Maintaining EIS is self-defeating and contentious, says KCGCCI sec-gen

He felt that the business concerned should be responsible for dealing with the lay-off benefits of its retrenched workers under the prevailing law.

“Unlike the Employees Provident Fund ( EPF), when employees and employers make their contributions to the proposed EIS, employees will only benefit when they are being retrenched.

“Looking at the relatively small percentage of workers retrenched annually in this country, we don’t need a pool of funds serving such purpose at the expense of the private sector,” he pointed out.

Chai said the sizable amount deployed in maintaining the proposed EIS ‘is self- defeating and contentious’.

“If at all there is any additional protection or benefits required to be given to the retrenched workers, on top of the subsisting benefits provided under the prevailing law and social safety net, the government should be duty-bound to make such arrangements.”

He said there had been a series of policies put in place lately to escalate the costs of running business in the current difficult environment and deteriorating economy.

“Among the examples are the minimum wage policy and levies on foreign workers. If the government goes ahead with implementing the EIS, it would definitely be a blow to local businesses, affecting their sustainability or even survival,” he stressed.

On Saturday, Norma told Bernama that the contributions towards the EIS fund would be made by both employers and employees under the new scheme.

According to her, the proposed EIS would make it cheaper for employers to lay off workers in order to upgrade their technology and automate their businesses compared with the current workers protection scheme.

“When we talk about lay- off and the termination benefits, ( currently) the responsibility falls on the employers alone and they are supposed to pay an equivalent of 4.5 months of the terminated worker’s salary. And it is only covering workers earning RM2,000 and below.

“The EIS is contributory, where every employee will also have to contribute to the fund. The contribution will go into a pool fund, similar to the EPF, where this fund is going to be invested,” added Norma.

The EIS Bill was tabled for the first reading in Parliament by Human Resources Minister Datuk Seri Richard Riot last Tuesday.

The novel Bill seeks to extend welfare coverage for the country’s 6.5 million private workers by compelling employers to contribute additional payment and bar them from making cuts to wages and fixed perks.

Clause 24(1) of the Bill states: “[ The] employer shall not, solely by reason of his liability for any contributions payable under this Act, directly or indirectly, reduce the wages of any employee, or discontinue or reduce benefits payable to the employee under the conditions of service which are similar to the benefits conferred by this Act except as provided for in any other written law.”

Employers found guilty of violating the rule can be punished with a jail term of up to two years and a maximum fine of RM10,000.

The EIS is primarily aimed at helping to provide financial assistance to private workers who lose their jobs until they are able to find new employment.

Retrenched workers will also be given help to search for new jobs, career counselling and training.