When the Movement Control Order (MCO) was first announced on 16 March 2020, the main concern of most employees was whether they will be paid their salary for the entire MCO period. After all, the MCO will be in place for 14-days long! Following which this concern was addressed by the Human Resources Ministry through their FAQs on Movement Control Order. To the working class’ relief, the government has highly encouraged employers to pay our salaries in full.
A month and a half of the MCO went by, and the whole situation of the pandemic hasn’t seemed to get any better. On 26 March 2020, the Prime Minister announced that the MCO will be further extended until 14 April 2020. Which means, we would have not worked for a month by that time. Now the employers are also required to pay their employees’ full salary for this extended period and employees cannot be forced to take unpaid leave. However, this can be done if the employees agree to such terms. For those Employees agreeing to the unpaid leave, they will be entitled to RM600.00 allowance from the government under the Employee Retention Programme (ERP).
There have been discussions as to whether employers can rely on force majeure clause to terminate employment contracts. This can only be invoked if such a clause has been provided in the contract itself. However, based on the directive issued by the Human Resources Ministry, it is unlikely for employers to rely successfully on this breakout of the COVID-19 pandemic as force majeure; nor can they use this to argue that the employment contract has been frustrated under section 57 (2) of the Contracts Act 1950.
Note: Although the directive may not have the force of law, it is believed that it will be highly persuasive when used in court.
Employers must be now wondering what they can do. After all, it remains uncertain as to whether MCO will be lifted on 28 April! As business owners, they have overheads to pay, employees to take care of, and of course, they have their own families too. Whilst the Government may have implemented the Wage Subsidy Programme to assist with the welfare of both employers and employees, it is inevitable that most SMEs will be affected during this difficult time and some may be forced to close.
Here are a few things that the employers may want to consider:
- Allow employees to work from home where ever possible
- This will keep the business from running even if minimal
- Disciplinary actions may be taken against employees who refuse to abide by this
- Employers may also encourage their employees to undertake self-development programme from home
(If you are thinking about costs, many online courses are being offered for free now)
- Discuss for an alternate agreement with your employees
- You may want to consider this with those at higher operation level, potentially those that are more capable in undertaking a pay cut
- Explain to your employee if your business is experiencing difficulty and let them know that you might need to lay-off people in the event your business is no longer sustainable
- Where there is consensus, ensure that an agreement is signed
(This is to protect the interest of both parties)
- Retrenchment exercise
- This should only be done as a matter of last resort and the process must be done fairly
- Your business must be genuinely affected by the outbreak and the MCO and steps have been taken to avoid termination being exercised
- Foreign workers should be laid off first; as for the locals, the rule of first in, last out should be followed
Likewise, the Government has also announced an increased Wage Subsidy of up to RM1200 for companies with the number of employees below 75 and waived the requirement of 50% reduction of sales revenue earlier stated by the Government. `
Nevertheless, the last option that a Company may take will be carrying out Retrenchment exercise based on two main reasons namely poor economic condition affecting the financial situation of the Company or redundancy of the employees.
As for the employees, we urge everyone to work together with their employers to keep the business running. We should also be mindful of the global economic situation and the fact that it will take some time to recover and peak up again. On the other hand, we urge business owners to always have their employees’ welfare in mind and only execute plans by taking into account the interests of both parties.
In this time of difficulty, all of us could use a little more kindness and love. Our enemy is the pandemic, not each other. Let us all be together at heart, stay home, stay safe, and stay healthy!
we are all in this together