(Speech by Parliamentary Opposition Leader, DAP Secretary-General and Member of Parliament for Petaling, Lim Kit Siang, in the Dewan Rakyat on Friday, 20th June 1980, on the Employment Ordinance (Amendment) Bill 1980)
The Deputy Minister for Labour, Dato K. Pathmanaban, said when moving the second reading of the Employment Ordinance (Amendment) Bill 1980 yesterday that the amendments proposed in this Bill are “progressive advances in labour standards and social legislation” in Malaysia.
His self-praise is rather extravagant and unrelated to the facts. Although I concede, and welcome, several improvements in the Employment Ordinance provision, like the proposal to include bonus as part of ‘wages’, the extension of period of notice of termination of service, triple pay for overtime on rest days increase of paid public holidays from 7 days to 10 days in a year, increase of paid sick leave for another four days for those with two years service, to five years service, another eight days with more than five years service; increase in paid annual leave, etc., they are rather nominal and in many cases, had not even measured up to the demands we in the DAP had in the past made inside and outside the House.
The workers must probably be thankful for the ‘little mercies’ although the amendments certainly do not qualify or justify the Deputy Minister’s claim to “progressive advances in labour standards and social legislation.
Law needed to make bonus of at least one month’s salary payable to every employee
Yesterday, the Deputy Minister, in his speech, said that with the amendment to Clause 2(1)(g)of the Bill to include bonus as part of “wages”, it would be mandatory for employers to include the element of contractual annual bonus when working out the ‘ordinary rate of pay’ for his employees for the purposes of calculating maternity allowance, annual leave pay, sick pay, leading to the enhancement of the quantum of such payments.
The Deputy Minister claims that the minimum standards laid down in the Employment Ordinance are meant to benefit the 2½ million wage earner not unionised or covered by the 500 or so collective agreements.
If this is the case, then this provision on bonus would not benefit the overwhelming number of workers at all.
The Government should introduce legislation to make the payment of bonus mandatory, and for a start, the bonus payment should be not less than one month’s salary. At present, bonus payment is discretionary, and with the enactment of this amendment, employers would be tempted to withdraw bonus payments, even in cases where collective agreements provide for it.
To forestall such management attempts to evade the provisions of the law, there should be an urgent amendment to the Employment Ordinance to provide that in cases where bonus are being paid, the quantum of bonus should henceforth be fixed as to be the minimum bonus payable for the category of workers concerned.
The legislation of mandatory bonus for workers would be a significant measure to help unorganised workers, especially in these inflationary times, to secure a living wage.
I find the way definition of ‘wages’ is being amended to include bonus as rather strange.
Thus, the definition of ‘wages’ in Section 2 of the principal Ordinance, is defined to mean “all remuneration which is payable to a labourer for work one in respect of his contract of service” with a list of exclusions, to now include “(f) any annual bonus or any part of any annual bonus which is not payable under contract of service.”
This would mean that the Ordinance envisages that there is a category of bonus which is paid to a labourer but which does not come within the ‘contract of service’, as for instance, discretionary bonus, which clearly provides an escape route for all employers in all new collective agreements to term bonus payable as belonging to this category (f).
This would defeat the entire purpose of this amendment, and I hope the Deputy Minister would be able to elucidate on it.
Period of Notice inadequate
Clause 6 of the Bill seeks to increase the period of notice of termination of service by either party, where no specific provision in this regard is contained in any contract of service.
The period of notice for those with less than two years of service will now 4 weeks, as compared to one week under the old law; for those with 2 to 5 years service, 6 weeks as compared to two weeks; and for those of over 5 years service, 8 weeks as compared to one month.
Although this is an improvement, the period of notice of termination of n employee is inadequate. In this case, with the inequality of bargaining strength between the employer and employee, they should not be put on bass of equality. In other words, I advocate that while employers should be required to give adequate notice before terminating the services of an employee, an employee should not be required to have to give an equal period of notice.
During the debate on the Employment (Ordinance) amendments in July 1976, I had suggested in Parliament that the period of notice of termination which employer should be required by law should be: one month’s notice for workers with less than two years’ service; two months’ notice for workers’ with two to five years’ service; and three months’ notice for workers with more than five years’ service.
The period of notice which employees should by law be required by to give employers should be as provided in the new amendment on Section 12.
Call for Legislation to Guarantee Security of Jo Tenure
In July 1976, I had urged in this House, while seeking to introduce a private member’s bill entitled “Employment (Unfair Dismissal) bill 1976” that we shod legislate to guarantee security of job tenure to the workers.
It is unfair for an employer to terminate the services of an employee, who had spent say 15 or 20 years of his employment, by eight weeks’ notice of termination under the present amendment to Section 12 of the Employment Ordinance.
The Government has not yet accepted the concept of security of job tenure, that just as the employer has the interest in planning production and in being protected against its interruption, similarly, workers have the equivalent interest in planning his and his family’s life and in being protected against interruption in his mode of existence through the loss of his job.
It is only when the Government has accepted concepts like security of job tenure for workers that it could claim to have made “progressive advances in labour standards and social legislation.”
I urge the Government to give this matter serious consideration. Workers who are members of strong unions can use their industrial power to protect themselves against terminations, including proper terminations under Section 12, but not the majority of workers who are not unionised.
Termination, Lay-Off Benefits
Even provisions for termination, lay-off and retirement benefits are not answers to the need for acceptance of the concept of job security for workers.
The Bill incorporates in Clause 29 a new Part XIIA dealing with termination, lay-off and retirement benefits for employees.
In July 1976, I protested vehemently against amendments to the Employment Ordinance deleting Sections 60G and 60H, which remove the legal entitlements of workers to retrenchment and retirement benefits. The 1976 amendments gave powers to the Minister of Labour to make Regulations to prescribe conditions for payments of retrenchment and retirement benefits.
The Labour Minister than, Datuk Lee San Choon, in reply said the workers would not lose what rights they had enjoyed. But the fact is that for four long years, workers lost their legal right to retrenchment and retirement benefits – and in these four long years, my colleagues and I had pressed the Labour Ministry without any let up as to why the Regulations on retrenchment and retirement benefits had not been made to restore the rights to the workers.
At long last, the Labour Ministry has finalised the Employment (Termination and Lay-off Benefits) Regulations, 1980, which will be gazetted to be brought into force simultaneously with the coming into force of this Bill. I must deplore the fact that the question of retirement benefits have not been finalised, and at the rate of the ministry’s productivity, it may be the 1990s before we see any Regulations pertaining to retirement benefits.
The Employment (Termination and Lay-Off Benefits) Regulations 1980 provides for the payment of termination and lay-off benefits to an employee whose employment is terminated for whatever cause, other than termination on grounds of misconduct, retirement, expiry of fixed period contracts and voluntary resignation.
The benefits provided are a minimum of 10 days’ wages for every year of employment if the employee has been employed for a period of less than two years; 15 days’ wages if employed for a period of two years or more but less than five years; and a minimum of 20 days’ wages if he has been employed for more than five years.
I have two comments to make on these Regulations at this initial stage:
The Deputy minister said, in seeming justification for the four long years the Ministry has taken before finalising the Regulations, that his Ministry had carefully studied the legislation and procedures of other countries, in this region and in advance countries, as well as the problems encountered in regard to their implementation, and that this study was one of great depth.
I am surprised therefore that the scope and circumstances of termination giving rise to termination benefits is not as comprehensive as it should be, if the experiences of other countries had been taken into account.
For instance, the proposed Regulations makes no provision for what is known as ‘constructive termination’, i.e. where owing to the actions of the employer which make it impossible for the employee to reasonably continue to work, the employee terminates the employment himself. Although the employer can claim with all feigned sincerity that he still wanted the employee to continue in service, this is a clear case of ‘constructive dismissal’ or ‘constructive termination’ which should be covered by the Regulations.
The Regulation, as presently drafted, do not cover such a situation. The Regulation should be amended to specify clearly that situations of ‘constructive termination’ would so attract payment of termination benefits.
The second comment on the Regulation it that the quantum is too low, and for a start, it should be revised to two weeks’ wages for every year of employment with less than two years’ service; four weeks’ wages between two to five years’ service; and eight weeks’ wages for those having more than five years.
DAP condemn Labour Ministry for merely paying lip service to check the abuses of contract labour system
In 1976, the Employment Ordinance was amended by a new Section 2A which enables the Minister to prohibit by order the employment, engagement or contracting of any person or class of persons to carry out work in any occupation in any agricultural or industrial undertaking, constructional work, statutory body, local government authority, trade, business o place of work other than under a contract of service entered into with the owner or principal of such undertaking, constructional work, trade, business or place of work, or with that statutory body or local government authority.
On the making of any such order, all persons or classes of persons specified in the order would become employers and employees for the purposes of the Employment Ordinance and other written law.
In the previous Parliaments, I had many a time spoken on the exploitation of working class in Malaysia through the pernicious use of contract labour system, as this permits the employer to get cheap labour by enabling him to avoid his other responsibilities to a regular worker, as security of employment, medical benefits, EPF, leave and other fringe benefits.
The new Section 2A of the 1976 amendment to the Employment Ordinance was presented as a powerful weapon to be wielded by the Government to check the abuses of contract labour system.
But to date, four long years later, as far as I know, the Minister of Labour had never used this section to prohibit contract labour system in any economic sector. This must be condemned as the Government is merely paying lip-service to the fight against contract labour system and its abuses.
This, more than anything else, demonstrates the indifference of the government to the exploitation of contract labour.
I want the Deputy Minister of Labour, who should have a deep understanding and awareness of the abuses of contract labour system, to explain why contract labourers remain the ‘untouchables’ in the labour market. I say, let us take legislative steps to make contract labourers the ‘harijans’, in the way that Gandhiji dedicated himself to the cause of the harijans.