1980 is no longer just or sufficient given the fact of changes in the employment patterns in Malaysia.

Today, a lot of employers hire workers, be it local workers or migrant workers, on a short fixed term basis which may range from 1 to 2 years. Thereafter, a new contract may be entered into for some. 

There is also the practice of contracting out some of the jobs to private contractors, and in this case the workers become employees of the contractor, and not the owner of the place that they work with. 

This changing employment practices has had serious implications for workers, for they not only lose job security but also rights as workers, including the right to join existing unions.

The current Employment (Termination And Lay-Off Benefits) Regulations 1980 is for the long-term worker, and this is also reflected in Regulation 3(1) that states ‘…that an employer shall be liable to pay termination or lay-off benefits payment calculated in accordance with regulation 6 to an employee who has been employed under a continuous contract of service for a period of not less than twelve months…’ . This means that short-term fixed contract employees who have worked for less than a year is not entitled to any benefit under the regulations.

Eventhough Regulation 3(2) provides that, ‘For the purpose of this regulation a continuous contract of service for a period of not less than twelve months shall include two or more periods of employment which are not less than twelve months in the aggregate if the intervening period or periods between one period of employment and another does not in the aggregate exceed thirty days…’, unscrupulous employers have been known to evade this by entering into new short-term contracts after the lapse of 30 days, or even causing the worker to enter into new contractors with some labour provider.

Regulation 6, which provide for the calculation of benefits, that state as follows, :-

‘…the amount of termination or lay-off benefits payment to which an employee is entitled in any case shall not be less than —

(a) ten days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for a period of less than two years; or

(b) fifteen days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for two years or more but less than five years; or

(c) twenty days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for five years or more,

and pro-rata as respect an incomplete year, calculated to the nearest month…”

clearly will not provide justice for the short-term fixed contract workers, and workers working in the establishment allegedly under some other labour provider or contractor.

To aggravate matters, unionized workers, when they most need the assistance of their unions become no longer members of the union by a bad law, being section 26(1A) of the Trade Unions Act 1959, which states, “No person shall join, or be a member of, or be accepted or retained as a member by, any trade union if he is not employed or engaged in any establishment, trade, occupation or industry in respect of which the trade union is registered…”. This provision must be repealed, and membership of the union after being retrenched, laid-off or terminated should continue for so long as necessary for as rights of these members as workers are pending. 

Malaysian Trades Union Congress (MTUC) after the 1998 economic crisis, being fully aware of the fact that many a worker were not paid their requisite compensation and benefits by reason of the fact the employers did not have any more money, proposed to the Malaysian government to set up a National Retrenchment Scheme.

When these companies renege on their legal and contractual obligations to their workers by defaulting on statutory contributions to the Employees Provident Fund (EPF) and to the Social Security Organisation (SOCSO) as well as payment of retrenchment benefits pursuant to the Employment (Termination and Lay–Off Benefits) Regulations, 1980, then this National Retrenchment Fund could come in to immediately assist these workers. 

Although in March 2009, The Malaysian government has ruled out setting up a retrenchment fund (Sun, 4/3/2009, No plan for retrenchment fund, MTUC urges that the government to reconsider this decision, and immediately set up this very much needed  National Retrenchment Fund, which will surely benefit workers like those from Nikko Electronics Bhd.



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