16 Apr Dealing with employment issues during and post the Movement Control Order (MCO) period
Dealing with employment issues during and post the Movement Control Order (MCO) period
By Mr. Kee Tong Kiak
- Can the employees be forced to take annual leave during the Movement Control Order (MCO) period?
A: If the contract of employment provides for power to the employer to require the employees to take annual or unpaid leave during temporary shutdown, then the employer may do so. Otherwise it may be done only with written consent (agreement) of the employees. The law is that in the absence of contractual provision, the employer may not force the employees to utilise their annual leave or take unpaid leave.
The need for agreement is also stated in the FAQs No. 3 issued by MoHR on 31.3.2020 where it stated that subject to the agreement of both parties, the employer may offer to employees either:
- Paid leave;
- Half pay leave;
- Unpaid leave.
Note: The terms of the contract of employment may be found in the letter of offer, employee handbook, rules and regulations, staff memo and etc.
- Must the employer pay full salary during MCO period?
A: In the Frequently Asked Questions (FAQs) issued by the Ministry of Human Resources (MoHR) and published by the National Security Council on 19.3.2020, the Ministry has given directives that the employer may not force the employees to take annual leave and the employer must pay the employees salary in full during the period of MCO. It was also stated that that it is an offence for the employer to breach the directives under the Regulation 7 of the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulation 2020 and if found guilty, the employer may be fined not exceeding RM1,000.00 or imprisoned for a term not exceeding 6 months or both.
The Ministry has not stated what law it is relying on to hold the position.
As far as we are concerned, there is no provision in the Prevention and Control of Infectious Diseases Act 1988 or the Employment Act 1955 providing that the employer is required to pay the full wages during temporary shutdown.
We would advise the employer to first take a look at the contract of employment to ascertain whether the employer is given the power to reduce the employees’ wages during temporary shutdown. If there is none, we have to look at the common law.
There are conflicting authorities on this issue. On the one hand, there are authorities where it was held that it is unfair to require the employer to pay full wages to the employees during temporary shutdown and that it is fair for the employer to cut 50% of the employees’ wages during such shutdown. There was a case which allowed reduction of 66%. On the other hand, there are authorities where it was held that if there is no provision in the contract giving such power to the employer, the employer has no power to reduce the employees’ wages.
Our view is that:
- Section 2 of the Employment Act defines wages as basic wages and other payments in cash payable to an employee for work done. Naturally, if there is no work done, there should be no pay. This is also reinforced by section 23 which provides for situations where wages is not due for absence from work;
- We believe that there is a lacuna in the law;
- Therefore it is unfair to require the employer to pay full wages to the employees during temporary shutdown and a 50% reduction may be acceptable and fair.
Our advice is to engage the employees and get them to understand the critical situation everybody is currently facing and the need for the employer to reduce their wages. The best possible way is to get their agreement in writing.
We do have to caution you that if you can’t get their agreement in writing but still proceed to reduce their wages, you may have to see them in court if there are any complaints and there may also be criminal charges.
- Do WhatsApp and Telegram messages constitute as written consent?
The Evidence Act allows electronically transmitted messages as evidence in court. In the case of WhatsApp and Telegram messages, the employer may adduce the evidence in court subject to proof that the messages are from or sent to that particular employee.
- If the employer allows the employees to work from home, does the employer have to pay full wages as it is almost impossible to quantify whether they are working full time as how they would normally do at the office?
If their nature of work permits them to work from home, then they would be considered working and would be entitled to receive full wages.
- If the employer pay full wages during MCO though the employees are not working, can the employer require the employees to work on Saturdays after MCO?
The employer may not ask employees to work on extra days in May and June just because they have been paid in full in March and April though they did not have to work. Depending on the contract, they may claim OT.
- Due to Covid-19 epidemic, a new employee who was supposed to start working on the 1st of April will now start on 16th of April. Does the employer have to pay his salary from the 1st of April to 14th of April?
If the contract of employment provides that he was to start on 1st April, then his period of employment commenced on 1st April and he should be paid from 1st April unless he agrees with the employer to defer the commencement date to 16th of April. However he may be subjected to the same pay-cut as other employees if there is one implemented by the employer.
- Can the employer apply different percentage in reduction of wages where the employees who do not have the same workload?
Yes, as long as the employer is able to justify based on the fact that they do not have the same workload as other employees.
- Can the employer retrench those employees who refuse to agree to reduction of wages?
If the employees do not agree with the ‘pay-cut’ imposed by the employer, they will make a complaint either to the Human Resources Department, make representation to the Industrial Relations Department or file an action in the civil court. If they do not take any action and continue to work on the reduced wages, they may be deemed to have consented to it. The court will look at the facts and circumstances of each case.
- How does the employer implement pay-cut?
The employer must give notice to the employees stating the reason and the percentage of reduction and get them to agree and sign on the duplicate of the notice. If the employees do not agree, be prepared to see them in court if they lodge a complaint against the employer.
- Can the employer ask the employees to work 4 days out of 5 and only be paid for 4 days a week after MCO?
This would be a different scenario altogether. Generally, the employer may not change the terms of employment without the consent of the employees. However if the employer has no other alternatives but to retrench some employees, the FAQs No. 3 issued by MoHR on 31.3.2020 stated that before the employer undertakes retrenchment of employees, the employer should consider:
- Reduce working hours;
- Freeze on recruitment;
- Limit OT;
- Reduce work on weekdays & public holidays;
- Reduce pay;
- Lay off;
- Last in first out principle.
- How do I ascertain whether my company is qualified for the Wages Subsidy Programme?
Wages Subsidy Programme (WSP) is the Prihatin SME Economic Stimulus Package by the government subject to its terms and conditions. Please refer to the FAQs No. 4 issued by MoHR on 6.4.2020, FAQs No. 2 issued by Perkeso on 7.4.2020 and Guidelines for implementation of WSP dated 9.4.2020 for the details. In the event of doubt, please refer to Perkeso, the agency tasked with implementing the WSP.
Disclaimer: This FAQ is not to be regarded as legal advice. All statements in these FAQs are summaries only and are qualified in their entirety. It should not form the basis of your management decision. For any specific legal issues on the specific facts of your case, kindly consult your legal adviser or contact us for further discussion.