Observation (CEACR) - adopted 2008, published 98th ILC session (2009)

Equality of Treatment (Accident Compensation) Convention, 1925 (No. 19) - Malaysia - Peninsular (Ratification: 1957)

For many years, this Committee as well as the Conference Committee on the Application of Standards have been drawing the Government’s attention to the fact that the national legislation and practice need to be brought in full compliance with the principle of equality of treatment between nationals and non-nationals with regard to compensation for industrial accidents, in conformity with Article 1, paragraph 1, of the Convention. In 1993, foreign workers were transferred from the Employees’ Social Security Scheme (ESS) which provides for periodical payments to victims of industrial accidents and their dependants to the Workmen’s Compensation Scheme (WCS), which only guarantees the payment of a lump sum. In 1997, the Conference Committee concluded that the level of benefits granted under the ESS was significantly higher than that guaranteed by the WCS and insisted that foreign workers benefit from the same protection as Malaysian nationals. An ILO high-level technical advisory mission visited the country in May 1998 to examine ways of giving effect to the conclusions of the Conference Committee. As a result, the Government stated in its 1998 report that it was planning to review the coverage of foreign workers under the ESS and to propose amendments to the Social Security Act of 1969 in this regard. Since then, however, no information was provided by the Government with regard to the intended amendments.

The Committee recalls that, while foreign nationals residing in Malaysia on a permanent basis are treated equally compared to national workers and covered by the ESS, those working in the country for a period of up to five years are covered only by the WCS. In its latest report, the Government stated that the policy to separate foreign and local workers should not be viewed as a form of discrimination against foreign nationals working in Malaysia. Foreign workers were transferred from the ESS to the WCS when it was found that the system had to operate under great administrative and operational problems due to the extreme practical difficulties to obtain accurate vital information about the beneficiaries residing abroad. The decision to place foreign workers under the WCS was motivated by the desire to protect such workers by a scheme that would best serve their interests. It was accompanied by an increase of the quantum of lump sum granted as well as, since 1996, by an extension of the insurance coverage also to accidents occurring outside working hours. A new extension of the WCS to foreign maids in order to provide them with greater protection was also currently being examined. The Government therefore considered that the assumption that the level of benefits under the WCS is substantially lower than that provided under the ESS should no longer be entertained. It indicated that an in-depth study on the proposal to cover foreign workers under the ESS Act of 1969 brought to light several impediments in implementing the proposal mainly related to administrative considerations such as the control and monitoring of long-term periodical payments. Malaysia’s experience reveals, according to the Government, that equal treatment through placing local and foreign workers under the same scheme is not only impossible to implement but also unfavourable to foreign workers themselves.

The Committee takes due note of the Government’s explanations that in separating national and foreign workers into different schemes offering differential treatment it has acted in the best interests of foreign workers in the situation where administrative difficulties precluded them from the provision of long-term periodical payments. The Committee however wishes to point out that the objective of the Convention consists precisely in helping ratifying States to deal with such kind of situations promoting solutions based on the principle of equality and not on discrimination. Depriving foreign workers of the right to equal treatment invoking their best interest would twist the meaning of the Convention to the extent that it does not make sense anymore and serves no useful purpose for other ratifying States. Although the Government affirms that the compensation payable under the WCS is not inferior to that paid under the ESS, it does not give any actuarial data comparing the benefits granted under these two schemes, which would demonstrate that the lump sums paid under the WCS correspond in each particular case (temporary or permanent incapacity, invalidity or survivors’ rights) to the actuarial equivalent of the periodical payments granted under the ESS. The Committee is therefore bound to observe that the current situation is not substantially different from the situation in 1997 when the national law and practice were found to be in breach of the principle of equal treatment guaranteed by the Convention. With respect to the difficulties mentioned by the Government concerning the payment of compensation abroad, the Committee wishes to stress that measures in this respect need to be taken by way of special arrangements between the Members concerned in line with the second paragraph of Article 1 of the Convention. Such arrangements are even more important in cases where the main countries supplying workforce to Malaysia are also parties to the Convention: among the 1.9 million foreign workers currently employed in Malaysia, more than 1.5 million come from the following countries: Indonesia (1.17 million), followed by India, Myanmar, Bangladesh, the Philippines, Thailand, Pakistan and China. Taking into account the large number of foreign workers concerned and the high accident rate among them, the Committee considers that the situation calls for special efforts from the Government of Malaysia to overcome administrative and practical difficulties which impede equal treatment of foreign workers who suffer industrial accidents. The Committee therefore asks the Government to report the steps undertaken to bring national law and practice in conformity with the Convention and wishes to recall the possibility for the Government to avail itself of the technical assistance of the Office in this respect.

[The Government is asked to reply in detail to the present comments in 2010.]