Major Legal Developments in 2021 that Employers Need to Know

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There were several significant changes to the law in Malaysia in 2021. Some of these changes were brought about by the pandemic while others have been a long time coming. These changes as well as proposed changes are set out in brief below.

Pembangunan Sumber Manusia Berhad Act 2001 (“PSMB Act 2001”)

With effect from 1 March 2021, the PSMB Act 2001 has been expanded to cover a much larger group of employers. The PSMB Act 2001 governs the Human Resources Development Fund (HRDF). The PSMB Act 2001 imposes the obligation on industries covered by the Act to register and to pay a human resources development levy. The levy is used to fund training and skill upgrading of employees.

The Pembangunan Sumber Manusia Berhad (Amendment of First Schedule) Order 2021 lists the classes of employers that need to register and pay the human resources development levy. According to HRDF’s website, the expansion increased the number of employees eligible to training under HRDF from 2.5 million to 6.1 million. Industries now covered by the PSMB Act 2001 include Property, Tourism & Recreation, Oil & Gas, Food & Beverage, Information System, Banking & Finance, Professional, Trading, Business & Wholesale, Cosmetic, Education and Small & Medium Enterprises, just to name a few. For employers in industries which are now covered by the PSMB Act 2001, registration and payment of levy are compulsory if the employer has 10 or more employees.

The rate of the levy is 1% of the monthly wages of the employee. All payments of the levy need to be made by the employer not later than the 15th day of the month immediately following the month in which those payments fall due.

Occupational Safety and Health (Amendment) Act 2020

The Occupational Safety and Health (Amendment) Act 2020 (“OSHA Bill”) which amends the Occupational Safety and Health Act 1994 (“OSHA”) was also passed this year. The OSHA is the primary legislation governing health and safety at the workplace.

Among other things:

  1. The OSHA Bill extends the application of the OSHA. Once it comes into force all places of work throughout Malaysia (with limited exceptions) will be covered by the OSHA. Currently, this legislation only applies to limited industries set out in the First Schedule (construction, mining, etc).
  2. Additional duties – Employers have additional duties, including:
    • develop and implement emergency procedures;
    • conduct safety and health risk assessments; and
    • implement risk controls to eliminate or reduce the safety and health risk if risk assessment identifies such risks.
  3. Duties on principals – Principals (defined as a person who for business contracts with a contractor for the execution of any work undertaken by the principal), have, in short, a duty to ensure the safety and health of persons working under the principal’s direction.
  4. Right of employee to remove himself from danger – A new provision will be inserted allowing an employee to remove himself from danger or work if he believes there is an imminent danger at his place of work if the employer fails to take action to remove the same.
  5. Penalties for directors – With the OSHA Bill, the authorities can charge directors or officers of a company together with the company that commits and offence under the OSHA.

As at the date of the writing of this article, no date has been fixed for the OSHA Bill to come into effect.

Anti-Trafficking in Persons and Anti-Smuggling of Migrants (Amendment) Act 2021

Since the pandemic started, there have been reports of mistreatment of foreign labour and use of illegal foreign labour, due to restrictions of movement and shortage of legal foreign labour. In order to show that the Government takes this issue seriously, the Anti-Trafficking in Persons and Anti-Smuggling of Migrants (Amendment) Act 2021 (“Anti-Trafficking Bill”) which amends our Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007, was recently passed by both the Dewan Rakyat and Dewan Negara.

The Anti-Trafficking Bill increased the penalties for offences in that legislation.

Additionally, the definition of ‘trafficking in persons’ is widened. Currently, that term is narrowly defined as “acquiring or maintaining the labour or services of a person through coercion”. After the Human Trafficking Bill comes into effect, the term will have the following wider meaning:

“all actions of recruiting, conveying, transferring, acquiring, maintaining, harbouring, providing or receiving, a person, for the purpose of exploitation, by the following means:

  1. threat or use of force or other forms of coercion;
  2. abduction;
  3. fraud;
  4. deception;
  5. abuse of power;
  6. abuse of the position of vulnerability of a person to an act of trafficking in persons; or
  7. the giving or receiving of payments or benefits to obtain the consent of a person having control over the trafficked person”.

Although passed by the Parliament, the Human Trafficking Bill will only come into force once a date is fixed.

Other Bills Presented to the Parliament

Two other bills were tabled before the Parliament. It bears noting at the outset that these bills have not been passed by the Parliament and were only, at the time of writing of this article, presented for first reading.

First, amendments are proposed to the main legislation concerning employment in Malaysia, the Employment Act 1955. This bill proposing amendments to this statute sets out numerous changes to that statute. Among other things, this bill proposes to increase the number of days of maternity leave, introduce paternity leave, empower the authorities to inquire into discrimination in employment and allow employees to apply to be considered for a flexible work arrangement. However, there have been criticisms of this bill as many changes proposed in the bill are unclear and some amendments have the (possibly unintended) effect of limiting the rights of employees. It is unlikely that the bill in its current form will be passed. We therefore reserve further comments regarding this bill until it is revised to resolve these uncertainties.

Another bill presented for first reading to the Lower House is the Anti-Sexual Harassment Bill 2021. If passed, a new Anti-Sexual Harassment Act will be enacted. Among other things, this bill proposes to establish a tribunal to hear sexual harassment complaints. It remains to be seen whether the bill in its current form will be passed.

If you wish to learn more about the matters discussed above, please feel free to contact

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