Lecture 03: Legal Background to Employee Resourcing PDF

Lecture 3 LEGAL BACKGROUND TO EMPLOYEE RESOURCING  AN OVERVIEW ◼ Employment laws and regulations have assumed very important roles in the process of staffing ◼ The need for law is due to a) Balance of power b) Protection of employees c) Protecti...

Lecture 3 LEGAL BACKGROUND TO EMPLOYEE RESOURCING  AN OVERVIEW ◼ Employment laws and regulations have assumed very important roles in the process of staffing ◼ The need for law is due to a) Balance of power b) Protection of employees c) Protection of employers a) Balance of Power ◼ Maintaining the employer-employee relationships involves negotiation ◼ In most cases the employer has the upper hand because an employer has more to offer and more control over what to offer ◼ Employment laws and regulations reduce or limit the employer's power in employment relationship b) Protection of Employees ◼ Protections pertain to employment standards, individual work place rights, and consistency of treatment c) Protection of Employers ◼ Provide guidance to employers as to what are permissible practices as well as impermissible practices ◼ Questions about the meaning of the law are clarified thorough many avenues such as court decisions, policy statement from government agencies ◼ Allows employers to implement needed changes  ROLE OF GOVERNMENT ◼ Acts as a legislator through Parliament which passes the various employment-related legislations ◼ The Ministry of Human Resources is responsible for administering and overseeing the industrial relations system ◼ Main objectives are: 1. To protect the welfare of workers 2. To promote good employer-employee relationships 3. To equip the unemployed with basic industrial skills 4. To assist in maximizing the country’s manpower  Employment Contract ◼ 2 Types of contract: a) Contract of service / employment b) Contract for services a) Contract of service / employment ◼ An employee is one who has a contract of service. ◼ The more control an employer exercise over a worker, the more likely a contract of service exist b) Contract for services ◼ An independent contractor who provide services for an organisation. A contractor is in business for himself: he is self-employed. ◼ e.g. A factory manager engages a person specifically to repaint the factory.  CONTRACT OF SERVICE / EMPLOYMENT ◼ Employer-employee relationships ◼ May negotiate and agree on the terms and conditions that will define and govern their relationships ◼ The formal agreement represent an employment contract (contract of service) ◼ Written and Oral Contracts ◼ Both types are legally enforceable ◼ In the event of a dispute about the terms of their contract both parties will have to convince the Labour Department what the agreed terms of the contract are ◼ Terms of the Contract 1. Job title 2. Wages and details of other monetary payments 3. Normal working hours and whether there is a requirement to work overtime 4. Holiday and leave entitlements 5. Other benefits 6. Probationary period 7. Notice period prior to termination 8. Retirement age 9. Requirement of confidentiality 10. Requirement to give exclusive service 11. Mobility or transfer 12. Requirement to comply with company rules 13. Penalties for misconduct ◼ Duration of the Contract ◼ Fixed –term Contracts ◼ Employment contract is for a particular period of time ◼ Duration for which the worker is employed is stated ◼ Such contract terminate automatically at the end of the stated time period or when the job is finished ◼ Open-ended Contracts ◼ Offered to majority of employees ◼ Unspecified period ◼ Job is theirs until such time their services are formally terminated or they decide to leave ◼ Criteria of Contract ◼ Compliant with the law ◼ Understandable ◼ Complete ◼ Long lasting  PSYCHOLOGICAL CONTRACT Individual Expectations (Employee) ◼ Provide safe & hygienic working conditions ◼ Make every reasonable effort to provide job security ◼ Attempt to provide challenging and satisfying job ◼ Adopt equitable personnel policies and procedures ◼ Allow participation in decision-making ◼ Implement best practice in equal opportunity policies and procedures ◼ Provide reasonable opportunity for personal development and career progression ◼ Treat members of staff with respect ◼ Demonstrate an understanding and considerate attitude towards personal problems of staff Organization Expectations (Employer) 1. To accept the ideology of the organization 2. To work diligently in pursuit of organization objectives 3. Not to abuse goodwill shown by management 4. To uphold the image of the organization 5. To show loyalty 6. Not to betray position of trust 7. To observe reasonable and acceptable standards of dress and appearance  EMPLOYMENT LEGISLATION In Malaysia employment-related legislation are: ◼ The Employment Act, 1955 ◼ The Employees Social Security Act, 1969 ◼ Employees Provident Fund Act, 1991 ◼ The Occupational Safety and Health Act, 1994 ◼ Trade Unions Act, 1959 ◼ Industrial Relations Act, 1967 ◼ Factories and Machinery Act, 1967 ◼ The Children and Young Persons Act, 1966 ◼ Workmen's Compensation Act, 1952 ◼ Pension Act, 1980 ◼ Wages Council Act, 1947 ◼ Private Employment Agencies Act, 1981  EMPLOYMENT ACT, 1955 ◼ Lays down provisions to protect workers from exploitation and to provide minimum benefits ◼ People covered by the act: ◼ Employees under a contract of service / employment whose wages do not exceed RM 2,000 a month ◼ Employees under a contract of service, regardless of wages, who: 1. Carry out manual labour 2. Supervises employees engaged in manual labour 3. Is engaged in the operation or maintenance of any vehicle for the transport of passengers 4. Is engaged as a domestic servant 5. Foreign workers who are legally employed in Malaysia Employment Act Coverage ◼ Wages (annual bonus, overtime payments, commissions, subsistence allowances, traveling allowances) ◼ Employees’ right to unionizes ◼ Termination of contract ◼ Termination for misconduct ◼ Breach of contract ◼ Employment of women ◼ Working hours and leaves ◼ Termination benefits ◼ Employment of foreigners  Notice to Terminate a Contract ◼ The Employment Act (section 12) says: “Either party to a contract of service may at any time give to the other party notice of his intention to terminate such contract of service” ◼ There are two provisions of the Employment Act relating to notice of termination of a contract of employment. 1. the employer can decide the notice period required and have this agreed to in the contract of employment 2. when there is no such clause in the contract, the provision of Employment Act will apply. ◼ Section 12 states that when the contract is silent on the length of notice period then the notice shall be not less than: ◼ “four weeks’ notice if the employee has been employed for less than two years on the date on which the notice is given; ◼ “six weeks’ notice if the employee has been employed for two years or more but less than five years; ◼ “eight weeks’ notice if the employee has been employed for five years or more; ◼ Either party can terminate a contract of service without the required notice if he pays to the other party an indemnity, i.e., a sum of money equivalent to the amount of wages which would have been earned during the notice period.  Employment Of Women ◼ The provision of the Act relating to women mostly concern: ◼ working hours ◼ Women may not work between the hours of 10.00 p.m and 5.00 am in industrial and agricultural undertaking. ◼ Exemptions is usually granted with a number of conditions: (provision of transportation, payment of shift allowances for the female workers and the establishment of a rotating shift system. ◼ maternity benefits: ◼ All female employees are entitle to 90 days maternity leave each and every time they give birth. ◼ Paid maternity leave ◼ A female employee is entitled to be paid a maternity benefit or allowance which is an amount equivalent to her wages if, at the time of confinement, she has no more than 5 surviving children and she has served the employer for at least 90 days. ◼ Unpaid maternity leave ◼ When the employee already have 5 children, all of whom are alive; or ◼ Their service is less than 90 days.  Working hours ◼ All employees protected by the Act to be permitted one rest day per week. ◼ When a daily rated employee agrees to work on his rest day at the request of his employer, he is entitled to a higher than normal rate of pay. ◼ A monthly rated employee who works on a rest day will not only receive his normal monthly wages; but he is also entitled to an extra half day’ s wages for up to a half-day’s work and full day’s wages if he works between half the normal hours and a full day.  Maximum Working Hours ◼ The maximum working hours per day that can be required of an employee are 8. ◼ With overtime, this can be increased by 12. ◼ If the organisation does not require the employee to work 6 full days per week then the daily working hours can be increased to 9  Leave ◼ Public Holiday ◼ The Act only entitles workers to 10 public holidays per year whereas Malaysia has 16 to 17 such holiday. ◼ Compulsory public holidays - National Day, Agong’s Birthday, Sultan / Federal territory Day & Workers' Day. ◼ Annual Leave ◼ Employees are only entitled to annual leave once they complete a year of service. ◼ The duration of annual leave granted to workers depends on their length of service with the employer. > 1 yr < 2 yrs = 8 days, > 2 yrs< 5 yrs = 12 days, > 5 yrs = 16 days  Leave (continued) ◼ Sick Leave ◼ All employees are entitled for paid sick leave. ◼ An employee's sick leave entitlement depends on his length of service - < 2 yrs of service = 14 days, >2 yrs < 5 yrs = 18 days, >5 yrs = 22 days.  ENFORCEMENT OF THE EMPLOYMENT ACT ◼ Is the responsibility of the Department of Labour ◼ Done through state-level labour offices ◼ Responsibilities includes: 1. Carrying out routine inspection 2. Investigate complaints 3. Make decision when there is a dispute 4. Answer queries 5. Prosecute employers who refuse to comply  LABOUR COURT ◼ When disputes arises the labour officers are empowered to hear the disputes, a process known as the Labour Court ◼ Type of claims heard ◼ Termination benefits ◼ Maternity benefits ◼ Overtime payment ◼ Sick leave ◼ Annual leave pay ◼ Public holiday pay EMPLOYEES PROVIDENT FUND 1991, (EPF) Post-retirement income security can be provided in a number of ways including: a. Voluntary savings and investment by individual workers b. State provided pensions c. Employer provided pensions d. Saving schemes contributed to jointly by both employers and employees ◼ Membership ◼ All employees, employed under contract of service, are required to become members of the Fund ◼ Contribution ◼ Minimum rate of contribution is 11% and 12% of the employee’s monthly wages for employees and employers respectively ◼ Withdrawals ◼ Member’s saving in the Fund are divided into 2 accounts ◼ No withdrawals permitted from the 1st account until the employee reaches the age of 55 ◼ The second account with 30% contribution is available for withdrawals for housing, education medical purposes and upon reaching the age of 50  EMPLOYEES’ SOCIAL SECURITY ACT 1969 (SOCSO) ◼ All Malaysian employees who earn less than RM3,000 are required to become members of the SOCSO ◼ The once-in-always-in principle is applied ◼ Public sector workers are exempted because they are covered by the Pension Act ◼ Main purpose of this act is to establish an insurance system so that employees involved in an accident at work or who develop a work-related disease will be provided with compensation ◼ SOCSO contribution are paid by both the employer and the employee at the current rate of 2.5% of the employee’s monthly wages  SOCSO Schemes SOCSO has 2 scheme 1. The Employment Injury Insurance Scheme ◼ Entitles workers to treatment at a clinic on the SOCSO panel or at any government hospital 2. Invalidity pension scheme ◼ Workers are entitled to a pension or a grant and other benefits if they become invalid from whatever cause, provided that they have contributed to SOCSO for a minimum period of time ◼ Also covers accidents incurred when workers travel to & from work ◼ If the worker does not have an accident nor get any industrial disease during his working life, his contributions to the organization are not returnable Occupational Safety & Health Act, 1994 (OSHA) The philosophy of OSHA is: “ The responsibility to ensure safety and health at the workplace lies with those who create the risk and with those who work with the risk”  OSHA (continued) ◼ Tries to ensure that all parties at workplace are equally responsible for safety & health. ◼ Applies to all industries & sectors except armed forces and workers governed by the Merchant Shipping Laws.  The Law on OSHA (continued) ◼ Common law has always recognized the obligation of an employer to provide a safe working environment for his workers ◼ Is an implied term of every contract of employment that the employer will ensure safety at work for his employees  The Law on Occupational Safety and Health (OSHA), 1994 ◼ The laws on Health & Safety involve the use of 2 different approaches: (a) to prevent & reduce the number of industrial accidents & occupational diseases in the workforce (Factories & Machinery Act, 1967 and the OSHA) (b) To deal with accidents & diseases which are not successfully prevented by establishing an insurance scheme for workers (Employees’ Social Security Act, 1969)  OSHA (continued) ◼ The employer’s responsibilities extend to any independent contractor & his employees who may be working in the employer’s premises. ◼ Employers also have the duty to ensure the safety & health of people other than their employees who may be exposed to risk as a result of actions taken by the employees such as visitors to the plant ◼ Those who design, manufacture & supply plant, machinery, equipment & substances are also required to take all steps to test their equipment & substances to ensure their safety & to provide sufficient info about their proper use ◼ Employees are equally responsible for safety & health at work (can be fined up to $1,000 or jailed for up to 3 months or both if found guilty) ◼ Duties of employers ◼ Ensuring proper arrangements for the use or operation, handling, storage and transport ◼ The provision of information, training and supervision ◼ The maintenance of the place of work ◼ The provision of adequate welfare facilities ◼ Duties of Designers, Manufacturers and Suppliers ◼ Required to take all steps to test their equipment and substances to ensure their safety and to provide sufficient information about their proper use ◼ Duties of employees ◼ Required to wear protective equipment or clothing provided by the employer for their safety ◼ To comply with any instructions relating to safety ◼ Duties of Safety and Health Committees ◼ All employers with more than 40 employees are required to establish a safety and health committee at the work place ◼ Committee’s functions are: 1. To assist in the development of safety and health rules 2. To review the effectiveness of safety programs 3. To carry out studies on accident trends or occupation diseases 4. To recommend improvement in work systems 5. To inspect the place of work at least once every three months and investigate any accidents ◼ Q&A