55 to 60!

Minimum Retirement Age Bill 2012

In June 2012, the Parliament has passed Minimum Retirement Age Bill 2012. The age for retirement has raised from 55 to 60 for the private sector employees. One of the reasons for the government to raise the retirement age is that people have longer life span because most of the people are health conscious nowadays.

Under Section 4(1) Minimum Retirement Age Act 2012, the minimum retirement age for private sector is 60. This means that the employees have to work until the age of 60. However, there is an optional retirement that is stated under Section 6 Minimum Retirement Age 2012. The employees may retire upon the age of optional retirement which is agreed in the contract of service or collective agreement. This indicates that the employees may opt for an earlier retirement.

Minimum Retirement Age Act 2012 has identified 9 groups of employees that are not affected by the provision of this Act. The first group of people is the people who is employed on permanent, temporary or contractual basis and is paid emoluments by Federal Government, State Government, any statutory body or local authorities. A person who works on probationary term or an apprentice who is employed under an apprenticeship contract is also excluded under the Act. Besides that, a non-citizen employee or a domestic servant is also not affected by the provision. A student employed for a temporary term, a person who is employed with average hours of work not exceeding seventy percent of the normal hours of work of a full-time employee or a person who is employed on a fixed term contract of service, inclusive of any extension, of not more than twenty four months is also one of the groups that is not protected under this Act. The last group of employees will be before the enforcement of the act, the employee that has retired at the age of 55 or above and is re-employed after the retirement.

An employee who has been prematurely retired by his employer may write in the complaint to Director General within sixty days from the date of retirement. This is stated under the Section 8(1) of the Minimum Retirement Age Act 2012. The employee can opt to make complaint either under Section 8(1) Minimum Retirement Age Act 2012 or Section 20 Industrial Relations Act 1967. The Director General will carry out an inquiry under the Minister’s direction to determine whether there is prima facie evidence that the employee has been prematurely retired. If the Director General is satisfied that the employee has prematurely retired, Director General may direct the employer to reinstate the employee and pay any arrears of wages calculated from the date the employee prematurely retired to the date of the reinstatement or to pay the employee a compensation in lieu of reinstatement not exceeding the total wages of the employee calculated from the date prematurely retired to the date the employee attains the minimum retirement age. If the Director General is satisfied that the complaint is not substantiated, the Director General shall dismiss the complaint.

Before the employee make a complaint, the employee must make a choice either to make complaint under Minimum Retirement Age Act 2012 or Industrial Relations Act 1967. The employee cannot make complaint under both Acts because the Director General will not conduct an inquiry on the complaint. If the employee complaint is dismissed by the Director General, the employee can appeal the decision under Minimum Retirement Age Act 2012 or make a representation under Section 20 Industrial Relations Act 1967. If the employee makes a representation under Section 20 Industrial Relations Act 1967, the employee cannot appeal under Section 10 Minimum Retirement Age Act 2012. Thus, the employee must be clear with the choice and option that is available.

Although this Act has been gazetted, the Minister has yet to announce the date of enforcement. We believe that the private sector and the employees require a transition period to make necessary adjustment.

By: Ms Kelly Siew; Intern at Lee & Chong – Mini-placement 2012; Undergraduate of University Kebangsaan Malaysia

Supervised by: Ms Irene E. Tan, Esq

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5 responses to “55 to 60!

  1. Hi,

    Can I re-confirm. My contact of employment states that retirement age is upon attainment of 55 years.

    If i am attaining the age of 55 years on 9-June-2013 and implementation of this law is only on 1 July 2013, can my employer terminate me based on my attainment of 55 yrs of age before 1 July 2013 (the actual implementation date of the law)

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  2. Query: As the Minimum Retirement Age Act for the private sector will be implemented from July 1, 2013 at 60 and employers can apply to defer implementation up to December 31, 2013, I would like to seek clarification whether my retirement age would be 60 notwithstanding my attainment of age 55 on April 5, 2013 based on the Act that has been gazetted.

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    • Hi Mr. Wong,

      In your case, the employers can apply to defer the implementation until the end of next year. However, it is not as of right because the employers would have to show strong reasons in the application in order to defer the implementation. However, in order for you to fall under the Minimum Retirement Age Act 2012 (“MRAA”), you must first show that you do not fall within the Schedule in the MRAA. If you do not fall within the Schedule, then the MRAA would be applicable to you since the Schedule provides for the categories of employee NOT covered by the MRAA.

      However, kindly note that Section 7(1) of the MRAA 2012 specifically states that any contract for service or collective agreement which stipulates the minimum retirement age lower than the age of 60 is deemed to be void and substituted with the minimum retirement age of 60 (once the MRAA takes effect). Following this, it would not matter if your age would be 55 years old before, on or after the date of implementation of MRAA 2012 because Section 7(1) of the MRAA would come into force and change the minimum retirement age in a contract of service or collective agreement (whichever is applicable) to 60 years old.

      Having said that, you do have the option of early retirement. Despite the fact that MRAA 2012 applies retrospectively, Section 6 MRAA 2012 does allow for optional retirement, ie retirement before the age of 60 as stipulated in Section 3 MRAA 2012. Nonetheless, you will still need to look into your contract of service.

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  3. Why not implement the ACT immediately for the sake of retiring workers. Implemement it in September 2012.Employers have known about this ACT few years ago.It is unfair for some who are retired when the ACT hasbeen gazetted in August 2012.

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