With the recent advent of the Co-Vid 19 Pandemic, companies are forced to resort to cost-cutting measures including implementing pay-cut to safeguard their respective companies. However, could this be extended to maternity allowance even with the consent of the employee?
Section 37 of Employment Act provides for the following
37. (1) (a) Every female employee shall be entitled—
(i) to maternity leave for an eligible period in respect of each confinement; and
(ii) subject to this Part, to receive from her employer a maternity allowance to be calculated or prescribed as provided in subsection (2) in respect of the eligible period.
It is important to note the common misconception that maternity allowance as defined under the Employment Act is not salary but maternity allowance.
The reason it is always equated as salary is because it is always paid equivalent to monthly wages due to Section 37(2)(C) Employment Act
Section 37 (2)(C)) A female employee employed on a monthly rate of pay shall be deemed to have received her maternity allowance if she continues to receive her monthly wages during her abstention from work during the eligible period without abatement in respect of the abstention.
Inevitably we also come to the question what about employees that are paid daily wages?
Section 37 (2)(b) (b) A female employee who is eligible for maternity allowance under paragraph (1)(a) shall be entitled to receive from the employer for each day of the eligible period a maternity allowance at her ordinary rate of pay for one day, or at the rate prescribed by the Minister under paragraph 102(2)(c), whichever is the greater.
Thus from the examination of the statute quoted above, it not an issue of consent anymore as this are monies payable and dictated by statute where if we were to observe the wording of Section 37 Employment Act 1955 which provides for the word “shall”, which is mandatory in nature.
Thus employers that were to argue consent would be sufficient to override this express provision should be guarded as this is dissimilar with pay-cut with consent as remuneration of each employee is the amount of salary derived from the employment contract which is different from maternity allowance which is derived from express statutory provision.
Further pay-cut with the supposed justification of consent during confinement would be illegal as the moment the employee commences her confinement as defined in the act, the maternity allowance is payable. It is also provided by Section 43 Employment Act 1955 that any conditions that that is contrary to any of the provisions of the maternity protection is void.
Next would be the question raised, could the payment be differed? The law also provides that maternity allowance must be payable no later than 7 days after wage period. Section 38 of Employment Act 1955 provides for the following “maternity allowance shall be paid in the same manner as if such allowance were wages earned during such wage period as provided in section 19” and when read with section 19 Employment Act which states that salary must be payable within seven (7) days of wage period
Hence, it would appear that any attempt to deduct payment of maternity allowance even with consent cannot escape the express provision of the Employment Act. It would appear that it is mandatory to be paid as defined under the Employment Act 1955.
Lastly, common question on the extent of the applicability of this provision to only the employees governed under the employment Act, i.e those earning RM 2,000.00 or below or manual labour only? Then answer is no, Section 44A employment Act 1955 provides for maternity protection provision is applicable to all employees regardless of wages earned.
Employers that choose to disregard these provision apart from the civil remedy of recovery of maternity allowance payable should also be aware of the penalty as contravention of this provision amounts to an offence under Section 94 Employment Act 1955 which provides that an employer who—
(a) fails to grant maternity leave to a female employee employed by him and entitled thereto under Part IX;
(b) fails to pay the maternity allowance to a female employee employed by him and entitled thereto under Part IX, or to her nominee, or to her personal legal representative;
(c) fails to pay maternity allowance in the manner prescribed in section 38;
Commits an offence of law under the law which can be punished if convicted of a fine not exceeding RM 10,000.00 for each offence.
Premjit Singh is the Managing Partner of Prem & Associates (www.premlaw.com) and he can be contacted via email at prem@premlaw.com or mobile at 012-5236755
