COVID-19 Bill & Its Impact On Employment Matters

August 25, 2020

On 12 August 2020, the Government tabled in Parliament the Temporary Measures for  Reducing the Impact of Coronavirus Disease 2019 (COVID-19) Bill, otherwise known as the COVID-19 Bill. This was a much-anticipated legislation since the breakout of the pandemic and the implementations of numerous movement control orders (MCO) in the Country. It is hoped that the reliefs proposed in the Bill will help alleviate the impact of this unprecedented health and economic crisis. This alert highlights the 3 reliefs that this Bill will bring in relation to employment and human resource management.


Relief 1: Modifications To The Industrial Relations Act 1967 The MCO commenced on 18 March 2020 and remained in place until 3 May 2020 where it was replaced with Conditional MCO on 4 May 2020 to 9 June 2020. We are presently in the Recovery MCO, which commenced on 10 June 2020 and is expected to end on 31 August 2020. During these periods especially during the MCO, most sectors in the country, including government agencies and facilities, were not operating as usual.


Hence, clauses 39 and 40 of the Bill proposes to exclude the time period between 18 March 2020 to 9 June 2020 from the calculation of time period under several provisions of the Industrial Relations Act 1967 (IRA). The provisions are as follows:


Section 9(3) of the IRA Under Section 9(3) of the IRA, an employer or a trade union of employers shall within 21 days from the receipt of a claim for recognition served by a trade union of workmen, either accord recognition, or if recognition is not accorded, notify the trade union of workmen concerned in writing the grounds for not according recognition.


If the Bill is passed, the time period between 18 March 2020 to 9 June 2020 will be excluded from the calculation of the 21 day time limit. This means that for example if a trade union of workmen serves to their employer a claim for recognition of their trade union on 20 March 2020, the Company has until 1 July 2020, being 21 days from 10 June 2020 to provide the recognition, or if recognition is not accorded, provide the said trade union of workmen reasons for the rejection for recognition.


Section 9(4) of the IRA Consequent to Section 9(3) above, Section 9(4) provides that: (a) where the trade union of workmen concerned receives a notification that their claim for recognition is rejected, or (b) where the employer or trade union of employers concerned fails to provide any notification whatsoever,

the said trade union of workmen shall within 14 days of the receipt of the notification or within 14 days after the 21 day period abovementioned has lapsed, report the matter in writing to the Director General of Industrial Relations (DG) to have the matter addressed by him. Hence if the Bill is passed, the time period between 18 March 2020 to 9 June 2020 will be excluded in the calculation of the 14 days time limit abovementioned.


Section 20(1A) of the IRA The Bill seeks to exclude the time period between 18 March 2020 to 9 June 2020 from the calculation of the 60 days time limit for a workman, who considers himself dismissed without just cause or excuse by his employer, to make representations in writing to the DG to challenge his dismissal and seek reinstatement and/or  compensation.

Case law have shown that the failure to file a representation within the time period is fatal to the claim and hence, it is very important for any workmen who wish to challenge their dismissal as being without just cause or excuse, to file their representation within the 60 days time period.

This Bill provides an important relief by “extending” the 60 days time period by excluding the time period from 18 March 2020 to 9 June 2020. This means that for example if a workman was dismissed during the MCO i.e. on 2 April 2020, while normally he has 60 days from 2 April 2020 to make his representation to the DG (i.e. until 2 June 2020), if the COVID-19 Bill is passed, the workman’s 60 days would start running from 10 June 2020 only and hence he has until 10 August 2020 to make his representation.


Relief 2: Modifications To The Private Employment Agencies Act 1981 The second relief that the Bill provides is the proposed exclusion of the time period of 18 March 2020 to 9 June 2020 from the calculation of the time period under Section 11 of the Private Employment Agencies Act 1981. This is provided under clauses 41 and 42 of the Bill.

Under Section 11 of the said Act, a private employment agency has to renew its operating license within 60 days from the expiry of its license. If the Bill is passed, if an agency whose license expires on 5 May 2020, it will still have 48 days from 10 June 2020 to apply for the renewal of its license.


Relief 3: Inability To Perform Professional Service Contracts Under clause 7 of the Bill, a party who could not perform any contractual obligation arising from any contracts within the categories of contracts listed in the schedule to the Bill, due to the measures implemented by the government under the Prevention and Control of Infectious Diseases Act 1988 to combat COVID-19, shall not give rise to the other party of the contract, a right to exercise their rights under the contract.


Simply put, a party to a contract who failed to perform its obligations under the contract as a result of the MCO, shall not give rise to the other party a right to exercise their rights under the contract, such as terminating the contract, enforcing security and so on. However, employment contracts are not one of the categories of contracts listed in the schedule and therefore this clause will have no application on employment contracts. This means that this clause per se cannot prevent an employer, for example, from terminating an employee when an employee fails to perform his obligations under the employment contract as a result of the MCO. However, there are other employment-related laws to govern that.


Nevertheless, “professional services contract” is one of the categories of contracts listed under the schedule, and hence clause 7 will apply. While the Bill itself does not define “professional services contract”, a definition of “professional services” can be found in various legislation. For example, under the Income Tax (Exemption) (No. 10) Order 1998, “professional services includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants”.


Therefore, if the Bill is passed, a person who, for example, entered into a contract with a lawyer to appoint the lawyer to provide certain legal services, would not be able to terminate the contract on the basis that the lawyer failed to provide the said legal services if the reason of the lawyer’s failure is due to the MCO.


Conclusion It is hoped that legislators would continue to engage employment and industrial relations law practitioners as well as civil society organisations to further improve on the COVID-19 Bill before it is  passed, so to ensure that the reliefs provided can provide a stronger impact on Malaysians.

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