Episode 6: COVID-19: Employee's Rights

Ever since MCO 2.0 was implemented, many are required to work from home once again. Are the employee's rights affected in the midst of the current pandemic? We are excited to share our ideas and hopefully, inspire you through our law review. Here we go!

INTRODUCTION

Earlier this year, our Prime Minister Tan Sri Muhyiddin Yassin had announced a Movement Control Order (MCO) 2.0 to be imposed in Malaysia. The MCO, a cordon sanitaire (restriction of movement of people), was first implemented by the federal government of Malaysia on March 18, 2020, in response to the COVID-19 pandemic. Undeniably, this has caused perturbation among the public especially employees, as it would affect the execution of their jobs.Some are fortunate enough as they are able to work from home but some are not, as they will be dismissed due to the inability to perform their jobs from home. Furthermore, since its implementation, businesses have been struggling to avoid losses and drastic changes in operation structures. Employers are constantly bombarded with the alternative of cutting costs especially in the employment sector (Chew & Paramasivan, 2020, para. 3). As a result, this has caused employees to fear losing their jobs.

Besides, the spread of the novel coronavirus, which has been declared as a global health emergency by the World Health Organization last year, has indubitably been a source of great concern to most employees across the globe. Apart from the fear of losing their jobs, employees are also concerned about their rights and welfare pertaining to their jobs – which include health and safety, salary, the possibility of retrenchment, etc. Hence, this article seeks to shed light on the employees’ rights during the MCO 2.0.

1.0 HEALTH AND SAFETY IN WORKPLACE

1.1 What Are the Duties of Employers?

Employers have the obligation to provide sufficient facilities and measures in ensuring the safety, health and welfare of its employees in the workplace. In Malaysia, this obligation is provided under Section 15 of the Occupational Safety and Health Act 1994 (‘the Act’).The statute provides that employers have the duty to ensure the workplace is safe from any health risks. Moreover, they must direct adequate facilities for the welfare of their employees. During the COVID-19 pandemic, it is clear that the Act is an important piece of legislation for it governs issues on safety and health at the workplace in Malaysia (Rozanah Abdul Rahman, 2020).

According to Section 10 of the Prevention and Control of Infectious Diseases Act 1988, the employers in charge of the workplace are also liable to inform thenearest district health office or government health facility in any case of infectious disease happening there. Knowing that COVID-19 has tested every employer’s capacity to respond, their huge responsibility towards the workers is not only to prevent the virus exposure, but also to address their physical and mental health from time to time (Lee, 2020). In case of any violation of such provision in the Occupational Safety and Health Act 1994, Section 19 of the Act would come into operation, in which ifthe employers were found guilty, they would be fined not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding two years or both.

1.2 What Are the Rights That Employees Entitled To?

The same Act remains silent on providing the methods on how the employees can file a complaint for any misbehaviour done by their employers in providing sufficient facilities for their health and safety at the workplace. The nearest provision in this Act would only be in Section 32. This section explains that the employers shall notify the authority such as the occupational safety and health office in case of any accident, dangerous occurrence, occupational poisoning or occupational disease that has occurred or is likely to occur at the place of work. It cannot be considered as a tool for the employees to make a report following any misbehaviour done by their employers that infringe their health and safety rights at the workplace.

However, Section 70 of the Employment Act 1955 has provided the general explanations on how employees may bring upon their complaints pertaining to the any issue such as the failure of their employers to ensure that their workplace is safe from any risks of COVID-19, or even the issue where non-essential workers are being forced to attend the workplaces. For these issues, the complaints must be presented to the Director General of Labour whether in oral or written statement. Then, the Director General may inquire for the complaints to be heard and make such consequential orders as may be necessary to give effect to his decision.

1.3 How about the Mental Health among Affected Workers?

Since 60 percent of the total COVID-19 cases in Malaysia comes from the workplace clusters, most non-essential corporations have ordered their employees to work from home especially when MCO 2.0 started. Therefore, working from home can be more stressful than working on-site as the workers need to face many problems such as the lack of boundaries, too much distractions, and lack of focus. Besides from emphasizing the physical health of workers, the employers must not forget to give attention to the issue of depression, stress and anxiety among their employees which happened to be a huge drawback to deal with, especially in these forcing times.

Important attention must be given to the workers who are affected financially in the COVID-19 pandemic. This is because the financial consequence may eventually lead to the destruction of mental health and the working motivation among employees themselves. According to Aziff Azuddin (2020), those on unpaid leave appeared to have the highest level of depression, based on a study done, while those who were retrenched reported the highest numbers of them facing anxiety and stress, more than any other respondent types including those who are still securing a job. This shaft of employment during MCO has urged all accountable parties to take stern action in making sure the current Malaysian mental health support stays visible and regularly improved for the sake of all workers. This is vital as the mental health rights of workers need to be preserved too.

2.0 RIGHT TO SALARY

2.1 The General Principle

Under common law, an employee is deemed to be entitled to his salary whenever he is ready to perform his duty according to the employment contract he has entered into. This principle had been affirmed by the High Court in Viking Askim Sdn Bhd v National Union of Employees in Companies Manufacturing Rubber Products. Applying the principle to the current situation where companies have to shut down, most employees are more likely not ready to perform their services. This means the MCO 2.0 falls under the force majeure situation – unforeseeable circumstances that are beyond the control of employers and employees which prevent them from fulfilling a contract (Kanagaraj, 2020), especially for those working in the service sector such as in restaurants or malls, as they cannot perform their work from home. It renders the contractual rights and obligations of the parties to be suspended.

If there is no force majeure clause, the question that arises is whether it is possible to rely on the common law doctrine of frustration of contract. For instance, in V Kandiah v The Government Of The Federation Of Malaya, the court accepted that the employee’s contract of service with the Government of the Federated Malay States was terminated by reason of frustration due to the occupation of Malaya by the Japanese Forces for 3 and a half years. Hence, the employees would not be entitled to their salary. However, if a work can be done from home, especially for employees working in the government sector such as teachers, they will still be entitled to their full salaries.

2.2 What If There Is a Wrongful Dismissal?

According to Section 7 of the Temporary Measures for Reducing The Impact of Coronavirus Disease 2019 (COVID-19) Act 2020, any inabilities to perform contractual obligation due to the measures prescribed, made or taken under the Prevention and Control of Infection Diseases Act 1988 in order to prevent the spread of COVID-19, shall not give rise to the parties exercising their rights under the contract. Therefore, employees do not have to worry as their employers cannot wrongfully dismiss them simply because they are unable to perform their jobs due to the measures taken under the said statute, in order to prevent the dissemination of COVID-19. Besides, this denotes that they are still entitled to their salary regardless of their inability to perform their jobs.

2.3 How about Constructive Dismissal?

Under Malaysian employment laws, any wrongful salary deduction by an employer amounts to repudiation of the terms of the contract of employment, which entitles the employee to regard himself as being constructively dismissed. The High Court in the case of Dr. Rayanold Pereira v Menteri Sumber Manusia & Anor held “where the employee was not paid according to the contract, the industrial tribunal held that this entitled the employee to resign and to have her resignation treated as a constructive dismissal because the employer had repudiated a term of the contract.”

Generally, constructive dismissal refers to the conduct of an employer who commits a fundamental breach and repudiates the contract of employment. In such instances, the employee may give notice to resign due to the constructive dismissal. An employee who deems himself as being constructively dismissed has the right to file a written representation to the Industrial Relations Department pursuant to Section 20 of the Industrial Relations Act 1967 (‘the IRA 1967’) for reinstatement within 60 days from the dismissal’s date. Upon the employee's claim being referred to the Industrial Court, the Court will adjudicate whether the dismissal was done with reasonable cause. If the dismissal is held to be unreasonable, the Court will award back wages and reinstatement (or compensation in lieu of reinstatement) (HG Legal Resources Organization, 2020, para. 9).

2.3 Bona Fide Deduction of Salary

In general, the law does not permit employers to impose a salary deduction without obtaining the employee’s consent. Also, any salary deductions must be made with bona fide intention. To illustrate, the Industrial Court in NC Corporation Bhd & Anor v Kesvaran TP Murugasu held that an employee’s salary deduction which was done unilaterally and without valid justification, constitutes a variation of an essential term of the employment contract. In such circumstances, a deduction of an employee’s pay may be used as a ground to plead constructive dismissal.

Nevertheless, there is an exception to this general principle.The case of Lim Ban Leong v Gold Bridge Engineering & Construction Bhd held if a company is facing losses and trying to fight off closure of its business, its employer may communicate to the employees to take a salary cut which can be reinstated and increased later when the business picks up. To simplify, any salary-cut must be brought to the employees’ attention, its valid justifications must be conveyed to the employees, and it ought to be imposed only with the employees’ consent (Chew & Paramasivan, 2020). Therefore, employees should be aware of their rights on this matter.

3.0 RETRENCHMENT

3.1 Is There Any Redress for the Retrenched Employees?

Payment of termination benefits is expressly provided under Regulation 6 of the Employment (Termination and Lay-off Benefits) Regulation 1990, but it is subject to two requirements. Firstly, it is only available for employees under the Employment Act 1955 (earning less than RM2000 a month or all manual workers irrespective of their earnings). Secondly, the employee must be employed under a contract for at least 12 months prior to the retrenchment (Donovan & Ho, 2016). The sum of entitled payment under Regulation 6 is summarized below:

0. Duration of service (Sum of termination benefits)

1. Less than 2 years (Ten-day wages for every year of employment)

2. 2 – 5 years (Fifteen-day wages for every year of employment)

3. Above 5 years (Twenty days wages for every year of employment)

For employees outside the purview of the Employment Act 1955, reference should be made to the employment contract for any redress (Donovan & Ho, 2016).

3.2 Can an Employee Challenge the Retrenchment?

Under Section 20 of the IRA 1967, an employee has a right to file a claim at the Industrial Court should he feel that his claim is unfair or unjustified. However, if the retrenchment is rightly exercised, the chance of success is minimal. Therefore, it is important for employees to understand the considerations by the court in retrenchment cases to safeguard their right.

I)Redundancy as a precondition

The term ‘redundant’ is very subjective. Generally, redundancy refers to a surplus of labor arising from reorganization exercise. In Woo Vain Chan v Malayawata Steel Bhd, the Court of Appeal listed several considerations in determining whether a redundancy exists, that is: (1) whether the work continues to exist; or (2) whether the work, although continuing to exist, requires fewer employees to carry it out. The bulk of the matter lies in whether the job functions and duties are affected instead of a mere change in job position or title. In other words, there cannot be redundancy if similar work is carried out under a different name.

However, it is important to note that employers must first exhaust appropriate cost-cutting measures before resorting to retrenchment. Only if those measures fail and retrenchment has become inevitable, the employer is entitled to discharge the excessive employees (Hamidah & Jusoff, 2008).

II)Guidelines for retrenchment

Besides having to prove redundancy, a retrenchment must be fair and in conformity with accepted standards to be immune from courts’ intervention. The guidelines laid down in the Code of Conduct for Industrial Harmony (‘CCIH’) provides for the best practice for retrenchment exercises. Even though the CCIH itself is not legally binding, it is often recognized by the court through Section 30(5A) of the Industrial Relations Act 1967. This is clearly illustrative in Pengkalen Holdings Bhd v James Lim Hee Meng where the court ruled that the dismissal is unjust because there is a breach of CCIH for failing to give adequate notice and compensation to the claimant for his loss of employment. In short, a failure to comply with the CCIH per se cannot be fatal but it may be a good ground to prove that the retrenchment is unfair (Chia, 2020).

Another well-known industrial practice is the ‘Last In, First Out’ or LIFO principle whereby the junior employees in the same category will be first selected for retrenchment before the senior employees. Although failure to adopt the LIFO principle may also reflect unfair retrenchment, the employer still may depart from the LIFO principle provided that there are other valid and objective selection criteria (Chong & Muhendaran, 2020).

4.0 For workers suspected / diagnosed with Covid-19

4.1 Employers Provide Paid Sick Leave

Based on a press statement published by the Ministry of Human Resource (2020), the ministry has urged both employers and employees to utilize the provisions stated in the Employment Act 1955 following the huge outbreak of COVID-19 in the country. Among others, as stated in Section 60F of the said Act, all employers need to provide paid sick leave to their employees if they are diagnosed with COVID-19. Furthermore, the employee must be paid according to his ordinary pay rate without abatement in respect of the days or month during the sick leave. Other than that, Section 60E(1B) also promulgates for the annual leave owned by the virus-affected workers should not be deemed as has been taken in accordance to the sick leave which the employee has granted.

4.2 Related Guidelines For Employers

In addition to providing staff whose welfare is specifically affected by the pandemic, employers should also remember certain recommendations, as explained by the Ministry of Health (2020) in its guidelines, which include relieving workers from the office while they are sick and providing all employees with health education materials with respect to COVID-19. The COVID-affected employees too are entitled to be given paid sick leave, and the number of days taken for the sick leave must not be deemed as their annual leave whatsoever. It is illegal by law to regard that their annual leave must be cut together along with their deserved paid sick leave. If such action is not done properly, where the employers fail to grant the necessary paid sick leave for the COVID-affected employees, or determined to set their sick leave as an annual leave, the affected employees must voice out their concerns, and at least, decide to bring this matter to the authorities.

This is because they have the rights by law to be provided with such facilities, especially when the virus was caught by them at the workplace. In the situations where there is a suspect case at the workplace, the employers should find their employees who have recently come into direct physical contact among themselves as this is the easiest way for the virus to be transmitted (Nurhuda Syed, 2020). In addition, they need to ensure that the affected workers continuously monitor and take the required measures for the sake of their health while having their sick leave at home, including keeping proper hygiene and making regular temperature control. To this end, managers who personally oversee them should be told earlier of the value of such initiatives, so that appropriate steps can be taken in the workplace as required by the upper management bodies themselves. It is for the greater good of the organization, too, as employees realize that their welfare and health interests are not compromised by their employers.

CONCLUSION

The rippling effect of the Covid-19 pandemic has placed many employees in a position of vulnerability by exacerbating the gloomy business climate that is still in the process of recovery. In the cruel race of survival and sustenance, it is more than often that the employee’s welfare will be sacrificed. Hence, educating oneself on the importance of the right of employees has become more important than ever as a safeguard against unfair treatment or dismissal. On the other hand, employers are also advised to adhere strictly to the legal requirements in the course of downsizing or terminating the business to prevent legal complications. To conclude, we sincerely hope and call for more compassion from the society before the end of this challenging time.

REFERENCES

Legislations

Employment Act 1955

Employment (Termination and Lay-off Benefits) Regulation 1990

Industrial Relations Act 1967

Occupational Safety and Health Act 1994

Prevention and Control of Infectious Diseases Act 1988

Temporary Measures for Reducing The Impact of Coronavirus Disease 2019 (COVID-19) Act 2020

Subsidiary Legislation

(Ministry of Health) Annex 25 Guidelines COVID-19 Management No.5/2020

Cases

Dr. Rayanold Pereira v Menteri Sumber Manusia & Anor [1997] 3 CLJ SUPP 116

Lim Ban Leong v Gold Bridge Engineering & Construction Bhd [2017] 2 LNS 0370

NC Corporation Bhd & Anor v Kesvaran TP Murugasu [2004] ILJU 23

Pengkalen Holdings Bhd v James Lim Hee Meng [2000] 2 ILR 252

Viking Askim Sdn Bhd v National Union of Employees in Companies Manufacturing Rubber Products [1991] 2 MLJ 115

V Kandiah v The Government Of The Federation Of Malaya [1952] 1 MLJ 97

Woo Vain Chan v Malayawata Steel Bhd (currently known as Ann Joo Steel. Bhd) [2016] 2 MLJ 848

Journal Articles

Hamidah Marsono, & Kamaruzaman Jusoff. (2008). Retrenchment in Malaysia: Employer’s Right?. Journal of Politics and Law, 1(4) , 22-28. http://amco.org.my/n-archives/Retrenchment_-_Employer's_Rights.pdf?fbclid=IwAR1HlNhPcfOsh4SejXeKjE3WfJsGCM8YK7tvfelKjnY7BzVyVHyEMq_06Y4

Online Newspapers Articles

Adam Aziz. (2020, March 21). Employers must continue to pay full salary, allowance to all workers during partial lockdown — HR Ministry. The Edge Markets. Retrieved from https://www.theedgemarkets.com/article/mohr-employers-must-continue-pay-full-salary-allowance-all-employees-during-partial-lockdown

Anis Hazim Sharudin. (2020, October 22). A quarter of Malaysian workers fear job loss - survey. The Edge Markets. Retrieved from https://www.theedgemarkets.com/article/quarter-malaysian-workers-fear-job-loss-%E2%80%94-survey

Carvalho, M., Rahimy Rahim, Sivanandam, H., & Tan, T. (2020, December 9). Nearly 100,000 Malaysian have lost jobs since the start of MCO, says HR ministry. The Star. Retrieved from https://www.thestar.com.my/news/nation/2020/12/09/nearly-100000-malaysians-have-lost-jobs-since-start-of-mco-says-hr-ministry

Kanagaraj, D. (2020, March 25). Employees, employers and wagers during MCO. Free Malaysia Today. Retrieved from https://www.freemalaysiatoday.com/category/opinion/2020/03/25/employees-employers-and-wages-during-the-mco/

Lee, L. T. (2020, April 27). Safety, health the primary issues. New Straits Times. Retrieved fromhttps://www.nst.com.my/opinion/letters/2020/04/587689/safety-health-primary-issues

Rozanah Abdul Rahman. (2020, May 1). Safety and health at work can save lives during pandemic. BERNAMA. Retrieved fromhttps://www.bernama.com/en/thoughts/news.php?id=1837377

Vanugopal, S. (2020, April 12). Wages and leave during MCO. The Daily Express. Retrieved from https://www.dailyexpress.com.my/read/3652/wages-and-leave-during-mco/

Online Websites

Aziff Azuddin. (2020, May 15) How the MCO Affected Income, Jobs, and Mental Well Being – Part 2: Income and jobs during the MCO. The Centre. Retrieved fromhttps://www.centre.my/post/mco-employment-income-jobs-mental-health

Chai, G., & L., Raymond T., C. (2020, March). Coronavirus update: Employers’ obligations in Malaysia. Shearn Delamore & Co. Retrieved from https://www.theworldlawgroup.com/writable/documents/news/WLG-News-13.3.2020.pdf

Chia, S. W. (2020, March 31). Retrenchment in Malaysia (case update). Chia, Lee & Associates - Malaysian Law Firm. Retrieved from https://chialee.com.my/knowledge-hub/employment-law-retrenchment-in-malaysia-case-update

Chew, K., & Paramasivan, T. (2020, May 15). Legal impact of Covid-19 on employment in Malaysia – Addressing key employment legal issues. Tan Swee Im, Siva & Partners. Retrieved from http://www.tsi.net.my/news/21/Legal-Impact-of-Covid-19-on-employment-in-Malaysia-%E2%80%93-Addressing-Key-Employment-Legal-Issues/

Donovan & Ho, Advocates & Solicitors. (2016, November 19). 7 things you should know about retrenchment in Malaysia. Conventus Law. Retrieved from https://www.conventuslaw.com/report/7-things-you-should-know-about-retrenchment-in/

Malaysian movement control order. (2020, January 15). Wikipedia, The Free Encyclopedia. Retrieved from https://en.wikipedia.org/wiki/Malaysian_movement_control_order

Muhendaran Suppiah, & Chong, W. L. (2020). Retrenchment & redundancy. Sabah Law Society. Retrieved from https://www.sabahlawsociety.org/userfiles/media/mw.sabahlawsociety.org/retrenchment-redundancy.pdf

Nurhuda Syed. (2020, February 21). Coronavirus: What to do if someone at work is a suspect case. Human Resources Director Asia. Retrieved from https://www.hcamag.com/asia/news/general/coronavirus-what-to-do-if-someone-at-work-is-a-suspect-case/214550

Press Statement

Ministry of Human Resource. (2020, March 16). Garis panduan bagi mengendalikan isu-isu berhubung penularan wabak COVID-19 di tempat kerja [Press release]. Retrieved fromhttps://mohr.gov.my/index.php/ms/2013-03-19-10-53-47/kenyataan-media-2019/1341-kenyataan-media-16-03-2020-garis-panduan-bagi-mengendalikan-isu-isu-berhubung-penularan-wabak-covid-19-di-tempat-kerja

Reports from Organizations

Conventus Law. (2020). Malaysia - Employers’ obligations during Movement Control Order (MCO). Retrieved from https://www.conventuslaw.com/report/malaysia-employers-obligations-during-movement/#:~:text=Throughout%20the%20MCO%20period%2C%20employers,and%20related%20allowances%20to%20employees.&text=Aside%20from%20honouring%20salary%20payments,leave%20during%20the%20MCO%20period

HG Legal Resources Organization. (2020). Employees forced to take unpaid leave and pay-cut during COVID-19 Movement Control Order (MCO) in Malaysia. Retrieved from https://www.hg.org/legal-articles/employees-forced-to-take-unpaid-leave-and-pay-cut-during-covid-19-movement-control-order-mco-in-malaysia-55952

Malaysian Bar. (2020). Rights and obligations under the employment contract during MCO and COVID-19 pandemic. Retrieved from https://www.malaysianbar.org.my/cms/upload_files/document/Rights%20and%20Obligations%20under%20the%20Employment%20Contract%20During%20MCO%20and%20COVID-19%20Pandemic.pdf