Malaysia

UPDATED 20 MARCH 2020 – Please take note of the following updates which may be relevant to your business:

1. Some non-essential services and businesses have been allowed to operate by the Director General. A list of the same may be viewed here and here.

According to the latest guidelines by the National Security Council, businesses and companies of non-essential services operating during this Period are required to take measures such as ensuring that the workforce is kept to a minimum or at least 50%, submitting an application together with a list of employees who are required to work to MITI during this Period, taking daily temperatures and preparing hand sanitizers and undertake thorough sanitisation and cleaning efforts.

In view of the widespread restrictions on the opening of business premises, employers of essential services and permitted non-essential services, may want to provide their employees with letters explaining the need for their travel or movement to support their explanation in case he/she is queried by the police/other authorities.

2. Based on a FAQ which was released on 19.3.2020, the Ministry of Human Resources (MOHR) has taken, amongst others, the following positions:-

1. all employers are required to pay their employees’ salaries and allowances in full. For employees who do not earn a fixed daily wage, employers are required to ensure that their wages do not fall below the Minimum Wages Order 2020. Employees may make an official complaint against employers who refuse to pay their salaries during the Period to the Labour Department (Jabatan Tenaga Kerja);
2. Employers may not require their employees to offset their annual leave during this Period;
3. Employers may not require their employees to take unpaid leave during this Period; and
4. The RM600 benefit announced by the Government for employees who do not receive their salary for this Period are not eligible to receive this benefit as the duration of this Period is less than one month.

MOHR’s FAQ may be viewed here.

3. Lembaga Hasil Dalam Negeri (LHDN) has agreed to grant extra time for certain matters as can be seen here. Amongst other things, LHDN is permitting additional 2 months for all taxpayers who need to submit their tax declaration forms between March and June 2020. This extension would apply to employees who would otherwise be required to submit their BE Form by 30 April 2020.

See below for the updated FAQs. Please note that the answer to question 2 has been changed and an additional question and answer 13 has been added in light of recent changes.

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To enhance efforts to curb the Covid-19 outbreak, the Prime Minister of Malaysia (“PM”) announced on 16 March 2020 that a nationwide Movement Control Order (“MCO”) will be implemented from 18 March 2020 – 31 March 2020 (“Period”) under the Prevention Act and Infectious Disease Control 1988 and Police Act 1967. On 18 March 2020, the Government issued the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020 (“Regulations”) which lay down the relevant regulations in relation to the movement restriction.

We have prepared the following FAQs, which have been updated in line with latest guidelines and regulations, which we hope will assist you with some of the issues that you may be facing during the Period. Please note though that the FAQs do not constitute legal advice and as the situation remain fluid and further information is awaited from the Ministry of Human Resources in particular, the legal position may change in the near future. If you require legal advice, please contact one of the lawyers in our Employment Practice Group listed below.

1. Do employers have to close their businesses and/or places of employment?

Premises providing essential services may be opened provided that the number of personnel and patrons at the premises be kept to a minimum. Further, premises involved in food supply chain or in selling food and beverages by way of drive-through, take away or delivery may be open, subject to conditions which the Director General may impose (see Regulation 5(1) and 5(3) of the Regulations). To this end, employers in essential services are advised to:-

• Identify the units/departments within the business which need to work from the workplace for the smooth running of the essential services, while considering asking the rest to work from home or to stay at home; and
• formulate employee rotation plans to minimise the number of employees attending at the workplace at any one time.

Premises not providing essential services may not be opened unless written permission from the Director General is first obtained (see Regulation 5(2) of the Regulations). In practical terms, this means that while employers in non-essential services effectively cannot require their employees to attend at the place or premises of work, they can require employees to continue to work remotely and employers can implement work from home measures including :-

• Attending online meetings & conference calls;
• Require employees to attend to client queries and requests by email and other forms of communication; and
• Require employees to be contactable for work at home during regular office hours.

2. What are the essential services?

Essential services has been described in the Schedule to the Regulations as follows:-

1. Banking and Finance
2. Electricity and Energy
3. Fire
4. Port, dock and airport services and undertakings, including stevedoring, lighterage, cargo handling, pilotage and storing or bulking of commodities
5. Postal
6. Prison
7. Production, refining, storage, supply and distribution of fuel and lubricants
8. Healthcare and medical
9. Solid waste management and public cleansing
10. Sewerage
11. Radio communication including broadcasting and television
12. Telecommunication
13. Transport by land, water, or air
14. Water
15. E-commerce
16. Defense and security
17. Food supply
18. Wildlife
19. Immigration
20. Customs
21. Hotels and accommodations
22. Any services or works determined by the Minister as essential or critical to public health and safety.

Some non-essential services have been allowed to operate by the Director General. A list of the same may be viewed here and here. According to the latest guidelines by the National Security Council, businesses and companies of non-essential services operating during this Period are required to take measures such as ensuring that the workforce is kept to a minimum or at least 50%, submitting an application together with a list of employees who are required to work to MITI during this Period, taking daily temperatures and preparing hand sanitizers and undertake thorough sanitisation and cleaning efforts.

In view of  the widespread restrictions on the opening of business premises, employers of essential services and permitted non-essential services, may want to provide  their employees with letters explaining the need for their travel or movement to support their explanation in case he/she is queried by the police/other authorities.

You should also note that various Government ministries have also been issuing guidelines from time to time. You may refer to this website to view the FAQs issued by the various Government ministries and National Security Council.

3. Since there is no prohibition on carrying on business remotely, can employers organise face-to-face meetings with employees, either in smaller groups or one-on-one?​​

As the main purpose behind the MCO Announcement is to enforce social distancing between members of society, employers are advised to avoid requiring their employees to gather in any premise or location whatsoever for work-related purposes, irrespective of the size of the group.

In any case, movement within infected areas (which is the whole of Malaysia) is permitted for only an extremely limited set of circumstances, such as to purchase food or seek healthcare services (see Regulation 3(1) of the Regulations). Movement for work-related purposes or meetings is not permitted and employers cannot require their employees to travel in order to attend small group meetings or discussions.

4. Can employers deduct the employees’ annual leave entitlement or enforce unpaid leave during this Period as a result of the MCO?

Unless the contract of employment provides otherwise, the law does not permit annual leave entitlement to be set off against this Period or for employers to unilaterally require their employees to take unpaid leave during this Period as a result of the MCO.

5. Are employees entitled to the same salary or benefits during this Period?

Yes, they need to be paid as per their contract of employment.

6. Are employees required to pay the full salaries of their employees who cannot work from home or are not required to be on standby?

MOHR has issued an FAQ on 20 March 2020 stating that all salaries and allowances must continue to be paid in full during the period. This practice is also encouraged from a risk management, practical and even humanitarian perspective.

For employers whose businesses are severely impacted by the MCO and are unable to pay employees their full salaries during the Period, employers may need to consider other cost cutting measures.

While an argument may be made that due to supervening events beyond the control of both parties, the contract of employment temporarily cannot be performed by either party in a fundamental way and as the employee has not been able to fulfil the obligation to work, the employer is not required to fulfil its obligation to pay during the Period, this position has significant legal and practical risks  especially in view of the recent public position taken by MOHR.    We recommend that legal advice be obtained in dealing with potential measures that can be implemented during this time.

7. What about employees currently on sick leave and maternity leave during the Period?

A maternity leave period that overlaps with this Period will not affect the employee’s entitlement to or the duration of the maternity leave. If the employee is on sick leave, the employee may not be required to work from home and the sick leave would be deducted from his or her normal entitlement.

8. Can employers require their employees to come back to work during the Period if the employers’ business falls under the essential services identified under the Regulations?

If the nature of your business falls under essential services as identified in the Regulations, your business can continue to operate as usual during this Period. Your business can also continue to operate as usual during this Period if it falls under any of the permitted non-essential services allowed to open. As such, if employees in an essential service or permitted non-essential service have been granted approved annual leave during this Period, and if the needs of the business make it necessary, you may revoke the approval of the annual leave to require employees to return to work

You are however encouraged to allow employees in non-essential departments or aspects of these businesses to work from home.

9. Can employees travel on business during the Period?

Employers may not require their Malaysian employees to travel out of country during this Period (Regulation 3 of the Regulations). There is no similar prohibition on travel out of Malaysia for foreign employees.

The Immigration Department of Malaysia has issued a directive prohibiting travel between Sabah and Sarawak and Peninsular Malaysia. According to the latest guidelines by the National Security Council, travel between states save for health purposes is also prohibited. Employers are therefore advised not to require their employees to travel out of state during this Period.

Under the latest guidance from the National Security Council and the Immigration Department, foreign employees (and their dependents, where applicable) in possession of valid work passes or foreign nationals possessing Long Term Social Visit Passes are not allowed into Malaysia during the Period but may be exempted if they are employees of essential services businesses. A letter of confirmation from the employer is required for this purpose and must be furnished to the Immigration Department of Malaysia upon entry into Malaysia. They may be subject to healthcare screenings and quarantine.

There are no restrictions on foreign nationals remaining in employment in Malaysia during the Period.

10. How should employers deal with Malaysian employees who return from overseas during this Period?

All Malaysians who return to Malaysia during the Period are required to undergo a health examination and self-quarantine for 14 days (Regulation 4 of the Regulations). During this period of self-quarantine, regardless of whether it overlaps with the Period, employees may not attend at the workplace but may be required to work from home. The same principles regarding annual or unpaid leave will apply during the self-quarantine period.

11. Are any of the events surrounding the MCO grounds for an employee claiming compassionate leave?

No.

12. Can employers retrench, temporarily lay-off and/or impose pay cuts as cost-cutting measures?

Yes, employers facing financial difficulties as a result of the Covid-19 pandemic may find it necessary to reduce its business costs and expense by amongst others undertaking retrenchments, lay-offs and/or pay-cuts.

Retrenchment should be in accordance to the general principles of industrial law, and retrenchment benefits may be payable. Temporary lay-offs and salary reduction may only be done after consultation and with the consent of the employees. Lay-off benefits may be payable under the Employment (Termination and Lay-Off Benefits) Regulations 1980. Where there is a collective agreement in place, all such action shall be taken in compliance with the same.

Separate from the MCO, where cost cutting measures include a period of at least 1 month where employees will not be paid/ placed on unpaid leave, the PM has announced on 16 March 2020 that employees may be able to claim RM600 per month for a maximum period of 6 months under a stimulus package provided by the Government. Application forms may be downloaded here.

These measures are separate from the MCO.

13. Is the Lembaga Hasil Dalam Negeri/Inland Revenue Board (“LHDN”) giving any accommodation to submission and payment of tax??

Yes, LHDN has agreed to grant extra time for certain matters as can be seen here. Amongst other things, LHDN is providing a time extension of 2 months  to all taxpayers who need to submit their tax declaration forms between March and June 2020.  This extension would also apply employees who would otherwise be required to submit their BE Form by 30 April 2020.

 

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The information provided on this FAQ does not, and is not intended to, constitute legal advice.

Skrine attorneys are available to assist you with these and other workplace issues. For more information, please contact Siva Kumar Kanagasabai, Partner of Skrine at SKK@Skrine.com, or visit https://www.skrine.com/.

For more information please contact Joseph Granato, Communications Manager at L&E Global at joseph.granato@leglobal.org.

As one of the measures to contain the outbreak of the Covid-19 virus, the Prime Minister of Malaysia issued an announcement last night that the Government will implement a Movement Control Order throughout Malaysia from 18 to 31 March 2020. During this period –

• Government and private offices will be closed, except those involved in essential services (such as water, electricity, energy, telecommunications, post, transportation, irrigation, oil, gas fuel, lubricants, broadcasting, finance, banking, health, pharmacy, fire prevention, prisons, ports, airports, security, defence, cleaning, food supply and retail);
• A complete restriction will be imposed on movement and assembly (including religious activities, sports, social and cultural events) – to enforce this restriction, all houses of worship and business premises will be closed except supermarkets, public markets, sundry shops and convenience stores selling essential goods;
• A complete restriction will be imposed on Malaysians from travelling abroad;
• Malaysians returning home will be required to undergo health checks and voluntary self-quarantine for 14 days;
• A complete restriction will be imposed on foreign visitors and tourists;
• All public and private institutions of higher learning, i.e. universities, colleges and skills training institutes, will be closed; and
• All kindergartens and public and private schools, including day schools, residential schools, international schools, Tahfiz centres, and all other institutions of learning in primary, secondary and pre-university levels, will be closed.

For more information please contact Joseph Granato, Communications Manager at L&E Global at joseph.granato@leglobal.org.

If you have any questions, please contact:

Siva Kumar Kanagasabai, Partner
SKRINE
SKK@Skrine.com
+ 603 2081 3999