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Following consultation with the National Wages Consultative Council ("NWCC"), the Malaysian Ministry of Human Resources (the "Ministry") implemented the Minimum Wages Order 2012 ("2012 Order") pursuant to section 23 of the National Wages Consultative Council Act 2011 (the "2011 Act"). The Order became effective on 1 January 2013. The Order applies across the board, covering both local and foreign employees, with the singular exclusion of those who are classified as domestic servants under the Employment Act 1955. The minimum wage for employees in Peninsular Malaysia is set at RM900/- per month whilst employees in East Malaysia are entitled to RM800/- per month.
Under the 2011 Act, the Ministry is obliged to carry out a review of the national minimum wages at least once every two years to ensure that the minimum wage rates are in line with Malaysia's economic conditions as well as inflation rate. Concurrently, the Ministry is also set to publish a national wages index as part of the Malaysian Government's 11th Malaysian Plan once collection of all the pertinent data is concluded. The national wages index aims to serve as a guide or benchmark for employers to set a fair and transparent wage levels for employees based on the category of work, qualifications, skills and productivity. The Ministry has stated that it intends to take into account various factors such as employee qualifications, job category and industry in order to accurately furnish a national wages index that is practical, realistic and coherent. Whilst the implementation of the national minimum wages is widely welcomed by lower-income employees, employers, especially small-medium enterprises argue that they are now required to incur higher costs in their businesses, which will indirectly result in an increase of prices in products and services. The debates between the employers and employees are only expected to get more heated as trade unions are now pushing for higher minimum wages (in light of the reduced purchasing power due to the implementation of the Goods and Services Tax in April 2015) in the upcoming review of the national minimum wages by the Ministry.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Christopher & Lee Ong
Level 22, Axiata Tower ,
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Contacts: Lee Hock ChyeManaging PartnerD +603 2273 1919F +603 2273 8310hock.chye.lee@christopherleeong.comYon See TingPartnerD +603 2278 8311F +603 2278 8322see.ting.yon@christopherleeong.comFiona SequerahPartnerD +603 7958 8310F +603 7958 8311fiona.sequerah@christopherleeong.comLim Wee HannPartnerD +65 62320606wee.hann.lim@rajahtann.comYau Yee MingPartnerD +603 2278 8311F +603 2273 8322yee.ming.yau@christopherleeong.comKuok Yew ChenPartnerD +603 7958 8310F +603 7958 8311yew.chen.kuok@christopherleeong.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
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