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Malaysia: Covid-19 Update – Between normality and due caution

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last updated on 30 September 2020 | reading time approx. 6 minutes

  

  

  

 

Recovery movement control order

On 7 June 2020, the Malaysian Prime Minister announced that the country will be exiting the Conditional Movement Control Order which has been effective from 4 May – 9 June 2020, and enter the Recovery Movement Control Order effective from 10 June 2020- 31 August 2020. Under the Recovery Movement Control Order the following activities are permitted, subject to the adherence to the sector specific standard operating procedures:

  1. Interstate and domestic travel is permitted except for areas placed under the Enhanced Movement Control Order;
  2. ‘Almost all’ social, educational, religious and business activities, as well as economic sectors will reopen in phases;
  3. Business operations will return to normal;
  4. Malaysians returning from overseas may enter Malaysia, but are required to undergo a 14 days self-quarantine;
  5. All tourists and foreign short-term visitors are still barred from entering Malaysia; and
  6. Malaysian residents in Malaysia are currently barred from exiting Malaysia.


Employment

The Ministry of Human Resources (MHR) has issued a guideline titled “Guidelines on Handling Issues Relating to Contagious Outbreaks Including Novel Coronavirus” (MHR Guidelines). Although the MHR Guideline does not prescribe any statutory obligations, employers are encouraged to adhere to the same by the government.

 

For employees who have been declared unfit to work by a medical practitioner, the employer should provide paid sick or hospitalisation leave to that employee as specified in the respective Employment Contract or by the Employment Act 1955.

 
Employers have to provide full pay to employees who receive quarantine orders from a registered medical practitioner, upon return from countries with COVID-19 cases (if the employee was there following an official duty or instructions from his employer). Employers should not instruct employees to utilise annual leave entitlement or take unpaid leave during the quarantine period if a quarantine order has been issued. From the legal standpoint, an employer ought to bear in mind that he may not unilaterally place employees on unpaid leave solely based on the assumption that the employee is suspected to have contracted COVID-19. Leave on such basis should be treated as paid medical leave.

 
Employers should not prevent employees from attending work if no quarantine orders have been issued by any registered medical practitioner. However, an employer may instruct an unwell employee to not attend the workplace by providing paid sick leave to the employee.

 

Where possible, employers should permit and encourage working from home. Employees working from home should not have their annual leave entitlement deducted or salary reduced.

 
None of the above restricts the employer whose business is subject to a surplus of labour in terminating employees by following the retrenchment procedures. Employees may also be placed on temporary limited unpaid leave or their salaries reduced in order to avoid retrenchment. Appropriate procedures have to be followed. Employers and employees may always re-negotiate the terms of individual employment contracts to reduce salaries or place employees on temporary unpaid leave. Depending on the business of the employer, the participation of trade unions may be required. 
   

Health and Safety

Employers should also be cautious upon sending employees abroad for work to countries affected by COVID-19. An employer’s duty is to provide a safe system of work, and if sending employees to affected countries would expose them to health risks, employers will potentially be in breach of such a duty. All employers are obliged under Common law and the Occupational Safety and Healthy Act 1994 to provide a safe working environment. This includes the implementation of a Health and Safety Policy and practical measures depending on the industry requirements such as increased hygiene procedures.

 

Employers are required to update their health and safety procedures and to comply with any directives issued by the Ministry of Health. The Ministry of Health has also issued sector specific Standard Operating Procedures (SOPs) to control and limit COVID-19 infections. Although the SOPs are currently guidelines and not directly enforceable, companies should ensure compliance, as non-compliance may lead to the revocation of operating permits, constitute a breach of the Occupational Safety and Healthy Act 1994, or even provide the basis for a negligence claim by a third party negatively affected by a company not complying with SOPs. 
 

Contract Law

Commercial Common Law contracts (including contracts subject to Malaysian Law) frequently contain "force majeure" clauses to define what is to happen to contractual obligations if these cannot be fulfilled due to an “Act of God” or other circumstances not foreseeable by the parties. It depends entirely on the drafting of the specific clause, whether a pandemic such as COVID-19 will be covered or not. It should be noted that contracts related to finance and banking commonly do not contain such clauses, i.e. a company will still be under the duty to fulfil its obligations towards the bank.

 
Additionally, there may be the possibility of a contract being frustrated under Section 57 (2) of the Malaysian Contracts Act 1950. This applies to scenarios in which it became impossible for a party to a contract to fulfil its obligations without this party being able to prevent it, after the contract was signed. The party relying on this provision needs to prove that it is not simply more difficult to fulfil its obligations, but impossible. Whether a pandemic can make an obligation impossible to fulfil will depend on the specific facts of the case. The remedy for frustration is the contract to be considered void, and for each party to return the benefit already received under such contract.

 
These concepts do, generally speaking, also apply to employment contracts.
 

Personal data protection

While all employers are obliged to create and maintain a safe working environment for their employees, and therefore to protect the employees from COVID-19 infections in the work place, they also have to consider the rights of employees under the Personal Data Protection Act 2020 (PDPA). Personal data related to health conditions is defined by the PDPA as sensitive personal data. The disclosure of such data is only permitted with the consent of the employee and under some very limited circumstances. Therefore, care should be taken while disclosing COVID-19 infections to employees and/or third parties.
 

Immigration

Foreigners entering the country

Effective 21 September 2020, the Government of Malaysia has loosened its travel entry ban by allowing certain long term pass holders (including their dependents) and professionals from the 23 countries previously affected by the entry ban (countries with more than 150,000 COVID-19 positive cases such as Argentina, Bangladesh, Brazil, Chile, Columbia, France, Germany, India, Indonesia, Iran, Iraq, Italy, Mexico, Pakistan, Peru, the Philippines, Russia, Saudi Arabia, South Africa, Spain, Turkey, the UK and the US) to enter Malaysia. However, expatriates and professionals still require to obtain an Entry Permission or Approval Letter from the Director General of Immigration Malaysia (“JIM”) and a Support Letter from the Malaysian Investment Development Authority (“MIDA”).
 

Apart from that, permanent residents, foreign spouses of Malaysian citizens and student pass holders from the affected countries are also allowed to enter the country, provided it is a one-way trip.
 
Any travelers permitted to enter Malaysia will be subject to PCR COVID-19 testing upon arrival. Those tested positive will be transferred directly to a designated government hospital for treatment, while those tested negative will be required to complete a mandatory fourteen-days quarantine in designated quarantine facilities or hotels stipulated by the Ministry of Health Malaysia. All costs of PCR COVID-19 testing and quarantine measures of up to RM 4,700 per person for foreigners and RM 2,100 per person for Malaysian citizens shall be borne by the travelers. Travelers must also compulsorily download and install the MySejahtera application to their mobile before their departure to Malaysia.
 

Malaysians entering the country

Malaysian citizens who have left the country during the MCO period are allowed to re-enter the country without seeking prior approval from JIM. However, they are not allowed to leave the country again without getting permission from JIM despite having a Long Term Overseas Pass.
 

Malaysians coming from countries which have been imposed with the entry ban, or long term pass holders from these countries are allowed to re-enter, even though they have exited the country during the Movement Control Order (“MCO”) period.
 

Malaysians exiting the country

Diplomats and their dependents who need to leave to carry out their duties; students who are continuing their studies and those who have just received study offers; students taking exams; and long term pass holders of other countries (Permanent Residents/Resident Pass/ Employment Pass and others) as well as those working with petroleum companies and shipping companies which require to sign on a ship located abroad, do not need prior approval from the JIM to leave the country.
 

Categories which require to apply for a Leave Approval Letter are Malaysian citizens who entered Malaysia during the MCO period, who are obtaining a new job offer abroad, attending seminars/meetings/exhibitions/for business purposes, emergencies or parents accompanying their child to study abroad.
 

Malaysian citizens who wish to travel for vacation or to perform regular visits to family members abroad remain prohibited to exit from Malaysia.
 

Cross Border Movement Between Malaysia & Singapore

Effective 17 August 2020, the Government of Malaysia has allowed the re-opening of the border between Malaysia and Singapore for selected travelers using Periodical Commuting Arrangements (“PCA”) which require travelers to stay in the country of work for 90 consecutive days, or the Reciprocal Green Lane (“RGL”) scheme which allows travelers to stay in the country of work for up to 14 days.
 

Companies

On 21 August 2020, the Companies Commission of Malaysia (“SSM”) allowed applying for an Extension of Time (“EOT”) on the circulation and lodgement of Audited Financial Statements for Financial Year Ended from 1 January 2020 to 31 March 2020. The dateline to submit the EOT application will be 30 September 2020, and there will be a waiver of fees for such submission of EOT.

 

Social security

Social Security Organization (“SOCSO”) initiated the following programs:

  1. Prihatin Screening Programme (“PSP”)
    From 27 April 2020 onwards, a RM150 COVID-19 screening subsidy will be paid to employers for each screening. The screening approval will first focus on foreign workers of the construction and security industry within Kuala Lumpur and Selangor.
  2. Employment Retention Programme (“ERP”)
    ERP provides the company with a subsidy of RM600 for each employee (up to 200 employees) on the condition that the employee has been on unpaid leave for at least 1 month. The payment covers between one to six months.
  3. Wage Subsidy Programme (“WSP”)
    WSP was originally planned to be provided to employers for three months and is now extended for another three months. The amount for the period of extension of three months is only RM 600 for all companies. The original WSP provided for RM1,200 for companies with 76 employees and below, RM800 for companies with 76 – 200 employees and RM600 for companies with more than 200 employees. From 15 June 2020, the WSP will be combined with ERP. The additional conditions would be for the employer to retain the employees, however, the employer may now implement pay cut or reduction of working hours after discussion with the employee for up to 30 per cent of the salary.
  4. PenjanaKerjaya Hiring Incentives
    Employers that register their profile under the PenjanaKerjaya Programme and employ employees from the program will be eligible for hiring incentives from MYR600 to MYR1,000 for a period of 6 months
      

Employees provident fund (“EPF”)

EPF offices nationwide will be opened on 15 June 2020 and all services will resume as normal. However, to visit the offices, all members will have to make appointments via the Janji Temu Online facility.

 

SMEs may apply for the deferment scheme in respect of EPF payments made on behalf of their employees for three months on the employer portion of the monthly contribution.

 

Employees’ contribution has been reduced automatically to 7 per cent from April to December 2020. Employees who wish to maintain their contributions at 11 per cent will need to complete the form KWSP 19A (Khas 2020) and submit it through the employer.

 

Financial Reporting

Listed companies with financial year ending 31 March 2020 are given a one-month extension of time to submit their annual reports and annual audited financial statements.

 

Companies will now have to review, analyse and assess the current situation and the impact on the company’s financial reports to make sure the financial reports are able to provide a fair view on the company’s performance and cash flow position. The following list of topics linked to the related Malaysia Financial Reporting Standards is not exhaustive, it shows some items to be considered:

  1. Going Concern – MFRS 101 Presentation of Financial Statements
  2. Events after the Reporting Period – MFRS 110 Events after the Reporting Period
  3. Fair Value Measurement and Impairment of Non-Financial Assets – MFRS 13 Fair Value Measurement
  4. Expected Credit Losses for Financial Assets – MFRS 139 Financial Instruments
  5. Leases – MFRS 15 Leases
  6. Revenue Recognition – MFRS 15 Revenue from Contracts with Customers
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