Case Update: Employees hired under a PEO or outsourcing service provider structure have limited legal protection

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

The global PEO (professional employer organisation) industry has grown significantly in the past decade. While outsourcing or manpower service providers are certainly not new, the increasing professionalism and sophistication with which these services are provided has seen their adoption grow exponentially.

PEO arrangements are particularly ubiquitous in situations where a multinational entity does not have a local presence but wants to provide services locally, or hire a small number of local employees. This structure is also very useful for businesses operating in industries where work is project-based, and they therefore do not want the commitment of taking on permanent employees, or navigating the maze of employment law obligations.

But while PEOs offer companies convenience and flexibility, what sort of protection does it offer the individuals who are employed by the PEO or service provider? The Industrial Court award in Wan Nurfaizah Wan Md Nor v Cekap Technical Services Sdn Bhd [2022] 4 ILR 282 indicates that these employees may have very limited protection under the law.

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Five lawyers share their insights on the impact of the Employment Act amendments

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The past three years has been a busy, tumultuous, and very interesting period for HR and employment and industrial relations professionals in Malaysia. While 2020-21 saw employment lawyers — like most of the world — being kept occupied by the effects of the pandemic, and collectively learning on our feet, 2022 also threw lots of new issues our way, as clients adjusted to the new post-pandemic norms.

In Malaysia, a hot topic in 2022 was the long-awaited amendments to the Employment Act (“EA”)(originally scheduled to come into force on 1 September 2022, but postponed to 1 January 2023). I have already shared my views on the wide-ranging impact of (and some on-going uncertainty caused by) these major amendments. In this article, I canvassed the views of five fellow Malaysian employment lawyers on the EA amendments. I invited Amardeep Singh Toor, Donovan Cheah, Janice Anne Leo, Selvamalar Alagaratnam, and Wong Keat Ching to share insights on the following with readers of The Malaysian Lawyer:

  • Their views on the EA amendments.
  • The key areas their clients have been focusing on to adapt to the changes.
  • Whether there is still non-compliance among employers.
  • What issues/trends will keep employment lawyers busy this year.

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Case Update: Employee dismissed after sexual harassment complaint deemed unfairly dismissed due to improper process

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Malaysian employers are still coming to terms with how to properly handle sexual harassment complaints. While many employers have been introducing anti-harassment policies and processes, and organising awareness and training sessions for employees, mistakes are still often being made in responding to complaints of workplace sexual harassment.

In a previous Case Update, I wrote about a case which illustrated how a mismanaged harassment complaint could expose an employer to a constructive dismissal claim (“Case Update: Employer’s poor handling of workplace assault and harassment complaints amounts to constructive dismissal”). I have also previously shared an Industrial Court case which serves as a useful overview for how the court views workplace sexual harassment (“Case Update: A guide to how the Industrial Court assesses sexual harassment complaints”).

This Case Update reviews the Industrial Court award in Lim Po Seng v Resort Villa Golf Course Berhad (Award No. 471 of 2023), where the court decided that an employee who was dismissed pursuant to a sexual harassment complaint was unfairly dismissed.

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Case Update: Court of Appeal Invalidates Meeting Due to Failure to Wait for 15 Minutes

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The Court of Appeal in Abdul Malek Faisal bin Mohd Hyffny v Shaikh Marikhzan Jalani & 2 others (grounds of judgment dated 21 February 2023) invalidated an extraordinary general meeting (EGM) where the shareholders had passed a resolution to remove the director and chairperson of the company. The appeal turned on whether the shareholders should have waited for the full 15 minutes before electing one of their number to be chairperson of that meeting.
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Ng Jern-Fei KC’s Secret to Building a Successful Global Disputes Practice

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On 2 March 2023, Ng Jern-Fei KC shared his tips and experience in the building of his successful global disputes practice. The session was organised by Lim Chee Wee Partnership and the Asian International Arbitration Centre.

This post distills the 5 lessons shared by Jern-Fei at this session.
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Unpredictable implementation of amendments means full compliance with Employment Act proving problematic for Malaysian employers

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The Malaysian government this week urged all employers to ensure compliance with the revised Employment Act (“EA”). This is following the wide-ranging amendments to the EA which came into force on 1 January 2023.

While the comments from Human Resources Minister V. Sivakumar were targeted at the reportedly widespread non-compliance with the reduced 45-hour weekly working hour limit (down from 48 hours/week), it brought into focus the widely-known reality that many employers are in fact not in complete compliance with the amended EA.

However, while some irresponsible employers are being unfair to employees and blatantly delaying making changes, to some extent there may be some justification for this non-compliance when it comes to the EA in general.

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