Tuesday, September 04, 2012

HR Ministry finally responds about 'contractor for labour' ...

Well, finally we have obtained a proper response from the Malaysian government. In June, we received a letter from the PM's office referring the matter to the Ministry of Human Resources. Note the letter dated 4/5/2012 was also sent to the Minister of Human Resources. The letter, which was sent  on behalf of the groups that issued the statement, included the following statement

93 Groups:- Abolish the ‘Contractor for Labour’ system Withdraw the 2012 amendments to Employment Act 1955.

93 - Mansuhkan Sistem ‘Contractor for Labour’ Tarikbalik pindaan 2012 kepada Akta Kerja 1955.

Letter from Prime Ministers Office on Abolish the ‘Contractor for Labour’ system Withdraw the 2012 amendments to Employment Act 1955

Now, the letter is in Bahasa Malaysia (the Malay language), and I have hurriedly done a rough translation  which is included below. Best read the letter and then look at my comments here.

Having considered the letter, it is my opinion that the reasons given for the amendments to introduce 'contractor for labour' are lame and misleading

1- Now, sub-contractors for labour specifically could not supply workers to principals - only to other contractors, who normally did specific short-term work at the workplaces of the principal. So, it was not a mere extension of term 'sub-contractor for labour' to 'contractor for labour'. The protest is that this amendment now allows the contractor for labour to supply workers to the principal without the principal becoming employer of the said workers. Private employment agencies already exist in Malaysia, and they supply workers to principals, who once accepted by the principal becomes employees of the principal, and the private employment agency is paid a fee for services provided.

2- All employers, be they owners or factories or some small contractor is already required to abide by the Employment Act, and also maintain a register of their workers. 

3 - The amendments was not so much to protect workers - but really contractors for labour (where unlike Private Employment Agencies is currently not strictly regulated and monitored by any existing specific law). The new amendments even giving these contractor for labour priority of debt which is usually accorded to workers only, usually with regard to unpaid salary, etc. Contractor for labour is given a special treatment compared to all other contractors and companies dealing with the principal - why is that? 

4 - Para 8 - look at the last few sentences. Note that even if the proposed amendments concerning 'contractor for labour' is not there, the workers would not be prejudiced. The only prejudice is to the contractor for labour who now, just like any other contractors, sub-contractors, suppliers, etc will have to claim against the principal through the civil courts. Malaysian government should be concerned with the rights of workers - not rights of these contractor for labour.

5 - So, we must continue to call for the abolition of the contractor for labour, and repeal of all those amendments concerning contractor for labour. We already have Private Employment Agencies, and this is all we need for they can very easily assist principals to find workers, and assist workers to find employers.

6 - Really, when will a worker of a contractor for labour become an employee of the said contractor. The moment the said worker starts working with the principal? Or should it not be the moment the worker signs on with the contractor for labour? When will he stop being an employee of the contractor for labour - when he is no more needed by the principal? Rightly, if it is going be the case that the worker is an employee of the contractor for labour, his employment and salary should start when he signs up with the said contractor and until his contract with the said contractor ends, not when the principal says he does not require workers anymore. It is just too complicated for the contractor for labour really does not have workplace or work for workers - best to just abolish contractors for labour.

The above are initial reactions only..



(Below is a speedy rough translation from Bahasa Malaysia[Malay Language] to English of the letter dated 23/8/2012 that was received by me on 3/9/2012 from the Ministry of Human Resources. This letter is in response to the Letter and accompanying Joint Statement that was send on 4/5/2012, which was endorsed by over 90 different Trade Unions and Civil Society Organizations. Compare with the original Malay letter for confirmation of the accuracy of the translation)

Our Reference: KSM/DP(S)1/1/02
23 August 2012
I refer to your letter dated 4th May 2012 about the abovementioned matter.

2. In advance, I on behalf of the Ministry wish to record our appreciation to you for giving your viewpoints about the Employment Act (Amendment) 2012. As you would realize that the changes made are in line with the desire of the Government to implement transformation in the management of industrial relations and as such obviously the worker element in catalyzing development of the country is an important factor that much be given attention. Thus, in realizing this transformation, the Ministry is of the opinion that the said Employment Act 1955 need to be strengthened by making necessary amendments to already existing clauses after taking into consideration the views of workers and employers through a tripartite approach to ensure that the welfare of workers is given clear guarantees in labour legislations so that it is always protected.

3. As you would realize, before the Act was amended there was a pre-existing definition for sub-contractor for labour who functioned to manage workers needed by principals. What was clear was that the practice employment through this sub-contractor for labour has long been occurring and they were not registered. As a result, it caused the employment of workers through this system was not efficiently and effectively controlled. There were situations where the welfare of the workers was threatened and the employer that committed these wrongdoings were difficult to be identified and appropriate actions taken against them. As a result, based on the principle of improvement and not at for any negative reasons that these amendments were made to the definition of sub-contractor for labour changing it to contractor for labour (manpower contractor) under Section 2 Employment Act 1955 by merely adding the word ‘principal’ only. The amendment was meant to expand to expand the scope of usage so that it covers and includes the relationship between principal, contractors and sub-contractors that provide manpower. Thus, the Ministry, in good faith, brought about this new definition to control the practice of supplying workers by contractor for labour (manpower contractors) especially in the plantation sector so that it is more organized.

4. For your information, the Ministry did not intend to create simplification or the promotion of contractor for labour (manpower contractors). As such with this new definition it will ‘tighten’ all process of monitoring and enforcement by the Ministry through the Manpower Department (Labour Department). Vide this amendment it also will not provide opportunity to any party who simply want to be or with intention to be contractor for labour to do without complying with the existing labour legislations. The obligation for contractor for labour to register under section 33A with the Director General of Human Resource Department is to provide a register that will ensure workers are given appropriate protection including their welfare with regard contributions to the Employees Provident Fund (EPF/KWSP) and Social Security Organisation (SOCSO/PERKESO). This provision is important for the purpose of monitoring and inspection by the Human Resource Department and further will avoid the happening of violations/exploitations of employed workers.

5. With regard to this, Ministry would like to explain that the practice of contractor for labour (manpower contractors) is a global phenomenon and Malaysia is not exempt. Thus, the definition of contractor for labour (manpower contractors) is not a new proposal. This amendment was supported by the National Union of Plantation Workers (NUPW) because this practice of supplying workers by contractor for labour (manpower contractors) is already happening and need to be registered with the purpose of increasing transparency, enabling enforcement of laws and protecting the welfare of workers. The proposed amendments in no way reflective of the Government’s intention to create worry, erode rights and worker interests about security of tenure, jeopardize the permanency of jobs, or even avoid the status and responsibility of employers including contractor for labour (manpower contractors). The government has also no desire to create difficulty in identifying the true employer in the question of wage payments and absence of the right to unionize. In fact, the real intention of the amendments is to enable the Ministry in particular the Human Resource Ministry to identify positively the party that should be responsible for the said workers. Therefore, the belief that the Ministry is promoting employment of workers through the contractor for labour system or outsourcing is not accurate.

6. Further, the Ministry wishes to clarify that the amendment to the Employment Act 1955 came into effect on 1 April 2012, is meant to fulfill the needs and current changes by providing a more conducive environment for labour and strengthen the enforcement of labour laws. Amongst the other positive amendments which have been inserted is compulsory payment of wages of workers including domestic workers into bank accounts, maternity leave benefits to all women workers, new provisions to combat sexual harassment at the workplace which protects all workers, mandatory public holiday for Malaysia Day and others.

7. In making the amendment to labour laws, the Ministry always listens and takes into consideration views and feedback from employers and workers. This is to ensure a harmonious labour environment. As a step forward, the Ministry with the approval oif the Malaysian Trade Union Congress (MTUC) and the Malaysian Employers Federation(MEF) have set up a Committee to study the employment practice of contractors for labour. The object of this Committee which has been set up is to propose preventive steps and improvements so that there will not happen any abuse by any of the parties concerned when the said amendments start to be put into effect.

8. By taking the spirit of tripartism and caring Government on this issue, besides fulfilling the request of the NUPW that there be provisions enacted to protect the said workers as well as the request of MTUC to maintain the existing provisions, the Ministry has made an Exemption Order under section 2B of the Employment Act 1955. This exemption order is made to exempt all activities of manpower supply by any contractor for labour in all sectors, save the agricultural and plantation sector from compliance with the provisions concerning rights of contractors for labour as contained in section 31, 33A, 69 and 73 of the Employment Act 1955. This means, the new provisions concerning contractor for labour only applies to contractor for labour carrying out activities of manpower supply in the agricultural and plantation sector only. Whereas the rights of the subcontractors for labour for all the other sector is maintained as was before the Employment Act 1955 was amended. As such, if there are any claims against contractors for labour, the said workers can still make the said claims as per their capacity as employers under the Employment Act 1955 only. However, claims by contractors for labour against principals can only be made through civil courts.

9. In conclusion, in making a new policy and amendment to any labour laws, the Ministry always listens and considers any suggestions advanced by workers or employers and other dialogue partners. In connection with that, whatever decision made is only based on the interest of both parties being worker rights and employer interest which have to be balanced. It is hoped that the recent amendments to the Employment Act 1955 will get the support of all parties to ensure workers welfare is protected and to guarantee harmonious industrial relations in this country.

That’s all. Thank You

“Innovative Workers the Movers of Transformation”

On behalf of the Chief Secretary of the Ministry of Human Resources

c.c. SUSK YB Minister of Human Resources

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