The MCO has raised issues pertaining to the employment relationship. We have prepared the following FAQs, which we hope will assist you with some of the issues that Employer may be facing during the Period.

Q: Can my business remain open and operational during MCO?

A: Premises providing essential services may be opened during the Period. Note that the Government has also imposed a limitation on operating hours for eateries and supermarkets, i.e. from 8.00 a.m. to 8.00 p.m.

Employers in non-essential services effectively cannot require their employees to attend at the place or premises of work. However, they can require employees to continue to work remotely and employers can implement work from home measures.

Q: Can employers require their employees to come back to work during the MCO Period if the employers’ business is permitted to operate during this Period?

A: Yes. If the employer has been granted permission to operate, your business can continue subject to the conditions imposed by the Government. More particularly the Standard Operating Procedure provided by the Ministry of International Trade and Industry and any other conditions imposed by the regulatory of your business sector.

Q: Can employers deduct the employees’ annual leave entitlement or enforce unpaid leave during this Period?

A: No. Employer is not allowed to force their employees to take annual leaves during the MCO period. If the employer unilaterally imposes unpaid leave on their employees, employer may be liable to an offence of contravening the Employment Act 1955 which is punishable with a fine not exceeding RM10,000.00.

Q: Must employers continue paying the full salary and/or allowance of all workers, including employees who cannot work from home?

A: Yes. Employer still needs to pay employees their salary just like before, only the allowance is different because it is not a must to pay. However, the announcement by the Government on 6th April 2020 encourages negotiations between the employer and employee on options for salary reduction and unpaid leave. A reduction in salary can only be achieved through an agreement with the employee.

Unfortunately, not all employers have this privilege or enough resources to do so. For employers whose businesses are severely impacted by the MCO and are unable to pay employees their full salaries during the Period, employers may need to consider other cost cutting measures.

Q: Can employer lay-off their employee during MCO Period?

A: Yes. However, a retrenchment is only justified by the employer facing extreme financial difficulty. The employer must be able to show that there was a just cause to terminate the employee. Retrenchment should be in accordance to the general principles of industrial law, and retrenchment benefits may be payable.

Q: Can employer delay in submission and payment of tax?

A: Yes. Lembaga Hasil Dalam Negeri/Inland Revenue Board (“LHDN”) has agreed to grant a time extension of 2 months to all taxpayers who need to submit their tax declaration forms between March and June 2020.

Q: If my company goes bankrupt/wound up do I still need to pay my Employee Salary?

A: Yes. When a company goes bankrupt or insolvent, the employers is obligated to inform the Labour Department if they going to close down their business or retrench their staffs. Employer needs to submit an employment notification retrenchment form (PK Form) to any nearby Labour Office. Failing to do so will be subjected to a penalty of RM10,000.00. Employer must pay to their employees any of their unpaid salary including contribution to EPF and SOCSO.

Q: What if one of my employees has been tested positive for Covid -19?

A: Employer should immediately instruct any of the employees who came into close contact with the positive employee to quarantine themselves for 14 days. Employer must undertake disinfection of the work place in which the affected employee had worked.

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*Note: This article does not constitute legal advice to any specific case as the legal position may change in the near future. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for legal consultation.

** That’s all for now **

24.4.2020/cy