Productive and motivated employees are often crucial in ensuring the success of your business or company. Therefore, by offering benefits to your employees on top of salaries and wages, it shows that you care and are invested in not only their work, but their health and well- being.
Depending on the type of organization, the job, and the type of employees (Employment Act (EA) Employees/ Non- Employment Act (Non- EA) Employees), employee benefits may be quite different. So, how do you categorize EA and Non- EA Employees?
EA Employees are employees with wages not exceeding RM2000 a month or employees with wages over RM2000 a month that are engaged in manual labour; engaged in operation or maintenance of any mechanically propelled vehicle operated; engaged in any capacity in any vessel registered in Malaysia; domestic servants; or supervise or oversee employees engaged in manual labour. EA employees are governed under the Employment Act 1955 and are entitled to all benefits under the Act.
On the other hand, Non- EA employees will be governed by the employment contract terms, where employers are mostly free to set their own employment benefits, as long as the employees agree to them in the employment contract.
So, what are the employment benefits in Malaysia? Here’s all you need to know.
Compulsory employment benefits under the Employment Act 1955
Annual Leave
As for EA employees, their number of annual leave depend on the length of service in the company. They are allowed 8 days of annual leave if they have been in the company for a year or more but less than 2 years. For employees who served 2 years or more but less than 5 years, they are allowed 12 days of annual leave, and for 5 years or more, they will be given 16 days of annual leave. However, for Non- EA employees, they will be entitled to the number of leaves stated in the employment contract that they have agreed to.
Sick Leave and Hospitalization Leave
An employee is entitled to sick leave days that are approved by a registered medical practitioner. The number of sick leave provided will also depend on the employees’ length of service in the company. For employees who serve less than 2 years, 14 days are allowed. 18 days and 22 days sick leave will be allowed respectively to those who has been in the company for 2 years or more but less than 5 years, and those who worked for 5 years or more. Where hospitalization is required, EA employees are allowed 60 days of hospitalization leave per year but shall not exceed 60 days in total. On the other hand, for Non- EA employees, they once again have to refer to the agreed employment contract.
Maternity Leave
All female employees are entitled to 98 consecutive days of paid maternity leave according to Section 44A of the Employment Act. An employee is entitled to receive maternity allowance if she has been employed for at least 90 days in aggregate during the 9 months before her confinement AND she was employed at any time in the 4 months immediately before her confinement. A female employee cannot be terminated during maternity leave or for a period of 90 days after her maternity leave.
Public Holiday
In Malaysia, employees should be allowed a minimum of 11 public holidays, 5 of which must include National Day, Official birthday of Yang di- Pertuan Agong, Labour Day, Official birthday of the Yang di- Pertua Negeri of the state where the employee works and Malaysia Day. Where a public holiday falls on a Sunday, the next working day shall be a holiday. If an employee is required to work on a public holiday, he should be paid not less than 3 times his daily pay rate, the same applies to work overtime on the said public holiday.
Lay off benefits
An EA employee is entitled to receive termination or lay-off benefits employed under a continuous contract of employment for at least 12 months before the retrenchment exercise. Employees are entitled to 10 days’ wages for each year of employment if they have been employed for less than 2 years. If the employees have been employed for 2 years or more but less than 5 years, or 5 years or more, they are allowed 15 days’ wages and 20 days’ wages respectively for each year of employment. On the other hand, for Non- EA employees, they will once again have to rely on their signed employment contract.
Optional employment benefits
Insurance and medical coverage
Many employers in Malaysia offer medical and insurance coverage as benefits. For example, medical insurance for outpatient and inpatient, vision or optical coverage, dental coverage, personal accident insurance coverage etc.
Bonus
The way this is expressed varies from company to company. For example, a percentage of annual salary, a number of months of monthly salary etc. Bonuses are normally paid approximately twice to once a year to increase incentives amongst employees and encourage them to achieve their targets.
Allowances
In some cases, employers provide allowances to employees on top of their regular salary. These allowances can include parking allowance, travel allowance etc.
Remote Working
Recently, providing flexibility to work remotely or from home has been increasingly popular as employers now trust employees to be able to work outside the office, as long as they get their work done efficiently in the specific given time.
Professional Training and Certification
Some companies offer professional training or certification for its employees. The professional training or certification mainly focuses on strengthening the employee’s skills so they can be more productive.
In conclusion, other than the compulsory benefits set out in the Employment Act 1955, employers are free to provide any additional benefits that they think are most suitable in increasing employee productivity. Employers should always consider providing additional benefits to retain good employees and to attract new employees in joining the company.
*****
About the author:
This article was written by Edwin Lee Yong Cieh, Partner and Lee Jing, Intern – a law firm in Kuala Lumpur, Malaysia.
The view expressed in this article is intended to provide a general guide to the subject matter and does not constitute professional legal advice. You are advised to seek proper legal advice for your specific situation.
Edwin is a corporate and technology lawyer. He is also the founder and deputy managing partner of Lee & Poh Partnership (LPP Law). Edwin has advised a range of companies from technology startups to multinational corporations on a range of matters. In 2020, Edwin was named as a Malaysian Rising Star by Asian Legal Business, a finalist for the Young Lawyer of the Year at the ALB Malaysia Law Awards as well as a lawyer in the annual ALB publication of Asia 40 under 40.
View his full profile here.
