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Showing posts with label Minimum wage. Show all posts
Showing posts with label Minimum wage. Show all posts

Wednesday 28 November 2012

Minimum wage saga continues..

WE refer to the letters written by Samsuddin Bardan of the Malaysian Employers Federation (The Star, Sept 30), the Secretariat, National Wages Consultative Council (The Star, Oct 2) and Peter Raiappan (The Star, Oct 27) on the issue of minimum wage.

Come January, most of us will be concerned as to whether the minimum wages as previously announced by the Government will be enforced on our service industry e.g. security guards, waiters in hotels and restaurants or other workers in similar industries that require them to work 24 hours, including Sundays and public holidays.

In the case of security guards, it must be noted that most of these guards work 30 days a month as opposed to most regular employees who work 26 days.

The guards in particular will have to work the extra four days to claim the four days overtime payment (in addition to the daily four-hour overtime) to obtain that extra cash for a take-home salary of more than RM1,000 a month.

The security service employers are indeed in a dilemma.

Besides the overtime payment, the security companies will have to fork out additional expenditure such as the “post allowance” to the guards particularly for those assignments which are located in isolated places, transport allowance to guards for the use of their own transport, and not to mention the “attendance allowance” as an incentive to compel the guards to avoid unnecessary absenteeism. There are also cases where a “laundry allowance” is given to ensure that the guards are in their most presentable uniforms while on duty.

All this amounts to additional unavoidable costs to the security companies.

We, the security operators, are most concerned about the take-home salary of the guards and not just the basic salary of RM900 a month (less EPF and Socso deductions).

This is precisely why we encourage the security guards to work 12 hours (with four hours overtime payment daily) for them to earn the extra cash. Even the Nepalese guards that we employ work the 12 hour shift for the same reason.

We believe that even if we compel the guards to work for only eight hours a day, I am sure they will find some other part-time job to earn the extra cash during their time off.

This may not be healthy as they will most likely be too tired to effectively perform their duties as security guards in their regular assignments.

This may even result in them skipping work, which is worse.

Security guards are posted everywhere in the country. They are not stationed in one place like the factory workers.

Some people may not be too concerned about security but the role of these guards should not be taken for granted.

They are important in our society to prevent crime amidst the worrying level of crime in the country lately.

We are indeed in a dilemma whether we can continue to sustain our security service industry in the face of the above-mentioned escalating operating costs if the Government insists on proceeding with the minimum wage of RM900 requirement.

We therefore, urge the Government to exclude the security service industry and other similar industries from the implementation of this RM900 minimum wages scheme due to the extra costs to be incurred from the additional four hours of daily overtime work.

They also work during public holidays and Sundays.

These will incur extra double overtime which in return their take home pay is more than RM900.

We hope the Government to consider our appeal seriously to postpone the implementation of the new salary scheme which is due on Jan 1.

It is for the good of the security service industry and for the economy in general.

By DATUK RAHMAT ISMAIL Hon Life President (International) Asian Professional Security Association - The Star Nov  28, 2012

Related posts:
Malaysia's Minimum wage's benefits and effects
Are Malaysian Employment Laws Challenging?
What's minimum wage in Malaysia?

Friday 28 September 2012

Malaysia's minimum wage saga continues

AFTER all the debate between proponents and opposers and the accompanying fanfare which dragged on for years, the Human Resources Minister finally issued an order in July 2012, declaring that Minimum Wages need to be paid from January 2013.

While the intention was to ensure that all employees will be paid a certain minimum salary, RM900 in peninsular Malaysia, the way in which the order was worded has created problems and headaches for employers, not so much for those who are not paying the minimum wage of RM900 currently, but for employers whose current remuneration package for employees is far above that of RM900.

The blame for this rests squarely on the formulators of the law and the order.

This is further compounded by the recent issuance of so called “Guidelines – method of implementation of the Minimum Wages Order 2012”.

The National Wages Consultative Council Act, (the Act) under which the Minimum Wage Order has been promulgated, states that “wages” has the same meaning as that found in the Employment Act 1955.

“Wages” as defined in the Employment Act 1955 means basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include the listed exclusions.

However, the Act has also provided a definition for “minimum wages”, to mean, the basic wages to be or as determined under the order made by the Minister under Section 23.

Section 24(2) of the Act goes further to state that where the basic wages in an employment contract is lower than the minimum wage rate as specified in the Minimum Wages Order the minimum wage rate (RM900) shall be substituted for the ‘basic wage’ in the employment contract.

There are many employers, who for a variety of reasons, provide a low basic wage but top up the remuneration package with a variety of other payments such as commissions, allowances, service charge, shift allowance and other payment in cash.

In many instances, the calculation of the additional payments are based on the current “basic wage”.

At the end of each month, these employees earn much more than the minimum RM900.

Often employers fix a low basic wage but pay high rates for other payments, the calculation of which, as mentioned earlier, is sometimes linked to the basic wage. They do so to encourage productivity.

They are not short paying their employees but that is how the wage payments are structured in the country with each industry having its own peculiar structure.

Many instances can be cited where employees paid as much as RM1,500 or even more per month.

The Minimum Wages Order requires that the “basic wage” be now moved up to RM900.

The introduction of minimum wages was never intended to affect these good employers but to compel the ones who pay below RM900 to raise the wages of their employees to a minimum level of RM900 per month.

The Minimum Wages Order in Para 6, however, goes on to suggest that employers and employees and where trade unions exist, could go about and re-negotiate a restructuring of wages before the coming into force of the order.

How on earth are employers, who do not have a union, going to go about this renegotiating with their employees? What if they disagree?

Would any employee or trade union in the right frame of mind agree to raise his current basic (which is lower than RM900) to the new figure of RM900 (thereby helping the employer to conform with the requirement of the Minimum Wages Order) and permit all the other benefits that he is receiving (which is related to the basic) to be lowered so that the end result is that he is placed at a position, (in terms of total remuneration received at the end of the month ) no different than the original amount that he is currently receiving?

The Minimum Wages Order has indeed created confusion in the labour market and that is putting it very mildly. Fortunately, the order comes into force only in January 2013, giving time for corrective measures.

In an attempt to provide some clarity and explanation to this confused state of affairs, the National Wages Consultative Council exercising the powers provided under Section 4(2) of the Act has decided that apart from the matters contained in the Minimum Wages Order 1212 it shall issue some guideline relating to the method of implementation of the order.

Nowhere in Section 4(1) (which refers to the functions of the council) are powers given to it to elaborate, explain, modify or issue guidelines relating to the method of implementing the Minimum Wages Order issued by the Minister under Section 23(1).

If at all the council wants to make any recommendations it could exercise the provision under Section 22(1)(e).

In such an instance it has to make its recommendations to the Government through the Minister.

The Minister, if he agrees with the recommendation, can then issue an order as provided for under Section 22(1). .

Clearly, the drafting of the Minimum Wages Order could have been done much more professionally bearing in mind the objective of the introduction of the minimum wage law.

It is still not too late to remedy the situation and help relieve the unnecessary turmoil the vast majority of employers are now facing.

Up till now so much management time has been lost trying to find answers to the hundreds of questions raised by law abiding employers in the different industries for which no one in the ministry has been able to provide clear-cut answers.

Needless to say, any law enacted must be simple, well drafted, easy to understand and achieve what it is set out to do.

If it creates problems, especially for those who ought not to be affected by it, then something is fundamentally wrong with it.

PETER RAIAPPAN Kuala Lumpur

Related posts:

 Malaysia's minimum wage, and its implications
Malaysia's Minimum wage's benefits and effects
Are Malaysian Employment Laws Challenging?
What's minimum wage in Malaysia?

Wednesday 18 July 2012

What’s minimum wage in Malaysia?

I REFER to the Minimum Wages Order which the Human Resources Minister made by notification in the Gazette on July 16.

Although the said Order comes into operation on Jan 1, it is frustrating and appalling that it does not define what components can constitute “wages” to make up the minimum wage of RM900 for Peninsula Malaysia and RM800 for Sabah, Sarawak and the Federal Territory of Labuan.

Throughout the Order, the term “wages” is used repeatedly without denoting clearly and explicitly whether the term refers to merely basic pay and/or includes fixed and regular allowances paid to employees e.g. shift allowances, attendance allowances, meal allowances, overtime meal allowances, laundry allowances, competency allowances, etc.

To add to the ambiguity, the illustration in Section 4 of the Order, introduces yet another undefined term “current basic wage”.

Is this meant to suggest that only basic wage can be part of the minimum wage?
While I understand that it is only an illustration, this does not help for purposes of clarity.
The National Wages Consultative Council Act 2011, under which the said Order was made, defines wages as having the same meaning assigned to it in section 2 of the Employment Act 1955.

The definition of wages under the Employment Act 1955 is “wages refer to basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service.”

It excludes five types of payments which are mostly clearly defined. The definition of wages in the Employment Act 1955 is by no means a clear science.

Debate rages in the Labour Court even now, some 50 plus years after the Act was made law, as to what amounts to wages or not.

If one refers to paragraph three of the First Schedule of the Employment Act 1955, it states: “For the purposes of this Schedule wages means wages as defined in section 2 but shall not include any payment by way of commission, subsistence allowance and overtime payment”.

This means that under section 2 of the Employment Act 1955, commissions are part of wages. And since “wages” in the said Order refers to the definition of wages in section 2 of the Employment Act 1955, it follows that commissions are part of wages to make up the minimum wage.

Say if I hire a salesman and pay him a basic of RM500. In some months, when sales are good, he earns commissions in excess of RM400, and therefore his wages are more than RM900.

In other months, when sales are bad, his commissions are below RM400 and thus his wages are below RM900. It follows then that for the months where sales are good, I as an employer have not flouted the said Order whereas in the other months, I am in breach of the said Order.

Am I as an employer expected to watch the commission trend of each of my salesmen?

Imagine a car dealer who has 50 dealerships each hiring 20 salesmen. How am I to track this?

I do not underestimate the complexity of the issue of what components should or should not be part of wages.

I will be the first to agree that it is not an easy subject. However, if we are inclined to come up with a minimum wage with such uncertainty revolving around the word “wages”, surely the fixing of a minimum wage is to put the proverbial cart before the horse.

Let me remind the learned folks at the Human Resources Ministry and the Attorney-General’s Chambers that all these ambiguities are not doing any good to the employers or the employees; neither is it going to assist in its smooth implementation.

Unless a holistic and precise approach is made to the question of what constitutes “wages”, this very attempt to introduce a new regulation on minimum wages appears to be hurried through for political expediency and far removed from the concept of a high income society.\

FRUSTRATED HR PRACTITIONER
Kuala Lumpur

Related posts:
Malaysia's Minimum wage’s benefits and effects 
Malaysia's minimum wage, and its implications 
Are Malaysian Employment Laws Challenging?

Sunday 10 June 2012

Are Malaysian Employment Laws Challenging?

Are Malaysian employment laws and policies in keeping with the new models or do they still carry signs of the traditional master-servant model and archaic gender stereotypes?
 
WE hear of female civil servants taking optional retirement but that is because the Public Service Commission allows for that.

And when they go, they get a pension.

But to be forced to retire in the private sector before your male colleagues? That goes against the grain and, surely, Article 8 of the Federal Constitution which guarantees gender equality.

And yet that is the case for female workers in some industries in the private sector.

In June 2001, the Guppy Plastics Industries' new employee handbook stipulated that the retirement age for its female and male workers was 50 and 55 respectively. Apparently, women are prone to medical problems after 50.

Tan: The argument that female workers lose their ability at 50 is not backed by scientific fact.

The fact that the Federal Constitution was amended a month later to include gender in Article 8's equality provision and that Malaysia is a signatory to the United Nation's Convention on the Elimination of Discrimination Against Women (Cedaw) before that was of no consequence to them or the Court of Appeal.

On March 21 this year, the second highest court in the country dismissed an appeal by eight female employees against their forced retirement from Guppy in July 2001, saying the plastics company had merely followed its handbook and early retirement for female workers was industry practice.

The fact that other industries also have similar retirement policies is a matter for concern. Apart from a clear case of gender bias, some could, like Guppy had done, re-employ the terminated workers on a contract basis, depriving them of benefits they would have got otherwise.

The women are not giving up, though. They are applying for leave to appeal in the Federal Court.

Lawyer Honey Tan says the Guppy case reinforces the male and female stereotypes. “The argument that female workers lose their ability at 50 is not backed by scientific fact,” she says.

“If age was a bona fide occupational qualification, then both male and female workers should retire at the same time.”

Should our employment laws remain in the dark ages, leaving a worker with social security that is nebulous at best?

Tan will be raising the Guppy case and other cases of sex discrimination at the workplace for discussion and debate at a conference on “Challenges in Employment Law: Proposals for Reform” on July 2.

The one-day conference is organised by the Malaysian Chapter of the International Society of Labour and Social Security Law (MSLSSL) and Current Law Journal.

Roy: There is a great need to create public awareness of labour laws and social security.
 
Participants will hear from Susila Sithamparam, Industrial Court president, Lawasia Committee on Labour Law chair Bernard Banks, Human Resources Ministry officials, unionists, lawyers, employers and an Industrial Court chairman.

The other topics that will be debated are minimum wage, contract labour and labour claims under Section 69 of the Employment Act.

“There is a great need to create public awareness of labour laws and social security,” says conference organising chairman Datuk Roy Rajasingham.

As such, the Malaysian chapter of the international society was set up in 2011 to promote the study of labour and social security laws here and at the international level, adds Roy, who is also MSLSSL vice-president.

“It seeks to provide lawyers, labour practitioners and others working in the fields of labour and social security law with a forum for discussion and debate.”

Membership is open to all who, because of their scholarly work or judicial or professional activities, are interested in furthering the aims and purposes of the society.

Besides them, the Malaysian Employers Federation (MEF), Malaysian Trades Union Congress (MTUC), Human Resources Ministry, Employees Provident Fund and Social Security Organisation are entitled to nominate one representative each to be a member.

Conference participants can expect to look at proposals for reform in the changing field of social security, employment, and human resources management.

One of the long-time bones of contention has been whether to introduce a minimum wage.

Recently, the Government ended that dispute by announcing a minimum wage for the private sector but whether this is the best thing for workers here and Malaysia's competitiveness remains to be seen.

Lo: The matter of what constitutes minimum wage has to be resolved.
“Even though the rate has been announced, the matter of what constitutes minimum wage has to be resolved,” says Andrew Lo, who will be speaking on the topic.

“Does it include, for example, shift allowance, service charge, overtime payment, performance bonus? How about accommodation, transport and meals provided by employers?” says Lo, chief executive officer of the Sarawak Bank Employees Union.

Also speaking is MEF executive director Shamsuddin Bardan and participants can expect a robust discussion on who benefits most.

For example, would a minimum wage increase the standard of living for the poor and increase domestic consumption, which is the engine of economic growth?

Or would it destroy jobs?

Lo notes that some employers are already claiming that up to four million jobs are at risk and 200,000 businesses may close.

As such, he speculates, some companies may adopt more capital intensive and efficient production systems and reduce the number of workers needed.

MSLSSL president Datuk Dr Cyrus Das says it would be good for all stakeholders to remember that a minimum wage is tied to a “living wage”.

“Every society that prescribes to social justice must accept a minimum wage structure and employment. You can't pay a worker RM300 and expect him to survive on that today.”

Another major concern currently is the over-dependence on contract labour and foreign labour.

Dr Das says contract labour should not be introduced for the local workforce as that would mean bypassing trade union membership by workers, who would otherwise be eligible to join a trade union.

“The mechanism of trade union membership and terms of employment guaranteed by a collective agreement are generally regarded as minimum safeguards to an industrial workforce,” he adds.

Dr Das: You can’t pay a worker RM300 and expect him to survive on that today.

Lo, who is also MTUC Sarawak secretary-general, claims that the supply of foreign workers is controlled by syndicates and is a multi-million industry.

“Employment agents are exploiting foreign workers as they charge more than what the workers would have earned during their employment contract.”

One of the recent amendments to employment law is that which allows labour supply companies to source and employ foreign workers and farm them out to work for a fee.

“The problem arises when these labour contractors abscond, leaving their workers unpaid. The company where the employees have been working will deny responsibility as they are not the employer, leaving employees high and dry,” Lo says.

This amendment and others were greeted with protest and concern but were passed by Parliament anyway, ostensibly to facilitate the easier registration of labour contractors.

The question now, says Lo, is whether the amendments will ensure greater accountability and protection for workers or would they be legalising an undesirable practice.

He adds that the conference will look into whether a Royal Commission would be appropriate to provide an independent, in-depth inquiry to assist the Government in formulating a robust, effective, enforceable, and sustainable foreign labour policy.

By SHAILA KOSHY koshy@thestar.com.my

> Register before June 11 for an early bird fee. For conference details, contact 03-4270 5400 or e-mail priority@cljlaw.com