FMM: Phase out current termination, layoff benefit scheme to avoid overlaps

KUALA LUMPUR: Federation of Malaysian Manufacturers (FMM) has recommended phasing out the Employment Termination and Lay off Benefits scheme if the government insists on the Employment Insurance Scheme (EIS) to avoid overlaps and unnecessary duplication in unemployment compensation.

In a statement, FMM president Tan Sri Lim Wee Chai said employers are already contributing towards the

Human Resources Development Fund

(HRDF).

On August 1, 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 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 of 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 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 includes retrenched staff, those undergoing a voluntary or mandatory separation scheme, force majeure — an unforeseen event 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 January 1 next year, while interest payments would be made from January 1 2019.

Yesterday, Human Resources Minister Datuk Seri Richard Riot announced the government will lower the payments for the proposed EIS from 0.5 to 0.2 per cent. Ooi Tee Ching