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LABOUR LAW

SOCIAL SECURITY SYSTEM. LABOUR LAW. LEARNING OUTCOME. INTRODUCTION. Malaysia is not a welfare state but the government has introduced a system to ensure that Malaysian citizens will have funds to support themselves and their family if a disaster befalls them.

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LABOUR LAW

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  1. SOCIAL SECURITY SYSTEM LABOUR LAW

  2. LEARNING OUTCOME

  3. INTRODUCTION • Malaysia is not a welfare state but the government has introduced a system to ensure that Malaysian citizens will have funds to support themselves and their family if a disaster befalls them. • Government servants : Pension Act • Private sectors; The Employees provident Fund Act, The Employees’ Social Security Act and the Workmen’s Compensation Act 1952. .

  4. EMPLOYEES’ SOCIAL SECURITY ACT 1969 • It provides social security protection by social insurance including medical and cash benefits, provision of artificial aids and rehabilitation to employees to reduce the sufferings and to provide financial guarantees and protection to the family. • The Social Security Organization (SOCSO) is an organization set up to administer, enforce and implement the Employees' Social Security Act, 1969 (ESSA) and the Employees' Social Security (General) Regulations 1971. family. It is commonly known in • the Malay term as PERKESO or PertubuhanKeselamatanSosial.

  5. The main purpose of the ESSA 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 and financial assistance. • Employers are responsible for registering their employees as members of the PERKESO and for remitting the mandatory contributions monthly to the organisation. If fails, is liable to be prosecuted.

  6. The scope • An employee employed under a contract of service or apprenticeship and earning a monthly wages of RM4,000 and below must compulsorily register and contribute to SOCSO regardless of the employment status whether it is permanent, temporary or casual in nature. • An employee must be registered with the SOCSO irrespective of the age. • SOCSO only covers Malaysian workers and permanent residents. As a result, foreign workers are • protected under the Workmen's Compensation Act 1952.

  7. Nevertheless, SOCSO does not cover the following categories of persons : • A person whose wages exceed RM4,000 a month and has never been covered before. • Government employees. • Domestic servants employed to work in a private dwelling house which includes a cook, gardeners, house servants, watchman, washer woman and driver. • Employees who have attained the age of 55 only for purposes of invalidity but if they continue to work they should be covered under the Employment Injuries Scheme. • Self-employed persons. • Foreign workers.

  8. If individual worker’s wages are raised above RM4,000, he remains be the member of SOCSO and continue contribute monthly. • An employee whose salary for his first job was more than RM4,000 can opt to become a member of SOCSO, providing his employer agrees to contribute on his behalf – there must be mutual agreement. • In practice, nevertheless, the employers usually take on a group basis insurance rather than SOCSO for their employees who earn more than RM4,000.

  9. WHAT IS THE RATE OF SOCSO CONTRIBUTION ? • The principal employer must make a monthly contribution for each eligible employee according to the rates specified under the Act. Refer to the third schedule of the Act. • The current rate total approximately 2.5 % of the employee’s monthly wages with the employer pay a higher proportion than the employee.

  10. SOCSO SCHEME SOCSO provides coverage to eligible employees through 2 schemes namely; • Employment Injury Insurance Scheme • Invalidity Pension Scheme. These schemes are classified into 2 categories : • 1) First Category - Employment Injury Insurance Scheme and Invalidity Pension Scheme. The contribution payment is made by both the employer and employee. • 2) Second Category - Employment Injury Insurance Scheme Only. The contribution is paid by the employer only. An employee who is not eligible for coverage under the Invalidity Pension Scheme is protected under this category (Age ; above 55 years old.)

  11. THE INVALIDITY PENSION SCHEME • Invalidity Pension Scheme provides a 24-hours coverage to employees against invalidity and death due to any cause not connected with employment before the age of 55 years. • The benefits provided under this scheme are Invalidity Pension, Invalidity Grant, Constant Attendance Allowance, Survivors Pension, Funeral Benefit, Rehabilitation and Educational Loan.

  12. a) Invalidity pension • For the purpose of Invalidity Pension, invalidity means a serious disease or disablement of a permanent nature that is either incurable or not likely to be cured, as a result of which an employee is unable to earn. The following conditions must be fulfilled by an employee to be eligible for Invalidity Pension : a) at the time the notice of invalidity is received, the employee has not completed the age of 55 years b) if the employee has completed the age of 55 years when the notice of invalidity is received, such employee has to provide proof that the invalidity occurred before 55 years and he had ceased employment at that time.

  13. c) certified as an invalid by a Medical Board or Appellate Medical Board d)has fulfilled the contribution qualifying conditions- is subject to the condition that the total number of monthly contributions made during the stated period, is at least 24 months.

  14. b) Invalidity Grant • This is an outright payment paid to worker or employee who does not qualify for the invalidity pension, as he does not meet any of the contribution qualifying conditions stated, but has made at least 12 monthly contributions.

  15. c) Constant Attendance Allowance. • If an employee is severely incapacitated and requires constant personal attendance, the recipient of Invalidity Pension is also entitled to Constant Attendance Allowance. • The Medical Board or an Appellate Medical Board will decide on the eligibility to receive this allowance and will pay the recipient of the benefit directly. Subject to a maximum of RM500 per month, the benefit is 40% of the rate of Invalidity Pension.

  16. d) Survivors Pension • Where an employee dies in any of the following situations, irrespective of the cause of death, the dependants will be paid Survivors Pension : • Where the deceased is a recipient of Invalidity Pension, the rate of the Survivors Pension is equivalent to the rate of the Invalidity Pension received by him.

  17. Who are dependents; a) to the widow or widower during life, and, if there are two or more widows, the widow’s share of dependants’ Benefit b) to each child until marriage or until he attains the age • of twenty-one years, whichever occurs earlier and provided further that the Organization may continue such benefit to any child who is in receipt of education in any institution of higher learning but not beyond the first degree until he completes or ceases to receive such education or until he marries, whichever occurs earlier.

  18. e) Funeral Benefit • This benefit is paid to the eligible next-of-kind if an employee dies : a) while receiving Invalidity Pension b) before reaching the age of 55 but meets the full or reduced qualifying contribution conditions.

  19. f) Rehabilitation Benefit • An employer who suffers invalidity is also entitled to receive Rehabilitation Benefit as provided under the Employment Insurance Injury Scheme

  20. EMPLOYMENT INJURY INSURANCE SCHEME • Several benefits are provided under the Employment Injury Insurance Scheme : a) Medical Benefit • Where an employee contracts any occupational disease or meets with an accident, he is entitled to treatment at a SOCSO Panel Clinic or any government hospital or clinic.

  21. b) Temporary Disablement Benefit • An employee who has been certified by a doctor to be unfit for work for not less than 4 days including the day of the accident is eligible for this benefit. This benefit will be paid for the period the employee is on medical leave.

  22. c) Permanent Disablement Benefit • An employee who has been certified by a Medical Board or an Appellate Medical Board to be suffering from permanent disablement as a result of an employment injury is eligible for this benefit. • Where the permanent disablement is assessed to be 100%, an employee will be paid a daily rate. • An employee can claim the benefit to be paid as a lump sum if the permanent disablement is assessed to be 20% or less. • However, where the assessment of the loss of earnings capacity exceeds 20%, the employee is given an option to exchange 1/5 of the daily rate of permanent disablement benefit into a lump sum payment while the balance will be paid as a monthly pension for life. While receiving this benefit, an employee may continue to work.

  23. d) Constant Attendance Allowance • This allowance is paid to an employee who is suffering from permanent total disablement or 100% loss of earnings capacity, and is so severely incapacitated that he constantly requires the personal attendance of another person. Subject to a maximum of RM500, the allowance is equivalent to 40% of the rate of permanent total disablement benefit.

  24. e) Funeral Benefits • Where an employee dies as a result of an employment injury or while receiving disablement benefit, an amount of RM1,500 will be paid. • Payment will be made to the eligible next-of-kin. Where there are no next-of-kin, the person who incurred the funeral expenditure will be paid the benefit. The maximum amount for the benefit is the actual amount incurred or RM1,500 whichever is lower.

  25. f) Rehabilitation Benefit • SOCSO provides facilities for vocational and physical rehabilitation to employee who suffers from permanent disablement. • Physical rehabilitation includes physiotherapy, occupational therapy, reconstructive surgery, as well as the supply of artificial limps such as artificial leg, hand, eye, wheelchairs, hearing aids, etc. • An employee who is unable to find a suitable job due to his permanent disablement, can apply to undergo vocational training in courses such as radio or television repairs, metal trade, electrical wiring, repairs of refrigerator and air-conditioner, tailoring, plumbing, typing and secretarial work.

  26. g) Dependant's Benefit • Where an employee dies as a result of an employment injury, the dependants are entitled to this benefit. Subject to a minimum rate of RM10 per day, the full daily rate of dependants' benefit is 90% of the average assumed daily wage. • Provided that if a widow or a widower is entitled to more than one dependants’ benefits, she or he shall be paid only one benefit, being the benefit with the higher rate.

  27. WHAT ARE THE RESPONSIBILITIES OF AN EMPLOYER ? • An employer must cover their employees even if the employees have other private insurance coverage. • A company or firm with one or more employees whose individual earnings do not exceed RM1,000 a month has to register with SOCSO. The contributions for such employees are borne solely by the employer. • Where an employee reached the age of 55 and continues to be employed after that age, only the employer shall contribute to SOCSO for such employees.

  28. Under the Employees' Social Security Act 1969, it is the duty of an employer to make contribution to the SOCSO on behalf of the employees to insure them against employment injury and the contingencies of invalidity.

  29. THE DECISION OF PERKESO CAN BE APPEALED • Two types of appeal boards, namely Appellate Medical Board and Social Security Appellate Board, • Appellate Medical Board • The Appellate Medical Board reviews the decision of the Medical Board. Employees who are not satisfied with a decision of a Medical Board regarding assessment of permanent loss of earnings capacity or the determination of invalidity can appeal to this board. The decision made by this board is final.

  30. Social Security Appellate Board • The Social Security Appellate Board reviews the decision of the SOCSO. Employees or dependants who are not satisfied with a decision made by SOCSO can appeal to this board. • An appellant can be represented by a lawyer, a trade union representative or any person authorized by the Board.

  31. WORKMEN’S COMPENSATION ACT 1952 • Applicable mostly to the foreigners. • Previously foreigners covered under SOCSO. However, in 1993, they are excluded because many of them have returned to their country and therefore difficult to pay compensation on monthly basis.

  32. The scope; • Those who are paid up to RM500 per month and those who have been employed in manual labour irrespective of their wages. • Exclude: domestic labour.

  33. The Act provides that the foreign workers who are injured as a result of the work-related accident and who are disable for a period more than four days are entitled to be paid compensation. Should the workers die, his dependents are entitled for the compensation. • All claims are made through the Labour Department. If there is the dispute, the Labour Department can make decision.

  34. The employer is required to buy an insurance policy from a panel of insurance companies to cover their liabilities. • In the case of death, a maximum lump sum of RM25,000 will be given. The amount of other benefits are fixed by the Act.

  35. EMPLOYEES PROVIDENT FUND • Post-retirement income security can be provided in a number of ways including; • Pension • Saving schemes contributed to jointly by both employers and employees.

  36. EPF is a compulsory government-run savings scheme to which both employers and employees are required to contribute on a monthly basis. • The Employees Provident Fund Act was legislated in 1951 which establishes a statutory body under the control of a Board which makes all decisions regarding the funds except the decision regarding the investment which has been made by investment panel separate from the Board.

  37. As long as a worker is employed under a contract of service, he is required to become a member of the Fund. This include part time workers and temporary workers. • Certain categories of employees have the option whether or not to join as members. These include workers who have retired, self-employed, domestic servants and foreign workers. • Employees in the public sector contribute to the fund while they are under probation and once they confirmed in their appointment they have a choice either to continue in the fund or opt for the government pension scheme.

  38. Contribution • Effective 1 January 2012, the employer's share contribution for employees who receive monthly wages of RM5,000 and below is increased 1% from 12% to 13%. The employee's share contribution rate remains at 11%. For employees who receive wages of more than RM5,000, the employer and employee's share contribution remains at 12% and 11%.

  39. WagesAll remuneration in money due to an employee under his contract of service or apprenticeship whether it was agreed to be paid monthly, weekly, daily or otherwise. • Among the payments that are liable for EPF contribution: • Salary • Payment for unutilised annual or medical leave • Bonus • Allowance • Commission • Incentive • Arrears of wages • Wages for maternity leave • Wages for study leave • Wages for half day leave • Other payments under services contract or otherwise

  40. withdrawal Money can be withdrawn to; • Buy or build a house, to pay off a hosing loan • Pay for medical expenses for the member of his immediate family • Living expenses for a worker who has been incapacitated by an accident or a serious illness. • Pay fees for tertiary education for the member or children • Invest in approved unit trusts.

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