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Employers in Malaysia must honour minimum rates or face penalty as new order on wages

Jul 01. 2016
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The Malaysian government implmented the Minimum Wages Order 2016 (MWO 2016) yesteday despite complaints by employers that they are ill-prepared to do so. The new rate is 1,000 ringgit ($248) for Peninsular Malaysia and 920 ringgit ($228) in the eastern pa

Human Resources Minister Richard Riot said the new minimum wage rates announced by Prime Minister Najib Razak in October last year when he tabled the 2016 Budget gave employers eight months to get their house in order.

“Claims that they are not prepared because the economy is not good is also unfounded,” he said in a statement.

The minister said last year’s labour productivity indicator showed an upward trend at 75,538 ringgit ($18,699) against 73,091 ringgit in 2014, while foreign direct investment amounted to 43.4 billion ringgit in 2015.

“Employers must honour the new rates for minimum wage without any delay,” he said in response to the Malaysian Employers Federation’s claim that many employers were ill-prepared to implement it as the current economic situation was not conducive for most employers.

The minimum wages are according to region, at 1,000 ringgit per month or 4.81 ringgit per hour for Peninsular Malaysia, and 920 ringgit per month or 4.42 ringgit per hour for Sabah, Sarawak and Labuan.

For workers paid on a piecework, tonnage, trip or commission basis, the monthly salary shall not be less than 1,000 ringgit in Peninsular Malaysia, and 920 ringgit in Sabah, Sarawak and Labuan.

The order will involve all employers in the private sector, regardless of the number of employees they have, except domestic helpers.

Riot said the government had studied all views and recommendations submitted by the National Wages Consultative Council before setting the new rates and had taken a balanced approach where the interests of both employers and employees were looked into.

Enforcement will be carried out to ensure employers heed the order and those who flouted it would be liable to a fine and even a jail term.

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