Malaysia: Approved amendments to Employment Act increase maternity leave

Employer Action Code: Act

The Employment (Amendment) Bill 2021 introduces a variety of changes to the Employment Act (EA), Malaysia’s primary law governing employment relationships, including establishing employer-paid paternity leave and substantially increasing paid maternity leave. The bill was passed by both houses of parliament, but its final enactment and effective date are still to be determined.

Key details

Following are notable changes introduced to the EA:

• The bill increases paid maternity leave from 60 to 98 calendar days. It also adds protections against dismissal during pregnancy or in the event of complications following birth. Note: All female employees in the private sector are covered by the maternity provisions of the EA (though generally the EA only applies to low-paid workers and their supervisors); however, the bill eliminates extension of the EA’s maternity provisions to all workers. The government has indicated that it expects to restore this extension via ministerial guidance as part of a review of the EA’s earnings ceiling (which hasn’t changed in decades).  
• The bill introduces seven consecutive days of paid paternity leave (for up to five births) for married male employees.
• The provisions on paid sick leave are amended so that sick leave in the event of hospitalization (up to 60 days) does not affect the employee’s entitlement to ordinary sick leave (14 to 22 days, depending on length of service).
• The bill gives employees the right to request flexible work arrangements regarding their hours, days or place of work. Requests must be made in writing, and employers will have 60 days to respond.
• The provisions reduce the statutory “normal” six-day workweek from 48 to 45 hours. In practice, all offices surveyed by WTW observe a 40-hour, five-day workweek; only a minority of plants and retail sites observe the full “normal” workweek.

Employer implications

The EA establishes the terms and conditions of employment for all manual workers, their supervisors and other employees with monthly wages under 2,000 Malaysia ringgits in Peninsular Malaysia. The same categories of employees in the states of Sabah and Sarawak are covered by separate Labor Ordinances that closely mirror the provisions of the EA. For all other employees, the EA is largely just a reference point for establishing the terms and conditions of employment, but it is an influential one, so these changes will likely have a significant impact on the general terms and conditions of employment across the private sector in Malaysia. Among companies surveyed by WTW, 40% offer maternity leave in excess of 60 calendar days, providing 12 weeks of paid leave at the median; 74% offer three days of paid paternity leave at the median. Employers should continue to monitor developments to remain in compliance while reviewing the potential impact of the amendments on their policies and practices.