Which Employees are Covered under the Employment Act?

Many employers and employees in Malaysia are still confused about the Employment Act 1955, particularly employees who are covered under it. 

But first, let's get back to the basics.

What is the Employment Act?

In Malaysia, the Employment Act 1955 is the law that oversees the employment matters in the private sectors. The Employment Act applies to Peninsular Malaysia and the Federal Territory of Labuan. 

While Peninsula Malaysia has the Employment Act, Sabah and Sarawak have their own Labour Ordinance respectively. The two ordinances are similar in contents. 

For the public sector, there is a different set of employment law which governs the civil servant under the purview of the Public Service Commission. 

Why should private companies follow the Employment Act 1955?

Employers who have committed an offence or failed to comply with the Employment Act are subjected to penalties. These penalties are listed in the Employment Act under Part XVII - Offences and Penalties.

The Labour Department is the responsible party in enforcing the Employment Act. 

Manual labour workers are protected under the Employment Act.

Which employees are covered under the Employment Act 1955?

These are the categories of employees covered under the Employment Act: 

A. Employee whose wages do not exceed RM2,000 per month.

Under paragraph 1 of the First Schedule of the Employment Act: any person, irrespective of his occupation, who has entered into a contract of s service with an employer under which such person's wages do not exceed RM2,000 a month is protected by the Employment Act.

B. Employee whose wages exceed RM2,000 a month but provided under paragraph 2 of the First Schedule of the Employment Act:-

B (1) Employee engaged in manual labour.

The employee is covered under the Employment Act if they perform manual labour in any one wage period that exceeds 50% of the total time in which they are required to work in such wage period.

The manual labour has to be purely physical work and not one that relies on brain and intelligence. 

B (2) Employee engaged in the operation or maintenance of any mechanically propelled vehicle operated.

B (3) Employee who supervises or oversees other employees engaged in manual labour.

There are three prerequisites for the employee under this category:

• They are "supervisors",
• As Supervisors, they are "supervising or overseeing other employees' labour"; and 
• They are supervising employees engaged in manual labour "in and throughout the performance of their work".

B (4) Employee is engaged in any capacity in any vessel registered in Malaysia.

B (5) Employee is engaged as domestic servant. 

A domestic servant is defined as a person employed in connection with the work of a private dwelling-house including a cook, house-servant, butler, child's nurse, valet, footman, gardener, washerman or washer-woman, watchman, groom, and driver or cleaner of any vehicle licensed for private use.

The Labour Department is responsible for employees under the EA.

What kind of protection does the Employment Act offer to an employee? 

The Employment Act provides many forms of protection; among them, are: 

• Automatic entitlement to minimum benefits provided by the Act or existing benefits, whichever is more favourable 

• The minimum notice period for termination or wages in lieu of notice 

• Minimum days of work for particular industry 

• Maternity benefits 

• Leave, holiday, rest day and payments 

• Termination and lay-off benefits 

• Right to seek the intervention of the Labour Office for the failure of an employer to uphold agreed term of employment.

What about employees not under the Employment Act?

When it comes to determining the terms and conditions of employment, there is no statutory minimum for any benefit to speak of. It is for the employee to negotiate for their terms and conditions of employment subject to their bargaining position and the existing practices of the prospective employer.

Once the terms and conditions are agreed upon, they become a part of the Contract of Service, which is enforceable like any other contract.

If there is a breach of contract of service by the employer, then an employee who is not protected will have to seek a remedy through civil court proceedings. In contrast, those who are protected can quickly obtain the assistance of a labour officer. 

Part-time workers are also protected under the EA.

Are part-time workers protected under the Employment Act?

It all depends on the nature of the employee's work and the employee's salary amount. If a part-time worker would fall under the definition of the Employment Act (for instance, monthly wages does not exceed RM2,000, or the employee is engaged in annual labour), then the part-time worker would be protected under the Employment (Part-time Employees) Regulations 2010.

If the part-time worker does not fall within the scope of the Employment Act, the Employment (Part-time Employees) Regulations 2010 do not apply to them, and their rights will be determined by contract. 

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Sources: Employment Act 1955, Employment (Part-time Employees) Regulations 2010, & Donovan & Ho.

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