In Malaysia, employers can retire their employees after the employees reach the minimum retirement age set by the law. This article will explore the law on the retirement age of Malaysian private-sector workers. Here are six fundamental points to know about the minimum retirement age in Malaysia.
The minimum retirement age in Malaysia is governed and regulated under the Minimum Retirement Age Act 2012, which first came into force on 1st July 2013 and was last amended in 2016. The act applies to full-time employees in the private working sector as opposed to those working in the public sector.
The Act does not apply to all working Malaysians. According to the Schedule contained in Section 2 of the Act, there are nine categories of employees who are excluded from the Act;
According to Section 4(1) of the Act, the minimum retirement age in Malaysia is set at 60 for those working in the private sector. Before the implementation of the act, the minimum retirement age in Malaysia was at the age of 55. The Act prohibits premature retirement through provision Section 5(1) states that no employer shall retire their employee before they reach the age of 60. Under the law, before an employee reach their 60th birthday, their employer cannot request them to retire early. Section 5(2) of the Act expressly states that the violation of Section 5(1) is considered an offence, and any employer who commits such is subject to a fine of not more than RM10,000 if found guilty.
If an employee has been prematurely retired by the employer, Section 8 provides the following options to the employee:
However, it is essential to highlight that if an employee has filed a complaint to the Director General, they must only file the application for unfair dismissal once their former complaint to the Director General has been resolved. If found that the application for unfair dismissal has been made, the Director General will not conduct any inquiry on the complaints made due to redundancy of the application.
If the Director General is satisfied that the employee has been made prematurely retired by their employer, the Director, under the power given to them under Section 8 (5) (b) of the Act, shall order the following to the employer:
Suppose the Director General, upon his inquiry, has dismissed the complaint of premature retirement made by the employee; the dissatisfied employee may then file an appeal to the High Court within 30 days of the communication of the dismissal or resort to the application of unfair dismissal at the Industrial Court.
If the employee has signed a contract of service or a collective agreement with a specific clause mentioning the age of optional retirement, the employee may voluntarily retire upon reaching the age stated in such a particular clause. Therefore, with mutual agreement between the employer and employee, an employer may retire an employee upon reaching any age below 60. However, if the contract of service is silent on the age of optional retirement, an employee is entitled to work until the average retirement age for employees in their field.
There have been a few debates urging for the revision of the retirement age including the suggestions to raise the minimum retirement age to be beyond 60 due to the current economy and high cost of living. However, until 2022, the government is not keen to increase the statutory retirement age as the previous increment of the retirement age from 55 to 60 before the coming of this Act has led to a loss of approximately a million job opportunities for millennials. However, the 60 years old retirement provides in the act is only the minimum age. There is no penalty for allowing employees who have reached the age of 60 and above to continue working for as long as they intend to. The age the employee should retire should be based on mutual agreement between the employees and their employer and must factor in their work performance, health condition and productivity.