Minimum Wage to be increased in 2019

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The Government has recently announced a new minimum wage which will come into force on 1st January 2019. This announcement provides for a significant change as the country will, for the very first time, have a standardised minimum wage across all states.

The table (inset) reflects the difference between the older and newer model:

While anticipating the Federal Gazette of the new Minimum Wages Order, employers can consider taking the following steps:

• Re-budget to cater to the increase of the minimum wage;

• Renegotiate with outsourced manpower providers and re-contract if the management fees will increase come 1st January 2019;

• If necessary, restructure (with consent) the current basic wages of those who are earning less than RM1050 before 1st January 2019;

• If necessary, consider the impact of this minimum wage increase against employees who are currently earning RM1050 – RM1100 after gaining an increment through their years of service;

• Revisit annual increment plans to align salary brackets accordingly.

Section 25 of the National Wages Consultative Council Act 2011 provides that the minimum wages Council may at least once in every 2 years review the minimum wages order. While this has been the norm, employers are further advised that the Council may, under sub-section (2) on its own accord or upon the direction of the Government, review the minimum wages order at any time.

Employers are further advised that failure to comply with the prescribed minimum wage carries an offence and shall, on conviction, be liable to a fine of up to RM10,000 for each employee. The fine is rolled forward based on RM1000 for each day of continuing offence after conviction. Repeated offenders shall, on conviction, be liable to a fine of up to RM20,000 or imprisonment for a term not exceeding five years.

Did you know?

The unemployment rate in Malaysia as of June 2018 is at 3.4%
Some employers rely on the fluctuation of the consumer price index as a factor to determine annual increments. As of now, the figure suggests an increase of 5%.

Insured employees of the Employment Insurance Scheme (EIS) who are retrenched will be able to claim full benefits if their last day of employment is after 1st January 2019.