How these 12 Budget 2020 Strategies to impact your HR Policy

Modernising the Labour Market with widen the Scope of Employment Act 1955

  1. Increase maternity leave from 60 days to 90 days effective Year 2021.
    How this affect you?
    Maternity Protection in Employment Act 1955 applies to all female employees regardless of wages or type of work they do. Employer should start to audit their current maternity leave policy to anticipate these changes, so the necessary updates can be done to comply with law once it comes into effect.

  2. Extend the eligibility to overtime from those earning less RM2,000 to those earning less than RM4,000 per month.
    How this affect you?
    As employer, you should start to review the numbers of employee who are earning between RM 2,000.00 and RM 4,000.00 a month. This group of employees are not entitled to overtime according to current Employment Act 1955. However, with the Proposed increase in eligibility, employer may now have to pay overtime for a larger sector of the workforce. This will be a good time to review your existing overtime policies so a better cost-control and overtime control can be done. Aside from these, you may not have a proper time management system to monitor employees’ working hours, now you need.

  3. Improve protection and procedures for handling sexual harassment complaints.
    How this affect you?
    Sexual Harassment in the workplace is a serious misconduct and employer has the duty to create a safe environment for their workers. Employers should examine whether they have a specific sexual harassment policy in place (a general policy about “misconduct” may not be enough), and if there is a specific procedure in place to deal with sexual harassment complaints.

  4. Introduce new provisions on the prohibition of discrimination on religion, ethnicity, and gender.
    How this affect you?
    New provisions to the Employment Act 1955 will be legislated to prohibit discrimination of employees based on religion, ethnicity and gender, among other things. While it is likely that the new prohibitions will not apply to jobseekers, employers should still ensure that they do not have discriminatory hiring practices

  5. The Government proposes to increase the minimum wage rate only in major cities to RM1,200 per month effective 2020.
    How this affect you?
    Businesses in major cities which are currently paying their employees below the proposed RM 1,200.00 a month, may have to start performing financial projections to estimate the payroll impact on the proposed increase to minimum wage. Note that the increase in minimum wage also effect on other payments such as statutory contributions like EPF, overtime rates, and even calculation for encashment of accrued but unused annual leave. So far there is no definition of what is a “major city” but it should be presumed that this will include Kuala Lumpur, Shah Alam and Penang at the least.

Income Tax (Monthly Tax Deduction/Potongan Cukai Berjadual)

  1. To ease the financial burden of parents who enrol their children in registered nurseries and kindergartens, individual tax relief for fees paid will be increased from RM1,000 to RM2,000.
    How this affect you?
    This should be noted while collecting TP1 Form from employees twice a year as per IRB guideline.

  2. The income tax relief of up to RM6,000 given on expenses incurred for medical treatment of serious illnesses will be expanded to include expenses incurred on fertility treatment.
    How this affect you?
    This should be noted while collecting TP1 Form from employees twice a year as per IRB guideline.

  3. Government also proposed that a new band for chargeable income in excess of RM2 million will be introduced and taxed at 30%, which is a 2-percentage point increase from the current 28% rate.
    How this affect you?
    This proposal mainly targeting a small group of high-income earners in the country, however if your company ever have a high-income employee who made more than RM 2 million a year, you should have taking note while populating their payroll and PCB.

Malaysian@Work Program

  1. Hiring of graduates who have been unemployed for more than 12 months. The graduates who secures work will receive a wage incentive of RM500 per month, for a duration of two years, while employers receive a hiring incentive up to RM300 per month for each new hire, for two years

  2. Women who have stopped working for a year or more and are between 30-50 years old. The wage incentive for returning women workers is RM500 per month for two years, and a corresponding hiring incentive for employers up to RM300 per month for two years. On top of the above, the current income tax exemption for women who return to work after a career break be extended for another four years until 2023

  3. The wage incentive for Malaysians who are hired to replace foreign workers is at either RM350 or RM500 per month, depending on the sectors, for a duration of two years, and corresponding hiring incentive for employers up to RM250 per month for two years

How this affect you? The 3 Programmes launches by government under Malaysians@Work initiative provides hiring incentives for employer as long the requirement is meet. This could be a good time to review workforce on how we can benefit by these programmes.

i-Suri Program

  1. In 2020, husbands may voluntary elect to contribute 2% from his 11% EPF employee contribution to his wife’s EPF Account.
    How this affect you?
    With the effective of this proposal, we should be expecting Male workers vote “YES” for this voluntary. However, the detail workflow of this contribution has yet to be announce by KWSP.

Most of the above proposals will still have to be legislated before they can take legal effect. Once these amendments are tabled in Parliament, employers will get greater visibility on how #Budget2020 will affect their business.

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