The document describes Malaysia's key employment laws and regulations. It outlines acts related to employment standards, trade unions, industrial relations, workplace safety and health, and skills development. The Employment Act 1955 sets minimum labor standards and protections. The Trade Unions Act 1959 allows workers to form registered trade unions. The Industrial Relations Act 1967 aims to encourage industrial harmony through collective bargaining and dispute resolution.

1. THE MALAYSIAN LEGAL
ENVIRONMENT
TOPIC 3b

2. Lesson learning outcome
At the end of this lesson students should be
able to:
 Describe and explain Employment Act 1955.
(CO1:PO3)
 Describe and explain Trade Unions Act 1959.
(CO1:PO3)
 Describe and explain Industrial Relations Act 1967.
(CO1:PO3)
2

3. THE LEGAL ENVIRONMENT
▪ The Employment Act 1955
▪ The Children and Young Persons (Employment) Act 1966
▪ The Wages Council Act 1947
▪ The Employees Provident Fund Act 1991
▪ The Workman’s Compensation Act 1952
▪ The Employees Social Security Act 1969
▪ The Occupational Safety and Health Act 1994
▪ The Factories and Machinery Act 1967
▪ The Trade Unions Act 1959
▪ The Industrial Relations Act 1967
▪ The Employment (Restriction) Act 1968
▪ Pembangunan Sumber Manusia Bhd Act 2001

4. The Employment Act
1955

5. ▪ Enforced by the Labor Department
▪ Sets minimum labor standards for workers
and seek to protect them from exploitation
▪ Apply to Peninsular Malaysia and the
Federal Territory of Labuan only
▪ The employees in East Malaysia is covered
under The Sabah and Sarawak Labor
Ordinances
▪ Covers
▪ Employees in the private sector earning not more
than RM1500 per month
▪ those who work as manual labors, supervise
manual labors, operate or maintain machines

6. ▪ Areas covered
▪ Contracts of service,
▪ Payment of wages,
▪ Employment of
women,
▪ Working hours and
holidays,
▪ Registers, returns,
complaints and
inquiries

7. Contract of Service
▪ An agreement whereby one person agrees
to employ another as an employee and
that the other agrees to serve his
employer as an employee
▪ Such agreement can be oral,
in writing, express or implied

8. Payment of wages
▪ Every employer shall
pay to each of his
employees not later
than the seventh day
after the last day of
any wage period the
wages, less lawful
deductions

9. Employment of Women
▪ no employer shall require any female employee
to work in any industrial or agricultural
undertaking between the hours often o'clock in
the evening and five o'clock in the morning
▪ nor commence work for the day without having
had a period of eleven consecutive hours free
from such work
▪ No female employee shall be employed
in any underground working

10. Maternity Protection
▪ Every female employee shall be entitled to
maternity leave for a period of not less than sixty
consecutive days
▪ A female employee shall be entitled to receive
maternity allowance for the eligible period from
her employer if:
▪ she has been employed by the employer at any time
in the four months immediately before her
confinement; and
▪ she has been employed by the employer for a period
of, or periods amounting in the aggregate to, not less
than ninety days during the nine months immediately
before her confinement.

11. Working Hours and Holidays
▪ Rest day
▪ Every employee shall be allowed in each week a rest
day of one whole day
▪ Hours of work
▪ an employee shall not be required under his contract
of service to work:
▪ more than five consecutive hours without a period of leisure
of not less than thirty minutes duration;
▪ more than eight hours in one day;
▪ in excess of a spread over period of ten hours in one day;
▪ more than forty-eight hours in one week

12. Working Hours and Holidays
Working on.. Pay rate Overtime Pay
Work day Normal rate 1.5 x normal rate
Rest day ▪1 x normal rate (for < ½
his normal hours of work )
▪2 x normal rate (for > ½
his normal hours of work )
Public holidays 2 x normal rate 3 x normal rate

13. Working Hours and Holidays
▪ Holidays, annual leave and sick leave
Years of
Service
Public Holidays Annual
Leave
Medical
Leave
< 2 YEARS 10 days including:
▪the National Day
8 days 14 days*
2 – 5 YEARS ▪the Birthday of the Yang di-
Pertuan Agong
12 days 18 days*
> 5 YEARS ▪the Birthday of the Ruler or
the Yang di-Pertua Negeri
▪the Workers' Day
16 days 22 days*
* 60 days if hospitalized

14. The children and young persons
(employment) act 1966
▪ To prevent the exploitation of child labor
▪ Under 14 yrs – only light work in family’s
business
▪ 14-16 yrs
▪ In light work that does not involve the use of
machinery; and
▪ A maximum of 7 hrs per day
▪ May not work between 8pm – 6am

15. The Wages Council Act
1947

16. ▪ Enforced by the Labor Department
▪ Employees are not organized into unions
▪ Covers 4 sectors
▪Shop assistants
▪Hotel and catering industry workers
▪Port of Penang stevedores
▪Cinema workers

17. The Employees Provident
Fund Act 1991

18. ▪ Administered by the Employees Provident
Fund Board
▪ To ensure workers have funds available
on their retirement
▪ Covers:
▪ All employees in Malaysia (16 years old and
above)
▪ Before 1 August 1998: Expatriats and foreign
workers are not required to contribute (but can
choose to contribute)
▪ After 1 August 1998: Expatriats and foreign
workers earning less than RM2,500 are required
to contribute.

19. ▪ Those who are exempted from making the
compulsory contribution are:
▪ employees or workers holding Employment Pass or
expatriates holding Visit Pass (Temporary Employment)
whose monthly wages is not less than RM2,500
▪ Thai workers who enter Malaysia with a Territorial Pass
▪ Seamen
▪ Foreign domestic maids
▪ Self-employed persons
▪ Out-workers who do cleaning and alteration repair works
▪ Persons detained in custody, in prison, Henry Gurney
School and mental hospital
▪ Pensioners

20. ▪ Contributions
Categories of employee
% of contribution
Employer Employee
All employees except
expatriates and foreign
workers
12 11
Expatriates and foreign
workers (except for those
excluded)
RM5/per
person
11

21. ▪ Members’ Account: 3 separate accounts
▪ Account 1 (60%): for pension
▪ Account 2 (30%): for purchase of house and
computer
▪ Account 3 (10%): for medical costs

22. The Employees Social
Security Act 1969

23. ▪ Enforced by the Social Security Organization
▪ To provide protection to workers who may be
involved in an accident at work or who contract
some occupational disease
▪ For employees in the private sector who earns
less than RM3000 per month
▪ An employee must be registered with the
SOCSO irrespective of the age.
▪ The principle “ once in, always in”

24. ▪ Nevertheless, SOCSO does not cover the
following categories of persons :
▪ A person whose wages exceed RM3,000 a month
and has never been covered before.
▪ Government employees.
▪ Domestic servants employed to work in a private
dwelling house which includes a cook, gardeners,
house servants, watchman, washer woman and
driver.
▪ Employees who have attained the age of 55 only for
purposes of invalidity but if they continue to work they
should be covered under the Employment Injuries
Scheme.
▪ Self-employed persons.
▪ Foreign workers.

25. ▪ An insured person or dependants will be entitled
to the following benefits :
▪ Periodical payments in the case of invalidity
▪ Periodical payments in the case of disablement
suffered as a result of an employment injury
▪ Periodical payments to the dependants of an insured
person who dies as a result of an employment injury
▪ Payments for funeral benefit or expense on the death
of an insured person as a result of an employment
injury
▪ Periodical payments to an insured person who is in
receipt of invalidity pension or disablement benefit
and is so severely incapacitated or disabled as to
require the personal attendance of another person
▪ Medical treatments for the attendance on insured
persons suffering from disablement
▪ Periodical payments to dependants of an insured
person who dies while in receipt of invalidity pension

26. ▪ SOCSO provides coverage to eligible employees
through 2 schemes namely
▪ Employment Injury Insurance Scheme
▪ Invalidity Pension Scheme.
▪ These schemes are classified into 2 categories :
▪ First Category - Employment Injury Insurance
Scheme and Invalidity Pension Scheme. The
contribution payment is made by both the employer
and employee
▪ Second Category - Employment Injury Insurance
Scheme Only. The contribution is paid by the
employer only. An employee who is not eligible for
coverage under the Invalidity Pension Scheme is
protected under this category.
▪ These schemes provide the benefits of invalidity
pension, invalidity grant, survivors pension,
rehabilitation, funeral benefit, constant attendance
allowance and educational loan.

27. The Workmen’s
Compensation Act 1952

28. ▪ Enforced by the Labor Department
▪ To provide compensation to workers who
have accidents at work or who contract
employment-related diseases.
▪ Covers:
▪ Foreign workers earning less than RM 500
per month
▪ Employers must take out an insurance
policy to cover liability under the act.

29. The Occupational Safety
and Health Act 1994

30. ▪ Gazetted on the 25 February 1994 by the
Malaysian Parliament.
▪ Enforced by the Department of
Occupational Safety and Health
▪ To ensure safety at the workplace
▪ Carry out inspections at workplaces
▪ Organize promotional activities
▪ Assist government departments with technical
expertise
▪ Carry out activities aimed at improving safety
and health

31. ▪ Applied to the following sectors
▪ Manufacturing
▪ Mining and Quarrying
▪ Construction
▪ Agriculture, Forestry and Fishing
▪ Utilities:
▪ Electricity;
▪ Gas;
▪ Water; and
▪ Sanitary Services
▪ Transport, Storage and Communication
▪ Wholesale and Retail Trades
▪ Hotel and Restaurants
▪ Finance, Insurance, Real Estate and Business
Services
▪ Public Services and Statutory Authorities

32. ▪ General duties of employers and self-employed persons to
their employees
▪ the provision and maintenance of plant and systems of work that are,
so far as is practicable, safe and without risks to health;
▪ the making of arrangements for ensuring, so far as is practicable,
safety and absence of risks to health in connection with the use or
operation, handling, storage and transport of plant and substances;
▪ the provision of such information, instruction, training and supervision
as is necessary to ensure, so far as is practicable, the safety and
health at work of his employees;
▪ so far as is practicable, as regards and place of work under the
control of the employer or self-employed person, the maintenance of
it in a condition that is safe and without risks to health and the
provision and maintenance of the means of access to and egress
from it that are safe and without such risks;
▪ the provision and maintenance of a working environment for his
employees that is, so far as is practicable, safe, without risks to
health, and adequate as regards facilities for their welfare at work.

33. ▪ General duties of employees at work
▪ to take reasonable care for the safety and health of
himself and of other persons who may be affected by
his acts or omissions at work;
▪ to co-operate with his employer or any other person in
the discharge of any duty or requirement imposed on
the employer or that other person by this Act or any
regulation made thereunder;
▪ to wear or use at all times any protective equipment
or clothing provided by the employer for the purpose
of preventing risks to his safety and health; and
▪ to comply with any instruction or measure on
occupational safety and health instituted by his
employer or any other person by or under this Act or
any regulation made thereunder.

34. The Factories and
Machinery Act 1967

35. ▪ Gives protection in terms of health and
safety for all workers working in factories
regardless of sex
▪ The jurisdiction of the act covers all
factories

36. The Trade Unions Act
1959

37. ▪ Administered by the Trade Unions
Department
▪ Permitting workers to form and join trade
unions provided these are registered
organizations
▪ Provides:
▪ The procedures for applying for registration,
the use of union funds, the rights and
liabilities of unions, and other matters relating
to the constitution of unions

38. The Industrial Relations Act
1967

39. ▪ Enforced by the Industrial Relations Department
▪ To provide systems which will encourage
industrial harmony
▪ Is applicable throughout Malaysia and provides
for the regulation of relations between
employers and workmen or employee and their
trade union and the prevention and settlement of
trade disputes.
▪ Emphasizes on direct negotiation between
employers and workmen or employees and their
trade unions to settle their differences and to
regulate their collective relationship

40. ▪ The Industrial Relations Act 1967
▪ Protects the legitimate rights of employers and
workmen or employees and their trade unions.
▪ provides the procedure relating to submissions of
claims for recognition and scope and representation
of trade union and collective bargaining
▪ Does not allow matters relating to promotion,
recruitment, dismissal, transfer, retrenchment,
reinstatement and allocation of duties and prohibition
of strikes and lockouts over any of these matters to
be included in the proposal for collective bargaining
▪ provides for speedy and just settlement of trade
disputes by conciliation or arbitration where direct
negotiation fails
▪ provides the power to the Ministry of Human
Resources to intervene and to refer at any stage any
trade dispute to the Industrial Court for arbitration

41. The Employment (Restriction)
Act 1968
▪ Non-Malaysian
citizens are required
to obtain a valid work
permit before they
can be employed
locally.

42. Human Resources
Development Bhd Act 2001

43. ▪ To ensure employers conduct training for
their workers so as to upgrade their skills
and abilities
▪ Enforced in January 1993
▪ Led to the establishment of the Human
Resources Development Fund (HRDF)
▪ Administered by the Human Resources
Development Council (HRDC).

44. ▪ Currently, the categories of employers
covered under the Act are as follows
▪ Employers with 50 employees and above in
the manufacturing sector
▪ Employers with 10 to 49 employees and a
paid-up capital of RM2.5 million and above in
the manufacturing sector

45. ▪ Employers with 10 employees and above in 20
selected industries in the services sector, namely, the
hotel industry, tour operating business (in-bound tour
only), shipping, air transport, telecommunication,
computer services, advertising, postal & courier
services and freight forwarding (w.e.f. 1 January
1995); private higher education, training and the
energy sector (w.e.f. 17 February 2000); and direct
selling, port services, engineering support &
maintenance services, research & development,
warehousing services, security services, private
hospital services and hypermarkets, supermarkets &
departmental stores.For hypermarkets, supermarkets
and departmental stores, only employers with 50
employees and above are required to register
▪ Employers in the manufacturing sector with 10 to 49
employees and a paid-up capital of less than RM2.5
million are given the option to register with PSMB

46. Manufacturing companies contribute as
follows:
Companies that employ 50 employees and
above
(Effective from 1 January 1993)
1% of employees'
monthly wages
Companies that employ less than 50 to a
minimum of 10 employees, with a paid-up
capital of RM2.5 million or more
(Effective from 1 January 1995)
1% of employees'
monthly wages
Companies that employ less than 50 to a
minimum of 10 employees, with a paid-up
capital of less than RM2.5 million are given
the option to register with PSMB.
(Effective from 2 August 1996)
0.5% of employees'
monthly wages