Employers are asking for guidance and leniency as they prepare to provide 1.8 million foreign workers with Social Security Organisation (Socso) coverage starting 1 January 2019. Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan said employers should be given support and not be prosecuted in the first year. “The government should give more briefings on the scheme rather than crack down on employers. “Taking action is unwarranted because a change of system is not easy, it takes time,” he said. “There could be glitches in the system. Employers must be given time for the registration itself,” he said, adding that besides preparing to register their foreign workers under Socso, employers also have to be prepared to spend more for their workers’ 1.25% Socso contribution. “There would be an increase of wages cost to employers of more than RM400mil per year. “Currently, under the Workmen’s Compensation Act (WCA) 1952 we are contributing about RM75 per worker on a yearly basis,” said Shamsuddin. The WCA provides compensation for death or disability.

Human Resources Minister M. Kulasegaran had said last month that the Cabinet had decided to place foreign workers under Socso in line with the Equality of Treatment (Accident Compensation) Convention, 1925 (No.19) and Conference Committee on the Application of Standard under the International Labour Organisation (ILO), which Malaysia had ratified. He said employers who hire foreign workers with valid documents including expatriates must register them with Socso and contribute to the Employment Injury Scheme under the Employees’ Social Security Act 1969 (Act 4).

Earlier this month, Kulasegaran said the Cabinet had approved a one-year “cooling-off” period from 1 January 2019 to 1 January 2020, for employers to settle the outstanding compensation of their workers before the employees are registered with Socso.

Meanwhile, the Federation of Malaysian Manufacturers, whose members employ some 700,000 foreign workers, has requested a grace period of one year before the scheme is fully implemented. Its president Datuk Soh Thian Lai said presently foreign workers were covered by comprehensive insurance schemes bought by their employers which among others, covers them when they get injured at the workplace. “Our members are requesting that the government allows the insurance policies of the respective workers to run its course before making it mandatory for the employee to contribute to the foreign worker’s Socso scheme.

The Malaysian Trades Union Congress president Datuk Abdul Halim Mansor said the registration process would require a proper mechanism. “The main concern is how the registration will be done and how will we handle those who are without a permit,” he said. He added that the National Labour Advisory Council would re-convene on 29 January to discuss, among others, how the administration would best be done.

Both the MEF and the MTUC have also called on the government to fine tune the EIS. Datuk Shamsuddin Bardan said the scheme has a large pool of contributors, but he claimed that only a few would benefit from it as the number of those retrenched only represents a small proportion of the working population in Malaysia. “For example, even if you look at the time when Malaysia saw its worst economic performance in 1997, the number of workers retrenched was about 50,000 people at most,” he said. He said employers may also be burdened by the “double-whammy” of having to contribute for workers’ EIS when these workers may also benefit from severance packages such as a Voluntary Separation Scheme. “The intention behind EIS is a good one – it is intended to make the labour market more flexible so that employees are able to move on to their next job easily. “However, the current structure of the scheme is adding more layers of burden on employers,” he said.

Datuk Shamsuddin said the scheme must be re-examined to ensure those who have already benefited from EIS do not apply to Section 20 of the Industrial Relations Act. The legal provision allows for a worker who considers himself unjustly dismissed to appeal to be reinstated in his former employment. The scheme was also unfair to certain categories of employees, said Shamsuddin, such as workers who are on fixed term contracts. “These workers are expected to contribute but when they complete their contracts, they do not get to claim EIS,” he said.

MTUC secretary-general J. Solomon said the whole EIS scheme “lacks transparency” as there has been no proper information communicated by the Social Security Organisation to workers. He said there has been no assurance that employers would not abuse the fund and carry out retrenchment freely. “We see a lack of effective enforcement by the labour inspectorate prior to retrenchment taking place. “If there is no proper enforcement from the labour inspectors, then we will see an increase in retrenchment.
“This will make EIS a mockery and not (suitable) for its intended purpose,” he said.

Source: The Star