Maternity, sexual harassment and corporate crime: proposed amendments to Malaysia’s Employment Act

The House of Representatives has passed the Employment (Amendment) Bill 2011 (the Bill). The Bill must still be passed by the Senate and receive Royal Assent before it will become law, however it is expected that these steps will occur in due course.  The Bill, once enacted, will amend the Employment Act 1955, to provide a regime for dealing with sexual harassment in the workplace, to extend maternity entitlements to all female employees and to extend liability for corporate offences to directors, managers and other officers.

Background

The Employment (Amendment) Bill 2011 (the Bill) was re-introduced to the Malaysian parliament for a second reading on 6 October 2011. It contains a range of amendments to the Employment Act 1955 (the Act) covering payroll requirements, outsourced labour and foreign domestic workers as well as key provisions on sexual harassment, maternity entitlements and corporate liability. A summary of the key amendments in the Bill is set out below.

 Sexual harassment

The Bill introduces a regime for the handling of complaints of sexual harassment between employers and employees. However, it does not extend to sexual harassment by third parties connected with the workplace such as clients or suppliers. The Bill defines sexual harassment as ‘any unwanted conduct of a sexual nature, whether verbal, non-verbal, visual, gestural or physical, directed at a person which is offensive or humiliating or is a threat to his well-being, arising out of and in the course of his employment’. The regime is designed to ensure that complaints of this nature are dealt with by internal processes of a company so far as possible. In particular, employers must:

• inquire into complaints received about sexual harassment, and
• take or recommend disciplinary action where sexual harassment has occurred.

If an employer fails or refuses to investigate a complaint, (except for certain prescribed reasons), the complainant may refer the matter to the Director General.

The Director General can require an employer to investigate a complaint and provide it with a report within 30 days. If the Director General finds that sexual harassment has occurred, the complainant may terminate their employment without notice and will be entitled to wages in lieu of their notice period as well as any termination benefits they would be entitled to either under the Act or their employment contract. Notably, there is no provision for the Director General to require the employer to take disciplinary action.

Unlike other sections of the Act, the Bill offers protection from sexual harassment to all employees, regardless of their salary.

Maternity

Part IX of the Act provides that female employees are entitled to maternity leave of not less than 60 days during their confinement. It also requires an employer to pay a maternity allowance for each day of maternity leave equal to a woman’s ordinary rate of pay (or such rate prescribed by the Minister, if higher) provided that:

• the employee has been employed by that employer during the four months preceding the confinement,
• the employee has been employed by that employer for not less than 90 days during the nine months preceding the confinement, and
• the employee does not have five or more surviving children at the time of confinement.

Currently maternity provisions only apply to employees whose wages do not exceed RM1,500 per month. After the amendment, the maternity protections and entitlements under Part IX of the Act will extend to all employees regardless of salary earned.

It is currently an offence for an employer to dismiss a female employee:

• during any period in which she is entitled to maternity leave, or
• so long as the employee remains absent from work due to illness after that period has expired, during the 90 day period following the maternity leave.

The Bill will introduce an exception which provides that no offence is committed where the termination takes place during maternity leave due to closure of the employer’s business.