KUALA LUMPUR: Federation of Malaysian Manufacturers (FMM) recommends the Employment Termination and Lay off Benefits (ETLB) should be aligned with the proposed Employment Insurance Scheme (EIS) so as to avoid unnecessary duplication in unemployment compensation.
In a telephone interview with NST Business today, FMM president Tan Sri Lim Wee Chai said, “if the employees had lost their jobs, they can claim the ETLB from their employers. Let's say the company goes bankrupt and is not able to pay out the ETLB, then those who have lost their jobs can claim under the EIS.
“It should be a claim from either one of the schemes, not both. We should avoid unnecessary duplication in unemployment compensation,” he said.
He also noted employers are already contributing towards the Human Resources Development Fund (HRDF).
"The EIS seeks to duplicate the HRDF’s Active Labour Market Programme which helps unemployed workers seek job placements. Since such benefits are already covered under other agencies or payment schemes, it should not be paid again," he said.
On 1st August, Human Resources Minister Datuk Seri Richard Riot Jaem tabled the EIS Bill for the first reading in Parliament.
The EIS is said to be administered by the Social Security Organisation (Socso) and employers will have to register and insure all their employees.
Failure to do so would result in employers being slapped with a maximum fine of RM10,000 or two years jail or both, upon conviction.
Both employers and employees will pay half of the contributions to Employment Insurance Fund. The government does not contribute anything to this fund.
Employers and employees contribution rates are based on the monthly wages of between RM30 and an insurable cap of RM4,000. The contribution ranges from 20 sen for wages up to RM30 a month to RM59.30 for wages up to RM4,000 a month, regardless of the salary scale for each retrenchment.
The EIS include retrenched staff, those undergoing a voluntary or mandatory separation scheme, force majeure (an unforeseen circumstance that makes it impossible for work to be completed) and those made redundant due to business restructuring or closure.
Under the job search allowance, an unemployed worker can get 80 per cent of assumed monthly wages for the first month, 50 per cent for the second month, 40 per cent for the third and fourth months, and 30 per cent for the fifth and sixth months.
Dependents are entitled to claim the benefits in the event that an insured employee dies, falls into a coma or is of unsound mind.
The Employment Insurance Fund accounts must be audited by the Auditor-General and tabled before the Parliament, every year. The EIS is expected to be enforced from 1st January 2018 while interest payments would be made from 1st January 2019.
Yesterday, Human Resources Minister Datuk Seri Richard Riot announced the government will lower the payments in the proposed EIS from 0.5 per cent to 0.2 per cent.
"The reduction was decided after a meeting with stakeholders on August 10, in which it was agreed that contributions from 0.5 per cent each by employers and employees to 0.2 per cent," the minister reportedly said.
This meant when employers pay 0.2 per cent and workers contribute 0.2 per cent, the total amount going into the Employment Insurance Fund is 0.4 per cent.
The reduction will be reflected in the EIS Bill, to be submitted when Dewan Rakyat next convenes.
"The Cabinet subsequently agreed on 11th August for the revised Bill to be tabled in the Parliament meeting in October 2017.”
Lim said FMM supports the government’s initiative to actively engage with the stakeholders especially employers prior to the second reading of the EIS Bill in Dewan Rakyat.
“We're not against the Bill. What we're concerned about is the EIS contributions by both the workers and employers are unreasonable compared with the payout,” he added.