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.
Following are notable changes introduced to the EA:
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.