Malaysian businesses warned they must pay employers’ levy

Minimum wage compliance also under spotlight as government increases pressure on organisations

Malaysian businesses have been warned they need to comply with the new minimum wage and recently introduced employers’ levy – or face a government crackdown.

Human resources minister M Kulasegaran said companies that have not registered with the Human Resources Development Fund (HRDF) have until the end of June to provide their details and contribute to the employers’ levy. Meanwhile, a new minimum wage regime is expected following the dramatic recent change of government in the country.

The government-imposed levy is mandatory for employers in the fields of manufacturing, mining, quarrying and other sub-sectors of the service industry with 10 or more Malaysian employees.

The purpose of the levy, which amounts to 1 per cent of collective monthly wages, is to invest in the training and skills of workers. Kulasegaran said that approximately 23,000 of the 45,750 employers who are eligible to register have yet to sign up and contribute to the levy.

“The ministry will not hesitate to take those who haven’t registered or [who have] defaulted to court,” Kulasegaran said. “We will give them until the end of this month to make the necessary contribution.”

Any employer which fails to register is liable to receive a fine of RM10,000 (US$2,508) and up to one year of imprisonment.

Kulasegaran said he hoped to avoid taking employers to court. “We don’t want to take the officers or office bearers to court and put them in jail or fine them,” the minister said. “This is the last resort, but having about 50 per cent who don’t contribute is not good.”

Kulasegaran said that employers experiencing financial difficulties could contact the HRDF and the ministry to see what can be done to find a “win-win position for both parties”.

The move comes as the incoming Parti Rakyat Sarawak government said employers must comply with new minimum wage regulation.

Doris Sophia Brodie, political secretary to the chief minister, said that many workers on a low income were struggling due to the rising cost of living.

Currently, the monthly minimum wage in Peninsular Malaysia is RM1,000 (US$251), dropping to RM920 in Sarawak and Sabah. Brodie said she was hopeful that a manifesto pledge to increase the minimum to RM1,500 (US$376) would come to fruition.

“I am certain those working at coffee shops and supermarkets are looking forward that the proposed minimum wage will materialise,” said Brodie, adding that she hoped employers would pass on the new minimum wage rate to their staff and that authorities would “ensure that employers do not abuse the system”.

She added that employees could lodge a complaint to the relevant authorities if their employers did not comply.

The increased cost of living and a stagnant minimum wage have increasingly led to discontent among Malaysian employees. Almost one in three (29 per cent) wants a pay rise, according to the Employees Job Happiness Index 2017 survey by JobStreet.com.

Meanwhile, Bank Negara has called for a new ‘living wage’ which would enable households to enjoy a ‘minimal acceptable’ living standard, including the ability to meaningfully participate in society, opportunities for personal and family development and freedom from severe financial stress.

Explore our related content

Reward management

Information on strategic, total, international and executive reward, managing an effective reward strategy and resources on pay and risks

Read more
Top