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  • Writer's pictureGayathri Sivananthan

Hari Raya and Other Festive Seasons: Managing Employee Gifts, Leave, and Absences

As Hari Raya approaches, employers in Malaysia face a unique set of challenges related to gift-giving practices, public holidays, employee absences as well as flexible working requests. This article highlights the common issues faced by employers and the intricacies of managing employees during festive seasons.

Addressing Concerns of Corruption in Gift-Giving Practices

One of the primary concerns during festive seasons is the exchange of gifts between employees and third-party vendors. While acknowledging the cultural significance of gift-giving (“Duit Raya”, expensive tokens etc) there is a

palpable apprehension surrounding potential corruption and bribery. To mitigate risks, it is essential to examine gift-giving practices through a multifaceted lens. Clear policies delineating acceptable gift thresholds within organizations can help uphold transparency and accountability. It is essential to ensure that the company takes certain measures and implements best practices to prevent any type of corruption as this may lead to liability under S.17A of the Malaysian Anti-Corruption Commission Act 2009.

Another contentious issue is whether Hari Raya should be considered a replaceable public holiday. According to the Employment Act 1955, Hari Raya falls under the category of replaceable holidays, granting companies the discretion to schedule work on those days. However, it is crucial to strike a balance between legal requirements and employee sentiments. While companies possess the prerogative to designate working days during Hari Raya, acknowledging the cultural significance of the holiday is also imperative. Proactive planning and incentivization strategies can help mitigate employee dissatisfaction and minimize absenteeism.

Managing Employee Absences and Medical Leaves

The challenge of managing employee absences, particularly when annual leave requests are rejected by the company and employees resort to using medical leave to circumvent this during festive seasons, is also another common issue. Companies should attempt to incentivize employees to work during Hari Raya by perhaps providing further rewards as well as having an effective leave planning system to curb absenteeism.

However, this approach underscores the importance of first understanding employee motivations and addressing underlying concerns. Regarding medical leave, what happens if an employee applies for annual leave but it was rejected and now the employee is instead on MC for those very days they applied for annual leave. Now, it is difficult to discern genuine illness from malingering. While companies can implement measures to detect abuse, such as analyzing leave patterns and behaviors, fostering trust and communication between employers and employees is essential.

Navigating Flexible Work Hours During Ramadan

Another common issue is accommodating requests for flexible working hours for employees observing the fast during Ramadan? Take for instance; a warehouse department proposed starting work half an hour earlier and ending half an hour earlier during Ramadan to avoid traffic congestion and facilitate timely preparation for breaking the fast.

While there's no legal mandate to adjust working hours for Ramadan, many companies do consider such requests as a gesture of respect and inclusivity towards their Muslim employees. However, this decision isn't without its complexities and considerations.

One primary concern is whether accommodating this request sets a precedent for other departments or non-muslim employees to seek similar adjustments. It's a valid concern, as maintaining consistency across the organization is crucial for fairness and operational efficiency. Yet, it's also important to communicate to other employees the specific needs of different departments and individuals, especially during religious observances like Ramadan.

A Compromise - Legal and Practical?

In many cases, companies opt for a compromise solution, such as shortening lunch breaks by 30 minutes as described above and allowing employees to leave work earlier. This approach balances the needs of fasting employees with operational requirements. However, it's essential to emphasize that there's no one-size-fits-all solution, and each company must evaluate what works best for its unique circumstances.

However, it has come to our attention that some companies provide flexibility to Muslim employees to have a continuous working arrangement without any lunch break (with the employee’s consent) so the employee can leave office earlier (e.g: original work hours are 8am to 5pm and without a lunch break 8 am - 4 pm). Now, this may be contentious. According to S60A(1)(a) of the Employment Act 1955, employers are mandated to provide employees with a break of at least 30 minutes after every five consecutive hours of work. This regulation applies regardless of the employee's consent or any special arrangements, such as during the Ramadan month, where some Muslim employees may prefer a straight working arrangement without a lunch break.

It's essential to understand that even if an employee voluntarily opts out of the break, the employer remains obligated to adhere to the break regulations stipulated by the Employment Act. Therefore, any deviation from the mandated break periods, even if mutually agreed upon, would constitute a breach of labor laws.

While accommodating flexible working hours during Ramadan is a common practice, it's not universally adopted by all companies. Some may choose not to adjust their schedules due to logistical constraints or other considerations. However, such decisions should be communicated transparently to employees to avoid misunderstandings or perceptions of insensitivity.

FAQs: Gift Giving Practices During Festive Seasons

FAQ 1: What is the difference between bonuses and gifts of money like “Duit Raya” (a monetary gift in an envelope, customarily given during Hari Raya) at the workplace?

Answer: Bonus is an extra reward to employees which is usually recorded in their payroll which is then subject to employer contributions like EPF and MTD. Per contra, Duit Raya is a gift of money (given during festivals), and is not considered as personal income.Thus, it is not subject to any employer's contributions.

FAQ 2: As an employer can I issue bonuses as a form of gift of money like Duit Raya to avoid it being subject to statutory contributions like EPF and MTD?

Answer: We highly recommend not to do so as the EPF authority may upon performing an audit see through this approach and later compel that the employees’ benefits are given. This may also lead to fines or penalties for failing to comply with the legal requirements.

FAQ 3: If your company has previously awarded bonuses or gifts of money as a kind gesture but could not do so for a certain year due to financial constraints, is the employee now entitled to claim for such payments?

Answer: If neither the Company handbook nor the employment contract provided that there would be an annual bonus or Duit Raya, then the employee has no contractual right to expect a bonus and/or Duit Raya every year.This is even though the employee had it for the previous years, received such entitlements. Again, these types of entitlements are at the discretion of the company.

FAQ 4: If gifts of money are at the discretion of the company, can an employer award them only to their favourite employees even if they are on an equal footing as all the other employees in the company?

Answer: It is not advisable to do so. This practice may give rise to concerns among employees regarding double standards or discriminatory treatment, potentially violating Section 69F of the Employment Act 1955. Unlike performance-based bonuses, which are justified by individual performance metrics, favoritism in the distribution of monetary gifts lacks objective criteria and fairness. Therefore, it is essential for employers to ensure transparency and fairness in all forms of rewards and recognition to maintain a harmonious and legally compliant workplace environment.

🎉 Click here to join our consultants Victor Gan and Dzulfadhli Lamin discussing the fine line between cultural gift-giving and bribery during CNY, alongside effective strategies for managing employees during festive seasons like Chinese New Year and Hari Raya.

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