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Employment Act 1955

As a general rule, the Employment Law applies to workers with salaries of RM2,000 or less. RM2,000 is the average minimum basic salary for new graduates, so in practice many workers will not be subject to this Employment Act. For non-target persons, the company's own employment contracts and work rules will take precedence. However, it is very important to understand the employment law, as many companies create work rules and contracts based on this employment law.

 ・ "Statutory law" and "customary law"
In Malaysia, it is composed of the "statutory law" specified in the Employment Law and the "customary law" judged by judicial precedents. Labor court decisions are often made in accordance with customary law, and it is important to examine customary law (case law) in order to deal with a number of labor issues.

Main provisions under the Employment Law

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Employment conditions

Working hours : 8 hours a day, within 48 hours a week


Wages :  Includes basic salary and other allowances. Wages must be paid at least once a month  Must be paid within 7 days of the last day of the wage calculation period  Minimum wage is 1,200 ringgit per month in 57 regions (2020 Minimum Wage Ordinance)


Allowances, etc . :  There are housing allowances, meal allowances, communication expenses, fuel expenses allowances (sales, etc.), etc., which are set individually according to job title, etc.

Since there is no health insurance system, many companies provide medical allowances up to a certain amount.

Overtime allowance :  Overtime must not exceed 4 hours a day, 104 hours a month  1.5 times or more hourly wage on weekdays, 2 times or more hourly wage on holidays, 3 times or more hourly wage on holidays

If you commute on public holidays, you will be paid two days' worth of salary.

Bonuses :  Although there is no obligation to pay under the Employment Law, many companies provide bonuses equivalent to one month's salary.

Severance pay :  If the employment contract is terminated due to reasons such as voluntary retirement or retirement, there is no need to pay a dismissal allowance.

In many cases, the company decides on its own in the employment contract and work regulations.

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Social insurance system

There are the following three types of social insurance

1. 1. Employees Provident Fund (EPF):

 Under the so-called pension system, you can save money throughout your working period and receive the principal and interest equivalent when you retire. Unlike the Japanese pension system, the younger generation can receive the amount paid by themselves rather than paying it. The premium rate is 12% or 13% for employees and 11% or 8% for workers, respectively.

2. 2. Employee Social Security Organization (SOCSO):

 This is a so-called industrial accident benefit system, which guarantees employees against injuries and illnesses that occur during work or commuting.
 The insurance premium rate is 1.75% for the employer and 0.5% for the worker. There is an upper limit to the amount of contribution, and if the monthly salary exceeds 4,000 ringgit, the employer pays 69.05 ringgit and the employee pays 19.75 ringgit.


3. 3. Employment Insurance System (EIS):

With so-called unemployment insurance, employers and workers bear about 0.2% respectively.

Necessity of joining Japanese (foreigners):
Of the above insurance systems, the one that foreigners are obliged to join is 2 SOCSOs. The burden rate is 1.25%, and if the monthly salary exceeds RM4,000, the maximum contribution is 49.40 ringgit.

Foreigners can also voluntarily join the EPF of 1 if the company approves it. If a foreigner who is a member returns home, he / she can receive the principal and interest accumulated up to that point.
As an international movement of social insurance, for example, when it comes to double participation in the social security system between Japan and overseas, some countries have signed "social security agreements" between the two countries. As a general rule, can only subscribe to the social security system of the country in which they work and prevent double payments. However, Malaysia has not yet joined the agreement.
Since Malaysia does not have the "health insurance" system in Japan, medical expenses will be borne by the individual. In the case of a new employee, it is often the case that he / she is assigned to Japan after taking out long-term overseas travel insurance in advance, but it is also common for the company to take out private insurance for local staff as well. There is also insurance that can be taken locally

Click here for information on Japanese social insurance while Japanese (overseas employees) are assigned overseas ...... Read more .

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Labor regulations

Although not a legal requirement, many companies create handbooks that include the following:

      
Employment conditions, etc . : Employment, employment form, trial period, working hours, salary / bonus / overtime allowance / various allowances, vacation / holiday, insurance, dismissal, severance pay, transfer / transfer, health examination, confidentiality, etc.

Policies / procedures : Service discipline, training, travel expenses, personnel evaluation, disciplinary action, taking leave, etc.

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Dismissal

Dismissal is divided into ordinary dismissal, disciplinary dismissal, and dismissal according to the cause.


1. 1. Normal dismissal :

Dismissal other than disciplinary dismissal and disciplinary dismissal, including dismissal performed when there is a reason for dismissal on the employee side such as poor working attitude

2. 2. Disciplinary dismissal :

It means that the company dismisses employees as a means of disciplinary action due to serious misconduct. Since there are many cases of disputes, companies are required to take appropriate measures in advance, such as internal investigation of fraudulent activities.

3. 3. Comprehensive employment : Reduction of surplus personnel due to company circumstances


The law states that the dismissal procedure can be done relatively under the initiative of the company, but in order not to lose in the event of a dispute, how to deal with it by referring to customs such as judicial precedents. If so, it is necessary to consider whether it is considered to be a dismissal for good reason.

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Working visa

VISA, work permit, etc. required to work locally:
Malaysia is also a host country for unskilled workers as well as expatriates. Work permits are "Work Permit" for low-skilled workers, "Employment Pass (EP)" for high-skilled workers, and "Professional Visit Pass" for professionals. It is said that about 98% of foreign workers working in Malaysia are low-skilled workers.

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Expatriate / locally hired Japanese or work visa to obtain:
Employment permits (EPs) are obtained by expatriates and locally hired Japanese, and are divided into the following three categories.
① Corporate executive class (Expatriate, Category I)
② Professional class (Expatriate, Category II)
③ General occupation class (Knowledge / Skilled Worker, Category III)

The period will be decided by examination.

A work visa is obtained under the sponsorship of the company, and the company registration is required before applying, and the capital requirements are also set (500,000 ringgit for foreign manufacturing industry, 1 million ringgit or more for foreign service industry, etc.). The difficulty of obtaining a work visa is increasing, and it is necessary to first solicit applications from the government's recruitment website for positions that can be replaced by local employees.

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