MINIMUM WAGES ORDER 2022 GAZETTED

The Minimum Wages Order 2022 was gazetted on 27 April 2022. These are the key provisions:

  • The monthly minimum wage is RM1,500 effective 1 May 2022.
  • Employers with less than 5 employees are exempted until 1 January 2023. Until then, the minimum wage for these employers is maintained at RM1,200 a month (City Council or Municipal Council area) or RM1,100 a month (other than City Council or Municipal Council area).
  • Employers carrying out professional activities are not exempted, even if they have less than 5 employees. The definition of professional activities is as per the Malaysia Standard Classification of Occupations (MASCO) as published by the Ministry of Human Resources. This includes, for example, engineers, lawyers, surveyors, and medical practitioners.

Commentary

Affected employers should take steps to comply with the Minimum Wages Order 2022. This should include communicating with employees, recording any increase in wages in writing, and notifying payroll providers. Employers with exemptions have at least 8 months to make these adjustments, since their compliance is only required on 1 January 2023.

Contrary to earlier announcements by the Ministry of Human Resources that certain businesses that have been “facing huge losses” will enjoy some flexibility or exemptions from minimum wage, there are no such exemptions in the Minimum Wages Order 2022. On the contrary, professional sectors are subject to more stringent requirements since they receive no exemption regardless of their number of employees. This means, for example, a sole proprietor of a law firm with only 2 employees will have to pay a monthly minimum wage of RM1,500 effective 1 May 2022.

The Minimum Wages Order 2022 as gazetted demonstrates the importance of distinguishing between “announcements” and the law. Government announcements and press statements are not the law. What is legally in effect is only what is gazetted.

The inconsistency between government announcements and the law will likely reoccur when we deal with the amended Employment Act 1955 and the proposed expansion of employee coverage. Previously, there were announcements that the amended Employment Act 1955 will apply to “all employees” but the Ministerial Order on this has not been gazetted. There is a strong possibility that the Ministerial Order, when gazetted, may reflect something different. Until this order is gazetted, employers will remain uncertain as to which part of their workforce will be covered by statute.

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This article was written by Donovan Cheah (Partner). Donovan has been named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific for 2017-2022, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work.

Donovan & Ho is a law firm in Malaysia, and our employment practice group has built a reputation for providing strategic employment advice to local and global organisations.  Our team of employment lawyers provide advice on employment law and industrial relations including review of employment contracts, policies and handbooks, advising on workforce reductions, and managing dismissals of employees for poor performance or misconduct. We also represent clients in unfair dismissal claims and employment-related litigation. Have a question? Please contact us.

 

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