KUALA LUMPUR, Dec 23 — The Malaysian government should postpone or gradually implement new changes in employment law — which will reduce the weekly working hours without overtime pay and entitle those earning up to RM4,000 to overtime pay — instead of having it start all in one go on January 1, 2023, a group representing businesses urged today.
Tan Sri Low Kian Chuan, president of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said this was because small and medium enterprises (SMEs) are still trying to recover while facing multiple issues such as higher operating costs.
Urging for SMEs which form the backbone of Malaysia’s economy “breathing space” to get back on their feet and contribute to the country’s economic recovery, Low said implementing these new laws at this critical period would go against the goal of revitalising the economy.
He pointed out that the higher minimum wage of RM1,500 — which had taken effect earlier on May 1 for companies with five or more employees and will apply from January 1, 2023 for those with less than five employees — “has already increased employers’ operating costs, pushing them to the brink of survival”.
The implementation of the new changes in employment law via the Employment (Amendment) Act 2022 at this point “could be the last straw to break the camel’s back”, he said.
“The weekly working hours are reduced from 48 hours to 45 hours and all employees with wages up to RM4,000/month will be entitled to overtime allowance that adds additional wage costs for businesses,” he said in a statement today.
Low said Acccim agrees in principle to the new law, but hoped for the Malaysian government to consider postponing the implementation of these two new changes to the maximum weekly working hours and overtime pay coverage, as businesses are still in dire straits.
Acccim suggested a postponement of at least six months “subject to the recovery progress of businesses to provide some breathing room”.
“If the recovery goes smoothly, businesses will be delighted to support the initiative; If the recovery is slow, ACCCIM hopes the government can implement the regulations gradually in phases, starting in 2024,” it said.
Low said Acccim had submitted multiple studies and proposals to the government to convey its views on the issue.
Stressing that businesses are not against the implementation of these new changes, he urged for the government to consider the pressures faced by businesses amid a still-challenging economic and business environment and to review the feasibility and impact of these changes.
“Therefore, a gradual implementation in phases is more appropriate rather than a sudden implementation,” Acccim said.
Low also highlighted that many businesses are facing foreign workers’ shortages, rising prices of raw materials, increasing costs for transportation and electricity, and the risk of economic slowdown in Malaysia next year, saying the government should focus on solving these issues and to help businesses overcome such challenges.
The new changes under the Employment (Amendment) Act 2022 received royal assent on April 26 and was gazetted on May 10.
Previously, the Malaysian government via then human resources minister Datuk Seri M. Saravanan had on August 12 made an order stating that the Employment (Amendment) Act 2022 will take effect on September 1, but he had later announced that it would start being enforced from January 1, 2023 instead.
On December 21, Human Resources Minister V. Sivakumar confirmed that the implementation date for these new changes will be from January 1, 2023.
Under the new changes, employees entitled to overtime pay will be those earning up to RM4,000, as compared to under the old law where only those earning up to RM2,000 were entitled to receive overtime pay.
Employees who work more than 48 hours per week were entitled to overtime pay under the old law, but the new law means that they will be entitled to overtime pay if they work more than 45 hours per week.
Among other things, the new changes to employment law now increases the maternity period that female employees are entitled to from the previous 60 days to the longer period of 98 days, while male employees will now be entitled to seven days of paid paternity leave.
