Overtime

Employers to be aware that Employment Act Will Now Cover All Employees With Effect from 1 January 2023 and the biggest financial impact is Overtime

Employers to be aware that Employment Act Will Now Cover All Employees With Effect from 1 January 2023 and the biggest financial impact is Overtime

The amendments to the First Schedule of the Employment Act 1955 (“EA”) were gazetted on 15 August 2022 and with effect from 1 January 2023, the EA will apply to all employees. It is stated that employees where their wages is more than RM4,000 a month will not be entitled to overtime and/or termination benefits as compared to RM2,000 previously as detailed below:

  1. Work and overtime payments on rest days
  2. Overtime payments for work in excess of normal hours of work
  3. Shift work allowance
  4. Work, allowance and overtime payments on public holidays
  5. Termination, lay-off and retirement benefits

What should employers do to comply?

  1. Employers must now have in place a a proper overtime procedure/policy in place to cover these employees that are earning from RM2,000 to RM4,000. Review its impact on your salary costs.
  2. As EA will now be applicable to all your employees, review all your employment contracts, policies and procedures to ensure compliance and this includes but not limited to reduced working hours per week, minimum number of elective and/or compulsory public holidays, annual leave, sick leave, maternity, paternity, hospitalisation leave, notice periods and flexible working arrangements.

    Also it is important to cover matters such as advance salary, allowance, timing of wage payments, and deductions from salary.

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