As of year-to-date, it is reported that in Malaysia, about four million individuals, over a quarter of Malaysia’s workforce, primarily young adults aged 25 to 44, are involved in the gig economy industry. The Budget 2021, 2022, and 2023 reports mentioned the growing importance of the gig economy. According to a 2019 Employees Provident Fund (EPF) study, four out of ten Malaysian workers will be gig workers within five years, double the global average. Further, a survey conducted by Zurich Insurance in 2020 shows that there were more than two million gig workers registered under the Malaysian Digital Economy Corporation. In the industrial platform, ‘gig’ is a well-known term for hiring, for example, a musician for a short-term performance or a one-off show. In fact, the term itself originated from music field, where its intended meaning was ‘engagement’. The term ‘gig’ has recently been associated with the employment landscape, particularly during the COVID-19 pandemic.
The consequences of not being recognized under labor laws prevent gig workers from benefiting from the social protection that traditional employees enjoy. This was until the government took the initiative to introduce the i-Saraan scheme and Self-Employed Social Security Scheme to assist gig workers’ social protection. Even so, these initiatives are ineffective because they are voluntary schemes, which means that gig workers can opt not to contribute to the scheme. As discussed earlier, there are various sectors in the gig economy, which further leads to the realization that due to those differences in nature, the governing bodies that possess the power to enforce laws on them are scattered. Even if we take one example from the transportation sector, explicitly e-hailing and p-hailing, several ministries might involve human resources, transportation, communication, and finance. This study explores the challenges and issues of gig workers in Peninsular Malaysia, where the business activity center is explored. The problem statement is carefully explained through in-depth inter-views by gathering responses from policymakers and legal practitioners related to employment law, rider associations, p-hailing drivers, and platform owners. A policy recommendation is proposed after critically evaluating the existing issues and challenges.
Definition of Employee under Malaysian Employment Act 1955
Among all those mentioned above and other available labor statutes in Malaysia, the EA 1955 is the principal legislation regulating employment law, including employee relations. Like most labor statutes, EA 1955 considers the legal employment relationship based on a contract of service or employment. A contract of service is defined in the EA 1955 as an agreement established between an individual who agrees to hire another person who also agrees to be in the ser-vice of the person who is hiring. The employment agreement concluded by the parties will constitute the employer-employee relation-ship, which enables them to be legally recognized under the labor laws in Malaysia. As for how labor laws work, individuals must have their employment based on the contract of service, which is essential in determining their legal status.
Legal Status of Employees in Malaysia
According to Malaysian labor laws, acknowledging an employment status significantly regulates statutory rights, protections, and legal claims as the contract of service entered into will give the employer the right to control the employee and establish the employer’s responsibility towards his employee during working hours. In the case of Hoh Kiang Ngan v Mahkamah Perusahaan Malaysia & Anor [1996] 4 CLJ 687, Gopal Sri Ram JCA, in giving judgement, stated that the more control an employer has upon an individual, it is more likely that the individual is an employee for the employer’s business.
It is worth noting that in October 2021, the Employment (Amendment) Bill 2021 (the Bill) was presented for its first reading in Parliament. The Bill proposed a few amendments to the EA 1955, and one of the fundamental changes was the definition of employee and employer under the EA 1955. The Bill proposed a new section that provides for the presumption of employment (the Bill, 2021). The House of Senate passed the Bill, which was gazetted in May 2022.It was proposed under section 101c of EA 1955 that the presumption of employment be made in the absence of any written agreement indicating the contract of service between employee and employer. There are several elements to be satisfied to constitute the presumption. For the employee, it includes the employer controlling the manner and hours of work of the employee; the work is proven to be an integral part of the employer’s business, the work executed for the benefit of the employer, and, in return, the employee receives payment which constitutes the employee’s primary source of in-come.
Findings and Analysis
Peninsular Malaysia’s gig economy faces many difficulties, such as unclear worker status, a lack of social protection, absent formal employment contracts, insufficient price regulation control, sub-par operational services, a gulf between platform owners and the government, and a disjointed institutional framework. It will take extensive work to address these problems by defining terms clearly, strengthening social protections, enacting fair employment practices, controlling pricing, fostering better stakeholder relations, and building a robust institutional framework that protects the rights and welfare of gig workers.
Author: Faizal Kurniawan
Details of the article:
Abdullah, N., Mohd Ismail, M., Huzni Murad, M. S., Jusoff, K., Kurniawan, F., & Salah, M. (2024). Critical Insights into Gig Economy: A Peninsular Malaysia Case Study. Jambe Law Journal, 7(2), 395–427. https://doi.org/10.22437/home.v7i2.460
