Observation (CEACR) - adopted 2017, published 107th ILC session (2018)

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

Article 6 of the Convention. Equal treatment. Minimum wages and the foreign worker levy. The Committee recalls its previous comments in which it noted that the National Wages Consultative Council Act 2011 (Act 732) and the Minimum Wages Order 2012 provided for a regional monthly minimum wage for Sabah covering national and foreign workers, but exclude domestic workers from their application. It also recalls that an annual foreign worker levy in the plantation sector, agricultural and fishing sector, manufacturing sector, construction sector, and in the services sector, and for domestic workers, is to be paid to the Immigration Department. The Government also indicated that, as of 1 January 2014, all employers employing foreign workers should pay the minimum wage and would be allowed to deduct the foreign worker levy and the cost of accommodation from migrant workers’ wages, but not from the minimum wage. As the Government had indicated in the past that the levy was paid by the employer and could not be deducted from the wages of the foreign worker, the Committee considered that ambiguity existed regarding the foreign worker levy and permissible deductions from minimum wages of foreign workers, since the establishment of the regional minimum wage for Sabah.

The Committee notes that the Government’s report has not been received. It notes however that the Government provided information in 2016 confirming the Malaysian government policy requiring the levy to be borne by the foreign worker. The Government however indicates that pursuant to section 113(4) of the Sabah Labour Ordinance (Cap 67), no deductions of levy and accommodation costs are allowed, except at the request in writing of the employee and with prior permission by the competent authority. The Government adds that when approving such requests, the wish of the foreign worker to pay the levy in instalments or by way of a lump sum, is being taken into account; not allowing the deduction of the levy from wages of foreign employees, despite their written request, would only burden these employees. While noting these explanations, the Committee remains concerned that, in practice, employers may still deduct the amount of the levy from the minimum wage of the foreign worker, which would result in less favourable treatment of these workers with nationals, contrary to Article 6(1)(a) of the Convention. Noting further that the Government had previously reported that the levy was meant to help defray the costs of maintenance of the facilities and infrastructure used by foreign workers during their stay in the country, the Committee considers that, especially when levy rates are high, imposing the burden of the levy on the foreign worker would not be equitable and could have a negative impact on the wages and general working conditions and rights of migrant workers. Regarding deductions for costs of accommodation, the Committee notes the Government’s explanations that such deductions will not be allowed if it is agreed that the employer has the obligation to provide free accommodation to the employees. The Committee asks the Government to clarify the reasons for laying the burden of maintenance costs of facilities and infrastructure, through payment of an annual levy, with the foreign worker, and to indicate whether any consideration is being given to shift the burden of the foreign worker levy onto the employer, or to examine alternative ways to compensate for the so-called costs for facilities and infrastructure generated by foreign workers during their stay. The Committee also asks the Government to specify the applicable legal provisions or policy prohibiting levy deductions from the minimum wage, and to indicate the measures taken to ensure that, in practice, employers do not deduct the levy amount from the minimum wages paid to foreign workers. Recalling that the Government had previously indicated that it was willing to examine the impact of the levy system on the working conditions and equal treatment of migrant workers, including wages, the Committee requests the Government to undertake such an assessment and provide information on its results and any follow-up given to it.

Article 6(1)(b) of the Convention. Equality of treatment with respect to social security. Employment injury benefits. The Committee notes that the Government’s report was not received despite the Committee’s longstanding comments regarding differences in treatment between nationals and temporary foreign workers with respect to payment of social security benefits in the case of industrial injuries. 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 to victims of industrial injuries 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 had previously indicated that it was looking into various options, with the participation of all stakeholders with a view to bringing the national legislation in line with the requirements of the Convention. The Committee recalls that it has been raising this same issue since 1993 in the context of its comments under the Equality of Treatment (Accident Compensation) Convention, 1925 (No. 19), with respect to Peninsular Malaysia and Sarawak. The Committee refers the Government to its observation on Convention No. 19 which notes the discussion on the application of that Convention in Peninsular Malaysia and Sarawak by the Conference Committee on the Application of Standards (CAS) in June 2017. The Committee notes that the CAS once again called upon the Government to take immediate, pragmatic and effective steps to ensure that the Convention’s requirement of equal treatment of migrant workers and national workers was met and to expedite its efforts to this effect, as the need for progress was becoming increasingly urgent. The Committee urges the Government to take into account its comments on the application in Peninsular Malaysia and Sarawak of Convention No. 19 when addressing the issue of equal treatment between migrant workers and nationals with respect to industrial injuries in Sabah.

Other social security benefits. With respect to other social security benefits, including medical care, old-age, invalidity and survivor’s pensions, as well as sickness and maternity benefits, the Committee notes that the Government has not provided any further information in this respect. Taking into account the large number of foreign workers concerned, the Committee urges the Government to provide information on the steps taken, including the conclusion of bilateral or multilateral agreements, to ensure that migrant workers 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.