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Movement Restriction and Unpaid / Annual Leave. What’s your right as an employee.

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The below is a good reference for all the employees in Malaysia who are currently working from home or staying at home doing nothing but were asked to take annual leave? It’s a Legal Quickie from ANTON & CHEN Advocates and Solicitors. (Do visit their FB page here for many more Legal Quickies yeah. Written in easy to understand language for everyone)

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Legal Quickie 19: UNPAID LEAVE DURING RESTRICTED MOVEMENT – YAY OR NAY.

Just yesterday, our Prime Minister Tan Sri Muhyiddin Yassin announced the imposition of a nationwide Restriction of Movement Order (RMO) which will take effect from 18th March to 31 March 2020 given the rising number of COVID-19 cases in Malaysia.

As a result, most companies and businesses would likely be financially crippled during this period given that the government has only allowed for “essential services” such as banks, water, electricity etc. to continue running.

Inevitably, the companies that you are employed with may ask for you either work from home or go on unpaid leave during this period. In general, companies cannot force their employees to take unpaid leave.

To that end, employers must always come to a mutual arrangement with their employees in the event that they require their employees to take unpaid leave notwithstanding the imposition of RMO by the government.

If we were to strictly follow the letter of the law, employers are required to pay their employees’ wages during this period unless the terms of the employment contract cover situations where employers can impose a lay-off period without pay.

An example of such a clause would be as follows: –The Company reserves the right to lay you off or put you on short time working where the needs of the Company’s business make this necessary, for example because there is a temporary cessation of or reduction in work or a temporary closure of the workplace. You will be notified of the lay-off or short time working, the date when it will start and how long it is anticipated to last for. The position will then be kept under regular review by the Company.In the event that you are laid off or put on short time working, your entitlement to pay on workless days in that period of lay-off or short time working will cease.

Similarly, employers cannot force employees to take annual leave. Take the case of of Kesatuan Pekerja-Pekerja Continental Tyre Pj Malaysia Sdn Bhd v Continental Tyre Pj Malaysia [2015] 3 ILR 462 where the Company compelled their employees to utilise their respective annual leave during a plant shutdown. The Industrial Court held that the Company had the right to shut down the plant but did not have the right to force their workers to take annual leave during those days.

In Goodyear (M) Bhd v. National Union of Employees in Companies Manufacturing Rubber Products [1982] 2 ILR 105, The Industrial Court held that the employer did not have to pay any compensation to employees who had been directed to take their annual leave during the cut-down in production but directed the employer to pay wages to the employees who had been instructed to take unpaid leave. It was further held to be fair and reasonable for the employer in that instance to pay employees half of their basic wages for each day the employee was laid off.

In conclusion, employers are urged to take cognizance of their respective legal obligations during this period and thread carefully each time they impose cost-cutting measures. On the other hand, employees who have been forced to take unpaid leave during this period may wish make a complaint to the nearest Department of Labour.

Messrs Anton & Chen urges everyone out there to not panic as panic is useless in times like this. Keep vigilant, stay sanitized and stay indoors.

Chen Yu Szen (Visit ANTON & CHEN FB page here)

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Next suggested article: Only essential premises remain open from 18th to 31st March 2020

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