Observation (CEACR) - adopted 2015, published 105th ILC session (2016)

Migration for Employment Convention (Revised), 1949 (No. 97) - Malaysia - Sabah (Ratification: 1964)

Article 6(1)(a)(i) of the Convention. Minimum wages and the foreign worker levy. The Committee recalls the National Wages Consultative Council (NWCC) Act 2011 (Act No. 732) and the Minimum Wages Order 2012, which provides for a regional monthly minimum wage of 800 Malaysian ringgit (MYR) for Sabah, to be implemented as of 1 January 2013, and the Minimum Wages (Amendment) Order 2013, which allows certain enterprises to defer payment of minimum wages until 31 December 2013. It also recalls that, under the Minimum Wage Policy (March 2013) issued by the Ministry of Human Resources, employers which implemented minimum wages were allowed to deduct the actual amount of the foreign worker levy on a prorated monthly basis, as well as the cost of accommodation not exceeding MYR50 per month per person. In special circumstances, based on individual merit, the Labour Department may consider applications to deduct the cost of accommodation exceeding MYR50 a month. The Committee notes the Government’s indication that, as of 1 January 2014, all employers employing foreign workers have to pay the above minimum wage, but will be allowed to deduct the levy and the cost of accommodation from migrant workers’ wages, but not from the minimum wage. The Committee considers that allowing the amount of the levy to be deducted from the wages of foreign workers would result in less favourable treatment of these workers than for nationals, contrary to Article 6(1)(a) of the Convention. Further, with respect to the deduction of accommodation costs, the Committee recalls that, where partial payments in kind are authorized, appropriate measures shall be taken to ensure that the value attributed to allowances, such as accommodation costs, is fair and reasonable, and does not lead to unequal treatment between national and migrant workers with respect to remuneration. In view of the ambiguity in the Government’s statement and the Minimum Wage Policy (2013) of the Ministry of Human Resources regarding permissible deductions from minimum wages for foreign workers, the Committee requests the Government to clarify whether the policy document under which employers are allowed to deduct the levy and accommodation costs from the minimum wages of foreign workers is still in force, and to provide a copy of the relevant text. The Committee further requests the Government to take the necessary steps to ensure that employers do not deduct the levy from the wages paid to foreign workers and that where they deduct accommodation costs, it should be fair and reasonable, so as to ensure that no less favourable treatment is applied to them compared with national workers, in conformity with Article 6(1)(a) of the Convention. Recalling that the Government indicated previously that it was willing to examine the impact of the levy system on the working conditions, including wages, and equal treatment of migrant workers, the Committee urges the Government to undertake such an assessment and to provide information on its results and any follow-up.

Article 6(1)(b). Equality of treatment with respect to social security. Employment injury and other social security benefits. The Committee recalls its previous comments regarding differences in treatment between nationals and temporary foreign workers with respect to social security benefits in the case of occupational accidents. The differences relate to the Workmen’s Compensation Scheme (WCS), which guarantees to foreign workers employed in the country for up to five years only a lump-sum payment of a significantly lower amount than the periodical payments for victims of industrial accidents provided under the Employees’ Social Security Scheme (ESS), while Malaysian nationals and foreign workers permanently residing in Malaysia (Sabah) continue to be covered by the ESS. The Government indicated in November 2012 that it was conducting an actuarial study considering the following three options: (i) extension of ESS coverage to foreign workers; (ii) creation of a special scheme for foreign workers under the ESS; or (iii) raising the level of benefit provided under the WCS so as to be equivalent to that of the ESS benefit. The Committee notes that the actuarial study was carried out and that foreign workers are still covered by the WCS, but it notes that the Government is considering extending the coverage of the ESS to foreign workers who are in a regular situation. In this regard, the Committee refers the Government to the comments made under the Equality of Treatment (Accident Compensation) Convention, 1925 (No. 19), with respect to Peninsular Malaysia and it notes that in this context the Government proposed to hold a technical consultation with the ILO to evaluate the conformity of the modified ESS scheme with Article 1 of Convention No. 19. The Committee hopes that the technical consultation with the ILO will be organized in the very near future so as to enable the Government to proceed with the modification of the ESS scheme in line with the principle of equality of treatment of foreign workers. Furthermore, the Committee reminds the Government that under Article 6(1)(b) migrant workers should be accorded treatment no less favourable than that which is applied to nationals regarding all social security benefits. The Committee reiterates its request to the Government to provide information on the steps taken, including the conclusion of bilateral or multilateral agreements, to ensure that migrant workers, who are in the country temporarily, do not receive treatment which is less favourable than that applied to nationals or foreign workers permanently residing in the country with respect to all social security benefits.

The Committee is raising other matters in a request addressed directly to the Government.