Wednesday, July 10, 2013

Malaysia denies senior workers in about 200 companies the right to Minimum Retirement age of 60

Retirement age for workers was increased by law, i.e MINIMUM RETIREMENT AGE ACT 2012, which came into force on 1/7/2013. But, there has been 2 Exemption Orders - denying many workers the right to benefit from this new law and right.

This new law increases the retirement age to 60 and also provides the Minister to even prescribe an even higher retirement age.

Section 4 Minimum retirement age(1) Notwithstanding any other written law, the minimum retirement age of an employee shall be upon the employee attaining the age of sixty years.
(2) The Minister may, by notification in the Gazette, prescribe a minimum retirement age higher than the minimum retirement age provided under subsection (1)....

Section 7  Invalidity of term of contract of service and collective agreement
(1) Any retirement age in a contract of service or collective agreement made before, on or after the date of coming into operation of this Act which is less than the minimum retirement age provided under this Act shall be deemed to be void and substituted with the minimum retirement age provided under this Act.

BUT, it does not apply to ALL workers, and the Schedule to this Act sets out who will not benefit from this new law

1. This Act does not apply to-
(a) a person who is employed on a permanent, temporary or contractual basis and is paid emoluments by the Federal Government, the Government of any State, any statutory body or any local authorities;
(b) a person who works on a probationary term;
(c) an apprentice who is employed under an apprenticeship contract;
(d) a non-citizen employee;
(e) a domestic servant;
(f) a person who is employed in any employment with average hours of work not exceeding seventy percent of the normal hours of work of a full-time employee;
(g) a student who is employed under any contract for a temporary term of employment but does not include an employee on study leave and an employee who studies on part-time basis;
(h) a person who is employed on a fixed term contract of service, inclusive of any extension, of not more than twenty four months; and
(i) a person who, before the date of coming into operation of this Act, has retired at the age of fifty five years or above and subsequently is re-employed after he has retired.

[I am at loss with regard to (a) - does this mean that public sector workers will not enjoy this right. The word 'emoluments' is not defined in the Act. Is it different from salary or remuneration?]

The most important group, is short or fixed term contract employees - and today, this is a very large group. Many employers using all kinds of means including VSS (Voluntary Separation Schemes) have gotten rid of regular/permanent employees - many of who get re-hired as short[or fixed] term contract employees. 

24 (twenty four months) in para (h) will also prejudice short/fixed-term contract employees, for now employers to avoid their entitlement will ensure that their period of employment would not exceed twenty four months.

MINIMUM RETIREMENT AGE (EXEMPTION) ORDER 2013 [PU(A) 186/2013] - in force from 29/6/2013

- here about 200 over employers were  exempted from all provisions of the Act for the period commencing from 1 July 2013 to 31 December 2013.
- this means that all workers in these companies who would be retiring earlier, depending on their employment contract or Collective Bargaining Agreement, which could be 50 or 55 or even earlier would not benefit from this new Minimum Retirement Age of 60. 
-  No obligation also placed on these Employers to protect these workers by providing re-employment or any payment of compensation.[Remember that one of the reasons for the increase on compulsory retirement age was because of a realization that retirees, even with the Employee Provident Fund(EPF) monies, had insufficient monies to survive in Malaysia until their demise - and had to find work and income to survive. Most affected would be the low-income earning workers.] How many workers would suffer by reason of what has been done by this new Human Human Resources Minister Richard Riot? How will they survive?

PU(A) 200/2013 - in force from 1/7/2013

The Minister exempts all employers with the names and registration numbers as specified in columns (1) and (2) of the Schedule from all provisions of the Act in relation to the executive and non-executive male employees who, before the coming into operation of this Order-
(a) have opted to change the age of retirement as stated in the contract of service from 60 years to 55 years; and
(b) have been paid compensation by the employers in respect of the change of the age of retirement referred to in subsubparagraph (a).

- Here about 28 companies are listed, out of which about 23 are PETRONAS companies, and being government-linked companies, it is shocking.
- Now, the question is what compensation? What is the rate? 
- Should there not be a law stipulating the rate of compensation? 
- It may also be a good idea for the government to stipulate a rate of compensation, if employees are compelled to 'retire' earlier than the minimum retirement age?

Sadly, a perusal of the internet, did not disclose any protest from the MTUC and/or Unions about this. Possibly, they may have protested but not in the public arena.

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