The revised Employment Insurance System (EIS) Bill was passed unanimously at the Dewan Rakyat early this morning. The EIS, a fund to protect 6.5 million local workers in case they are laid off, was passed after midnight Wednesday after five hours of debate. The revised EIS Bill has maintained the monthly contribution to the scheme as the equally shared responsibility of both employer and employee. Monthly contributions are based on fixed rates ranging from the lowest at 10 sen to a maximum of RM59.30, and is only applicable for those whose monthly wages are RM4,000 or less.
Human Resources Minister Richard Riot in his winding-up speech said even though the government was not contributing, it is launching the fund with RM120 million. “The government has also contributed for the training. Therefore, the government does not have to contribute towards the fund.”
Retrenched workers are also entitled to an early re-employment allowance, reduced income allowance, and training allowance. The insurance scheme also covers staff involved in a voluntary or mandatory separation scheme, or those made redundant due to business restructuring or closure. It also offers protection for those whose resignation is tantamount to constructive dismissal or due to threats to the insured or family including sexual harassment. Failure by employers to comply with the scheme or employees making false claims could lead to a maximum RM10,000 fine or a jail term of up to two years, or both, upon conviction. The EIS will be administered by the Social Security Organisation (Socso). It was reported that almost 40,000 workers lost their jobs in 2015 and 2016.
Responding to the passing of the Bill, the Malaysian Employees Federation (MEF) claimed the government pushed through the policy without taking into account the views of employers. MEF executive director Shamsuddin Bardan (pic) said some of the provisions in the bill were flawed, including the part about the power vested on the Human Resources Minister to change the combined 0.4% contribution rate to 1.5% without having to go through Parliament. At 0.4%, Shamsuddin said some RM650 million a year would be collected, 10 times more than the average amount of retrenchment compensation paid out per year. This amount of money, he said, was unnecessarily being diverted away from the market. “There’s no cap or mechanism for freezing contribution so employers could end up continuing forking out money when there’s no need to. “It also seems like the EIS is duplicating a number of roles of government agencies like the Human Resources Development Fund, particularly by carrying out job matching, research and retraining activities.” Shamsuddin added that the final form of the bill, which was “very different” from what was discussed with Putrajaya, included employees who opted for Voluntary Separation Schemes (VSS). Shamsuddin said unlike retrenched workers, those who took VSS already benefited from severance packages and this would only serve to deplete the EIS fund at a faster rate.
On the other side of the fence, the Malaysian Trades Union Congress (MTUC), which represents over 500,000 private sector employees sees the EIS as a “win”. MTUC president Abdul Halim Mansor defended the EIS, particularly the 0.2% contribution rate from both employers and employees, noting this was a figure agreed to by the triparte management body of the EIS, made up of employee and employer groups and Putrajaya.
He said that the inclusion of employees who opted for VSS was also fair, seeing as how these workers were also contributors to the EIS.