To enhance efforts to curb the Covid-19 outbreak, the Prime Minister of Malaysia ("PM") announced that a nationwide Movement Control Order ("MCO") will be implemented from 18 March 2020 – 14 April 2020 ("Period") under the Prevention and Control of Infectious Diseases Act 1988 and Police Act 1967. The Government issued the Prevention and Control of Infectious Diseases (Measures within the Infected Local Areas) Regulations 2020 ("Regulations") which laid down the relevant regulations in relation to the movement restriction for the period 18 March 2020 to 31 March 2020. A new set of regulations, Prevention and Control of Infectious Diseases (Measures within Infected Local Areas) (No.2) Regulations 2020 have been issued and will be in force from 1 April 2020 to 14 April 2020 ("New Regulations").

We have prepared the following FAQs, which we hope will assist you with some of the issues that you may be facing during the Period. Please note though that the FAQs do not constitute legal advice and as the situation remains fluid, the legal position may change in the near future. If you require legal advice, please contact one of the lawyers in our Employment Practice Group listed below.

  1. Do employers have to close their businesses and/or places of employment during the entire Period?

In view of the extensive control of movement, only premises providing essential services may be opened during the Period. Please note that the Government has also imposed a limitation on operating hours for eateries and supermarkets, i.e. from 8 am to 8 pm.

To this end, employers in essential services are advised to:-

  • Identify the units/departments within the business which need to work from the workplace for the smooth running of the essential services, while considering asking the rest to work from home or to stay at home; and
  • formulate employee rotation plans to minimise the number of employees attending at the workplace at any one time.

Premises of critical manufacturing businesses may continue to operate during the entire Period if approval from MITI has been obtained subject to conditions imposed by MITI. As of 24 March 2020, MITI is no longer accepting applications for approval to operate.

Businesses in the food supply chain and e-commerce, including logistics and transportation services (confined to the provision of essential services as provided for under the New Regulations) may also operate subject to conditions imposed by KPDNHEP. KPDNHEP is also no longer accepting applications for approval to operate.

As part of restrictions on movement, employers who are permitted to open their business premises during the Period are required to provide their employees with letters of authorisation (see Regulation 4(1)(d) of the New Regulations).

Employers in non-essential services effectively cannot require their employees to attend at the place or premises of work. However, they can require employees to continue to work remotely and employers can implement work from home measures including :-

  • Attending online meetings & conference calls;
  • Require employees to attend to client queries and requests by email and other forms of communication; and
  • Require employees to be contactable for work at home during regular office hours
  1. What are the essential services?

Essential services under the New Regulations now only encompass the following:-

  1. Food
  2. Water
  3. Energy
  4. Communication and internet
  5. Security and defence
  6. Solid waste and public cleansing management and sewerage
  7. Healthcare and medical including dietary supplement
  8. Banking and finance
  9. E-commerce
  10. Logistics confined to the provision of essential services
  11. Transportation by land, water or air
  12. Port, dock and airport services and undertakings, including stevedoring, lighterage, cargo handling, and pilotage, and storing or bulking of commodities
  13. Production, refining, storage, supply and distribution of fuel and lubricants
  14. Hotels and accommodations
  15. Any services or works determined by the Minister as important or critical to public health or safety.

Businesses which fell within the list of Essential Services in the Regulations, but which no longer do so under the New Regulations may not operate during this time unless otherwise approved by the Government.

  1. Can employers deduct the employees' annual leave entitlement or enforce unpaid leave during this Period?

Unless the contract of employment provides otherwise, the law does not permit annual leave entitlement to be set off against this Period or for employers to unilaterally require their employees to take unpaid leave during this Period.

  1. Are employees entitled to the same salary or benefits during this Period?

Yes, they need to be paid as per their contract of employment.

  1. Are employees required to pay the full salaries of their employees who cannot work from home or are not required to be on standby?

MOHR has issued FAQs (Part 1, Part 2, Part 3) stating that salaries and allowances for all employees must continue to be paid in full during the entire Period. This practice is also encouraged from a risk management, practical and even humanitarian perspective.

For employers whose businesses are severely impacted by the MCO and are unable to pay employees their full salaries during the Period, employers may need to consider other cost cutting measures.

While an argument may be made that due to supervening events beyond the control of both parties, the contract of employment temporarily cannot be performed by either party in a fundamental way and as the employee has not been able to fulfil the obligation to work, the employer is not required to fulfil its obligation to pay during the Period, this position has significant legal and practical risks especially in view of the public position taken by MOHR. We recommend that legal advice be obtained in dealing with potential measures that can be implemented during this time.

  1. What about employees currently on sick leave and maternity leave during the Period?

A maternity leave period that overlaps with this Period will not affect the employee's entitlement to or the duration of the maternity leave. If the employee is on sick leave, the employee may not be required to work from home and the sick leave would be deducted from his or her normal entitlement.

  1. Can employers require their employees to come back to work during the Period if the employers' business are permitted to operate during this Period?

If the nature of your business falls under essential services as identified in the New Regulations or has otherwise been granted permission to operate, your business can continue subject to the conditions imposed by the Government. As such, if your employees have been granted approved annual leave during this Period, and if the needs of the business make it necessary, you may revoke the approval of the annual leave to require employees to return to work.

Employees in non-essential departments or aspects of your business ought to be allowed to work from home instead of being present at the work premises.

  1. Can employees travel on business during the Period?

Employers may not require their Malaysian employees to travel out of country during this Period (see Regulation 3 of the New Regulations). There is no similar prohibition on travel out of Malaysia for foreign employees.

The Immigration Department of Malaysia has issued a directive prohibiting travel between Sabah and Sarawak and Peninsular Malaysia. According to the guidance by the National Security Council, travel between states save for health purposes is also prohibited. Employers are therefore advised not to require their employees to travel out of state during this Period.

Under the guidance from the National Security Council and the Immigration Department, foreign employees (and their dependents, where applicable) in possession of valid work passes or foreign nationals possessing Long Term Social Visit Passes are not allowed to return to Malaysia during the Period but are exempted if they are employees of essential services businesses. A letter of confirmation from the employer is required for this purpose and must be furnished to the Immigration Department of Malaysia upon entry into Malaysia. They will be subject to healthcare screenings and quarantine at designated quarantine areas (see Regulation 8 of the New Regulations).

There are no restrictions on foreign nationals remaining in employment in Malaysia during the Period.

  1. How should employers deal with Malaysian employees who return from overseas during this Period?

All Malaysians, Malaysian permanent residents or expatriates (under permissible circumstances) who return to Malaysia during the Period are required to undergo a health examination upon arrival and will be required to undergo quarantine at a designated quarantine area for 14 days (see Regulation 8 of the New Regulations). During this period of quarantine, regardless of whether it overlaps with the Period, employers may not require the relevant employees in question to attend the workplace. The same principles regarding annual or unpaid leave will apply during the quarantine period.

  1. Can employers retrench, temporarily lay-off and/or impose pay cuts as cost-cutting measures?

Yes, employers facing financial difficulties as a result of the Covid-19 pandemic may find it necessary to reduce its business costs and expense by amongst others undertaking retrenchments, lay-offs and/or pay-cuts.

Retrenchment should be in accordance to the general principles of industrial law, and retrenchment benefits may be payable. Temporary lay-offs and salary reduction may only be done after consultation and with the consent of the employees. Lay-off benefits may be payable under the Employment (Termination and Lay-Off Benefits) Regulations 1980. Where there is a collective agreement in place, all such action shall be taken in compliance with the same.

Separate from the MCO, where cost cutting measures include a period of at least 1 month where employees will not be paid/ placed on unpaid leave, the PM has announced on 16 March 2020 that employees may be able to claim RM600 per month for a maximum period of 6 months. The application forms may be downloaded here.

These measures are separate from the MCO.

  1. Is the Lembaga Hasil Dalam Negeri/Inland Revenue Board ("LHDN") giving any accommodation to submission and payment of tax?

Yes, LHDN has agreed to grant extra time for certain matters as can be seen here. Amongst other things, LHDN is providing a time extension of 2 months to all taxpayers who need to submit their tax declaration forms between March and June 2020. This extension would also apply employees who would otherwise be required to submit their BE Form by 30 April 2020.

  1. Are employees entitled to withdraw their EPF savings as a result of the Covid-19 pandemic?

Based on the Prime Minister's announcement on 23 March 2020, beginning 1 April 2020, all employees below the age of 55 may withdraw the maximum amount of RM 500 per month for 12 months from their respective EPF Account 2.

This benefit is in addition to employees' temporary ability to reduce EPF contributions from 11% to 7%.

  1. I have just discovered that one of my employees tested positive for Covid-19. What should I do?

Employers must instruct the employees who came into close contact with the positive employee to quarantine themselves for 14 days. According to MOHR FAQs, employers may not cut the affected employees' salaries during this period of quarantine or place them on unpaid leave. They may however be required to work from home.

You will also have to undertake disinfection of the work place in which the affected employee had worked; and if the work premises are in a common space or a shared office building, you must inform the building management of the same.

The information provided on this FAQ does not, and is not intended to, constitute legal advice.

The Skrine Employment Practice Group is monitoring the relevant developments and will from time to time issue updated FAQs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.