Private Employment Agencies (Amendment) Bill 2017 - Sneaking in 'contractor for labour' system? Local Worker suffers?

Private Employment Agencies (Amendment) Bill 2017 is now before the Parliament - A close perusal will see that the proposed amendments are detrimental to workers are trade unions...it seems to be re-enforcing the 'contractor for labour' scheme..., and its impact to local workers may be serious..

The dangers of the contractor for labour scheme (in brief):-

1 - The labour supplier('contractor for labour') supplies to employers that need workers for their workplace their 'own employees' - rather than supplying workers, who will become employees of the workplace (factories, offices, companies) that they will be working.

2 - Being 'non-employees' of the factories or workplace they are really working at, these 'non employee'( ) will not be able to enjoy the benefits of employees through existing Collective Bargaining Agreements, who are union members at the workplace. The direct impact to to the workers(employees) of the particular workplace is that their ability to 'bargain' for better rights and better working conditions is significantly weakened. Unions representing workers at a particular workplace lose their power to bargain and get better rights for their union members. Note Malaysia places NO LIMITS to the number of 'non-employees' that can be utilized in the workforce of a particular workplace - nothing stopping employers of workplace from reducing their employees - and simply just using these 'non-employees' supplied by contractors for labour. This would result in the end of Trade Unions - and great injustice to worker(union members). Laws must be created to ensure all workers at a workplace are employees of that workplace, hence able to form unions and get better rights and working conditions from their employers.

3 - Being non-employees(these supplied workers) can also be discriminated - Wages, Annual Leave, Worker Rights, Promotions and Wage Increments, etc... The Agreements with the 'labour suppliers - the contractors for labour' is for the supply of a certain number of workers, and the Workplace employers pay directly to the labour supplier who then pays their own employees directly - of course, after taking a certain percentage.

4 - The Malaysian Trade Union Congress(MTUC), trade unions and civil society groups have been calling for the abolition of this 'contractor for labour system' insisting that all workers at any workplace must be direct employees of the factory/workplace employers. One point made was that we should use the Private Employment Agencies, who find employers for workers looking for employment, and find employees for Employers needing workers - a service provided for a one off stipulated fee. The new proposed amendment changes the role of Private Employment Agencies - trying to transform them into 'Contractors for Labour' - giving them to supply their 'own employees' - not simply supplying workers, one accepted shall be employees of the employer of the workplaces. Sneaky amendments...????

How is the new amendment trying to do this?

First, it changes the very definition of the 'private employment agency'..

The now existing definition is 

"private employment agency" means-

(a) an employment agency conducted with a view to profit, that is to say, any person, company, institution, agency or other organisation which acts as intermediary for the purpose of procuring employment for a worker or supplying a worker for an employer with a view to deriving either directly or indirectly any pecuniary or other material advantage from either employer or worker; the expression does not include newspapers or other publications unless they are published wholly or mainly for the purpose of acting as intermediaries between employers and workers;

(b) an employment agency not conducted with a view to profit, that is to say, the placing services of any company, institution, agency or other organisation which, though not conducted with a view to derive any pecuniary or other material advantage, levies from either employer or worker from the above service an entrance fee, a periodical contribution or any other charge;

The proposed amendments...

(a) by substituting for the definition of “private employment agency” the following definition:

‘ “private employment agency” means a body corporate which is incorporated under the Companies Act 2016 [Act 777] and is granted a licence under this Act to carry on recruiting activity;’;

(i) by inserting after the definition of “private employment agency” the following definition:

‘ “recruiting” means activities which have been carried on by any person, including advertising activities, as intermediaries between an employer and a job seeker to—

(a) offer to look for an employment, offer an employment or obtain an employment, for a job seeker; or

(b) offer to look for an employee, offer an employee or obtain an employee, for an employer;’...

Well, here you see it - "offer an employee" - when they should be offering "a worker" - see the old definition that was clear. By using the word "employee", it allows the 'private employment agency' to provide their own employees - instead of workers that will be employed by the employer of the work place. Go read the Amendment Bill, found in the Parliament's website 

When an employer of a workplace signs an agreement with a labour supplier(contractor for labour) it is usually for the supply of an unnamed number of workers, where the rate of payment depends also on the number of hours of work done(including a different rate if work done is overtime ad/or work on a rest day or public holiday). It is the 'contractor for labour' that pays his own employees - Guess what, they will not pay their 'employees' the full sum paid by the employer of the workplace to them(the labour supplier) - so profit from workers supplied continues to role in for so long as their 'employees' are working for the workplace employer.

So, is it justified that they now get to charge 'one month wages' for supplying an employee to the employer of the workplace? Well, that is in the new amendment - see the proposed new Schedule 1, 2nd Table - (b) Placement Fees - item (iii) -Non-citizen employee who is employed within Malaysia. Does this mean, they cannot still collect the month percentage of profits from the amount paid by the employer of workplaces to them? No mention, so this means, that it is additional payment by migrant workers? Does this mean that this is the maximum they can charge 'foreign workers' for all matters related to recruitment? Not very clear...

See also item (i) and (ii) of the same table - see there the word 'job seeker' is used.. not 'employee' as used in para (iii)

(i) Job seeker who is employed within Malaysia

(ii)Job seeker who is employed outside Malaysia

Item (iii) reads as follows - 'Non-citizen employee who isemployed within Malaysia

 Looking at the proposed amendments, it seems that the contractor for 'labour system' will only apply to 'foreigners'(migrant workers) and not local workers - and this is good, if true. At present, the supplied employees include both foreign and local workers...So, no more 'outsourced'(the common term used for this employees of contractors for labour supplied to work in other employer's workplaces)

Malaysia has still failed to indicate what is the employer's obligation for 'employee's supplied by the 'contractor for labour'? None. If this 'contractor for labour' system is to continue, then there must be clear provisions in law as to what is the employer obligations of the supplier, and what is the 'employer obligations' of employers who use these supplied 'employees'? 

Remember a 'supplied employee' of another, and not an employee of the workplace really have no rights to demand better rights or better working conditions from the workplace employer. Once 'supplied', most of these 'employees of the supplier' really is under total control of the employer of the workplace ...BUT No Right to Complain? No Right To Ask For Better Rights? Well, this is so wrong....

Is there a discrimination against Local Workers?

Well, the fee that the 'Private Employment Agency' gets for the placement of a local worker "job seeker' is just 25% of the basic wages for the 1st month's wages... For a local worker, earning minimum wage of RM1,000 - the Private Employment Agency gets only RM250-00 (But wait, if the worker is put on probation by the new workplace employer, the 25% is even a lesser amount)

Now, if it was a migrant worker 'employee' - they get 1 month's wages > So guess what, it is more profitable to deal with migrant workers - they get more...so will they bother with 'local' workers - maybe the more highly paid local workers, but not the 'minimum wage' workers....

Now, for the migrant worker - they are listed as 'non-citizen employee' - so they will remain as employees of the Private Employment Agencies(now becoming a 'contractor for labour') - and the monthly profits(income from the sweat and efforts of the supplied worker) will continue to roll in... Wow, better to just deal with the 'non-citizen employee'...rather than local workers...

Hence, Local Workers will suffer - private employment agencies may no longer be interested in 'local workers' looking for employment???

Remember that Private Employment Agencies is to HELP workers find jobs, and Employers to find workers ... Will they be playing that role anymore especially for local workers? For such employment agencies helping local workers, it should be made easy to form such companies - as they help Malaysian workers find jobs...

What about Permanent Residents - should they not be treated differently, and not lumped into the same category of 'non-citizen employees'? Should they not be treated as better than foreign worker? Remeber PR status is usually given to spouses of Malaysians - and now both spouses really need to work to survice in Malaysia...

There may be other things wrong with the proposed amendments being tabled about the Private Employment Agencies Act 1981 - so look at these amendments seriously..

Has our members of Parliament, Senators and/or trade unions even noticed what is happening? Have they been distracted with many other matters like 1MDB, etc -- I have not looked at the Hansard to see whether there were even serious questions raised and points made...

I must say that I just became aware of this - sadly, Media also seems to have not highlighted much on the implications of the proposed changes...

 

Recommendation(at the moment):-

1.With regard to placement fees within Malaysia, which will affect most Malaysian workers, which is now "Not more than 25% of the basic wages for the first monthly wages" - it really should be increased to at least be RM500 or RM1,000 - Maybe the new wordings could be ""Not more than 25% of the basic wages for the first monthly wages, or RM1,000, whichever is more" Maybe, the government should pay half(RM500) of this with regard low-waged local workers - as, the Private Employment Agency is really helping our local workers find jobs. An 'incentive' may be the right thing for every local worker helped to find a new job.

 

2.Keep the Private Employment Agencies for the purpose of helping workers find employment with employers of workplaces that need employees, and help employers find worker they could employ. Private Employment Agencies should not be transformed into 'contractors for labour'. Fees chargeable must be a one time fee, payable by the employer.

 

3. For migrant workers, Private Employment Agencies, may also be entitled to charge employers, all the other expenses incurred in bringing in the migrant workers.

 

4.  PR holders should be differentiated from migrant workers, especially PR holders who are spouses of Malaysians, they should be charged the same rate as local workers or maybe slightly higher say -  "Not more than 25% of the basic wages for the first monthly wages, or RM1,500, whichever is more" All spouses of Malaysians should be accorded PR status, with 3 months of the marriage being registered in Malaysia. Divorce or separation could be a condition for the revoking of PR status. However, if there are children, who are Malaysians, then rightly PR status should be retained especially if the said parent and children chose to remain in Malaysia.