June 20, 2021

Volume XI, Number 171

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June 18, 2021

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Global Employment Law Update - Part 4: Israel to Malaysia

Introduction

Welcome to the latest edition of the McDermott Will & Emery Global Employment Law Update. The purpose of this publication is to provide you with concise summaries of many of the laws and court decisions from 2020 that significantly affect employers and employees all over the world. No publication has ever captured all new employment law developments from every single country. However, our effort to create the most comprehensive global employment update ever assembled has resulted in updates from 53 countries. 

Many of the updates presented in this publication describe changes in the law that are well known to lawyers and human resources professionals from those countries, but are lesser known in other parts of the world. Our aim is to provide you and your colleagues with a useful reference guide to significant changes in employment law all across the globe. Furthermore, we hope this guide—and other specially designed products we create for our clients—will serve as a tool to assist multi-national businesses in their ongoing struggle to maintain a consistent global corporate culture amidst an ever-changing landscape of local employment laws.

Local employment lawyers from each country, who are either McDermott lawyers or part of McDermott's Global Employment Law Network, prepared these updates. We select each law firm participating in our network based on their outstanding local reputation and, in most cases, our prior experiences in working with them. Participants in the network work closely with McDermott lawyers on client projects, article writing, seminar and webinar presentations as well as signature client events. 

Israel

THE EFFECTS OF COVID-19 ON THE ISRAELI EMPLOYMENT MARKET

COVID-19’s full impact on the economy and employment is yet to be known. During 2020, the Israeli government imposed at least two lockdowns, each of which lasted three to four weeks. Many regulations were passed regarding workplace restrictions, such as the number of employees allowed in a workplace, social distancing at work and which employees or workplaces can be categorized as essential to the Israeli economy, among others.

Coronavirus Sweeping Paid Sick Leave

During the early stages of COVID-19, an order was released establishing a blanket medical certificate for those who were ill or forced to stay in isolation due to COVID-19. As a result, employees were able to use their accumulated paid sick leave for time spent in quarantine. Israel's Supreme Court accepted a petition by Israeli employers and by the Employers' Associations opposing the sweeping sick leave coronavirus order because of the financial burden it imposed, requiring them to finance their employee's long-lasting quarantines. The Supreme Court ordered that quarantine does not qualify as “sickness” under the Sick Leave Law and canceled the sweeping medical certificate. Following the court ruling, a law was enacted which determined that the Israeli National Insurance Agency will participate in the cost of quarantine payment.

MAJOR COURT RULINGS

Labor Appeal (National) 383-03-18 ILAN Israeli Association for Injured Children v. Michael Mochdinov

250% pay for hourly employees working on holiday: According to Extension Order – Framework Agreement from 2000, all hourly and daily salaried employees are entitled to nine days of paid holiday per year under certain conditions—even if they did not work during the holiday. Additionally, under the Hours of Work and Rest Law, an hourly or daily employee who worked during the holiday is entitled to 150% of his/her regular salary. According to earlier court rulings, only an employee who was forced by the employer to work during the holiday was entitled to both the 100% holiday pay and the 150% pay. In the ILAN case, the labor court ruled that so long as the employer was involved in the scheduling the work arrangements of the employee during this period (even if the employee chose to work) it is considered as if the employee were forced to work, and the employee will be entitled to the entire 250% payment.

Labor Appeal (National) 47271-06-18 Hatama v. Sami Hafuta

Under Israeli law, prior to terminating an employee, an employer must conduct a hearing to grant the employee an opportunity to give their position to the employer before a final decision of termination is made. This court case dealt with the hearing process prior to the termination of an employee of contractor for disciplinary reasons when the termination process was initiated by the party receiving the service from the contractor (i.e., the termination process was not initiated the contractor who is formally the employer). The national labor court ruled that when dismissing a contractor’s employee upon demand of the service recipient due to serious circumstances, it is not sufficient that the contractor conduct the termination hearing process, but rather both the contractor and the service recipient must participate in the hearing.

Labor Appeal (National) 316-10-19 Opus-HR v. Zeit Tafari

This recent court ruling softened the above Hatama v. Sami Hafuta. The court ruled that if the employee of the service contractor has spent a limited amount of time on the premises of the service recipient, only the service contractor (i.e., the employer), and not the service recipient, must attend the termination hearing. In conclusion, the court ruled that service recipient is required to attend the termination hearing of the employee of the contractor only under certain circumstances, specifically based on the amount of time the contractor’s employee spent on the premises of the service recipient.

Labor Dispute (Tel-Aviv) 16863-07-20 Dor Alon Energy v. National Workers' Union

Dor Alon Energy attempted to prevent the national workers’ union (Histadrut) from unionizing Dor Alon’s employees by claiming that the Histadrut was using illegal tactics to force Dor Alon employees to join the union (specifically offering employees with gift cards and phone chargers, among others). The court ruled in favor of the Histadrut, stating that the gifts provided to Dor Alon employees did not affect their freedom to choose whether they wish to join the Histadrut, and the court ruled that the Histadrut is the representative union in Dor Alon. This court ruling widens the power gaps and capabilities between employers and the unions, as employers are not permitted to take any action to attempt to influence their employees from joining a union.

Laos

HYGIENE AND SAFETY MEASURES DURING THE COVID-19 OUTBREAK PERIOD

In 2020, the COVID-19 outbreak seriously impacted the emerging economic sector in Laos. On May 11, 2020, the National Taskforce Committee for COVID-19 Prevention and Control issued Instructions No. 071 on Adjusting the Conditions and Measures for the Operations of Business Unit during the COVID-19 Outbreak (the Instructions) to assist the country’s business units in resuming operations and maintaining sanitary conditions, thereby preventing further economic loss. Most recently, the government issued a notification in January 2021 confirming the continued enforcement of the various mandates to uphold hygiene and safety in the workplace, cooperate with authorities in their efforts to combat the virus, and restrict certain activities, among other measures.

The May 2020 Instructions address all types of business units in Laos and give special attention to specific workplaces (i.e., factories) that have many workers and therefore increase the risk of spreading the virus on a large scale. In particular, the Instructions provide six conditions that factories and workplaces must observe throughout the outbreak:

  • Working areas must not be narrowed and must accommodate social distance measures.

  • Canteens must be spacious and allow good hygiene. Utensils must not be shared. One meter must be observed between each seat. There must be a separate room in which suspected positive COVID-19 cases can be placed.

  • Clean water, masks and places to wash hands with sufficient soap and gel must be provided.

  • There must be an employee who monitors staff entering and leaving the working areas.

  • Employees must dispose of their trash properly.

  • The National Task Force’s inspections should be facilitated.

In addition, the Instructions require the following five measures to be implemented:

  • Temperature checks in the morning and evening. If an employee presents symptoms (temperature of 37.5°C, cough or difficulty breathing), records of this must be made, and they must be isolate, and consult with the emergency number on what must be done accordingly.

  • Provision of masks.

  • Social distancing of at least one meter. Activities that cannot ensure such social distancing must be prohibited.

  • Monitor outsiders working with the legal entity.

  • Clean working areas, canteens, toilets, dormitories and warehouses/storerooms every day.

IMPORTING FOREIGN LABOR

As a measure to limit the spread of COVID-19, Laos’ borders with its neighboring countries and international checkpoints (e.g., airports) have been closed unless there are certain reasons for them to be opened. Given this limitation and the ensuing economic loss, the local authorities have put in place procedures to allow requests for importation of foreign labor. According to these procedures, employers willing to import foreign labor during the COVID-19 outbreak must apply for and obtain business visas from the Consular Department of the Ministry of Foreign Affairs for the foreign workers to enter Laos. In addition, employers must inform the relevant ad hoc taskforce committee under the Ministry of Foreign Affairs of the foreign workers’ estimated travel times, travel vehicles, checkpoints to enter, places for quarantine, countries transited and reasons for the need to employ foreign laborers. Because these requirements have been in place since almost the beginning of the pandemic, employers now consider these requirements as the standard procedures to follow for hiring foreign laborers in the country, rather than as temporary emergency regulations.

Latvia

CHANGES IN THE LABOUR PROTECTION LAW

As specific forms of employment become more relevant, especially during the COVID-19 pandemic, as of July 1, 2020, the Labour Protection Law of Latvia has been supplemented with the definition of telework, stipulating that it is a form of work performed when the work that the employee could perform within the company is permanently or regularly performed outside the employer's company, including work using information and communication technologies; however, telework will not be considered to be work which, due to its nature, is related to regular movement.

The definition of telework complies with international norms and also includes an explanation of the use of information and communication technologies in accordance with the agreement on telework of the European social partners of July 16, 2002. The new regulation also states that an employee who performs telework shall cooperate with the employer in the assessment of the risk of the work environment and provide the employer with information on the conditions of telework which may affect their safety and health during the performance of the employee's work.

Considering that the regulatory enactments contain different definitions of self-employed depending on the regulatory context, the new amendments also include a definition of self-employed within the meaning of the Labour Protection Law, providing that a self-employed person is a natural person who performs work independently and is not considered an employee within the meaning of the Labour Protection Law. The general principles of labor protection for the self-employed must be observed to the extent that they correspond to the nature of the work to be performed by the self-employed person, for example, to eliminate the causes of work environment risk, replace dangerous with safe or less dangerous, etc.

ADMINISTRATIVE FINES INDICATED IN THE LATVIAN LABOUR LAW AND LABOUR PROTECTION LAW

Because of the de-codification process in Latvia, the Latvian Labour Law has been supplemented with Part E “Administrative Liability,” which came into force at the same time as the new Administrative Liability Law, i.e., on July 1, 2020. 

Henceforth, administrative penalties for violations of employment regulations now are indicated in the Latvian Labour Law, relevant changes were also made to the Labour Protection Law. Although the de-codification changes affect the penalty application system and the penalties in general, administrative fines regarding employment regulations are the same, though, the penalties are determined in the penalty units—one penalty unit is equal to EUR 5.00.

COVID-19 - ONLINE INTERACTIVE RISK ASSESSMENT

To help employers to assess the readiness of their work environment and workplace because of COVID-19, the State Labour Inspectorate of Latvia in cooperation with the European Agency for Safety and Health at Work has developed a new free Online Interactive Risk Assessment (OiRA) tool in the Latvian language. (More information available here.)

The OiRA tool helps employers, even without special prior knowledge in labor protection regulations, to identify the factors of the work environment present in their workplace and to assess the risk that employees will suffer or become ill at the workplace.

Also, with the help of the OiRA tool, it is possible to determine the labor protection measures to be performed in the company, as well as to prepare the necessary documentation (work environment risk assessment and labour protection measures plan). More information and helpful tips about the OiRA is available in the Latvian language here at the homepage of the State Labour Inspectorate of Latvia.

CASE LAW OF LATVIA 2020

Supreme Court: Qualification of Psychological Terror in the Workplace or Mobbing

In this case, the Supreme Court established that in the case of psychological terror or mobbing committed by the employer, the principle of equal rights has been violated, and this qualifies as a violation of the principle of equal rights and obligation to ensure fair and safe working conditions that are not harmful to health. 

It was established that the duration of mobbing against an employee must be assessed in conjunction with other signs of psychological terror, in particular the nature, purpose and systematic nature of the activities. The more frequent and systematic the harmful activities, the shorter the time it may take to detect a mobbing, and vice versa. Therefore, in the current case, there is no reason to believe that mobbing cannot take place for 13 days alone, thus, for a relatively short time. This is an important conclusion, given that so far mostly six months have been considered as a reference period.

Finally, the Supreme Court also established that in certain cases, it may be permissible to record an employee's conversation with an employer without informing the employer and to use this record in court as evidence to protect the employee's rights. In considering whether, in the circumstances of a particular case, the employer's right to privacy or the employee's right is preferable, the court must assess: (i) the circumstances in which the recording of the conversation took place; (ii) for what purposes it was recorded; (iii) what was the framework of the conversation; (iv) how the record was used; (v) whether there was other possible evidence which could equally effectively prove the existence of the infringement in question; and (vi) whether the recorded person has been unduly provoked. (More information available here.)

Supreme Court: Separation of Working Time and Rest Time during Breaks

In this case, the Supreme Court reviewed and clarified the concept of working time and mainly referred to the case law of the Court of Justice of the European Union on working time under Directive 2003/88/EC, and in particular the decision in Matzak (C-518/18).

To separate working time from rest time, the Court pointed out that the work break is a time during which, following the law and the employer's rules of procedure (shift schedules), the employee does not have to perform their work duties and may leave the workplace to use this time freely, but mainly to rest and eat.

Working time status is granted for the period during which the employee is obliged to be physically present at the place specified by the employer and to be available to the employer so that the relevant services can be provided immediately if necessary (on-call time).

However, if the employee is at the disposal of their employer, in so far as they must be reachable, the employee may organize their time in a less restrictive manner and devote it to their interests; in this case, only the time associated with the actual provision of the service is considered as working time (call readiness). Therefore, employers should evaluate their rules of procedures and other internal regulations and assess whether employees during their work breaks are actually on a rest time or such break could be considered as an on-call time to which a working time status is granted, thus shall also be paid. (More information available here.)

LITHUANIA

PERSONAL INCOME TAX EXEMPTION FOR EMPLOYEE’S SHARES ACQUIRED UNDER SHARE OPTION AGREEMENTS

The Lithuanian Parliament adopted changes of tax legislation in the Law on Personal Income (the Law). As of February 1, 2020, the shares of the employees acquired under the Share Option Agreements could be tax-exempted from personal income tax. The new amendment of the Law establishes that the shares acquired under the Share Option Agreements could be exempted from personal income tax in compliance with the following requirements: 1) the Share Option Agreement was concluded not earlier than February 1, 2020 (shares acquired under Share Option Agreements which were concluded earlier than February 1, 2020, could not be exempted from personal income tax); and 2) the employee shall obtain a right to acquire the shares not earlier than after three years, i.e., after February 1, 2023. All employees of the company may have a right to acquire the shares, as well as the manager of the company, members of the supervisory board and/or the management board who are employees of the company. It should be noted that the shares may be acquired either from the employer or from the shareholder of the company. Share Option Agreements are becoming more attractive as an employee motivational tool, especially for start-ups.

A NEW LEGAL GROUND FOR IDLE TIME AND DISMISSAL OF AN EMPLOYEE

As of March 19, 2020, Article 47 of the Labour Code of the Republic of Lithuania was supplemented by a new legal ground for idle time. Since then an employer may declare idle time for an employee or group of employees when the Government of the Republic of Lithuania declares an emergency situation and/or quarantine and the employer cannot therefore provide the employee with the work stipulated in the employment contract, because due to the peculiarities of work organization it is not possible to work remotely or the employee does not agree to work remotely. An employee on idle time should be paid not less than the minimum monthly salary. Moreover, Article 49 paragraph 31 of the Labour Code of the Republic of Lithuania was supplemented by an additional legal ground for dismissal of an employee. According to it, the employer has a right to suspend the employee (whose health condition endangers the health of other workers, e.g., employees returning from COVID-19-affected areas or having had a direct contact with COVID-19-affected people) from work and not to pay the salary if they do not agree to work remotely.

CHANGING REGULATION REGARDING THE POSTING OF EMPLOYEES

Amendments to Articles 108 and 109 of the Labour Code of the Republic of Lithuania entered into force beginning July 30, 2020. Changes include the application of foreign state imperatives, maximum duration of posting, posting of temporary staff, etc. When the duration of the secondment exceeds 12 months all provisions of foreign labor law and provisions of higher than at the level of the employer collective agreements will have to be applied, except for the conditions for concluding, terminating employment contract and non-competition agreements. Upon reasoned request to the authority of the Member State concerned (in Lithuania – State Labour Inspectorate), this period may be extended to 18 months. However, if the employer replaces a posted employee with another posted employee performing the same duties at the same place, the durations of their postings shall be added up. These changes are not applicable for road vehicles drivers.

POSSIBILITY TO DISMISS PREGNANT EMPLOYEES AND EMPLOYEES RAISING A CHILD UNDER THE AGE OF THREE

As of August 1, 2020, adopted amendments to the Labour Code of the Republic of Lithuania it became possible to dismiss a pregnant employee during their pregnancy and until their baby reaches the age of four months, where a court or employer’s body makes a decision to terminate the employer’s activities (e.g., in the event of bankruptcy, liquidation). It will also be possible to dismiss employees raising a child under the age of three if the employee does not agree to the continuation of the employment relationship in the event of transfer of all or part of a business or if a court or employer’s body decides to terminate the employer (Art. 61). Finally, Article 57 of the Labour Code of the Republic of Lithuania will set a three-months’ notice period for pregnant employees if they have worked for the company for more than one year (if less, the notice period will be six weeks) and are dismissed due to the termination of the employer.

CHANGING REGULATION OF APPLICATION FOR RESIDENCE PERMITS (THE BLUE CARD)

Temporary residence permits procedure for highly qualified employees was facilitated in Lithuania. Highly qualified employees are now allowed to submit applications for temporary residence (the blue card) and provide copies of necessary documents online, and if Migration Department issues a positive decision regarding a residence permit, such foreigner will have right to enter the Republic of Lithuania. The residence permit will be issued within a few days upon submission of the original documents and biometric data to the Migration Department. This should reduce the terms for issuance of a temporary residence permit to up 15 days (fast track) or one month (standard). In addition, a temporary residence permit issued to a foreigner may be revoked by the employer who has employed or undertakes to employ the foreigner. It is important to note that a high professional qualification is a qualification where higher education diploma or at least five years of professional experience equivalent to a higher education qualification is required for a profession or sector specified in the employer’s commitment to employ a foreigner or in an employment contract. Highly qualified employees can also bring their family members (spouses, partners, minor children and/or their dependent parents) to Lithuania.

SUPREME ADMINISTRATIVE COURT: THE USE OF EMPLOYEES’ FINGERPRINTS HAS NO LEGAL BASIS AND IS AN UNJUSTIFIED AND DISPROPORTIONATE MEASURE

The employer stated that only the processing of biometric data could achieve the desired goals—accounting of working time and control of work discipline. However, the Court emphasized that measures for the processing of biometric data could be used for certain very important purposes and only in exceptional circumstances which were not been established in the case at hand. According to the Court, the Inspectorate’s investigation had reasonably established that the biometric data of the applicants’ employees had been collected without their consent. The fact that the employees had not been provided with information about the processing of their biometric data and their consents had not been obtained was confirmed by the fact that the applicants did not have any document governing the processing of personal data during the investigation, as well as any document confirming the provision of oral information to the employees. Finally, the Court stated that the employer must always look for the least intrusive measures and, if possible, choose non-biometric measures. Also, the panel of judges noted that from May 25, 2018, the new European Union regulation governing the processing of biometric data prohibits the processing of personal data disclosing biometric data attributed to special categories of personal data.

SUPREME COURT: WITHDRAWING MONEY FROM AN EMPLOYER’S CARD WITHOUT A REASON CAN BE CONSIDERED A GROSS VIOLATION OF WORK DUTIES

The employee was given an employer’s bank card for small payments. The employee withdrew €2,000 as severance pay if he was fired sometime. The employee returned the money, but only after he was threatened to apply to the police; nevertheless, he was fired (at the initiative of the employer due to the fault of the employee). He challenged the dismissal because he was "instructed to withdraw the money and keep it for as long as necessary." The Court stated that an employer who entrusts an employee with certain work functions for their benefit and is obliged to pay for it, entrusts the employee with their material means and financial resources, has a reasonable expectation that the employee will perform their duties honestly, without abusing the law, protecting the employer’s property. Therefore, it is obvious that when an employee disposes the employer’s funds not in accordance with the conditions set by the employer, failing to meet the employer’s needs, but intends to satisfy their own or other people’s needs, the employer loses trust and has grounds to consider such employee’s actions as gross violation of work duties and terminate the employment contract.

LUXEMBOURG

NEW LAW ON INTERNSHIPS FOR PUPILS AND STUDENTS

The law of June 4, 2020, amending the Labour Code and introducing an internship scheme for pupils and students, entered into force on June 9, 2020.

The law differentiates between three types of occupation of pupils and students by companies: (a) during school holidays; (b) during mandatory internships required by an educational institution; and (c) during voluntary internships to acquire professional experience.

In particular, the law determines the formal requirements of the internship agreement/convention. The law also sets out the remuneration requirement, where relevant, to be observed in each specific case, subject to certain conditions: (a) during school holidays remuneration must be equivalent to a minimum of 80% of the minimum social wage for unskilled workers; (b) for mandatory internships of less than four weeks, remuneration remains discretionary; however, remuneration of at least 30% of the minimum social wage for unskilled workers is now mandatory for all internships of over four weeks; and (c) for voluntary internships of less than four weeks, remuneration remains discretionary; however, for internships of more than four weeks remuneration of at least 40% of the minimum social wage for unskilled workers and up to 100% of the minimum social wage for skilled workers depending on the duration of the internship, the age and the qualification of the intern is now mandatory.

NEW LAW ON INTERNAL AND EXTERNAL EMPLOYEE RECLASSIFICATION

The law of July 24, 2020, which entered into force on November 1, 2020, amends the provisions on internal and external reclassification of employees.

This law notably defines the missions and powers of the Mixed Committee, the body that oversees decisions on internal or external reclassification, as well as the status of the person undergoing occupational reclassification, the adaptation of working hours, the compensation fee, the rehabilitation, the reconversion or the continuous vocational training measures for persons under internal reclassification.

The new conditions of eligibility for internal or external reclassification measures are also set out in this law (i.e., employees are now eligible to reclassification if their seniority is of at least three years or if they obtained a certificate of suitability for the job established at the time of hiring).

In addition, the law provides that employers which, on the day the request is submitted to the Mixed Committee, employ at least 25 employees and which do not occupy the number of employees benefiting from internal or external reclassification within the limits of the rates relating to the employment of disabled workers provided for by the Labour Code, are obliged to reclassify the employee concerned by this measure. To this end, the law reintroduced the provisions where employees benefiting from internal or external reclassification are considered as disabled workers for threshold purposes.

This new law also amended the conditions for granting the compensatory allowance in the event of reclassification as well as its calculation, payment and its consideration for unemployment or pension allowances, for example. Furthermore, the law provides that individuals under reclassification status who are at the end of their unemployment compensation rights (including any extension), may benefit from a waiting professional indemnity under the condition that they can demonstrate at least five years of suitability in their last job or five years of seniority. In case of fraud concerning compensatory allowances or professional waiting indemnities, the Labour Code now provides for a prison sentence of one to six months and/or a fine of €500 to €5,000. Attempted fraud is punishable by imprisonment from eight days to three months and/or a fine of €251 to €2,000.

NEW AGREEMENT ON THE LEGAL REGIME OF TELEWORKING

On October 20, 2020, a new agreement on the legal regime of teleworking was signed between the social partners Union des Entreprises Luxembourgeoises, Onofhängege Gewerkschaftsbond Lëtzebuerg (OGBL) and Lëtzebuerger Chrëschtleche Gewerkschaftsbond (LCGB). This new agreement replaces the previous 2006 version and updates the teleworking framework for employers and employees.

Under the agreement, employees and employers may freely choose the organization of remote work, subject to applicable provisions, either when the employee is hired or at any point during the course of employment. Employees who choose to telework must be treated equally to employees working on site for the business. In the case that an employee refuses to telework, the employer may not take action to dismiss the employee on the sole basis of such refusal.

With respect to regular teleworking, the employer must provide the employee with the equipment needed for the job at its own cost. This obligation does not apply, however, to occasional teleworking, which is a new concept introduced by this agreement and is defined as telework that represents less than 10% of the normal annual working time of the teleworker or telework that responds to unforeseen events (such as COVID-19).

The agreement does not cover secondment, the transport sector (generally speaking, except for administrative positions), sales representatives, coworking spaces, smart-working (occasional work via smartphone or laptop outside of the usual workplace) and all services provided to clients outside of the business.

A Grand-Ducal regulation making this agreement a general obligation applicable to all employees is expected in the course of 2021.

NEW LAW IMPLEMENTING EU DIRECTIVE 2018/957 ON SECONDMENT

The purpose of this law, which entered into force on December 22, 2020, is to adapt and extend provisions relating to employees seconded to Luxembourg from a company established abroad, in accordance with the latest European directive on this subject. The law broadens the compulsory provisions applicable and further specifies those applicable to long-term secondments (i.e., of more than 12 months). In addition, the law indicates that the provisions on secondments are also applicable to temporary work agencies established abroad when they second employees to Luxembourg. New provisions regulating the accommodation conditions of employees who are away from their usual place of work as well as provision of allowances or reimbursement of expenses to, cover travel accommodation or food expenses incurred by employees as a result of their secondments have also been included in the Labour Code. The powers (control and sanctions of the above-mentioned requirements) and the scope of information and documents that can be requested by the Luxembourg employment authorities (Inspection du travail et des mines, or ITM) are also expanded. Finally, this law underlines that its provisions are not applicable to the road transport sector.

Malaysia

In 2020, the Malaysian Parliament passed several amendments to the Industrial Relations Act 1967 (IRA), a critical piece of legislation regulating disputes between employers and their workers and/or trade unions. These amendments took effect on January 1, 2021. The amendments include the following:

  1. Expediting References to the Industrial Court 

While a ministerial discretion previously existed to determine whether disputes or matters ought to be referred to the Industrial Court, this level of discretion has been removed. The power of referral now vests with the Director General of Industrial Relations. Cases that are not settled in (pre-court) conciliation proceedings are automatically referred to court for adjudication. 

  1. Greater Powers in Dealing with Unjust Dismissal Claims

The amendments have further allowed for the Industrial Court to (a) award compensation and back wages to deceased claimants’ next of kin (previously, a claim would abate in the event of the claimant’s death); and (b) grant interest of up to 8% per year on monetary awards that remain unsatisfied after 30 days.

  1. Enhancement of Penalties 

The failure to comply with awards of the Industrial Court previously attracted a rather paltry maximum fine of RM 2,000 (approximately USD $496). The maximum fine has since been increased to RM 50,000 (approximately USD $12,400). This is in addition to being compelled to pay any monetary award that may have been ordered. The general penalty for contravention of the Industrial Relations Act has similarly been increased from RM 2,000 to RM 50,000. 

These amendments aim to enhance the speed with which matters are handled in the Industrial Court. Enhanced penalties are intended to ensure that employers take greater care before terminating employees. The effect of these changes may take some time to be seen given the various movement control orders in place in Malaysia, but one thing is for sure: These changes are here to stay.

© 2021 McDermott Will & EmeryNational Law Review, Volume XI, Number 159
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