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What are the changes to the Employment Act 1955?

Both employers or employees would always like to protect their rights and fulfil their obligations. For those in Peninsular Malaysia and Labuan, these rights and obligations are enshrined in the Employment Act 1955; whereas for Sabah and Sarawak, the same are governed by the respective state enactments.

To keep up with the progress of time, the Act was amended by the Parliament in 2022. Now that the amendment will take effect on 1 January 2023, are you aware of the changes?

As the premier business solutions provider which has developed the leading Human Resources Management solution, HRX, IFCA is delighted to highlight the main changes for you.

Expansion of coverage

The Act now covers everyone in the workforce regardless of income level.

Nevertheless, the following subsections are only applicable to those earning up to RM4,000 monthly:

1. 60 (3) – Overtime rates for rest days 

2. 60A (3) – Overtime rates outside working hours 

3. 60C (2A) – Allowance for shift-based work 

4. 60D (3) – Overtime rates for public holidays

5. 60D (4) – Overtime rates for half working days 

6. 60J – Benefits upon termination, lay-off or retirement

Inclusion of gig workers 

Section 101C “Presumption of who is an employer and employee” states that in the absence of a written contract, it should be presumed that one is an employee until the contrary is proven, if any of the criteria is met:

1. Where his manner of work is subject to the control or direction of another person;

2. Where his hours of work are subject to the control or direction of another person;

3. Where he is provided with tools, materials or equipments by another person to execute work;

4. Where his work constitutes an integral part of another person’s business;

5. Where his work is performed solely for the benefit of another person; or

6. Where payment is made in return for work done at regular intervals and such payment constitutes the majority of his income.

With this, e-hailing drivers, delivery riders or courier drivers (who are considered “partners” by their companies) will finally enjoy legal protection.

Lowering the maximum working hours

The maximum number of weekly working hours has been lowered from 48 hours to 45 hours in Section 60A. 

Therefore overtime rates (at least 50% higher than the hourly rate) will automatically kick in whenever the threshold is exceeded.

To calculate overtime payment accurately, the Time Attendance module of HRX will certainly come in handy. By capturing the clock-in and clock-out times of every employee, and feeding such information to the Payroll module, you will pay the right amount always. 

Wages for an incomplete month

Section 18A is now introduced to set forth the formula for calculating the wages of someone who works less than a month:

To secure your peace of mind, why not just let the Payroll module of HRX handle all the calculations? 

Flexible Working Arrangements 

Under the new Section 60P and 60Q, employees may apply for flexible working arrangements (such as working from home) with the management in writing. The employers are required to respond within 60 days, and to furnish the grounds in case of rejection.

Stop offsetting hospitalisation against regular sick leave

The existing provision under section 60F(1) for the total sick leave to include up to 60 days of hospitalisation is now removed. Hence employees will no longer need to deduct their regular sick leave if hospitalised.

Maternity & paternity leaves

In line with the International Labour Organisation (ILO) standard, paid maternity leaves were increased from 60 days to 98 days, as stipulated in section 37 (1)(d)(ii). 

Under the provision of the newly enacted section 60FA, married male employees are given a paternity leave of 7 consecutive days that will commence on the day of baby’s birth. 

However, it is limited to 5 births per father, irrespective of the number of wives. To qualify, the father should be employed by the employer for 12 months, and notify the employer at least 30 days before the expected delivery.

Employees are entitled to various types of leaves, and each person is entitled to a different number of days based on position and seniority.

To avoid the trouble of calculation, just leave it to the Leave Management module of HRX. It is capable of listing the availability and absences of all staff, and will configure individual’s leave eligibility based on company policies.

It also allows employees to submit overtime applications, shift change requests, time-off applications via mobile devices, and is capable of cascading them instantly to the appropriate supervisor, besides automatically allocating leave earned. Human errors will be eliminated, saving you a lot of trouble!

Protecting pregnant mothers against termination

Section 41A titled “Restriction on termination of pregnant female employees” was introduced to prohibit the dismissal of pregnant mothers suffering from illness arising from pregnancy.  However, termination due to cessation of business, willful breach of contract or misconduct are excluded.

Raising awareness on sexual harassment

According to the section 81H, “Notice on sexual harassment”, employers must prominently display a notice to educate employees against sexual harassment at their workplace.

Sexual harassment is a serious issue that affect staff morale. Besides displaying the notice physically as mandated, is it also good to show it in high digital traffic areas where employees can view the latest company updates. The Employee Portal of HRX can do exactly that!

Prior approval for hiring foreigners

Based on Section 60K, employers are required to obtain the consent of the Director General of Labour before hiring foreigners, instead of just furnishing the DG with the particulars of migrant labours as practised previously. 

Failure to obtain the approval is an offence, and the employer could face up to a RM100,000 fine and / or 5 years of imprisonment.

As the amendment of the Employment Act is coming into effect, employers are urged to keep their HR procedures up-to-date, to avoid any unintentional violation which might be costly in terms of money and reputation.


Digitalisation and automation will benefit businesses tremendously. By enabling the submission of leave applications or claim requests via mobile devices anytime, anywhere, and the cascading of applications to the right decision maker automatically, it will save businesses precious time and money. It will also free your staff from mundane paperworks and allow them to focus on real work instead. Furthermore, automatic calculation of salary and overtime will also reduce the workload of your HR staff.

So, does your HR Management software comply with the latest changes to the Employment Act of Malaysia? Give HRX a try by requesting a Free Demo today. It is fully compliant to the latest legal requirements, and will enhance the efficiency and profitability of your business!
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