Workers on fixed-term contracts:- HR Ministry fails to provide JUST calculation of benefits when they are retrenched

Today, many employers are using NEW methods to employ workers ...and unfortunately the government has not put in place laws that will protect these workers.

Short-term contracts - Now employers enter into short-term employment contracts with their employees. This could be for 3 months, 6 months, 1 year or maybe even 2 years. There may be promises of renewal but alas, there is no guarantee of renewal - and hence, job security is not there, and workers find it more and more difficult to get new jobs as they get older and gain more experience. What many employers do is not renew these short term contracts after 1 year...or 2 years. Maybe later on, after a month or 2 has passed, they may sometimes hire the same worker back for maybe a different position for another short term.

Using Labour Supply Companies - Again, on record, the employer is the Labour Supply Company (usually some 2 ringgit company with no fixed assets...) - and not the company that uses these workers. Wages are paid by the labour suppliers to the workers - and not by the Company to the workers. These workers also cannot join the unions of the Company, if they exist. Labour supply companies are usually not industry specific - hence workers there also have difficulty even being part of any national union. Employment in Labour Supply companies are also not at all 'permanent' - and even hints of wanting to unionize may invite termination. Further, the fact that workers in Labour Supply companies are placed in different locations for different periods makes 'organizing' workers even more difficult.

Outsourcing Work To Other Smaller Companies - Even Banks in Malaysia have started doing this - and check vetting, internet/phone bankings, etc have been all outsourced. But alas, workers in these 'smaller companies' that do these outsourcing work
are not members of of Union - the NUBE, the National Union of Bank Employees. Bank Employees have been retrenched when banks decide to 'outsource' parts of its work - and with the emphasis on automation (ATMs, etc), internet banking, phone banking - we would be seeing another 30% of bank employees being retrenched in the near future, and this would happen whether global crisis came or did not..

The current provisions in law, as provided for EMPLOYMENT (TERMINATION AND LAY-OFF BENEFITS) REGULATIONS 1980 really will not do any justice for workers who are under these short-term fixed contracts, etc..

To be entitled to termination and lay-off benefits, one must have been working for at least 1 year (12 months),

an employer shall be liable to pay termination or lay-off benefits payment calculated in accordance with regulation 6 to an employee who has been employed under a continuous contract of service for a period of not less than twelve months ending with the relevant date if —

(a) the contract of service of the employee is terminated; or

(b) the employee is laid-off within the meaning of regulation 5.

(2) For the purpose of this regulation a continuous contract of service for a period of not less than twelve months shall include two or more periods of employment which are not less than twelve months in the aggregate if the intervening period or periods between one period of employment and another does not in the aggregate exceed thirty days.- Regulation 3, EMPLOYMENT (TERMINATION AND LAY-OFF BENEFITS) REGULATIONS 1980

and the calculation of termination and lay-off benefits is based on the number of years that one has been working for...

...the amount of termination or lay-off benefits payment to which an employee is entitled in any case shall not be less than —

(a) ten days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for a period of less than two years; or

(b) fifteen days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for two years or more but less than five years; or

(c) twenty days’ wages for every year of employment under a continuous contract of service with the employer if he has been employed by that employer for five years or more,

and pro-rata as respect an incomplete year, calculated to the nearest month. - Regulation 6(1) EMPLOYMENT (TERMINATION AND LAY-OFF BENEFITS) REGULATIONS 1980

Under the current law, those who have been employed for less than a year will NOT get any termination or lay-off benefits.

When workers were being employed as permanent employees, and generally will be employed until they resign - the 'termination or lay-off benefits' would have been just and fair.

But it certainly will NOT be fair to those being employed under fixed-term employment contracts, and it is proposed that for justice to be done to these workers, the calculation of what they should be paid should be 70% of their basic wages multiply the number of remaining months in their fixed-term contract/agreement.

Why 70%, and not 100%? Because 30% would be roughly the amount of money that they may spend for their food, etc - and this is early termination. [Maybe, they should be given 100% ...]

Some employers may try to terminate the contract alleging worker's breach, etc - and maybe there must be a provision in law, that the employer should be required to deposit the amount due with a HR Ministry Fund pending resolution of any dispute initiated by the worker, etc...

The Human Resource Minister must amend the Employment Act to include this manner of calculation, which shall be the minimum amount that employers must pay their fixed-term contract employees/workers.

The HR Minister must also discourage the practice of using Labour Supply Agencies - maybe these Labour Supply Groups may need to be banned. There must be direct employment of workers by the Company.