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Labuan: Labour Regulation

Regulatory Environment

Wages in Malaysia are well below levels prevailing in industrialized countries, but substantially higher than any of its neighbors except Singapore. Until recently there was no national minimum wage, and minimum wage legislation covered only certain classes of employees: retail clerks, hotel and restaurant employees, cinema workers, and stevedores not employed directly by a port authority. However, a minimum wage of MYR900 per month (MYR800 per month in the states of Labuan, Sabah and Sarawak) was introduced in 2012.

There is no welfare program or unemployment compensation in Malaysia, although employers are required by law to pay employees termination benefits. A new system of unemployment insurance was due to be enacted in September 2012, but the legislation was shelved by the Government.

Under the Employment Act, working hours may not exceed 8 hours per day or 48 hours per work week of 6 days. Each work week must include a 24-hour rest period.

An Occupational Safety and Health Act (OSHA) covers all sectors of the economy except the maritime sector and the military, at the time of writing. The act established a national Occupational Safety and Health Council, composed of workers, employers, and government representatives, to set policy and coordinate occupational safety and health measures.

It requires employers to identify risks and take precautions, including providing safety training to workers, and compels companies that have more than 40 workers to establish joint management-employee safety committees. The act requires workers to use safety equipment and to cooperate with employers to create a safe, healthy workplace.

The Social Security Organization (SOCSO) provides cash benefits to insured employees who sustain temporary disability, or to the heirs of victims of fatal industrial accidents. Financial support for SOCSO is shared by employees and employers.

The Employee Provident Fund (EPF) provides old-age benefits for most workers. EPF contributions are (at the time of writing) around 11 percent of wages from the employee and 12 percent from the employer, although many large employers contribute more under their collective agreement or compensation plan. EPF is fully funded with contributions and accrued interest being credited to the individual's account. The amount accumulated becomes available in a lump sum or in installments at retirement, if the contributor becomes disabled, or if he or she permanently leaves Malaysia and Singapore.

Unions are organized among workers in a particular trade, occupation, or industry, or similar trades, occupations, or industries. Unions are not allowed to organize workers in industries outside their primary one. As a result, Malaysian private sector unions are generally organized on industry or company lines. It is not uncommon for more than one union to be represented in a single employer, but the different unions represent quite different classes of employees.

A contentious issue has been that of in-house unions. Most in-house unions are in the public sector, although the privatization of the telecommunications department and other government services has moved a number of in-house unions into the private sector. The Malaysian Government sees in-house unions as creating a better industrial relations climate between employers and workers, in part because one union would represent all workers in a firm. The leaders of the national unions see them as weakening their own unions and reducing the protection union membership affords a worker.



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