Msian govt is subsidising workers salaries. Here’s how employers can sign up for it

Note: Article has been updated to reflect the increase in the wage subsidy programme, announced on 6 April 2020.

As we write this, Malaysia’s Movement Control Order (MCO) is now in the second week. The MCO has slowed our economy down, with the government estimating we would need 6 months to recover from it. Companies feeling the pinch might feel the need to cut costs.

Right now, there are ways to reduce overheads, such as asking your landlord for a discount on your rent. However, if the cashflow in isn’t great, your employer might feel it’s necessary to start cutting your wages, or worse, fire you or one of your colleagues. 

But your employer might not need to resort to it just yet. To help with the financial issues companies are going through, the Prime Minister announced the Wage Subsidy Programme under PRIHATIN. If you’re reading this, you can probably sign up soon because...

Your employer can sign up for it from 1 April 

The aim of the Wage Subsidy Programme is to avoid employees being fired and losing their income. To do so, the government will provide a subsidy between RM800-RM1200, depending on the number of employees in the company, for the next three months. This is an increase of the subsidy announced previously, which is RM600 per employee.

Unlike a few other financial schemes under the PRIHATIN, it is not automatic and employers would need to register to be eligible for it. Employers can sign up at PERKESO’s website starting from 1 April 2020. Do note that registering on the first day may be difficult, due to the high number of visitors on the site. If you can’t access it in the day, we suggest trying it during off-peak hours such as late night or early mornings.

It will potentially be a short wait for the payment, as the subsidy will be transferred to the employer’s account within 7 days of submitting the application. The amount given will also be based on the number of eligible employees, as not every employee would qualify for the subsidy.

To qualify, the company and employee must meet these requirements:

1. The subsidy is only for employees earning below RM4,000
2. The employees have been registered and contributed to the Employment Insurance Scheme (EIS)
3. The company has seen a 50% decrease in income since 1st January 2020

The amount of subsidy given will be tiered depending on the size of the company.  Do note that companies can only claim subsidies for up to 200 workers earning below RM4,000.

• Companies with more than 200 employees are given RM600 for each eligible employee.
• Companies with 76-200 employees are given RM800 for each eligible employee.
• Companies with less than 75 employees are given RM1200 for each eligible employee.

Let’s give a quick example of how this works. Suppose a company has 250 employees, but only 180 employees earn below RM4,000. The company will be given a subsidy of RM600 x 180 = RM108,000 per month. This is assuming the workers have been registered to the EIS, and the company’s income has went down by 50% since January.

But there’s one more requirement companies need to fulfill during these three months, which is that...

Your boss can’t fire you or cut your wages

When your employer signs up for the Wage Subsidy Programme, there are three things they cannot do:

1. They cannot lay off workers 
2. They cannot force workers to take unpaid leave
3. They cannot cut their workers wages

Employees also must retain workers for six months – three months under the wage subsidy, then three months after that. 

This programme is an extension of the Employee Retention Scheme (ERS), which was introduced on 16 March. Within the ERS, the Human Resources Ministry has set out the punishments for not the following their guidelines. Employers who did one of the three things can be fined RM10,000 for each offence committed.

If you feel that your employer has gone against the guidelines, you can make a complaint at the Human Resource Ministry by calling 03-8886 5192.

[READ MORE: Here's how Malaysian employers might break the law during the COVID-19 outbreak]

Other measures to help with cashflow issues

Wages aren’t the only concerns for an employer. There are other costs in keeping a company running such as EPF contributions and electricity bills, and these all cost money. So besides wage subsidies, there are also other measures planned to help employers with cashflow issues during the MCO. 

EPF is introducing the Employer Advisory Services (EAS) programme on 15th April 2020. Under the programme, EPF will assess how a company is doing during the MCO, and offer customised plans for their EPF contributions. So if monthly payments of EPF contributions are starting to affect the cashflow, the company could potentially defer payment or have the payments staggered or restructured.

Companies are also exempted from paying the Human Resources Development Fund (HRDF) fee for the next six months, beginning 1st April. It can be a small amount, as the levy is between 0.5%-1% of their employee payroll, but every cent counts right now.

There is also a discount on electricity bills for six months starting from1st April to 30th September. Six industries directly impacted by the COVID-19 pandemic will be given a 15% discount. These industries are:

1. Hotel operators
2. Travel and tourism agencies
3. Shopping complexes
4. Convention centres
5. Theme parks
6. Local airline officers

Other commercial, industrial and agricultural sectors not listed above will receive a 2% discount on their electricity bills. Hopefully, these measures will give us enough lift to stay afloat during the pandemic.