Malaysia Covid-19 Employment Related Measures
This guide was first published on 17 April 2020, and was later updated on 9 May 2020, 9 June 2020 and 19 October 2020.
In this summary, we focus on employment related measures under the purview of the Ministry of Human Resources, Department of Labour, Social Security Organisation (SOCSO) and Employees Provident Fund (EPF).
Employment Retention Program (ERP)
Private sector employers whose employees are on unpaid leave for at least 1 month up to 6 months at the request of the employers can apply for monthly cash assistance of RM600 for each of such employees for up to 6 months starting from March 2020. Online applications opened from 13 April 2020 onwards at prihatin.perkeso.gov.my. Physical applications that have been submitted since 20 March 2020 will be processed accordingly without re-application online.
The conditions include:
- the employees must be on unpaid leave for at least 1 month up to 6 months
- the employees must earn monthly salaries of less than RM4,000
- the employees must be registered and contributing to the Employment Insurance System
- the unpaid leave notice must have been issued by employer from 1 March 2020 onwards
- employers are required to pay the ERP payment to the relevant employees within 7 days upon receipt of the same from SOCSO
We would like to add that the ability of employers to request their employees to go on unpaid leave is subject to the terms and conditions of the relevant employment contracts.
Wage Subsidies Program
(*updated on 19 October 2020*)
(A) Wage Subsidies Program 1.0
(1) Initial Period (from April – June 2020):
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The conditions include:
- Wage subsidies only cover employees whose monthly salaries are RM4,000 and below.
- Employers are required to retain their employees, shall not deduct salaries or impose forced unpaid leave for at least 6 months, ie 3 months during the wage subsidy period and 3 months thereafter.
- Employers who are registered with the Companies Commission of Malaysia (SSM) or local authorities before 1 January 2020 and are registered with the Social Security Organisation (SOCSO).
- Employers must have commenced operations before 1 January 2020.
- For employers with more than 75 employees, they have to prove at least 50% decrease in sales or income compared to January 2020 and the following months.
The Ministry of Human Resources clarified that this Wage Subsidies Program commenced on 1 April 2020 for a period of 3 months, or will commence from the month of actual application by the employer for a period of 3 months. Applications open from 9 April 2020 and the last date for application falls on 15 September 2020. Employers can submit applications at prihatin.perkeso.gov.my.
The Ministry of Human Resources have also clarified that the following do not qualify for wage subsidies:
- Employees who have obtained assistance under the Employment Retention Program (ERP) do not qualify for these wage subsidies in the same month.
- Self-employed individuals, including freelancers.
- Foreign workers
- Expatriates
According to the Ministry, the computation of salary to determine whether employees earn less than RM4,000 per month include all incomes in the form of money as defined under the Employees’ Social Security Act 1969, including base salary, overtime, commission, annual leave payout, medical allowances and other allowances and monetary incentives.
For employers with more than 75 employees, the Ministry clarified that these employers can prove at least 50% decrease in sales and income by furnishing supporting documents which show comparisons of sales and incomes between January 2020 and the following months.
Other clarifications from the Ministry of Human Resources are as follows:
- Employers who have not yet registered with SOCSO but who have already registered with Companies Commission of Malaysia (SSM), local government bodies such as city councils and municipal councils, as well as regulatory bodies of professional, scientific or technical services before 1 January 2020, shall be entitled to apply for these wage subsidies provided that these employers register with SOCSO now.
- Employers who have received assistance under the Employment Retention Program (ERP) may still apply for the Wage Subsidies Program if they meet the conditions, provided that the employers cannot claim for wage subsidies in the month where they have received assistance under the ERP for their employees.
(*Updated on 9 June 2020*)
(2) Extended Period (from June – September 2020):
The Wage Subsidies Program is extended for all eligible employers for another 3 months until September 2020. However, the monthly subsidies are now set at RM600 per employee up to a maximum of 200 employees per employer.
Employers under the Wage Subsidies Program are now allowed to:
- reduce work week along with reduced pay, provided that the employee’s consent is obtained; and
- (for employers in the tourism sector and other prohibited sectors during the Conditional Movement Control Order) allow employees who have taken unpaid leave to receive wage subsidies, provided that the employees receive the wage subsidies directly.
(*Updated on 19 October 2020*)
(B) Wage Subsidies Program 2.0
The Wage Subsidies Program is extended under the Wage Subsidies Program 2.0 for all eligible employers.
For employers who have been receiving wage subsidies, the program is extended for another 3 months until December 2020. However, for employers who have not been receiving wage subsidies, the program is available for 6 months. The monthly subsidies remain at RM600 per employee up to a maximum of 200 employees per employer.
In order to be eligible, employers and employees must be registered with and contributed to SOCSO prior to 1 September 2020. Employers should also have registered with the Companies Commission of Malaysia (SSM) or the relevant local authority prior to 1 September 2020. Sales or revenue must have also decreased by at least 30% year-on-year (from 2019 to 2020) after the implementation of the Recovery Movement Control Order (RMCO).
All employers have to apply for the new program, including employers who have been receiving the wage subsidies. Applications started on 1 October 2020 and must be submitted by 31 December 2020.
Penjana Kerjaya – Allowances for Hiring Unemployed & Disabled Persons
(*updated on 9 June 2020*)
(*Updated on 9 June 2020*)
Monthly allowances to employers for the employment of the following persons for a period of 6 months:
- RM800 per month for the employment of unemployed persons under the age of 40; and
- RM1,000 per month for the employment of unemployed persons of age 40 and above and disabled persons.
Training allowance of RM4,000 will be provided to individuals who lost their employment even if they are not contributors to the Employment Insurance Scheme.
Training Allowances for Youths
(*updated on 9 June 2020*)
(*Updated on 9 June 2020*)
Training allowance of RM600 per month to employers for a period of 6 months until December 2020, for apprenticeship programs for graduates and school leavers.
EPF’s Employer Advisory Services
Employer Advisory Services by the Employees Provident Fund (EPF) to employers has begun from 15 April 2020. This service includes options for deferring payments, restructuring and rescheduling of employers’ contributions to the EPF, aimed to provide cash flow to employers.
EPF’s Employers’ Covid-19 Assistance Programme (e-CAP)
(*updated on 9 May 2020*)
(*updated on 9 May 2020*)
The Employees Provident Fund of Malaysia (EPF) introduced the Employers’ Covid-19 Assistance Programme (e-CAP) which allows eligible small & medium enterprises to opt for a deferment and restructuring of the employer’s share of EPF contributions for the months of April, May and/or June 2020. The deferred contribution for the respective month of choice can be settled over a maximum period of 3 months.
To be eligible, employers must satisfy the following conditions:
- Employ up to a maximum of 200 employees
- All monthly contribution payments (both employees’ and employer’s contributions) up to February 2020 contribution date (for January 2020 salaries) have been paid
- The employees’ contributions for the months being applied for (April, May or June) have been paid
To read more, please go to our alert on 2 May 2020 via this link.
Human Resources Development Fund (HRDF) Levy Waiver
Human Resources Development Fund (HRDF) levy is exempted for all sectors for 6 months beginning April 2020.
Foreign Worker Levy Discount
Foreign worker levy is reduced by 25% for all companies with work permits expiring in the period of 1 April to 31 December 2020.
This is not available for the domestic help sector.
Movement Control Order (MCO) Not Frustration of Employment Contract
Importantly, the Ministry of Human Resources has clarified that the Movement Control Order (MCO) alone does not amount to a frustration of employment contract. This is because the inability of the employer and the employee to perform their obligations under the employment contract does not involve a long period of non-performance.
We would like to add that employment obligations can still be largely performed by implementing work-from-home policies, depending on the nature of work involved.
Nonetheless, the presence of force majeure clauses in employment contracts may or may not lead to termination of employment relationship, depending on the parameters of events specified.
Workforce Redundancy and Retrenchment
Employers who have applied for the Wage Subsidies Program are not allowed to carry out retrenchment within the 3-month wage subsidies period and the 3 months thereafter.
For employers who have not applied for wage subsidies, retrenchment caused by workforce redundancy is a prerogative of the employer.
In this respect, the Ministry of Human Resources has clarified that employers must meet the following conditions before they are able to carry out retrenchment:
- Firstly, there must be genuine justification for the redundancy, ie that the employer’s business has been genuinely and negatively impacted by Covid-19.
- Secondly, the employer must have taken precautionary measures such as reducing work hours, limiting or restricting the hiring of new employees, limiting overtime, limiting weekly or general work leave, reducing salaries and implementing temporary stop-work.
- Thirdly, if termination of employment is inevitable, foreign workers must be terminated first. In the event of termination of local employees, the Last In First Out (LIFO) principle shall be adhered to. However, this principle may be ignored if the employer has strong justification.
Employers who carry out retrenchment shall do so in compliance with the law. We add that there are other options for workforce downsizing, such as mutual separation schemes and voluntary separation schemes which employers may consider. Employers may also discuss with employees and mutually agree on alternatives such as reduction of pay and workload.
Employees who have been retrenched without reasonable cause or justification have the right to submit a written representation to the Director-General of Industrial Relations for reinstatement to the original job position. Such written representation must be submitted within 60 days from the date of termination of employment.
On this, the Ministry of Human Resources has clarified that the period of the Movement Control Order (MCO) is included in the calculation of the 60-day time period for employees to submit the written representation. However, if the 60th day falls on any day within the MCO period, the day immediately following the last date of the MCO period will be taken as the 60th day.
Payment of Salaries & Allowances
All employee salaries and allowances shall continue to be paid by employers, except where the relevant allowances relate to physical attendance at work or travelling which are not performed during the MCO period.
No Forced Annual Leave
Employers cannot impose forced annual leave upon employees, as annual leave is a discretion of employees.
This summary is updated as of the date of writing. The relief measures above are attached with different conditions and some of them require submission of forms and documents. Should you need any clarification or assistance in this respect, please feel free to contact us.
To read all of our guides on Malaysia’s Covid-19 relief measures, please go here.
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