SOCIAL SECURITY PLANNING AND LEGISLATION
MAL/74/014
MALAYSIA
Project Findings and Recommendations
UNITED NATIONS DEVELOPMENT PROGRAMME
m
INTERNATIONAL LABOUR ORGANISATION
Geneva 1978
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41561
ISBN 92-2-102001-0
SOCIAL SECURITY PLANNING AND LEGISLATION
ML/747014
MALAYSIA
Project Findings and Recommendations
Report prepared for
the Government of Malaysia
by
the International Labour Organisation
acting as executing agenoy for
The United Nations Development Programmo
UNITED NATIONS DEVELOPMENT PROGRAMME
INTERNATIONAL LABOUR ORGANISATION
Geneva 1978
TABLE OF CONTENTS
Page
INTRODUCTION
'
k
1
PART I
Population, Employment and Earnings
1.
2.
3.
4.
5.
Population
Gainfully Occupied Persons
Employed Persons and.Wages.
EPF Statistics
Other Statistics
«
,
;
3
3
3
3
3
PART II
Relevant Social Security Measures
Labour Code
6.4
Medical Care
5
Workmen's Compensation Ordinance, 1952
7.1 Scope
7.3 Employers' Liability
7.5 Waiting Period
6
6
6
Amount of Compensation
7.6
7.8
7.9
7.10
7.11
7.12
Death
Permanent Disablement
Permanent Partial Disablement
Death Following Temporary Disablement
Constant-Attendance of Injured Workman
Temporary Disablement
7
7
7
7
8
8
Employment Ordinance. 1955
*
„
B.l
8.4
8.5
8.6
8.7
8.9
8.10
8.11
Sick Leave
Maternity Protection
Entitlement
Period
Rate of Allowance
Limitation
Scope of the Sick Leave and Maternity Provisions
Exclusion
.
•
10
10
11
11
11
11
11
11
- 11 -
Page
PART III
Employees' Social Security Act, 1969
9.
Progress
10.
Scope
11. ? Problems
12.
Wages Ceiling .
12.3
,12
12
13 .
13
Proposal
13
Low Benefit Payments
t
13.
!
13.1
13.3,
13. A
13.5
Causes of Low Benefit Payments under Employees' Social Security
Act, 1969
Low Wages
Dependants
Primary Group
Secondary Group
14
14
14
14
14
Proposed Solutions
13.10 Disablement
13.14 Dependants' Benefit
13.15 Funeral Benefit
,
15
15
15
PART IV
Proposals for New Benefits
Sickness Benefit
14.4
14.5
Proposed Qualifying Conditions
Commencement of Benefit Payment
16
17
14.6
14.8:
14.10
14.12
14.14
14.15
Proposal
Duration of Sickness Benefit
Proposal
Sickness Benefit Rate
Proposal
Medical Certification for Temporary Incapacity
17
17
17
17
18
18
Maternity Benefit
15.
15. 2'
15.3;
15.4<
Qualifying Conditions
Benefit Duration
Proposal
Maternity Benefit Rate
18
1H
18
19
15.5
15.7
Recommendation
Maternity Allowance under Employment Ordinance and Maternity
Benefit
19
19
- iii -
Page
Age Benefit
*
16.
16.7
16.8
16.10
Introductory
Pensionable Age
Social Aspects in General
International Practice
20
21
21
22
16.11 Pensionable Ages in Various Countries
*
23
Relevant Conditions in Malaysia
16. 23 Aged Population
16. 29 Expectation of Life
24
26
Retirement from Gainful Activity
16.32 Law and Practice in Malaysia
16.35 Provisions under the Employees' Social Security Act, 1969
16.36 The Cost Factor
16.40 Proposals
16.45 Contribution Conditio ns
16.47 Proposals
16. 50 Rate of Pension
26
27
27
28
28.
29
29
Maximum Rate of Pension
16.53
16.56
16.57
16.59
Proposal
Deferred Retirement
Proposal
Transitional. Provisions for "Aged" Entrants into the
Pension Scheme
16.60 Proposal
16.65 Age Grant
16.66 Proposal
29
30
30
30
30
31
31
Minimum Rate of Retirement and
Invalidity Pension
17.1
Proposal
•
32
Invalidity Benefit
•
18.1 Age Qualification
18.2 Proposal
18.4 Contribution Conditions
18.6 Proposal
34
34
34
3/]
18.8 Invalidity Grant
35
18.9 Proposal
18.10 Benefit Rate
18.12 Current Invalidity Pension Rate and the Proposed Age
Pension Rate
18.16 Proposals
•
35
35
35
36
- iv -
Page
Survivors' Benefit
19.
Current Provisions
38
Proposals
19.2
Types of Survivors' Benefit
39
19.6
Rate of Periodical Payments
39
19.12 Conditions to be Satisfied by a Widow
19.13 Widow's Pensions and Widowed Mother's Allowance
19.16 More than One Widow Entitled to Periodical Payments
42
42
42
19.18 Orphan's Allowance
43
Lump Sum Payments
19.20 Widow's Grant
19.24 Survivors' Grant
•
43
43
Medical Care
20.
20.2
20.4
Introductory
Methods of Determining Entitlement to Medical Care
Proposal
4 3'
44
44
Maternity
20.7
20.8
20.9
20.10
Conditions for Entitlement
Duration of Entitlement
Responsibility of Objectives
Social Security Organisations Operating their own Medical
Facilities
20.16 Proposals for Hospital Care
20.19 Ambulatory/Out-Patient Medical Care
.,
44
45
45
45
46
46
PART V
The Social Insurance Scheme and the
Employees' Provident Fund
21.1
21.5
The Employees' Provident Fund Relevant Statutory Provisions
Statistical Information
47
48
21.6 Membership of EPF
21.12 Contribution Income, Withdrawals and Investments
48
50
21.20 Growth Projection
21. 21 East Malaysia EPF
21.22-EPF and Government Finance and Policy
21.26 Recommendations
53
54
54
55
....
-
V
-
Page
PART VI
Draft
Bill
22.
22.3
Introduction
C l a u s e 1 -r
57
57
22.4
22.7
22.10
22.11
22.12
Clause
Clause
Clause
Clause
Clause
2(5)
2(31)
5(2)
10
13(2)(c)
57
57
58
58
58
22.13
22.14
22.16
22.18
Clause
Clause
Clause
Clause
13(3)
21(5)
25
29(2)
58
58
58
58
22.19
22.21
22.26
C l a u s e 33
C l a u s e 38
C l a u s e s 47 and 48
59
59
60
22.27
22.28
22.29
22.30
22.31
22.33
22.34
22.36
22.37
22.38
22.39
22.40
C l a u s e s 49 t o 51
C l a u s e 52
P a r t V of t h e B i l l
C l a u s e 78
S e c t i o n 56(2) of t h e Act
C l a u s e 98
F i r s t Schedule
Second Schedule
T h i r d Schedule
F o u r t h Schedule
F i f t h Schedule
New S c h e d u l e s
60
60
60
60
60
61
61
61
61
61
61
61
'
PART VII
Social Insurance and the Proposed Motor
Vehicle Accident Compensation Scheme
62
- VI -
LIST OP APPENDICES
Page
APPENDIX I Table 1 - Malaysia:
Population Size and Age Structure, 1975-80
Table 2 - Expectation of Life in Certain Countries
63
64
APPENDIX II Table 1 - Malaysia:
Employment by Occupation, 1970, 1975 and 1990
65
Table 2 - Employed Persons in First and Second Half of 1975 by
Wage Range
66
Table 3 - Employment and Salaries in Manufacturing Sector
67
Table 4 - Manufacturing Survey 1972 - Wage-Class Distribution of
Pull-Time Employees in the Last Pay Period of 1972,
by Sex
68
Table 5 - Manufacturing Industries - Average Wages by Category
of Employed Persons - 1972
69
Table 6 - Malaysia: Employment Status of Population aged ten
years and over
70
APPENDIX III The Social Security Scheme: and the Employees' Provident Eund
71
APPENDIX IV Draft Bill
79
APPENDIX V Social Insurance and the Proposed Motor Vehicle Accident Compensation
Scheme:
•
I'.'.'/
INTRODUCTION
1.
Following the mission of Mr. K. Thompson, ILO Social Security Regional
Adviser in May-June 1974, the Malaysian Government requested the assistance of a
legislation expert under the United Nations Development Programme.
The DirectorGeneral of the International Labour Organisation, in agreement with the Malaysian
Government, engaged Mr. Joseph Vella-Bonnici, previously Permanent Secretary,
Ministry of Labour, Employment and Welfare, Malta, to carry out the mission with
the following terms of reference (1)
to draw up the main and subordinate legislation for a social
insurance scheme providing medical care and sickness, maternity
and survivors' benefits, within the framework of the existing
social security system;
(2)
to advise on the form of an old-age pension scheme and to draft
the necessary legislation covering also the transformation of
the existing provident fund scheme in relation to the proposed
pension scheme;
(3)
to advise on the method of extending social security to farmers
and fishermen, including self-employed workers.
1.1
Mr. Vella-Bonnici arrived in Malaysia on 23 October 1975.
He was
attached to the Social Security Organisation in the Ministry of Labour and Manpower.
1.2
This mission was carried out as part of a team of experts of the International Labour Organisation.
Between October 1975 and January 1977 the team
consisted of the legislation expert (Mr. J. Vella-Bonnici) and an expert on
computerisation and administration .(Mr. B.H. Christensen).
In February 1977,
Mr. S.N. Iyer, a senior actuary of the International Labour Office, joined the
team for a period of six months.
The reports of the compuberisation and actuarial
experts are being submitted separately to the Government of Malaysia.
'1.3
In September 1977, an interim report on the legislation project was
submitted to the Minister of Labour and Manpower to facilitate discussions before
the expert's departure from Malaysia.
That report included a draft bill providing
for benefits in the event of sickness, maternity, old age, survivorship and for
medical care, as well as existing provisions providing for employment injury and
invalidity benefits and the legislation previously drafted by the expert to set
up the Social Security Organisation as a statutory body.
This final report
incorporates the said interim report with a number of modifications.
1.4
Subsidiary legislation for the implementation of the new benefits has
also been drafted.
This will be submitted to the Malaysian Government separately,
together with necessary explanations.
1.5
The report is divided into seven parts.
The first three parts deal
briefly with relevant facts concerning population, employment earnings and the
Employees' Social Security Act, 1969The proposals for the new schemes are
explained in Part IV, while Part V refers to the Employees' Provident Fund in
relation to the proposed social security schemes.
Part VI contains certain
explanations on the draft bill which is found in Appendix IV of the Report.
Part VTI, together with Appendix V, outlines the relationship between the proposed
Motbr Vehicle Accident Compensation Scheme and the Social Security Scheme.
Programme Review Meetings
1.6
In the course of the mission four programme review meetings were held,
namely in May 1976
February 1977
June 1977
October 1977
- 2 -
The regional representative of the United Nations Development Programme in Kuala
Lumpur, the Ministry of Labour and Manpower, including the Director-General of the
Social Security Organisation and the experts participated in the meetings.
The
Economic Planning Unit of the Prime Minister's department was directly represented
in all but the first meeting.
The ILO was directly represented at the second
meeting by Mr. T.I. Mathew, Senior Social Security Officer, ILO Regional Office
for Asia.
1.7
At the last meeting, which was the terminal review meeting, it was noted
that the social security legislation project was completed with the exception of
the part concerning the extension of social security to farmers and fishermen. It
was realised that this part of the project required further investigation and would
require the data which would become available from the nationwide census of
agriculture which would be available in March 1978. .The UNDP regional representative suggested that there should be a further six months' consultancy service for
the continuation of this part of the project.
The ILO was subsequently informed
by the UNDP regional representative that provision was made for six months' consultancy service in 1978 to make possible further work relating to the formulation
of appropriate schemes for farmers and fishermen.
Meetings with the Minister
1.8
The expert had periodical meetings with the Minister of Labour and
Manpower and the Deputy Minister at which progress was reviewed and special subjects
were discussed.
After the submission of the interim report, the expert had three
meetings with the Minister and Deputy Minister and officials of the Ministry.
Other Meetings
1.9
Throughout his stay in Malaysia, the expert had special meetings with
several officials of government departments and statutory bodies, employers, leaders
of workers and employers and representatives of the medical profession, all of whom
helped the expert to understand local conditions.
Acknowledgements
1.10
The Director-General of the ILO acknowledges the assistance given to the
expert by officials in government ministries and statutory bodies, and the great
usefulness of discussions which the export had with employoi-s and trade union
leaders.
It would not be possible to mention all the persons who have given such
valuable assistance in the course of the fulfilment of the mission; but a special
expression of gratitude is due to Y.B. Dato Sri Lee San Choon, SPMJ, KMN, Minister
of Labour and Manpower and to his Deputy, Y.B.K. Pathmanaban, KMN, for their advice,
sympathy and understanding in discussions with the expert.
1.11
The expert received valuable assistance from Mr. Lee Cheng Yan, SecretaryGeneral of the Ministry and his officers.
The wholehearted support generously
given by Mr. Nik Mohamed Amin, Director-General of the Social Security Organisation
as the expert's counterpart is recognised as an outstanding factor contributing to
the fulfilment of the mission.
The assistance given by other officials of the
Organisation and particularly Mr. Chin Fook Kiong, the expert's liaison officer,
is also acknowledged.
1.12
The support given by the office of the regional representative of the
United Nations Development Programme is greatly appreciated.
- 3 -
PART I
Population, Employment and Earnings
population
1.
In 1975 the total population of Malaysia was 12,249,000. That of
Peninsular Malaysia was 10,385,000. The population between the ages of 15-64
constituted 54.4$ of the total population for the whole of Malaysia. The population
for Peninsular Malaysia was slightly higher at 54.9$. The population over 65 years
was 3.5$ for the whole of Malaysia, and 3.7$ for Peninsular Malaysia.
1.1
Further details, including the estimated population in 1980 are given in
Appendix I, Table 1.
Gainfully Occupied Persons
2.
The total number of gainfully occupied persons in 1975 was approximately
3-928 million compared to 3.340 million in 1970. This was an increase of
approximately 18$.
1.2
Of the total gainfully occupied -
Agricultural workers
Service and other workers
Production workers
Total:
47.0
.1.9.2
13.6
73.8
2.2
Further details of gainfully occupied persons in Malaysia are given in
Appendix II, Table 1.
Employed Persons and Wages
3.
As far as it is known, no complete statistics of employed persons, as
distinct from gainfully occupied persons are available. Most statistics are based
on surveys of selected industries.
E.P.F. Statistics
4.
The Employees' Provident Fund may be the best available source of
information on the number of employed persons in the various groups in the private
sector, but these statistics also include employees in the public sector (Government
and Statutory Bodies) in respect of whom the EPF contribution is payable.
4.1
Available data for the first half of 1975 showed that there was a total
of 1,324,381 employed persons. The figure for the second half of 1975 was 1,152,952.
These figures probably show the number of employees in respect of whom at least one
contribution was paid in the respective six months period.
4.2
Appendix II Table 2 shows the number of members by wage range. It is
obwerved that the totals show a decrease of 171,429 in the second half of the year.
The two lowest wage scales (50-99, 100-149) showed a total decrease of 305,647. All
the other wage groups showed an increase. This may be due to a number of factors,
including the end of the year bonus, and the method of compilation of the statistics.
Other Statistics
5.
Statistics of employment and salaries in manufacturing industries between
1963 and 1975 are given in Table 3 of Appendix II. Table 4 in the same Appendix
shows a breakdown of male and female employees by wage range in manufacturing
industries in 1972.
5.1
Table 5 in Appendix II shows average total earnings of the main
occupational groups in manufacturing industries in 1972.
5.2
Table 6 in Appendix II which is based on data in the Population Census of
1970 shows a breakdown of employed and self-employed persons as well as of persons
seeking first employment and others. The broad division into two main areas, namely
gazetted towns with population of 10,000 persons and over, and smaller towns gives
an indication of the employment status of economically active persons in the latter
towns which include the rural areas.
- 5 -
PART II
Relevant Social Security Measures
This part includes a brief description of certain statutory and nonstatutory measures related to social security. The Employees' Social Security Act
and the Employees' Provident Fund Ordinance will he referred to in later parts.
Labour Code
(Chapter 154 of the laws of the Federated Malay States)
6.
The Code was consolidated and amended in 1933. The sections of the 1933
Act which were not repealed when the Employment Ordinance, 1955 came into force include provisions for medical care to be provided for "labourers" performing manual
labour, including supervisors, on estates.
6.1
The term "estate" means any agricultural land exceeding twenty-five acres
in extent upon which agricultural operations of any kind are carried on or upon
which the produce of any plants or trees is collected or treated or any mine or
other place of employment to which the provisions, or any portion of the provisions,
of this Part have been declared to apply to the extent of the provisions so declared
to apply.
6.2
Mines and sawmills were subsequently included by Government notices.
6.3
The definition of "dependant" included such of the members of the
labourer's family, namely wife, father, mother and children and adopted children
under the age of fourteen, as are living with and dependent on him.
Medical care
6.4
For the purpose of this Report, the most important provisions are thoue
which concern medical care. The Commissioner of Labour is empowered to require an
estate employer (a)
to construct and maintain at his (employer's) expense a hospital;
tb)
to enlarge an existing hospital; and
(c)
to employ a registered medical practitioner.
6.5
The employer is required to treat and maintain in the estate hospital the
labourer or dependants at least up to thirty days, after which he may recover from
the labourer the expenses in respect of any further period subject to the control
of the Commissioner. Where a labourer or a dependant is admitted to a Government
hospital, the employer is also liable for the cost of treatment and maintenance up
to thirty days. .
6.6
Th'e Code provides for the treatment and maintenance of labourers, etc.
in estate group hospitals. On an estate on which the employer is not required to
maintain a hospital, he must make provision for the treatment of sick labourers.
6.7
In regard to estate hospitals, "Rules" may be made providing, inter alia,
for the nature of hospital accomodation, staff, diets, drugs and surgical and
medical appliances.
6.8
Rules have been made providing for three bods for every 200 labourer.'!
employed, and for additional beds to accomodate patients suffering from specified
conditions such as dysentery. A suitable dispensary is to be provided at each
hospital to the satisfaction of the Health Officer.
- 6 -
Workmen's Compensation Ordinance, 1952
(As amended by Act A361)
7.
The Workmen's Compensation Ordinance was last amended (by Act A361 of
1976) with effect from 1.1.1977 and any reference hereunder to previous provisions
is intended to mean provisions in force before that date.
Scope
7.1
The Ordinance applies to any "workman" employed under a contract of
service or apprenticeship, whether by way ol.' manual, labour or 0 Uie.rw.i r.c. Broadly,
the following are excluded from this definition:
(a)
any person employed otherwise than by way of manual labour whose
earnings exceed five hundred dollars (previously four hundred
dollars);
(b)
any person whose employment is of a casual nature and who is
employed otherwise than for the purposes of the employer's trade
or business, not being a person employed for the purpose of any
game or recreation and engaged or paid through a club;
a domestic servant;
an out-worker;
any member of the family of the employer who dwells with him in
his house;
any class of persons whom the Minister may declare not to be
workmen for the purposes of this Ordinance.
(c)
(d)
(e)
(f)
7.2
In the Ordinance, "member of the family" means wife, husband, parent,
grandparent, step-father, step-mother, child, grandchild, step-child, brother,
sister, half-brother, half-sister, step-brother and step-sister.
Employer's Liability
7.3
Under sections 4 and 15, the employer of an injured workman is liable (a)
to pay compensation to the workman or to his dependants, in the
event of his death;
(b)
to pay any expenses incurred in the treatment of the workman,
including all ward and treatment fees in the event of hospitalisation
and medicines;
(c)
to pay for the rehabilitation of the workman and the cost of such
artificial limbs, wheelchair and surgical appliances (including
the-cost of renewal of such artificial limbs, wheelchair and
surgical appliances) as are certified by the registered medical
practitioner in charge of the hospital to be reasonably necessary
and which are in fact supplied to the workman:
Provided that the Minister shall from time to time prescribe
the maximum amounts for which an employer shall be liable in
respect of the several fees and costs related to the medical treatment and rehabilitation. This has been done.
7.4
By definition "dependant" means any member of the family of a deceased
workman who wholly or in part depended upon his earnings at the time of his death
or would but for the disablement due to the accident have been so dependent:
Provided that a person shall not be deemed to be a partial dependant of
another person unless he was dependent partially on contributions from that other
person for the provision of the ordinary necessities of life.
Waiting Period
7.5
(a)
An employer shall not be liable to pay compensation in respect of
any injury which does not disable the workman for a period of at least four days
from earning full wages at the work at which he was employed; and no compensation
shall be payable in respect of the first four days of such disablement unless the
disablement lasts for a period of at least fourteen days.
- 7 -
(b) An employer shall not be liable to pay compensation in respect of an
injury to a workman resulting from an accident if it is proved that the injury to
the workman is directly attributable to the workman having been at the time thereof
under the influence of alcohol or drugs, unless such injury results in death.
Amount of Compensation
Death
7.6
Compensation is payable as a lump sum to dependants as follows: In the event of death (i)
45 months (previously 36) earnings; or
(ii) 014,400
whichever is the less.
If a deceased workman does not have dependants the lump sum shall be
equal to actual funeral expenses or to 05OO/-(previously $100), whichever is the less.
7.7
In the Ordinance "dependant" means any member of the workman's family
who is wholly or partially dependent upon the workman's earnings at the time of his
death. "Partial dependant" means one who depended partially on contributions of the
workman for the ordinary necessities of life.
Permanent Disablement
7.8
In the event of permanent total disablement compensation is a lump sum in
the case of (1)
"adult" over 18 years (i)
equivalent to 60 Months' (previously 48) earnings; or
(ii) 019,200 (previously 09,600),
whichever is the less.
(2)
"adult" aged 16-17 years (i)
84 months' earnings (previously 72); or
(ii) 019,200 (previously 09,600),
whichever is the less.
(3)
"minor" viz. under 16 years (i)
108 months' earnings' (previously 96); or
(ii) 019,200 (previously 09,600),
whichever is the less.
Permanent Partial Disablement
7.9
Compensation in respect of permanent partial disablement is payable at
such percentage of the compensation payable in the case of permanent total disablement as is proportionate to the permanent loss of earnings capacity caused by the
injury. The compensation payable shall not be less than the percentage indicated in
the First Schedule to the Ordinance.
Death Following Temporary Disablement
7.10
In the event of the death of the injured workman following a period of
total or partial temporary disablement, the total of all payments and the lump sum
payable to the dependants shall not exceed 019,200.
- 8 -
Constant-Attendance of Injured Workman
7.11
When the injured workman requires constant help of another person the
amount of compensation is increased by 25$.
Temporary Disablement
7.12
In the event of temporary disablement a half monthly payment shall be
made during the disablement or during a period of five years, whichever period is
shorter, of $135/- (previously #65) or an amount equal to one-third of his monthly
earnings, whichever is the less.
7.13
It is observed that (a)
the maximum compensation in the event of death ($14,400) corresponds
to earnings of $320/- per month;
(b)
the maximum temporary disablement rate corresponds to earnings
of $270/- per month;
(c)
the monthly temporary disablement rate is equivalent to two-thirds
of the monthly earnings.
7.14
The Ordinance provides for the method of calculating earnings but subject
to the condition that the earnings shall be deemed to be not less than (i)
$105/- a month (previously $80/-) in the case of a person over
18 years;
(ii) $90/- a month (previously $65/-) in the case of a person aged
16-17;
(iii) $70/- a month (previously $45/-) in the cane of a peruon under
16 years.
7.15
Where permanent disablement follows a period of temporary disablement
exceeding 12 months (previously 6 ) , the temporary disablement benefit received by
the workman in respect of any period exceeding 12 months shall be deducted from the
amount of compensation due in respect of the permanent disablement.
7.16
The foregoing provision means that from 1st January, 1977, the injury
benefit period prior to the assessment of permanent disablement has been increased
from 6 to 12 months.
7.17
The provisions for medical care and rehabilitation include the following:
"(3) Where an injured workman is admitted to or treated at either an
approved or a special hospital, the employer shall, in addition to the
payment of compensation to the workman or, where the workman's death
supervenes, to that workman's dependants, be liable to pay directly to
the management of such hospital all ward fees and treatment fees in
respect of such workman and the cost of such medicines and of such
artificial limbs, wheelchair, and surgical appliances as are certified
by the registered medical practitioner in charge of the approved or
special hospital to be reasonably necessary and which arc in fact
supplied to such workman:
Provided that the Minister shall from time to time by notification
in the Gazette prescribe the maximum amounts for which an employer shall
be liable in respect of the several fees and costs specified in this
sub-section.
7.18
The liability of a contractor in the event of sub-contracting is as
follows: "19.1(1) Where any person (in this section referred to as "the principal")
in the course of or for the purpose of his trade or business contracts
with any other person otherwise than as a tributer (in this section
referred to as "the contractor") for the execution by or under the
contractor of the whole or any part of any work undertaken by the
principal, the principal shall be liable to pay to any workman employed
in the execution of the work any compensation which he would have been
- 9 -
liable to pay if that workman had been immediately employed by him ami
where a claim has been made to the principal for compensation this
Ordinance shall apply as if references to the principal were substituted
for references to the employer, except that the amount of compensation
shall be calculated with reference to the wages of the workman under the
employer by whom he is immediately employed.
(2) Where the principal is liable to pay compensation under this
section, he shall be entitled to be indemnified by the person who would
have been liable to pay compensation to the workman if this section had
not been enacted.
(3) Nothing in this section shall be construed as preventing a
workman from recovering compensation under this Ordinance from the
contractor instead of the principal, and a claim made against a principal
or a constractor, as the case may be, shall not bar subsequentproceedings under this Ordinance against the other to recover so much
of the compensation agreed or awarded as may remein unpaid.
(4) This section shall not apply in any case where the accident
occurred elsewhere than at or about the place where the principal has
undertaken to execute work or which is otherwise under his control or
management."
7.19
The Ordinance provides for the worker's right to claim compensation or
damages from some person other than the employer as follows: "20.(a) the workman may take proceedings against that person to recover
damages and may claim against any person liable to pay compensation
under this Ordinance, but he shall not be entitled to recover both
damages and compensation; and
(b) if the workman has recovered compensation under this Ordinance,
the person by whom the compensation was paid, and any person who
has been called upon to pay an indemnity under subsection (2) of
of section 19 shall be entitled to be indemnified by the person
so liable to pay damages as aforesaid and all questions as to
the right to and amount of any such indemnity may, in default of
agreement, be settled by an Arbitrator."
7.20
The workman's right is restricted to a choice between compensation and
common law in the following terms: "41.(1) Nothing contained in this Ordinance shall be deemed to confer
any right to compensation on a workman in respect of any injury if he has
instituted and is prosecuting a suit for damages in respect of that injury
in any Court against his employer or if he has recovered damages in
respect of that injury in any Court from his employer; and no suit for
damages shall be maintainable in any Court by a workman against his
employer in respect of any injury (a);if he has applied to the Commissioner to settle any question in
respect of the injury under sub-section (2) of section 27; or
(b) if an agreement has been come to between the workman and the
employer and such agreement has been recorded under section 28;
or
(c) if he has recovered damages in respect of the injury in any
Court from any other person.
(2) If a suit is instituted in any court to recover demages
independently of this Ordinance for injury caused by any accident, and
it is determined in such suit or on appeal that the injury is one for
which the employer is not liable in such suit, but that he would have
been liable to pay compensation under the provisions of this Ordinance,
the suit shall be dismissed; but the trial court, or if the determination
is given on appeal, the appellate court shall, if the workmen so choose,
proceed to assess such compensation, but may deduct therefrom all or
- 10 -
part of the costs which, in its judgement, have been caused by the
workman instituting the suit instead of proceedings under this Ordinance;
and in any proceedings under this sub-section, when the trial court or
appellate court assesses the compensation, it shall give a certificate
of the compensation it has awarded and the direction it has given (if
any) as to the deduction of costs and such certificate shall have the
force and effect of an Arbitrator's order."
7.21
The above restriction applies also to the workman's dependants in
accordance with sub-section (3) of section 2 of the Ordinance which reads as follows: "2.(3) Any reference to a workman who has been injured shall, unless the
context otherwise requires, where the workman is dead, include a
reference to his legal personal representative or to his dependants or
any of them or to any public officer whom the Minister may appoint to act
on behalf of the dependants of the workman."
7.22
Under the amendment effective from 1st January, 1977, every employer is
now required to be insured in respect of any liability which he may incur under the
Ordinance, but the Minister is empowered to declare by notification that this
requirement shall not apply to any employer or class of employers.
7.23
A notice issued by the Minister on the 25 November, 1976 provides that
the provisions requiring employers to be compulsorily insured do not apply to (i)
the Government of the Federation;
(ii) the Government of each of the States;
(iii) Statutory Bodies established by any written law;
(iv) Local Authorities as defined in any written law.
7.24
Before the 1976 amendment employers were only required to be insured if
they employed workmen in certain occupations. These included felling, cutting,
sawing, collection and removal of timber including drivers.
Employment Ordinance, 1955
8.
The Employment Ordinance, 1955 as" amended by Act A91 of 1971, and Act
A360 of 1976, includes provisions for sick pay and maternity allowance. The 1976
amendment came into force on the 1st January, 1977.
Sick Leave
8.1
The 1971 amendment provides that an employee who served an employer for
a period of not less than twelve months is entitled to sick leave "not exceeding in
the aggregate" (a)
fourteen days in each year if no hospitalisation is necessary; or
(b)
sixty days in each year if hospitalisation is necessary, as may be
certified;
Provided that if an employee is hospitalised for 46 days or
less in one year, his entitlement to paid :;.i ok leave for that year f.hnll
not exceed the aggregate of fourteen ilayu plus the number of days on
which he is hospitalised.
8.2
The 1976 Amendment removed the condition of twelve months' employment for
entitlement.
8.3
The employer is to pay sick leave at the ordinary rate of pay. Sick leave
is not payable for any period during which the employee receives compensation for
temporary disablement under the Workmen's Compensation Ordinance, benefits under
the Employees' Social Security Act, 1969, or maternity allowance under the same
Ordinance.
Maternity Protection
8.4
The 1976 Amendment provides for the payment of a "maternity allowance"
as follows:
- 11 -
Entitlement
8.5
A female employee is entitled to maternity allowance from an employer if (a)
at any time during the four months immediately preceding her
confinement she was employed by him, and
(b)
she had been employed by that employer for a period of or periods
amounting in the aggregate to not less than ninety days during the
nine months immediately preceding her confinement.
Period
8.6
A female employee is entitled to the maternity allowance for a period
not exceeding sixty consecutive days. This period may commence from any day within
a period of thirty days immediately preceding the confinement or from the day
immediately following the confinement.
Rate of allowance
8.7
The allowance is payable at the employee's ordinary rate of pay, or at
the rate prescribed by the Minister, whichever is tho greater. The rate ourrontly
prescribed is #4.00 per day.
8.8
It is observed that before the 1976 amendment, the maternity allowance
was payable at a fixed rate of #3.00 per day.
Limitation
8.9
A female employee is not entitled to any maternity allowance if at the
time of her confinement she has three or more surviving children. For this purpose
"children" means all natural children, irrespective of age.
Scope of the Sick Leave and Maternity Provisions
8.10
Broadly, the above sickness and maternity provisions apply to persons
employed (a)
in manual labour and their supervisors or overseers;
(b)
in the operation or maintenance of any mechanically propelled
vehicle operated for the transport of passengers or goods or for
reward or for commercial purposes; and
(c)
seamen on ships registered in Malaysia (but with certain
exceptions).
The provisions also apply to all other employed persons whose wages do not exceed
#750/- a month.
Exclusion
8.11
The provisions do not apply to domestics. Persons directly employed under
a contract of service by any Statutory body or local authority are excluded from the
application of the whole of the Employment Ordinance, 1955.
- 12 -
PART 111
Employees' Social Security Act, 1969
Progress
9.
The Employees' Social Security Act covers employees in thirty one social
security areas in'Peninsular Malaysia and one each in Satan and Sarawak. The total
number of registered employees in April 1977 was 838,660. The number of registered
employers in the same month was 23,331. Contribution income and benefit expenditure
between 1972 and 1975 were as follows: Contributions and Benefit Expenditure
Year
Contributions
1972
2 ,294 ,566
1973
1974
1975
7 ,547 755
17 ,774 ,837
22 ,460 ,002
B e n e f i t Expendi t u r e
Cash
Medi c a l
Care
Total
Proportion
(Benefit/
Contribution)
97 ,164
406 ,193
952 ,660
1,311 ,360
170 915
761 535
1,543 280
1,832 ,640 •
7.4°/
10.0%
73,
355,
590,
621,
751
342
620
280
8.7%
8.8%
Scope
10.
The Act provides benefits in respect of employment injuries including
death benefit (dependants' benefit), invalidity pension and invalidity grant. The
invalidity scheme does not include survivors' benefit.
10.1
The Act applies to employers in undertakings having five or more
employees. An employee is an employed person earning not more than $500/- a month.
10.2
In 1976 the expert carried our a survey of establishments within all the
existing social security areas which yielded the following information.
(a
Total number of employers registered
under the Act in the month of the survey.
22,354
(b
Number of employers with less than
5 employees.
20,437
(c
Total number of employers at (a) and (b).
42,791
(d
Proportion of (b) on total.
47.8%
(e
Number of employees registered under the Act.
808,739
(f
Number of employees in establishments with
less than 5 employees.
(g
Total of (e) and (f).
(h
Employees
at (f) in proportion to total
ye
at (g
46,417
855,156
5,i
- 13 -
The general range of monthly earnings in selected centres was found to
he as follows: SOCSO Centre
Earnings Range
Kuala Lumpur
Ipoh
$ 65 - $250
$ 80 - $200
Petaling Jaya
Johor Bahru
Melaka
Kuala Trengganu
Penang
$150
$ 80
$106
$ 85
$100
-
$200
$400
$375
$250
$300
10.3
Persons who suffer an employment injury are entitled to free medical care.
This is provided hy the Organisation through private medical practitioners appointed
on the panel of the Organisation as Insurance Medical Practitioners, Government
Hospitals and private hospitals.
Problems
11.
Two of the problems investigated by the expert concern the wages ceiling
which restricts insurability, and low benefit payments.
Wages Ceiling
12.
The scope of the present scheme is limited in general to persons whose
wages do not exceed $500 per month (First Schedule paragraph (1) ).
12.1
The most recent available statistics on the distribution of employed
persons by wage range are those obtained from E.F.P. given in Appendix II Table 2.
The data for 1975 shows the following distribution.
In the first half of 1975 Total number of employees given
Number of employees earnings over $500
per month
Proportion
In the second half of 1975 Total number of employees
Number earning over $500
per month
Proportion
1,324,381
•
81,793
6,2'/. of Total
1,152,952
105,756
9.2$
The higher proportion shown in the second half of the year is partly due to the
annual bonus paid in December which may be equivalent to one month's pay or more.
12.2
It is considered that as the social security scheme has been in operation
since 1971, the time has come to remove the ceiling altogether. This will be a
further step forward towards the sharing of risks and pooling of resources among the
largest possible number of workers.
Proposal
12.3
It is recommended that the following wage scale be introduced as- a
continuation of the existing one.
- 14 -
Monthly wage scale for the purpose of Insurability, Contributions, and Benefits
I
Monthly wage group
Monthly assumed wage
•
Exceed
Exceed
ExceecL
Exceeil
Exceed
Exceed
0500 but
0600 but
0700 but
0800 but
0900 but
01000
not
not
not
not
not
0600
0700
0800
0900
01000
0550
0650
0750
0850
0950
01050
Low Benefit Payments
Causes of Low Benefit Payments under Employees' Social Security Act 1969
13.
Employment injury payments under the present Act have been frequently
criticised for being too low. It is therefore important to analyse the circumstances
in which low benefit payments are made, and, where possible, to suggest a remedy.
i
Low Wages
I
13.1 |
Benefit under the ESS Act is related to wages. Therefore, if the wages of
an insured person is low, the benefit is proportionately low.
13.2 J
Wages are low for different reasons. The Act does not exclude casual
workers (except those whose casual employment is not for the employer's trade or
business) and part-time workers. If they work in a covered industry they are
insurable. In fact, the first two wage scales are under 030 and between 030 and
050 per month, respectively. If a person in the second wage scale (030 - 050) is
injured, his assumed monthly age is 040 per month, and on that basis his temporary
disablement benefit at 60$ would be 024 per month or 80 cents per day.
Dependants
13.3
Where an insured person earning, for example, between 070 and 0100
per month dies as a result of an employment injury the amount of benefit payable to
his dependants is shared as follows: \
The corresponding assumed wage is 085 and the maximum total amount of
benefit is 60% of it, which works out to 051 per month. The Act recognises
dependants in two groups, those in the second group are entitled if there
are none in the other group. For convenience the first group is called
the "primary group", and the other the "secondary group".
Primary Group
I
13.4 '
The dependants in this group and their respective shares of the tota'l
benefit available (051 in this example) are as follows: i
(i)
the widow 3/5 of 051 = 030.60
(ii) a child 2/5 of 051 = 020.40
If thpre are two widows, the widow's share is divided equally between them.
If there is more than one child, all shares are reduced proportionately. In effect
the widow and children may receive the 051 which the deceased would have received as
pension had he been permanently and totally disabled.
Secondary Group
13.5 1!
This group is divided into two sub-groups which are independent of each
other . Each of them must be wholly dependent on the deceased. The only exeption is
a widowed mother of the deceased who need not be dependent on the deceased.
13.6 ;
The first sub-group may consist of parents and/or grandparents. The share
for the sub-group is 30%. If there are two persons each will receive 15%.
- 15 -
13.7
The second sub-group may consist of brothers and sisters (in general up
to the age of fourteen years), and any other persons claiming to be dependants.
Total share of this sub-group is 2/10 of $51. If, for example, there are four of
them, each individual share becomes 1/20 of $51 = $2.55 per month.
13.8
If the deceased is, say, a young son, he may be survived by two
comparatively young parents, who may be under 40 years of age. If they happen to be
unemployed at the time of the death of the insured person, they each become entitled
for the rest of their lives to a pension of 15$ of the pension the deceased would
have received had he been permanently and totally disabled.
13.9
If a deceased son or daughter is survived by a gainfully occupied parent
a claim is generally made in respect of other dependants.
Proposed Solutions
Disablement
13.10
The problem of low temporary and permanent disablement benefit payments
can be solved to some extent by fixing a minimum rate of benefit of $75 per moneth
($2.50 per day). At the current benefit rate of 60% of assumed wage, the minimum
benefit rate of $75 per month means, in effect, that an insured person is being
guaranteed a benefit on the basis of a wage of $125 per month.
13.11
The wage of a person under 18 years is generally lower than that of an
older person. It is therefore proposed that for a person under 18 years a minimum
benefit rate of $60 per month ($2 per day) be provided. At the current 60% rate,
benefit at $60 per month corresponds to a wage of $100 per month.
13.12
Low periodical payments are partly due to the fact that when permanent
disablement is assessed at a low percentage, benefit is in the form of a periodical
payment unless in case where the benefit does not exceed 50 cents a day ($15 a month)
it is commuted at the request of the beneficiary. The low periodic benefit is one of
the causes of criticism of the scheme.
13.13
It is recommended that where the degree of permanent disablement la
assessed at less than 20%, the benefit shall be a lump sum payment. In some social
insurance schemes benefit is a lump sum when the degree of disablement is less
than 30%. A lump sum payment entails only a fraction of the work involved in
making periodical payments. The elimination of small periodical payments would
save a great deal of administrative work and expense.
Dependants' Benefit
13.14
It is considered that the most serious problem arises when two parents
of the deceased person receive benefit at the rate of 15% of available benefit.
This problem can be solved by making the benefit rate more meaningful. However, a
higher rate should be based on. a more realistic situation. Higher benefit should be
provided only if a parent who was wholly dependent on the earnings of the deceased
satisfies one of two conditions, namely a parent is (a)
over pensionable age; or
(b)
permanently incapable of self-support by reason of physical or
mental disablement.
This proposal is made in Part IV of this report in respect of survivors' benefit.
Funeral Benefit
13.15
Costs of funerals have no doubt increased since 1969 when the Act was
passed. A maximum of $500/- is considered fair and reasonable in the present
circumstances. It is recalled that the maximum amount of funeral expenses provided
under the proviso to paragraph (a) of section 8 of the Workmen's Compensation
Ordinance was revised from one hundred to five hundred dollars.
- 16 PAliT IV
Proposals for New Benefits
Sickness Benefit
14.
Sickness benefit schemes are intended to assist gainfully occupied persons
during periods of suspension of earnings.
The benefit should protect the insured
person during short-term illnesses.
If the benefit is provided for employees, the
person claiming it should have completed a period to prove that he is normally an
employed person under the scheme.
This proof which is specifically mentioned in
the Social Security (Minimum Standards) Convention, 1952-*- is generally based on his
contribution record.
Various sickness benefit schemes have different qualification 'periods.
In many schemes which have been in operation for some years it is
found that conditions were initially strict and subsequently relaxed on the basis
of experience as the scheme developed.
14.1
In 1976 the expert, after consultations with the Malayan Employers'
Consultative Association (MECA), carried out a sickness and maternity survey in
places of employment registered under the Employees' Social Security Act. It was
designed mainly to collect the following data:
(a)
(b)
(c)
incidence and duration of sickness;
incidence of maternity;
the cost of medical care provided by employers.
14.2;
The survey was planned to cover at least 1,545 registered employers
throughout Malaysia.
It was conducted on the basis of a questionnaire issued
through the 32 local offices of the Social Security Organisation, each of which was
required to collect the information from a predetermined number of employers
representing about 10 per cent of registered employers in their respective areas.
An effort was made to cover a cross-section of industries in each area.
Although
the questionnaire was as simple as possible, the collection of information took
considerable time.
14.3
tion:
Preliminary data of two industrial areas yielded the following informa-
Area
Kelang
and
Shah Alam
Petaling
Jaya
Sickness
Maternity
No. of days per
employer per year
Male
Female
No. of cases per
100 women per
year
Medical care
c
*
t
*
employee
* *
J
5.91
5.29
9.23
$79.80
4.90
3.67
6.32
$78.66
Proposed Qualifying Conditions
14.4
It is proposed that an insured person becomes entitled to sickness
benefit if (a)
not less than three-monthly contributions have been paid in his
respect in the relevant contribution period of six months;
ILO Convention No. 102, Article 17.
- 17 -
(b)
he is currently employed in insurable employment;
(o)
he is over 16 years and under pensionable age.
Commencement of Benefit Payment
14.5
It is generally considered that loss of earnings for two or three days
does not cause serious hardship.
In the case of Malaysia, as explained earlier,
employees are entitled to 14 days' sick leave (when not hospitalised) at the normal
rate of pay from the employer.
Proposal
14.6
It is proposed that initially no benefit shall be payable in respect of
the first three days of any spell of incapacity for work.
14.7
This proposal is being made not only in the light of what is stated in
the preceding paragraph, but also because it would eliminate a large number of
claims which would otherwise entail considerable administrative work.
In the
course of time this could be liberalised in the sense that in the event of a second
spell of sickness within a certain period the waiting period would not be imposed.
Duration of Sickness Benefit
14.8
Many social security schemes provide for the payment of sickness benefit
for an aggregate period of six months.
This may be one uninterrupted period or a
number of spells of sickness not separated by more than a specified number of days
or weeks.
When the full period is exhausted, the insured person may qualify again
after paying a specified minimum number of contributions after resuming work.
This condition is imposed because a sickness benefit scheme is only intended to
provide for a contingency of a relatively short duration.
14.9
Although many existing schemes provide for a benefit period of six months,
it is a common practice that a new scheme initially provides for a benefit period
of three months.
Conventi on No. 102 allows the benefit period to be limited to
three months within a period of 12 months.
The Medical Care and Sickness Benefit
Convention, 1969 (No. 130) provides that the benefit period may be limited to
52 weeks in each case of incapacity, or in certain cases, 26 weeks.
Proposal
14.10
It is proposed that (a)
the benefit shall be payable for a maximum of 91 days (three
months) in any "continuous period";
(b)
;i period with two or more spells of illness shall be deemed to
be continuous if each spell is not separated by two full
calendar months;
(c)
after exhausting his entitlement of three months' benefit, an
insured person qualifies again after resuming employment and
paying three monthly contributions.
14.11
This proposal would make it possible for an insured person to have up
to six months' benefit in a period of 12 months.
One may also consider the
possibility that in the case of certain specified diseases like tuberculosis the
"continuous period" may be extended to six months.
Sickness Benefit Rate
14.12
Convention No. 102 provides that the sickness-,benefit rate for the
standard beneficiary should be 45 per cent of earnings;
Convention No. 130 provides for a rate of 60 per cent.2
1
Schedule to Part XI.
Article 22, paragraph 1.
- 18 -
14.13
It is recalled that the temporary disablement benefit rate under the
present scheme is 60 per cent of the assumed average wage.
There is a school of
thought which maintains that the temporary disablement benefit rate should be
higher than the sickness benefit rate.
Proposal
14.14
It is proposed that the sickness benefit rate shall be 50 per cent of
assumed average earnings,
Medical Certification for Temporary
Incapacity
14.15
Medical certification of temporary incapacity for work, both for the
purposes of cash sickness benefit and for temporary disablement benefit (injury
benefit), quite frequently presents serious problems in the administration of a
social security programme.
These arise because of the insistence of some workers
on certification for medical leave.
Employers are often deeply concerned because
of loss of man-days and additional benefit cost, especially where they are legally
Liable to pay benefits.
Medical practitioners on their part are worried and
annoyed when they have to fulfil their obligations under such pressure.
As a
result of investigations, the expert believes that these kind of problems exist
in Malaysia or may arise as the social security programme is developed.
He is
therefore proposing in the draft legislation that the Organisation should have the
power to verify temporary incapacity for work and recommends that such powers be
exercised on the basis of planned scrutiny of the relevant claims.
It is hoped
that such verification will be accepted by all interested parties, and particularly
by medical practitioners and tho large majority of honost, workers as n nocessary
control.
Maternity Benefit
Qualifying Conditions
15.
It is generally considered that a woman should complete a period of
insurance to acquire the right to maternity benefit.
This is recognised in
Convention No. 102.
15.1
It is proposed that a woman shall be entitled to maternity benefit if
not less than six-monthly contributions have been paid in respect of her in the
ten consecutive months preceding her confinement.
Benefit Duration
15.2
The maternity benefit period should be such as to allow the woman to
abstain from work before and after confinement to be able to take care of her own
health and her baby. A total period of 12 weeks would be up to the standard
required in Convention No. 102.
The Maternity Protection Convention (Revised),
1952 (No. 103) sets the same minimum period, but it also stipulates that the
benefit period after confinement should in no case be less than six weeks.^
' Proposal
15-3
It is proposed that a woman shall be entitled to maternity benefit for a
period not exceeding 91 consecutive days (viz. 13 weeks).
Such period shall not
commence earlier than six weeks before the expected date of confinement.
The
woman should forfeit maternity benefit in respect of any day on which she performs
remunerative work as an employed or self-employed person.
1
Article 51.
2
Article 3, paragraph 3.
- 19 -
Maternity Benefit Rate
15.4
Social security programmes have adopted different rates of maternitybenefit.
In some countries the rate is equivalent to the normal rate of pay of
the woman.
In most countries the rate is much lower, but generally not below
50 per cent of the normal rate of pay.
Convention No. 102 1 requires a rate not
below 45 per cent of earnings, while Convention No. 103 specifies a rate not less
than 66 2/3 per cent of the woman's previous earnings.
Recommendation
15.5
Taking into account the current employer's liability under the maternity
protection provisions in the Employment Ordinance, it is recommended that the
maternity benefit rate shall be equivalent to two-thirds of the average assumed
monthly wage.
15.6
It is to be observed that the rate of two-thirds is higher than the rate
of 50 per cent proposed for sickness benefit.
This is being done to ensure that
the proposed benefit will not be inferior than that currently provided as a
liability of the employer.
A woman who is entitled to maternity benefit should
not be entitled to maternity allowance under the Ordinance.
15.7
The proposed maternity benefit compares with the benefit provided under
the Employment Ordinance as shown hereunder Proposals
Maternity Allowance under Employment Ordinance
:
and Maternity Benefit
Employment Ordinance
Proposed Benefit
Coverage
Employed persons whose wages
do not exceed $750 per month
Persons insured under the
Social Security Act with
no earnings limit (as
proposed)
Qualifying
conditions
1)
Six months' contributions
in the ten consecutive
months immediately preceding confinement
Employed by the employer
at any time during the
four months' preceding
confinement
2) Aggregate of at least
90 days employment with
the same employer in the
nine months immediately
preceding confinement,
and
3)
Has less than three surviving (natural)
children
Benefit
duration
60 days
91 days
Benefit
Maternity allowance at
100 per cent of wage
66 2/3 per cent of assumed
average monthly wage
Schedule to Part XI.
Article 4, paragraph 6.
- 20 -
15.8
The total amount of benefit payable under the proposed scheme will be
slightly higher than the total allowance payable under the Employment Ordinance,
and the higher the wage the greater will be the difference.
15.9
In general, the only qualifying conditions proposed will be more favourable
than those under the Employment Ordinance.
The six-monthly contributions required
may be paid in employment with different employers in different months within the
ten months' period.
The contribution requirement is necessary if abuse of the
scheme is to be minimised.
15.10
The fact that the maternity benefit will not be the employers' liability
may make it easier for a married woman to obtain and retain employment.
Age Benefit
Introductory
16.
For several years increasing numbers of workers in Malaysia have become
entitled to a lump sum on retirement from employment.
The amount of the lump sum
depends upon various factors, of which two important ones may be mentioned, namely (a)
the aggregate period of employment which a worker has during his
working life; and
(b)
the level of his earnings throughout that period.
The shortest aggregate period of employment may well be found among the low-income
workers and this is why a lump-sum arrangement to meet the contingency of old age
may by itself be inadequate.
16.1
It does not appear that in Malaysia any detailed study has been made to
determine how workers make use of the lump-sum payments they receive on retirement
from employment.
In the circumstances, one can only guess whether the average
worker is more likely to use the lump sum to meet his immediate and most pressing
social needs, or to make some long-term arrangement to assure himself and possibly
his wife, of a steady income in old age.
16.2
Employees' Provident Fund statistics show that in 1975, 19,158 members
received over $57,339,000 when they withdrew their balances at the age of 55 years.
The average amount per head was over $2,992.
Although there must have been
several thousand persons who had more than that amount, there was no significant
change in the number of annuity policies in the private insurance sector.
Statistics published by the Director-General of Insurance showed that there were
only 36 annuity policies at the end of 1975 and 38 at the end of 1976.
(Incidentally, the purchase price of an annuity of $100 per annum - $8.30 per month for an annuitant only, viz. no dependants, payable monthly, payment commencing
one month after purchase was quoted as follows (i)
(ii)
man aged 55 years - price $1,132;
woman aged 55 years - price $1,237.)
16.3
There is a widespread belief that enterprising persons look forward to
a lump sum to start businesses on their retirement.
It is not known how many of
these persons manage to build thriving businesses in their remaining period of
activity so as to assure themselves of a steady income.
In the course of inquiries
about needy elderly persons, the expert learned that a proportion of such persons
were petty traders some of whom may have invested their lump-sum payments in a
business.
16.4
A student of the development of social insurance would find that most of
the industrialised countries recognised' the need for a steady income in
old age as far back as the nineteenth century when they were going through their
developing stages.
Germany is a typical example where the principle of compulsory
social insurance for age pension was adopted in the year 1889.
- 21 -
16.5
The International Labour Organisation did not take long to initiate
studies and diecusralone nt. the annual Oont'oreniioei which led to the adoption, in
1933, of Convention No. 35 concerning compulsory old-age insurance in industrial
or commercial undertakings, in the liberal professions, and for outworkers and
domestic servants.
In the same year, the Conference also adopted Recommendation
No. 43 concerning the general principles of invalidity, old age and widows' and
orphans' insurance.
These two instruments in themselves were a great achievement
because at the time many of the developed countries were in the throes of the great
economic depression and had many short-term problems, particularly unemployment,
to cope with..
The Organisation continued to inspire member States to endeavour
to achieve a better quality of life for their senior citizens.
In fact, since
1933, provisions regarding old-age benefit figured in no less than 11 Conventions
including the Minimum Standards Convention, 1952 and Convention No. 128 concerning
invalidity, old-age and survivors' benefits, 1967.
16.6
In the Asian region there may still be a school of thought which does not
recognise the great need for steady periodic payments in old age.
This appears
to stem from the concept of mutual help within the family.
However, it is
pertinent to recall that the Sixth Asian Regional Conference recognised the fact
that protection previously extended by the family group was being lost through
migration.1
As stated earlier, statistics in Malaysia show that large numbers of
elderly persons seek public assistance.
There is no indication how many more are
in need of such assistance but refrain from asking for it and this is not peculiar
to Malaysia.
Pensionable Age
16.7
When a scheme for age pension is planned, the age at which the pension
can be received, generally referred to as "pensionable age", is a crucial issue
which has to be determined in the light of various important aspects.
The expert
submitted two papers to the Minister explaining these aspects.
Social Aspects in General
16.8
Guidance relating to social aspects in general is provided in International labour Instruments.
The following provisions are-relevant to this issue.
Social Security (Minimum Standards) Convention, 1952 (No. 102):
"Article 26 1.
The contingency covered shall be survival beyond a prescribed
age.
2.
The prescribed age shall be not more than 65 years or such
higher age as may be fixed by the competent authority with
due regard to the working ability of elderly persons in
the country concerned.
3.
National laws or regulations may provide that the benefit of
a person otherwise entitled to it may be suspended if such
person is engaged in any prescribed gainful activity or that
the benefit, if contributory, may be reduced where the earnings
of the beneficiary exceed a prescribed amount and, if noncontributory, may be reduced where the earnings of the beneficiary or his other means or the two taken together exceed
a prescribed amount.".
Invalidity, Old-Age and Survivors' Benefits Convention, 1967 (No. 128):
"Article 15 1.
The contingency covered shall be survival beyond a prescribed
age.
ILO, Report II, Sixth Asian Regional Conference, Tokyo, Sept. 1968, p. 67.
- 22 -
2.
The prescribed age shall be not more than 65 years or such
higher age as may be fixed by the competent authority with
due regard to demographic, economic and social criteria,
which shall be demonstrated statistically.
3.
If the prescribed age is 65 years or higher, the age shall
be lowered, under prescribed conditions, in respect of persons
who have been engaged in occupations that are deemed by
national legislation, for the purpose of old-age benefit, to
be arduous or unhealthy."
Recommendation Concerning Income Security, 1944 (No. 67):
Paragraph 12 of the "Guiding Principles and Suggestions for Application"
contained in the Annex to the Recommendation reads as follows:
"Old-age 12.
The contingency for which old-age benefit shoiild be paid is the
attainment of a prescribed age, which should be that at which
persons commonly become incapable of efficient work, the incidence
of sickness and invalidity becomes heavy and unemployment, if
present, is likely to be permanent.
(1)
The minimum age at which old-age benefit may be claimed
should be fixed at not more than 65 in the case of men
and 60 in the case of women: provided that a lower age
may be fixed for persons who have worked for many years
in arduous or unhealthy occupations.
(2)
Payment of old-age benefit may, if the basic benefit can
be considered sufficient for subsistence, be made conditional on retirement from regular work in any gainful
•occupation; where such retirement is required, the receipt
of casual earnings of relatively small amount should not
disqualify for old-age benefit."
16.9
It is observed that international labour Conventions Nos. 102 and 128
quoted above, which were adopted in 1952 and 1967 respectively, indicate a more
flexible approach than Recommendation No. 67 which was adopted in 1944.
This
modified approach is considered to have been influenced by an increasing awareness
of the future growth of the aged population.
It has also been recognised that a
pensionable age, once fixed, can only be raised with the greatest difficulty.
International Practice
16.10
Every country has its own peculiar social, economic and political conditions.
For this reason;, it would not be advisable to adopt any particular
approach to a problem simply because it has been adopted elsewhere.
The main
objective should be to apply standards adopted in international labour instruments
in the context of local conditions and within the flexible limits indicated in the
said instruments.
However, in so far as the pensionable age issue is a common
problem, a general survey of practice in various countries can be of some assistance.
16.11
A survey of pensionable ages prescribed under pension insurance schemes
for employees generally or for industrial employees, and under universal pension
and social assistance schemes covering 84 countries in 1967, revealed the following distribution:
- 23 -
Pensionable Ages in Various Countries
Age
70
68
67
67-62
65
65-50
65-60
Note:
Number of
countries
Age
Number of
countries
2
1
2
1
15
1
13
63-60
1
2
15
19
8
3
1
62-57
60
60-55
55
55-60
50
Where two ages are shown, the first is
for men and the second for women.
16.12
The above table is accompanied by the following observations: "It is
interesting to find that the process of balancing the various considerations should
have produced, in a group of countries differing widely in demographic constitution
and in wealth, so dense a concentration at the ages of 60 and 65.
This result is
perhaps influenced by the fact that some countries with a small aged population
happen to be too poor to afford a comparatively low pensionable age.
It is •
indicative of the vagueness of the notion of old age and of the character of
parliamentary discussions that all but 8 of these 84 schemes fix the pensionable
age at a multiple of 5.
Yet the quantum of five years has substantial financial
implications; the same pension may cost the scheme 40-50 per cent more at 60 than
at 65 because of difference in the numbers of persons surviving beyond those ages.
The reason which determined the choice of 67 and 70 happens to be known: the
existence of an exceptionally numerous aged population in countries where a social
assistance or universal scheme has to protect a large peasant class of limited
taxable capacity."
16.13
Practically all the Asian countries which have an old-age pension scheme
have adopted a pensionable age at 60 years.
Most of them adopted the age of
55 years for women.
16.14
In the Philippines the pensionable age is 60 years for both men and
women, and up to the age of 65 years it is subject to retirement, except that a
limited amount of earnings is allowed.
16.15
In Japan pensionable age under the Employees' Pension Insurance Scheme
is 60 years and subject to retirement.
This is said to have taken into consideration the fact that, in general, retirement age is about 60 years.
On the other
hand, under the National Pension Programme which is also a contributory scheme,
whose coverage includes self-employed persons, the pensionable age is 65 years for
men and women, without any retirement condition.
16.16
Iraq, Iran, the People's Republic of China, USSR and North Viet Nam have
pensionable ages of 60 and 55 for men and women respectively.
16.17
In Australia pensionable age is 65 and 60 for men and women respectively.
In New Zealand pensionable age is 60 for both sexes, but for unmarried women unable
to work, it is 55 years.
16.18
Algeria, Egypt, Morocco, Libya, Saudi Arabia and Tunisia have pensionable
age at 60 years for men and women and all, except Algeria, stipulate retirement
from covered (or insurable) employment.
ILO, A Workers' Education Manual. Geneva, 1970.
24 -
16.19
In European countries, 60 and 55 years (men and women) are the lowest
pensionable ages.
This is the case in Italy, Hungary and Prance (60 years for
men and women).
In other European countries pensionable ages range up to 65 and
60 years for men and women, respectively, with Denmark, Norway and Sweden having
pensionable age at 67 years.
16.20
In the American'continents, pensionable ages range generally from
65 to 60 years.
16.21
Many of the countries indicated have adopted a lower pensionable age
(generally five years lower) for men who have worked for a specified minimum number
of years in arduous or unhealthy occupations, such as underground work.
Some
countries having a high pensionable age, such as Sweden (67 years) and the United
States (65 years), provide for an earlier pension at a reduced rate.
16.22
It is emphasised that surveys of practice under social security systems
have to be treated with great caution.
The development of these systems has no
doubt been influenced by local social, economic and political situations.
However,
it is safe to conclude that the age of 60 years (with the age of 55 for women in
some countries) is the lowest widely adopted pensionable age.
Relevant Conditions in Malaysia:
Aged Population
16.23
"Aged Population" is a relative term.
There cannot be any standard
definition to indicate the age at which a citizen is to be considered as forming
part of this group.
This group has to be identified in the light of local conditions and according to local demographic statistics.
In the following tables
the term "aged population" in regard to Malaysia is given two arbitrary
interpretations, in the sense of two alternative ways of looking at the population
likely to be retired from gainful activity.
16.24
The following table shows changes in the structure of the population
aged 50 and over which took place between 1957 and 1972.
Peninsular Malaysia: Elderly Persons:
All C ommumties
Year
Aged 50 years
and over
Aged 55 years
and over
Aged 50 years
and over
Both sexes
Males
Females
Number
Percent
of total
population
Number
- Percent
of total male
population
Number
Percent of
total female
population
1957
677 883
10,.79
252 631
7.80
295 914
9.73
1972
1 027 719
11 .09
383 704
8.23
503 132
10.93
16.25
The following two tables show the population of Peninsular Malaysia in
the working age group under two different assumptions.
Tho first assumes rotiroment from gainful activity at the age of 60 years.
The second assumes retirement
at 55 years.
Persons over those age groups are considered, for the purpose of
this discussion, to constitute the aged population.
- 25 -
60
Peninsuliar Malaysia - 14721
Age group
Total
Males
Females
4 741 883
2 353 833
2 388 050
Aged population
(60 years and over)
508 757
261 931
246 826
Percentage of
working population
10.7$
11.1?5
10.3/o
Working population
(15-59 years)
Working Population up to Age-, 55
Peninsular Malaysia - 1972^
Age group
Total
Males
Females
4 506 185
2 232 060
2 274 125
Aged population
(55 years and over)
744 455
383 704
360 751
Percentage of
working population
16.59°
17.27°
15. 99°
Working population
(15-54 years)
16.26
The following table shows the proportion of persons in the labour force
who were in the upper age groups 55-65 years plus.
Total Labour Force and "Aged Persons", 1970
Peninsular Malaysia
labour force
Females
Males
Age group
Number
51 and over
55-59
60-64
65+
55 and over
Source:
9° of
total
males
age 15
and over
Number
1 907 003
87 822
_
4.6
869 819
30 661
65 531
65 890
3.4
3.5
21 867
17 153
219 243
11.5
69 681
Total
9° Of
total
females
age 15
and over
Number
_
3.5
2.5
2.0
8.0
Soci.al Statistics Bulletin, 1972
Social Statistics Bulletin, 1972, Appendices B and E.
7° of
total
persons
age 15
and over
83 043
4.3
3.1
3.0
288 924
10.4
2 776 822
118 483
87 398
- 26 -
From the preceding table, it may be noted that 288,924 persons (over 10 per cent)
of the labour force in 1970 were age 55 or older.
This tends to refute the notion
that persons over the age of 55 years generally retire from gainful activity.
16.27
The original statistics on which the above table is based show that out
of the 288,924 persons in the labour force in the three age groups covering persons
age 55 and over, only 1.5 per cent were unemployed.
16.28
It may also be observed from the same table that there were 118,483
persons in the labour force in the age group 55-59According to the same
statistical source, only 1.5 per cent of the persons in this age group were
unemployed.
Expectation of Life
16.29
Pensionable age has to be related to expectation of life in the country
concerned.
It is a matter of great interest in general and it must be considered
for the purpose of determining the cost factor of a pension scheme.
16.30
The expectation of life in Peninsular Malaysia at selected ages is given
in the following table, which also shows the increase which has taken place between
1957 and 1972.
Expectation of Life - All Communities"'
Peninsular Malaysia
Year
Age
Years
Male
Years
Females
Years
Both Sexes
Years
1957
1972
45
24.0
26.9
27.1
31.3
25.6
29.1
1957
1972
50
20.4
22.9
23.4
27.1
21.9
25-0
1957
1972
55
17.1
19.4
19.9
23.4
18.5
21.4
1957
1972
60
14.1
16.1
16.7
19.8
15.4
18.0
1957
1972
65
11.5
13.8
13.8
17.2
12.7
15.5
16.31
It may be useful if the expectation of life in Malaysia is compared, to
the extent possible, with expectation of life in other countries.
For this
purpose the expectation of life in a few selected countries is given in Appendix I,
table 2.
Retirement from Gainful Activity - Law
and Practice in Malaysia
16.32
There are no statutory provisions regulating retirement from employment
under a contract of service in the private sector.
However, it appears that the
age of 55 years is considered to be the age at which employees should be retired.
In a number of collective agreements examined, this age is generally referred to as
the "normal" retiring age and sometimes the age of 50 years is mentioned in regard
to female employees.
However, most of these agreements provide for the possibility of extending employment beyond the "normal" age at the employer's invitation
or by mutual consent.
Social Statistics Bulletin, Peninsular Malaysia (1972), table 14.
- 27 -
16.33
Under the Employees' Provident Fund Ordinance, a member (man or woman)
may withdraw all the amount standing to his credit at the age of 55 years.
16.34
In the public sector, the normal retiring age is 55 years for males and
females.
This is regulated under the Pensions Ordinance.
It is recalled that
government employees are exempted from year to year from the operation of the
Employees' Social Security Act, 1969, but this exemption does not apply to persons
recruited directly by statutory bodies.
Provisions under the Employees' Social
Security Act, 1969"
16.35
The Act provides for an invalidity pension for which contributions are
being paid.
The pension becomes payable from 1 January 1977.
In accordance with
the provisions of the First Schedule to the Act, paragraph 12, an employee who
completes his fifty-fifth year of age is no longer insurable for the invalidity
•pension.
This age, which applies to both men and women, would have to be raised
should a higher pensionable age be chosen.
The Cost Factor
16.36
Age benefit invariably develops as the predominant cost element in a
social insurance scheme.
The cost of this benefit is a major factor in determining the contribution required to finance the scheme.
If the contribution is too
high, the portion payable by the insured person may cause serious hardship to the
worker.
The portion of the contribution to be paid by the employer in respect of
his employees may bring about unfavourable economic repercussions if it is too high.
16.37
One of the principal determinants of the cost of an age-benefit scheme is
the age at which the pension is to be payable.
The following table provides an
indication of the effect of various retirement ages on the amount and the ultimate
cost of the pension.
It is assumed in column 2 that at each age the insured
person has earned a benefit of 100 units per annum payable from age 60.
This
column shows the amount of annual pension the insured person would receive were he
not to wait until age 60 to receive the benefit, but instead begin to receive it at
the ages shown in column 1.
Column 3 shows the increase in the ultimate cost of
providing an annual pension of 100 units at the ages in column 1 compared to providing it at age 60.
Pensionable Age and Cost of Age Pension
Aee when
„;T r„«V0„.i„„
pension begins
Amount of
annual pension
(units)
(1)
(2)
50
55
56
57
58
59
60
47
67
72
78
05
92
100
160
65 (deferred
pension)
Increase in
cost to provide
100 units W
'
(3)
113
49
39
28
10
9
37
- 28 -
The deferred pension refers to the case of a person who becomes entitled to a
pension on reaching pensionable age, say 60 years, but postpones his claim for
pension till he attains the age of 65.
It is customary in age pension schemes
to provide for an increase in the pension in proportion to the members' years of
contribution after pensionable age.
The above table only shows that because of
such postponement, a pension of 100 units at 65 would cost 37 per cent less than a
similar pension at age 60.
16.38
It is observed from the above table that a pension of 100 units payable
at age 60 would cost 49 per cent more if payment starts at age 55.
Alternatively,
if the cost of a pension at age 55 is to be the same as a pension of 100 units at
age 60, the rate of pension at age 55 would be 67 units.
In other words, a pension
at 55 would be less adequate.
16.39
It should be noted that the above table is not based on Malaysian data.
Precise estimates of the Malaysian experience will be provided by the actuary.
It is unlikely, however, that the cost estimate ratios shown in column 3 will vary
substantially.
Proposals
16.40
In the light of the aspects considered in the foregoing paragraphs, it
is proposed as follows.
16.41
Pensionable age should be 60 years for men and women.
However, with
regard to current practice in Malaysia, if the age of 60 is considered too high
(especially for women) it may be provided that where a person satisfies the minimum
contribution conditions for an age pension before the age of 60 he or she may claim
an age pension but not before attaining his fifty-fifth birthday.
For the reason
explained above, such a pension must be at a rate lower than that which would be
payable at 60.
The rate of such reduced pensions will be determined by the
actuary.
16.42
The age pension should be subject to the condition that the pensioner
retires from gainful activity.
However, the pensioner should not be made to feel
that he is no longer of use to the community, nor should he be deprived of the
opportunity of supplementing his income to a limited extent.
He should be allowed
to undertake employment which may be restricted by regulations to a limited number
of hours of work per week or month, or in some other appropriate manner.
16.43
Insured persons who satisfy the contribution conditions for a pension on
reaching pensionable age should be able to earn an increment in the form of an
appropriate increase in their pensions for every 12 contributions actually paid
after pensionable age.
16.44
The Minister should be enabled to prescribe a lower pensionable age for
persons who complete a specified period of insurance in occupations which are particularly strenuous or hazardous.
Contribution Conditions
16.45
A qualifying period of insurance is an essential condition for an age
pension under a social insurance scheme.
This ensures that the persons protected
are those for whom the scheme is intended.
In general, it should prevent persons
approaching pensionable age from procuring a pension possibly even by obtaining
some nominal insurable employment.
This possibility becomes greater under a scheme
which covers also casual and part-time employment, as in tho case of Malaysia.
16.46
Convention No. 102 allows an age pension to be payable after a period of
30 years of insurance;
but it also requires that a reduced pension should be
payable after the completionpOf 15 years of insurance.1
Convention No. 128
contains the same condition.
"••Article 29, 1(a) and 2(a).
2
Article 18, 1(a) and 2(a).
- 29 -
Proposals
16.47
It is proposed that the minimum qualifying conditions for an age pension
will be as follows:
(a)
not less than 36 monthly contributions actually paid since entry
into insurance; and
(b)
not less than 180 monthly contributions paid and credited.
16.48
A contribution shall be credited in respect of an insured person, without
being actually paid, for every complete month during which GUCII person is entitled
to sickness benefit, maternity benefit or temporary disablement benefit.
16.49
Such credited contributions shall be valid for pensions.
Credited contributions may also be allowed in respect of complete months during which a person
is in'receipt of invalidity pension.
However, the application of this arrangement will depend upon the harmonisation of the invalidity pension with the proposed
scheme.
This will be discussed later in this report.
Rate- of Pension
16.50
The higher the rate of pension the more meaningful and attractive it
will be.
On the other hand, the higher the benefit rate, the higher will be the
required contributions if the scheme is to be self-financing.
Persons criticising
the benefit rate tend to overlook the cost effect.
16.51
Convention No. 102 requires a minimum pension of 40 per cent for a man
with a wife of pensionable age (considered to be the standard beneficiary).!
The
later Convention No. 128 requires a minimum rate of 45 per cent for the standard
beneficiary.2
16.52
It is proposed that the rate of pension shall be as follows:
(a)
a rate of 40 per cent when the minimum contribution conditions
are satisfied;
(b)
an increase of 1 per cent for every 12 monthly contributions
paid and credited over and above the minimum of 180 paid and
credited contributions.
Maximum Rate of Pension
Proposal
16.53
It is proposed that the maximum rate of age pension shall be 60 per cent.
16.54
On the basis of the proposed rate of pension, the maximum rate of
60 per cent will be reached when a person completes 35 years of insurance.
This
rate is the same as for permanent total disablement resulting from an employment
injury.
In regard to the period of 35 years, it has to be explained that an ago
pension should normally be earned by contributions throughout the insured person's
working lifetime.
If normal working life is taken to be the period between the
ages of 16 and 60 years, it covers a period of 44 years.
16.55
Under the present scheme, the maximum rate of invalidity pension is
65 per cent.
This is being discussed later in this report.
Schedule to Part XI.
Schedule to Part V.
- 30 -
Deferred Retirement
16.56
It is customary to provide for persons who elect to continue to work in
insurable employment after reaching pensionable age.
A person may be unable to
complete 35 years of insurance before reaching pensionable age.
He should be given
an opportunity to increase his pension rate if he chooses to continue in insurable
employment.
Proposal
16.57
It is proposed that a person who continues to pay contributions after
attaining pensionable age shall earn increments in addition to the pension rate
which he has earned up to pensionable age.
This will only be allowed in the case
of a person who satisfies the minimum contribution conditions when he reaches
pensionable age.
16.58
The formula for this increment will be worked out by the actuary.
When
the pension is eventually claimed, the pension shall be calculated on the assumed.
average arnings for the 36 months immediately preceding the claim.
Transitional Provisions for "Aged"
Entrants into the Pension Scheme
16.59
An age pension scheme is generally based on the assumption that an
insured person pays contributions throughout his working life.
However, the
introduction of a pension scheme would have no significance for the first generation of insured persons if worthwhile benefits are not attainable by those who are
not very far from the age of retirement from work at the time the scheme is
implemented.
It is therefore accepted by social security planners that some
transitional provisions must be made for persons who become insured under such
schemes at ages which would not normally allow them enough time to satisfy the
minimum contribution-,conditions.
Such arrangements are also required in
Conventions Nos. 102 x and 128. 2
Proposal
16.60
It has been proposed that pensionable age should be 60 years for men and
women.
Subject to the condition that no person shall be entitled to an age
pension unless he has actually paid at least 36 monthly contributions, persons who
become insured under the pensions scheme at the age last birthday indicated in
column (l) of the following table shall be entitled to an age pension if, by the
time they reach pensionable age, the number of contributions shown in column (3)
have been paid or credited in respect of them.
Column (2) of the table is
included only for information.
It only shows, on average, the remaining number
of months to pensionable age for each age in column (l).
16.61
It is observed that a person who is 55 years when he becomes insured
will only be required to have 45 monthly contributions of which 36 must be actually
paid to satisfy the minimum contribution condition.
16.62
Persons who become entitled to an age pension under the transitional
arrangements shown in the table should not be entitled to claim an age pension
before reaching pensionable age.
16.63
The proposed arrangement is a transitional one, and applies to persons
age 41 to age 55 at the inception of the scheme (in a particular area).
It
cannot remain open indefinitely so that at any time in later years a person may
procure employment, say at an age over 50 years and qualify for an age: pension.
Nevertheless, even under the proposed transitional arrangements, the resulting
pensions which will be payable after short periods of contributions will be a heavy
burden on the scheme.
Article 29, 5.
Article 18, 4.
- 31 -
T r a n s i t i o n a l Arrangements for Aged E n t r a n t s
into Pensions Scheme
Age ( l a s t b i r t h day on appointed
da
y
(1)
55
54
53
52
51
50
49
48
47
46
45
44
43
42
41
Remaining months
a t l a s t birthday
.
less
(2)
S ^ H l S
^
™ £ & f cSEJibSiona
necessary to qualify
(3)
54
66
70
90
102
114
126
138
150
162
174
186
198
210
222
45
55
65
75
85
95
' 105
115
125
135
145
155
165
175
180
S1X m o n t h s
16.64
When a pension scheme becomes universally applicable to the persons
intended to be protected (for example, all employed persons), column (3) in the
above table would apply only to persons at the ages shown on the appointed date.
In the case of Malaysia the aged entrant concession should be applied according to
the extent of coverage attained when the pensions scheme is introduced.
Age Grant
16.65
When the pensions scheme is introduced, contributions will be compulsory
for all persons in covered industries, but some persons may not be able to qualify
for an age pension. In such cases a lump sum should be payable.
Proposal
16.66
Insured persons who will not satisfy the minimum conditions on the date
they attain pensionable age shall be entitled to a lump sum payable on the basis
of the following formula:
"X" per cent x average wage x number of contributions actually
paid, where "X" per cent shall be a percentage determined by the
actuary.
Average wage shall be the average of the assumed average wages
corresponding to the last 12 contributions paid.
- 32 -
Minimum Rate of Retirement and Invalidity Pension
17.
Retirement pension is generally earned after a long period of insurance.
The minimum rate of 40 per cent, as proposed, is earned after a period of 15 years
of insurance (except in the case of a pension earned under the transitional provisions).
An insured person's wage may even lie lower towards the end of his
working career than it was a few years before.
It is a matter of social justice
that an age pension scheme include some sort of minimum benefit to assure a low
wage earner of an adequate pension which at least meets subsistence needs, if not
a somewhat higher standard.
This social objective may be attained by the adoption
of various possible methods consisting mainly of the adoption of (a)
an amount as a flat rate of pension;
or
(b)
a formula related to the period of insurance completed.
The second approach may commend itself to the school of thought that a person who
has participated in a scheme for a longer period than another should have some
reward.
It may also be more appropriate in a system which does not provide for
any other flat rate periodical payments.
Proposal
17.1
It is proposed that the minimum rate of retirement pension should be
based on the following formula:
Rate of pension = percentage earned
through the period
of insurance- under
the scheme
x
standard
amount
For example, 40 per cent has been proposed for a person who completes the minimum
period of 15 years for a retirement pension.
A person who completes a longer
period would naturally have a higher percentage.
17.2
It is proposed that the "standard amount" will be a monthly amount which
will be fixed by the Minister by regulations or by order published in the Government
Gazette.
The Minister will be at liberty to adopt an amount which may bear some
relation to the average wage of (i)
(ii)
(iii)
an unskilled adult labourer;
a semi-skilled worker;
or
a skilled worker.
The Minister would not be expected to commit himself to determining what is the
average wage of any of the above three classes of workers.
This is why the term
"standard amount" is being suggested.
Any other term which may be considered to
be more appropriate may be adopted.
17.3
It is recommended that the standard amount be reviewed from time to time
to take into account changes in average wage levels.
17.4
It is proposed that the same formula be applied to determine the minimum
amount of invalidity pension.
In this connection it should be noted that casual
and part-time workers will be insurable as they also are at present.
Since the
earnings of these workers are generally very low, the proposed minimum rate arrangement would be particularly beneficial to them.
17.5
The fixing of the standard amount is a matter' of policy to be determined
by the Minister.
However, it is an element which has to be taken into account in
the costing of the scheme.
For this purpose it has been tentatively agreed with
the actuarial expert that the following standard amounts will be considered as
monthly wages:
$130,
$150,
$170,
$200
The pension which would be payable as a result of the adoption of any of the above
"standard amounts" is shown in the following table.
- 33 -
Minimum Pensions at Selected Rates
Standard amount
Period of
insurance
years
Rate of
pension
Amount of pension per month
based on standard amount of
$
130
$
150
170
200
Amount of Pension:
(i) Transitional
according to age
at entry .
3 9/12
to
14 7/12
40
52
60
68
80
(ii)
15
40
52
60
68
80
(iii)
20
45
58.5
67.5
76.5
90
(iv)
25
50
65
75
85
100
(v)
30
55
71.5
82.5
93.5
110
(vi)
35
60*
78
90
102
120
Notes
* Proposed m;ucimum rate is 60 per cent.
(1)
In regard to the amounts of pension shown in the above table in
respect of the various periods of insurance, it should be borne in
mind that, the standard amount applicable on the launching of the
scheme will be reviewed periodically as the Minister may deem
appropriate on the basis of actuarial advice.
(2)
The minimum amount of pension will be guaranteed even to an insured
person who works only on a part-time or casual basis.
(3)
Once a pension is awarded it will be subject to periodical review
to take account of substantial changes in the general level of earnings resulting from changes in the cost of living, as proposed in
clause 27 of the Bill to establish SOCSO as a statutory body.
17.6
It is recommended that once a standard amount is adopted it should then
be reviewed regularly on the basis of actuarial advice.
Revisons in the levels
Of benefits should be made with reference to substantial changes in the general
level of earnings or in the cost of living.
Invalidity Benefit
18.
The present scheme provides for an invalidity pension or a lump-sum
payment (invalidity gr.ant).
The latter is payable to an invalid who has paid at
least 12 contributions, but who does not satisfy the contribution requirement for
a pension.
The invalidity benefit scheme does not provide for any benefit to
survivors of an invalid pensioner.
It does not form part of a comprehensive
benefit scheme.
These circumstances are relevant to the explanations and proposals which follow.
Ref. Convention 102, Article 65, paragraph 10 and Article 66, paragraph 8.
Convention 121, Article 21.
Convention 128, Article 29.
- 34 -
Age Qualification
18.1
The following limitations are in force:
(a)
a person cannot become insured under the invalidity scheme
if he is over 50 years on the appointed day;
(b)
an insured person cannot claim invalidity benefit after he
attains the age of 55.
It is observed that at present there is no minimum age at which a person can be
insured, and there is no provision in regard to a minimum age at which a person
may claim invalidity pension.
Proposal
18.2
It is proposed that a person shall be entitled to claim invalidity
benefit if he is over the age of 18 years and under pensionable age.
18.3
The above proposal is to be treated.'.as forming part of the complex of
proposals which are being made in the following paragraph to harmonise the
invalidity benefit with the age benefit, and in particular:
(a)
the proposed basic invalidity pension rate;
and
(b)
the transitional provisions for aged entrants into the proposed
pensions scheme.
Contribution Conditions
18.4
In the present scheme (section 17) there are two sel;s of contribution
conditions, namely:
(1)
(2)
Full qualifying period
(a)
36 monthly contributions paid during the 60 consecutive
months immediately preceding the month in which the claim
for pension is made; or
(b)
paid contributions equivalent to not less than two-thirds
of the number of complete months falling between the date
of first entry into insurance and the date of claim,
subject to a minimum of 36 paid contributions.
Reduced qualifying period
Paid contributions equivalent to not less than one-third of the
number of complete months between the date of first entry into
insurance and date of claim, subject to a minimum of 36 paid
contributions.
18.5
The condition at (l)(a) above requires the insured person to contribute
an average of 7.2 months in every year of the last five consecutive years before
invalidity.
The alternative conditions at (l)(b) require an average contribution
of eight months in every twelve months throughout the period from first entry into
insurance (which may consist of interrupted periods of insurance).
Proposal
18.6
It is proposed that there be only one set of qualifying conditions which
are somewhat more liberal than the existing provisions for a full qualifying
period, as follows:
(a)
a minimum of 36 contributions paid since entry into insurance;
and
(b)
not less than 36 paid and credited contributions in the 72 consecutive months immediately preceding the month in which the claim
is made.
- 35 -
18.7
The above proposal would have the following advantages:
(a)
it would give the insured person coverage for up to three years
after leaving insurable employment, as compared with a possible
break of up to two years under current provisions;
(b)
it requires an average contribution of six in every twelve
months in the last 72 consecutive months instead of 7.2 months
out of every 12 months;
(c)
the proposal also introduces a condition favourable to insured
persons, because for the purpose of the pension credited contributions would be reckoned, while only paid contributions
are considered at present.
Invalidity Grant
18.8
Under Section 21 of the Act an invalid is entitled to a grant if he does
not satisfy the contribution conditions for a full or reduced qualifying period
and provided he has paid not less than 12 monthly contributions.
The grant is an
amount equal to the contribution deducted from the wages of the insured person plus
interest at 4 per cent in accordance with the regulations.
In effect, therefore,
the grant is a refund of the contributions paid by the insured person himself plus
interest thereon.
Proposal
18.9
It is proposed that an invalid who does not satisfy the relative contribution conditions for a pension receive an invalidity grant computed on the same
formula as the age grant.
Benefit Rate
18.10
follows:
Section 20 of the Act provides that the rate of pension shall be as
(a)
where a person satisfies the full qualifying period, the pension
shall be made up of a basic rate equal to 40 per cent of his
average monthly wage, increased by 1 per cent of the average
monthly wage for every 12 monthly contributions paid in excess
of the first 36 months up to a maximum rate of 65 per cent;
(b)
where an insured person only satisfies the
reduced qualifying period, a basic pension
of the average monthly wage increased by 1
12 monthly contributions paid in excess of
provided that the pension shall not exceed
conditions for a
equal to 25 per cent
per cent for every
the first 36 months
39 per cent.
18.11
It is observed that where the full qualifying period is satisfied after
15 years of paid contributions the pension rate would amount to 52 per cent (viz.
40 per cent plus 12 per cent in respect of 12 years' paid contributions after the
first three years).
Current Invalidity Pension Rate and the
Proposed Age Pension Rate
18.12
The present invalidity scheme is largely a scheme on its own.
It did
not have to fit into the pattern, of a wider programme which includes other benefits,
in particular, age and survivorship pensions.
The following table shows invalidity
pension rates under current provisions compared (on the basis of years of contribution) with the proposed retirement pension.
- 36 -
Current Invalidity Pension and Proposed
1S-XJ
'' J. •H snsion
Retirement
71 J . . .
r
Number of years
of
contribution
Current inval:id:i-ty
pension rate
Proposeid retirement
pension rate
*
3
15
20
40
52
57
28*
40
45
28
65
65**
53
60**
35
This is only a notional rate to indicate the base of the
pension formula.
Actually the minimum rate of retirement
pension payable after the completion of 15 years of insurance
or under transitional provisions will be 40 per cent.
Maximum amounts under the two schemes, respectively.
18.13
It is observed in the above table that (a)
an insured person who pays three years' contribution in a period
of five consecutive years may receive an invalidity pension of
40 per cent at any age under 55 years;
(b)
a person who pays 28 years' contribution may receive an invalidity
pension before pensionable age at the rate of 65 per cent, as
compared with a proposed retirement pension of 53 per cent after
the same period of insurance on reaching pensionable age.
The gap indicated in paragraph (b) above would produce a distorted pension structure,
and would have serious implications for the operation of the scheme.
18.14
It is considered most important that the various provisions of a pensions
programme - age, invalidity, survivors' and to a certain extent employment injuries should constitute a unified structure.
The inconsistencies indicated between the
current invalidity pension and the proposed retirement pension should be removed
either by revising the proposed retirement pension formula or the present invalidity
formula.
18.15
The proposed retirement pension formula is designed on the basis of the
estimates of the contribution income which is likely to be available on the assumption that a contribution to the Employees' Provident Fund is to continue.
The
actual cost of the scheme will be determined by the actuary.
The resulting rates
would meet the standards set in Convention No. 1 0 2 . It would not be advisable to
start a self-financing pensions scheme at a higher level of benefits, at least until
the policy in regard to the EPF contribution is determined.
(This matter is discussed in Part V of this report.)
Proposals
18.16
It is proposed that invalidity pension and retirement pension rates be
harmonised as follows:
(a)
The basic rate for invalidity pension will be 28 per cent after
three years' paid contributions.
This would be the same as
the notional basic rate for retirement pension.
- 37 -
(b)
The pension rate will be calculated on the sum of the credited
as well as actually paid contributions.
These credits will
be given in the event of complete calendar months during which
a person is entitled to sickness benefit, maternity benefit or
temporary disablement benefit.
At present no credited contributions are allowed in the event of temporary disablement benefit
which is currently the only benefit paid in respect of temporary
incapacity for work.
However, the condition for a minimum of
three years actually paid contributions will continue to apply.
(c)
The pension rate resulting from the paid and credited contributions will be increased by a number of years of insurance
equal to one half of the difference in complete years between
the invalid's age at the last birthday preceding the invalidity
and 45 years.
This proposal is in accordance with the concept
that on average an invalid is likely to have greater family
responsibility in the period before the age of 45 years.
It
may be argued that such responsibility may remain up to tho a^o
of 45 years.
However, it must be borne in mind thab t;hc hifth'T
benefit which is paid in recognition of such responsibility will
not be withdrawn when such responsibility becomes less or even
ceases altogether.
(d)
The maximum pension rate for invalidity should be the same as
for retirement pension which will be 60 per cent.
At that rate
it will also be the same as the present maximum rate for
permanent total disablement.
18.17
The following table shows the effect of the above proposals.
It shows
in column (6) the rate of invalidity pension which a person would receive if he
enters insurable employment at the age of 17 years and becomes an invalid at any
of the ages indicated in column (1). The table also shows in column (7) the
retirement pension rate corresponding to the contributions paid and credited in
column (2). The invalidity pension rate payable under th3 present provisions
in the Act is shown in column (8) but actually the rate could be lower because
column (2), on which the rate is based, includes credited contributions which are
not allowed under the present scheme.
Proposed Invalidity Pension Rates at
Selected Ages Proposala
Age at
invalidity
Contributions
paid
and credited*
Basic
rate
Remaining
years up
to age 45
*
(1)
(2)
(3)
(4)
20
22
25
30
32
35
40
45
3
5
8
13
15
18
23
28
28
28
28
28
28
28
28
28
33
35
28
28
25
23
20
15
13
10
5
-
50
52
*
Credits
at half
period
in col.
(4)
Invalidity
pension
rate
Retirement
pension
rate
Present
invalidity
pension
rate
*
(5)
*
*
(6)
(7)
*
(B)
12.5
11.5
10.0
40.5
41.5
43.0
7-5
6.5
5.0
2.5
-
45.5
46.5
48.0
40
43
48
53
50.5
53.0
58.0
60.0**
58
60**
40
42
45
50
52
55
60
65**
65
' 65
of which not less than three years' contribution must be actually paid.
3€3E
maximum rate.
- 38 -
18.18
In regard to the above table it is explained that the person who lias a
continuous period of insurance up to the age of 40 after which he becomes an invalid
would receive a pension at 50.5 per cent.
However, if a person who has completed
only three years' insurance becomes an invalid at the same age (40 years) he would
only receive a pension of 30.5 per cent made up of 28 per cent earned after three
years' paid contributions and 2.5 per cent under column (5). Thus the proposed
formula will give an advantage to the person who has completed a longer period of
insurance.
18.19
The invalidity pension at the proposed rate will meet the standard set
in Convention No. 102.-1
However, it will not meet the standard in the later
Convention No. 128 2 which requires an invalidity pension at the rate of 50 per cent
after the completion of 15 years of insurance.
18.20
The foregoing proposals regarding invalidity pension have been put forward
in the light of the following considerations:
(a)
They are necessary in the interest of a consistent and unified
social insurance programme.
(b)
They include more favourable qualifying contribution conditions
and introduce the system of credited contributions.
(c)
The invalidity pension will carry with it benefit to survivors,
and not to the invalidity pensioner only.
(d)
The amount of invalidity pension will be subject to a minimum
rate which will result in a distinct advantage to low wage
earners who may easily be earning much less than the standard
amount when they become invalids.
(e)
The benefit under the present provisions has only become payable
from January 1977 in regard to the areas first covered.
(f)
The harmonistation of the rates should reduce the problems which
would certainly arise w.i th insured peraonn if there is a substantial difference between the invalidity pension and Ike age
pension.
Survivors' Benefit
Current Provisions
19.
The Employees' Social Security Act only provides for a periodical payment
to survivors of an insured person who dies as a result of an employment accident.
This benefit is referred to as dependants' benefit.
19.1
Dependants' benefit is payable to persons specified under the definition
of "dependants" in section 2(3) of the Act.
Section 26 of the Act divides the
dependants specified by the definition into two groups, by providing that only if
there are no dependants in the first group, the benefit will be payable to dependants in the second group.
For the sake of clarity, it is proposed to identify
dependants in the two groups which result from the provisions of section 26 as
"primary dependants" and "secondary dependants", respectively.
Primary Dependants:
(i)
(ii)
(iii)
a widow;
minor legitimate or adopted son, an unmarried legitimate or
adopted daughter;
if wholly dependent on the earnings of the deceased insured
person at the time of his death, a legitimate or adopted son or
daughter over 16 years who is infirm and incapable of earning any
wages.
Schedule to Part XI.
Schedule to Part V.
- 39 -
Secondary Dependants:
(a)
a widowed mother whether actually dependent on the earnings
of the deceased insured person or not at the time of his death;
(b)
if wholly dependent on the earnings of the deceased insured
person at the time of his death (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
a parent other than a widowed mother;
a minor illegitimate son, an unmarried illegitimate
daughter or a daughter-' legitimate or adopted or illegitimate
if "'married and a. minor or if widowed and a minor;
a minor brother or an unmarried sister or a widowed sister
if a minor;
a widowed daughter-in-law;
a minor child of a predeceased son;
a minor child of a predeceased daughter where no parent
of the child is alive; or
a paternal grandparent if no parent of the insured person
is alive.
In the Act a minor is a person who has not completed his sixteenth year of age,
which is interpreted to mean a person who has not attained his sixteenth year.
Proposals
Types of Survivors' Benefit
19.2
It is proposed that the survivors' benefit be of two types, namely:
(a)
a periodj.cal payment by way of a pension or allowance;
or
(b)
a lump-sum payment hereinafter referred to as survivors' yrant.
19.3
Survivors' benefit shall be a periodical payment where the deceased
insured person at the time of his death (a)
was in receipt of an invalidity or retirement pension;
or
(b)
would have been entitled to receive invalidity pension or,
having reached pensionable age, retirement pension, had he
claimed such benefit.
19.4
Survivors' grants shall be payable where the deceased insured person at.
the time of his death would have been entitled to invalidity grant or age grant
had he claimed such benefit.
19.5
Survivors' benefit shall be a lump-sum payment in the case of the widow
of a deceased insured person who satisfies the conditions specified in paragraph
19.3 above, but the widow herself does not satisfy the relevant conditions for a
pension or allowance.
Rate of Periodical Payments
19.6
The maximum rate of survivors' benefit payable by way of periodical
payments shall be based on the rate of invalidity pension or retirement pension
referred to in paragraph 19.3 above and calculated as proposed in paragraphs 16 and
17 of this report.
19.7
The following table shows how the shares of available benefit are
allocated to dependants (dependants' benefit) according to the present Fourth
Schedule and also the proposals for persons entitled to survivors' benefit under
the new schemes.
- 40 -
Present Dependants' Benefit and Proposed
Survivors' Benefit
Share of available benefit
As in Fourth
Schedule in
respect of
employment
injuries
Dependants
Proposed
for new
survivors' benefits
Primary:
(i)
(ii)
widow
son/daughter under
14/16 y e a r s W
(2)
(6)
60$)
40/o)
(iii)
widower^
'
Secondary:
(a)
widowed mother
30fo
(b)
(i)
30#
parent
30$ k I)
^
40$ (8)
or
(ii)
(iii)
19.8
paternal grandparent
30/o (4)
30$ (9)
other male/female
under 14 years
20$ (5)
20$ (10)
The following explanations refer to the above table.
Conditions under Current Provisions
(1)
Up to 16 years if attending education.
In the case of an unmarried
son or daughter who is wholly dependent on the earnings of the
deceased insured person and unable to earn any wages because of
infirmity, benefit continues as long as the infirmity lasts.
(2)
If total shares exceed 100 per cent, each share.is reduced proportionately.
(3)
If there are two parents, each parent is entitled to 15 per cent.
(4)
By definition a paternal grandparent is entitled to 30 per cent
only if there is no parent.
In the event of two paternal grandparents, each is entitled' to 15 per cent.
(5)
If there is more than one person, the share is divided equally.
Proposals for the New Benefits
(6)
Conditions will remain as in (2) above, except that (a)
it is proposed that the widow herself will have to satisfy
certain conditions which are. specified later in this report;
and
(b)
benefits to sons
to the age of 16
up to the age of
continued, as is
or daughters will be payable generally up
years, or if attending full-time education,
18 years or until such education is disexplained later.
- 41 -
(7)
A widowed mother will be entitled to 30 per cent if she does not
satisfy the conditions indicated below.
(8)
A parent will be entitled to 40 per cent (two parents would receive
80 per cent between them) if (a)
over pensionable age;
or
(b) under pensionable age but permanently incapable of self
support by reason of permanent physical or mental disablement.
It is explained that this proposal is designed to attain two
objectives, namely:
(i)
(ii)
(9)
to make the benefit to parents much more meaningful, viz.
up to 80 per cent between two parents, instead of up to
30 per cent between them as at present;
to avoid what the expert considers to be an anomalous situation whereby two comparatively young and able-bodied parents
acquire a pension for the rest of their lives at 15 per cent
each if they happen to be unemployed when an insured son
or daughter dies, as can happen under the current employment
injuries provisions.
It is proposed that the condition referred to in (4) -above will
apply to the new benefit.
(10) The condition at (5) above will apply, but for the sake of uniformity, since other dependants are mainly brothers and sisters, the
benefit will be extended up to the age of 16 years without any
further extension.
(11) A widower is being included in the primary group subjoeL Lo such
conditions as may be prescribed both for the purpose of death
benefit and survivors' benefit.
In effect this is a corollary
to the present provisions in section 27 of the Act and to
Regulation 94.
19.9
Under the above proposals, the persons in the group of secondary dependants will only be entitled to benefit if the deceased insured person does not leave
a widow, whether entitled or not, or a son or daughter.
In the main, the question
of benefit to secondary dependants will arise in the case of an unmarried insured
person.
19.10
The parents of an insured person who dies through any cause including
an accident or after receiving an invalidity pension may be entitled to receive
a pension based on the invalidity or retirement pension to which the deceased
would have been entitled at the time of his death, if they were wholly dependent
on the earnings of such person and satisfy the relevant conditions.
This will
mainly help parents maintained by unmarried children.
It is advisable that the
invalidity pension be more meaningful and that the qualifying conditions be
realistic so that they will result in benefits being paid in circumstances where
the need is likely to be great.
Under the proposals these needs will be more
adequately met.
19.11
The concept of dependency in the Asian tradition must be recognised by
the social security scheme.
However, the concept is being adapted to changing
conditions, and its application should not be overstretched; otherwise the result
will be that social security benefits are spread out to such an extent as to become
meaningless and a'source of criticism of the social security system on the ground
of insignificant payments.
Furthermore, a long-term benefit should not be awarded
on the basis of what should be a temporary situation, as is the case of comparatively young able-bodied "dependent" parents.
This is really the realm of public
assistance or a social insurance unemployment benefit scheme.
- 42 -
Conditions to be Satisfied by a Widow
19.,12
It is proposed that a widow be entitled to benefit in the form of a
periodical payment as follows:
Widow's Pensions and Widowed Mother's
Allow ancT
19.13
(1)
(2)
(3)
A widow shall be entitled to a widow's pension if at the time of
her husband's death' (a)
she is over 40 years;
or
(b)
she is permanently incapable of self-support by reason of
physical or mental disablement.
A widow who does not have a child by her late husband shall not be
entitled to a pension if (a)
she married her late husband after he became entitled to a
retirement pension or an invalidity pension; and
(b)
her husband's death occurs less than three years after the
date of their marriage.
A widow's pension shall cease to be payable if the widow remarries.
19.14
A widow who at the time of her husband's death is not entitled to a
widow's pension shall be entitled to a widowed mother's allowance if on that date (a)
She has the care of a legitimate or adopted child who (i)
(ii)
(b)
is under 16 years;
or
is permanently incapable of self-support by reason of physical
or mental disablement; or
she is pregnant by herniate husband.
A widowed mother's allowance shall be payable at the same rate as a widow's pension
and!as long as the conditions at (a) or (b) are satisfied.
19.15
(1)
A widow, who on the death of her husband, receives a widowed mothers'
allowance in respect of a child in accordance with paragraph 19.14
above shall be entitled to a widow's pension on attaining 40 years
if on that date she still has the care of such child.
(2)
A widowed mother's allowance shall cease to be payable if the widow
remarries.
More than One Widow entitled to
Periodical Payments
19.16
Where two or more widows of the deceased insured person satisfy the
relevant conditions for a widow's pension or a widowed mother's allowance, the
pension or allowance payable to a widow shall be shared equally among the widows.
1
19.17
Under the above proposals, a married woman who at the time of her
husband's death has attained the age of 24 years and has a child is assured of a
pension for life or until she remarries if her husband dies.
On the other hand,
thejproposals are based on the concept that an able-bodied young widow without
family responsibility need not receive a social security benefit.
- 43 -
Orphan's Allowance
19.18
The children of a deceased insured person shall be entitled to benefit
as follows:
(1)
Each unmarried legitimate or adopted son or daughter of the
deceased shall receive an orphan's allowance until he attains
the age of 16 years.
(2)
In the case of a son or daughter who continues full-time education
after the age of 16 years, the allowance shall be payable up to
the age of 18 years or up to the date when full-time education
ceases, if this occurs earlier.
(3)
An unmarried legitimate or adopted son or daughter who is wholly
dependent on the earnings of the deceased insured person at the
time of his death by reason of physical or mental disablement
shall be entitled to receive the orphan's allowance as long as
the disablement lasts.
(4)
An orphan's allowance shall cease on marriage.
19.19
In the above proposals, the age for entitlement to benefit is being
extended by two years over the present provisions.
This should also apply in the
case of dependants' benefits (viz. in respect of employment injuries).
Lump Sum Payments
Widow's Grant:
19.20
A widow's grant shall be payable to a widow who at the time of her
husband's death would have been entitled to a widow's pension or a widowed mother's
allowance had she satisfied the relevant conditions: provided that where the
deceased insured person leaves more than one widow, and widow's pension or widowed
mother's allowance is payable to any one of them, no widow's grant shall be payable
to any other widow of the deceased.
19.21
In the case where there are two or more widows entitled to the grant,
the grant shall be shared equally among them.
19.22
A widow's grant shall be a lump sum equivalent to the amount of widow's
pension which the widow would have been entitled to receive in respect of a period
of 12 months had she satisfied the relevant conditions for such pension.
19.23
A widow who married her late husband after he became entitled to an
invalidity pension or an age pension shall not be entitled to widow's grant if her
husband's death occurs less than three years after the date of their marriage.
Survivors' Grant:
19.24
Survivors' grant will be payable in the circumstances indicated in
paragraph 19.4 above and in respect of persons who would have been entitled to a
periodical payment.
Medical Pare:
Introductory
20.
Convention No. 102 requires medical care of a preventive or curative
nature to be provided to protected persons in the event of a morbid condition,
whatever its cause, and pregnancy and confinement and their consequences.
Convention No. 103 specifies pre-natal, confinement and post-natal care by
qualified midwives or medical practitioners as well as hospital care where
necessary.1
Convention No. 130 sets a somewhat higher standard particularly with
the inclusion of dental care and medical rehabilitation.2
Article 4, paragraph 3.
2
Article 13.
- 44 -
20.1
Many social insurance programmes include medical care.
This is particularly the case in countries which seek to advance their medical services as
rapidly as possible.
Compulsory health insurance has been recognised as a most
effective means of achieving this objective.
In countries where there is no free
(or almost free) comprehensive personal health service for all citizens or where
health care facilities are inadequate, social insurance medical care provides two
distinct advantages to persons covered by the scheme, namely:
(a)
It enables large numbers of persons who cannot afford to obtain
medical care protection through private insurance to acquire
such protection through social insurance, and this protection
is available (subject to certain conditions) as of right.
(b)
If personal health care becomes more accessible to low income
workers it becomes possible for them to avoid (or at least delay)
complications resulting from certain degenerative diseases.
Methods of Determining Entitlement
to Medical Care
20.2
Social insurance systems providing medical care have adopted different
methods of establishing entitlement to this benefit.
In certain industrialised
countries which do not have a national health service, the only condition for
entitlement is that a person is in insurable employment or a member of a scheme.
This is suitable for these countries where continuity of employment is quite
normal.
20.3
In other countries entitlement is based on entitlement to cash benefits.
In some countries the entitlement to medical care is extended even when the right
to cash benefit is exhausted in respect of the illness for which cash benefit was
paid.
Propolsal
20.4
It is recommended that insured persons will be entitled to medical care
under the following conditions:
Short-term illness:
Persons who satisfy the relative conditions for entitlement to sickness
cash benefit (viz. basically persons who have paid at least three
monthly contributions in the last complete period of six months (the
relevant contribution period)).
Duration of Entitlement:
Six months (viz. throughout the benefit period).
20.5
The ultimate objective should be that medical care under social insurance
be extended to the immediate dependants of the insured person.
However, it is
recommended that this be considered after the lapse of some years during which
SOCSO would acquire experience in the administration of this benefit.
20.6
Medical care should also be provided to persons who receive a retirement
pension.
It is appreciated that the incidence of morbidity among such persons is
bound to be high, however the coverage of these persons can be partly financed
through contributions deducted from the pension.
Maternity
Conditions for Entitlement
20.7
It is proposed that entitlement to medical care will be based on entitlement to maternity cash benefit (six monthly contributions paid in the last ten
consecutive months preceding confinement).
- 45 -
Duration of Entitlement
20.8
i
(i)
throughout the maternity benefit period of 91 days commencing
42 days before the expected day of confinement; and
(ii)
for a further period not exceeding three months in respect of
medical care needed directly as a result of the confinement.
Responsibility of Objectives
20.9
The inclusion of medical care in a social insurance programme means that
the Social Security Organisation must assume the responsibility to provide the
medical care to which the insured persons become entitled by law when they satisfy
the relative conditions.
The contributory nature of social insurance imposes on
the Organisation administering the programme the dual obligation to ensure by all
possible means that (a)
the quality of personal health care provided within the stipulated
limits of the programme is up to the standard required; and
(b)
the method adopted for providing such care is the most economic
and as expeditious as possible.
Social Security Organisations operating
their own Medical Facilities
20.10
When a system of medical care under social insurance is planned, the
second major issue to be resolved is the system to be adopted for the provision of
this benefit.
20.11
In a number of Latin American countries social security organisations
have established and maintain their own hospitals and clinics.
For example, in
Peru, Mexico and Venezuela large hospitals were built to provide medical care
exclusively to insured persons.
However, since the early 1960s, the need has been
felt to co-ordinate these personal health services with the public health programme. •
20.12
In India, -where personal health care under the social insurance programme
was introduced in 1952, the social insurance institution during the first 12 years
of the scheme relied mainly on the reservation of beds in public hospitals.
Laker
it was considered expedient that the social insurance institution build 11,3 own
hospitals.
20.13
Social insurance medical care schemes in most developing countries have
established health centres in order to deliver ambulatory services efficiently.
These health centres are particularly useful where public health facilities are
inadequate both in densely populated areas and in the sparsely populated areas
where transportation is difficult or expensive.
The advantages of these centres
include (a) -the possibility of employment of para-medical staff who, at
lower cost and working under supervision, can save the more
expensive time of the physician; and
(b) the provision of curative and preventive services which may help
to reduce hospitalisation, which is particularly important if
few beds can be maintained for the purpose of observation or
convalescence and for normal maternity cases.
20.14
SOCSO is empowered under the Employees' Social Security Act to establish
and maintain its own medical facilities, including hospitals.
Section 39 of the
Act provides as follows:
"39. (l) The Organisation may establish and maintain such hospitals,
dispensaries and other medical and surgical services as it may
think fit for the benefit of insured persons.
(2) The Organisation may enter into agreement with any government,
local authority, person, private or individual in regard to the
provisions of medical treatment and attendance for insured persons,
in any area and payment of the cost thereof."
- 46 -
20.15
It is important to emphasise that whatever services are operated by
SOCSO, there should be the maximum co-ordination with the public health programme
in the planning as well as the operation of the various medical facilities.
This
is one of the most important recommendations contained in the 1971 report of a
Joint ILO/WHO Committee on Personal Health Care and Social Security.1
Proposals for Hospital Care
20.16
It is recommended that SOCSO should, in principle, make the maximum use
of facilities in public hospitals for inpatient care of insured persons.
The most
practical arrangement would be to agree with the Ministry of Health on a rate per
bed-day for all treatment and maintenance.
If this is not possible, an additional
charge may be payable in respect of a limited number of specified major operations.
20.17
If it is considered necessary, for reasons of different standards of
socia'l behaviour, that there be some distinction in accommodation in wards, variable
rates' per bed-day may be fixed according to the standard of the ward.
Allocation
to the type of ward may be related to the level of the assumed monthly wage corresponding to the contributions on the basis of which entitlement to the benefit is
acquijred.
20.18:
It should be open to insured persons to choose to go to a private hospital.
Such persons may be reimbursed an amount per hospital day which may either be at the
same (rate payable in a government hospital or some other appropriate rate.
j
Ambulatory/Out-patient Medical Care
20.19i
Ambulatory or out-patient care has to be considered under various aspects
which include (a)
the availability and the use to be made of out-patient departments
in government hospitals and of government clinics and dispensaries;
(b)
the establishment of SOCSO clinics;
(c)
the participation of private medical practitioners.
Service provided through (a) and (b) above is usually referred to as the "direct
system"•
When service is provided under some form of arrangement with private
practitioners, the system is known as the "indirect system".
20.20
The system to be adopted must be one which takes into account local conditions.
The choice may be between one system and the other or a combination of
both.; A decision can only be taken after appropriate consultations with the
interested parties, and an objective assessment of the relative merits of the two
systems is made.
World Health Organisation Technical Report Series, No. 480.
- 47 -
PART V
The Social Insurance Scheme and the
Employees' Provident Fund
21.
The UNDP social security project document requires recommendations on
the co-ordination of the new social security scheme with the Employees' Provident
Fund, and on the method of conversion of EPF balances.
The Fund has been in
operation for over 25 years, and a study of relevant circumstances was an absolute
prerequisite to any valid proposals.
In order to present this important question
in its proper perspective, it is considered that certain details resulting from
this study should be given as background to the proposals.
The Employees' Provident Fund Relevant
Statutory Provisions
21.1
The Employees' Provident Fund Ordinance, 1951, applies to employed persons
who have attained the age of 16 years, irrespective of the level of the wage; but
the following groups are excluded:
(a)
nomadic aborigines;
(b)
domestic servants, other than those engaged by any registered
society or corporation or in any licensed'business incorporated
under any written law;
(c)
domestic servants who do not indicate option to be members of the
Fund;
(d)
an out-worker;
(e)
a casual worker, being a person who has worked for the same
employer without a break in his employment for a period of less
than one month and has not mutually agreed with his employer that
their several liabilities to pay monthly contributions shall
commence with his employment;
(f)
persons in prison, under detention or in any approved school or
mental hospital or leper settlement;
(g)
any person employed principally for the purpose of catching fish
in maritime waters or employed in any capacity on any vessel
used for catching fish in maritime waters.
21.2
The current contribution rate, which came into force on 1 August 1975
is based on monthly wage as follows:
employer
employed person
-
7 per cent
6 per cent
The rate actually payable is a fixed amount related to wage scales with a uniform
rate of $20 up to.$3,000 per month.
Over that amount the rate is $7/- by the
employer,and
$6/by
the
employed
person
respectively, for every $100/- or part
of $100. x
21.3
The Ordinance provides that money standing to the credit of a member may
be withdrawn when a member (a)
has died;
(b)
has attained the age of 55 years;
(c)
is physically or mentally incapacitated from engaging in any
further employment;
All amounts given in this year are in Malaysian ringgitf$) unless otherwise specified.
(d)
is about to leave Malaysia;
(e)
has attained the age of 50 years he may be allowed to withdraw,
once only, a sum representing one-third of the amount standing
to his credit.
21.4
The Employees' Provident Fund Ordinance was extended to cover Sabah and
Sarawak in 1969 under a separate Board.
But the Chairman and the General Manager
are common to both Peninsular Malaysia and Sabah and Sarawak (East Malaysia).
The
Employees' Provident Fund (Amendment) Act, 1977, amalgamated the two funds under
one board for the whole of Malaysia.
Statistical Information
21.5
The information contained in paragraphs 21.6 to 21.22 refers to the
operation of the EPF in Peninsular Malaysia.
Information about Sabah and Sarawak
is given in paragraph 21.22.
Membership of EPF
21.6
From 1 December 1970, employees whose wages exceed $500/- per month
became liable to the EPF contribution.
Membership and number of employers since
1969 is shown in the following table.
Numbers of Members and Employers
• 1969-75
Year
1969
1970
1971
1972
1973
1974
1975
21.7
No. of members
1
1
2
2
2
2
2
853
955
064
185
339
484
626
000
000
000
000
000
000
599
No. of employers
55 121
58 000
60 000
63 000
67 000
71 000
n.a.
Membership of EPF at the end of 1975 was as follows:
- 49 -
Membership of EPF at the end of 1975
.. ^ Sex and Age Group
Total
Age
Male
Female
Unknown
f>
Number
450
255
210
204
145
110
71
88
16-25
26-50
51-55
56-40
41-45
46-50
51-55
Above 55
Not
available
GRAND
TOTAL
Note:
031
555
650
455
119
574
915
809
325
134
110
100
64
41
30
33
216
779
097
941
494
004
645
042
45
73
42
36
22
14
8
15
801
441
365
341
229
165
111
137
755
856
457
015
378
535
620
612
000
970
164
407
991
913
180
463
31
17
14
13
8
8
4
5
100
1 492 686
840 218
259 184
2 592 088
12 991
3 343
18 177
34 511
1 505 677
843 561
277 361
2 626 599
It is likely that the last age group should read 51-54.
21.8
It is noted that in the preceding table that there were 54,511 males and
females who could not be placed in any age group.
At the end of 1974, the number
of such persons was 71,060.
Considering that total membership increased steadily
throughout the years, it may be concluded that the 54,511 members whose age was
unknown were the upper age groups.
21.9
It is also noted from the above table that there were 137,463 members
over the age of 55 years.
In the previous year, the corresponding fitfuro war,
101,416 in 1974.
Thus there was an increase of 56,047 (36 per cent) over Unprevious year in this age group.
The General Manager of EPF. believed that the
majority of those persons would still be in employment.
21.10
In the four years 1972-75 the numbers of balance.3 withdrawn at the age
of 55 years in relation to total membership were as follows:
Total Membership and Withdrawals
at age 55 (years 1972-75T
Total membership
Year
All age groups
1972
1973
1974
1975
2
2
2
2
185
359
484
626
000
000
000
599
Withdrawals at age 55 years
Age group 51-55
% of
Number
total
Number
107
95
75
111
14
17
21
19
048
445
005
180
5
4
5
4
881
555
225
158
$> of total
in age group
14
19
28
17
- 50 -
21.11
In connection with the above table, the numbers of members who could not
be placed in an age group were as follows:
Year
Numbers
1972
71 946
71 414
71 060
1973
1974
1975
34 511
The much higher percentage of 28 per cent shown in the last column of the table
in paragraph 21.10 may be due to the fact that, among the withdrawals, there was a
substantial number of rnomboro whoso ago wan unknown.
'(?h.1.M v.l>)w in .supported by
the drop shown from 1974 to 1975 in the figures in this paragraph.
Contribution Income, Withdrawals and
Investments
21.12
Contribution income since 1969 was as follows:
EPP Membership and Contribution Income
1969-75
Contribut ion
Year
No. of
members
1969
1970
1 853 000
1971
1972
1973
1974
1975
1
2
2
2
2
2
955
064
185
339
484
626
000
000
000
000
000
599
Income
million
$
Yea:rly average
per member
$
156
187
224
259
263
270
84.19
95.65
108.53
118.54
112.44
108.70
-
n.a.
It is recalled that from 1 December 1970, the upper ceiling of $500 per month
was removed.
21.13
The grounds for the withdrawal of individual balances in 1975 were
analysed as follows:
Grounds for Withdrawals in 1975
Ground for withdrawal
Number
Death
Age 55 years
Incapacity
leaving Malaysia
Age 50 years
(one-third of credit)
5 028
19 158
*
14 118
12.4
47.1
3.3
2.5
34.7
40 652
100.0
1 333
1 015
Amount ($)
11
57
3
4
22
517 326
539 449
778 658
676 133
668 303
100 179 869
- 51 -
21.14
The number of withdrawals and the amount paid by the Fund in the last
five years are shown in the following table:
Withdrawals from EPF 1969-75
Year
Number
1969
1970
56
44
57
35
39
43
40
1971
1972
1973
1974
1975
Amount (thousand)$
291
559
209
826
178
920
652
81 563
72 986
62 520
66
77
91
99
857
769
432
768
21.15
In each of the years from 1953 to 1959 (the provisions of the EPP
Ordinance came into effect in July 1952 )the rate of interest of 2.5 per cent was
declared on the closing balance of the member for the year.. In I960, amendments
were made to enable the Board to declare higher rates of interest not exceeding a
rate recommended by the actuary and approved by the Minister of Finance.
At the
same time the basis for. crediting interest was changed from the credits of members
at the end of each year, to the credits as they stood at the commencement of the
year.
The rates were as follows:
Rates of Interest:
Year
1953-75
Rate (#)
From 1953-1959
" 1960-1962
2.5
4.0
"
"
1963
1964
5.0
5.25
"
"
"
"
"
1965-1967
1968-1970
1971
1972-1973
1974-1975
5.5
5.75
5.8
5.85
6.6
21.16
The rates of interest and the balances due to members after crediting
year-end interest since 1969 are shown in the following table.
- 52 -
Rate of Interest and Balance due to Members
1969-75
Year
Balance due to
members including
interest (thousand)
Rate of interest
Unpo 3table
contributions
(thousand) •
$
5.75
5.75
5.80
1969
1970
1971
1972
1
2
2
2
5.85
5.85
6.60
6.60
1973
1974
1975
914
135
419
749
I 323
L 748
520
377
434
566
n. a.
335
390
077
572
3 091 415
5 467 728
4 012 000
Interest is calculated on the balance at the commencement of each year.
21.17
table.
The levels and distribution of EPF balances are shown in the following
Number of Members by Sex and Credit Range
at End of 1975
Male
Female
Unknown
Total
Credit
No.
Below $1,000
$1,000-$1,999
$2,000-$2,999
$3,000-$3,999
$4,000-$9,999
Above $9,999
*
No.
821 214
176 412
60.5
13.0
107 564
80 345
146 907
25 Oil
7.9
5.9
10.8
541
85
45
29
38
1 357 453
Zero
balances
GRAND TOTAL
1.9
100
*
No.
043
808
72.4
11.4
6.0
4.0
493
7 185
5.1
1.1
169
47
19
11
16
2
895
540
747 964
100
fo
013
594
287
825
394
897
267 010
No.
*
1 532 122
309 546
64.6
13.0
7.2
4.4
6.1
1.2
171 894
121 978
201 794
35 093
100
2 372 427
63.3
17.8
7.2
148 224
95 597
10 351
254 172
1 505 677
843 561
277 361
2 626 599
5.1
8.5
1.6
100
9.7
21.18
The investments and interest, including staff housing loans, but not cash
at bank, from 1969 to 1975, as shown in balance sheets, and income and expenditure
accounts, were as follows:
- 53 -
Investments and Interest
1969-75
Year
1969
1970
1971
i972
1973
1974
1975
Investments
(thousand)
Interest
(thousand)
$
$
009
374
305
376
3 167 500
3 553 701
4 Oil 865
105 681
118 549
134 781
158 447
103 653
214 149
n.>a.
1
2
2
2
977
194
485
808
In the Economic Report 1976-77, it is stated that in 1976 the investment income
of EPF is expected to reach $285 million.
21.19
The type of investments and their redemption value at the end of 1975
were as follows:
Types of Investments and Redemption Value
Description
Amount
(thousand)
$
Malysian govt, securities
Other government securities
Debenture loans
Loans on mortgages
Mortgage loans for staff housing
Shares in public companies
3 759
39
205
2
066
040
338
481
3 741
2-199
365
It is observed that the total amount in government securities shown in Lho .['.iral
two items, $3,798 million, is equivalent to over 94 per cent of the total amount
of investments.
Growth Projection
21.20
The General Manager of the EPF, Mr. Lee Siow Mong, in his message dated
16 October 1976, in the publication "Employees' Provident Fund, 1951-76" commemorating the Fund's twenty-fifth anniversary gave this estimate:
"The average working life of a worker under normal circumstances is
about 35 years, and therefore, the potentials of the Fund will go on
growing at least until the year 2005.
The Fund has already reached
astronomical proportions now with investments totalling over $4,000
million.
It is therefore not difficult to visualise what the Fund
would be like by the year 2005.
Given political and economic stability,
the Fund would double itself in 1981 reaching over $8,000 million."
- 54 -
East Malaysia EPF
21.21
Statistical information about the- EPF in East Malaysia (Sabah and Sarawak)
is more scanty.
The latest available statistics are those in the annual report,
for 1973.
Total contributions received during 1973
Total amount standing to the credit of
members after crediting the year-end
interest was
Interest credited to members accounts at
Total members accounts at end of 1973
Number of withdrawals during 1973
Amounts withdrawn
Total investment in Malaysian government securities
Add advance deposit with Bank Negara,
Malaysia
Total
$28,835,409
;
$103 million
5 1/4$
205,946
2,197
$1,439,478
$104,763,700
$832,000
$105,595,700
EPF and Government Finance and Policy
21.22
The EPF plays a very important role in the Government's domestic borrowing.
This emerges very clearly from the following extracts from the Economic
Report 1976-77 (pp. 55-57).
"The composition of domestic debt changed very little during the
period ^Second Malaysia Plan).
The Employees' Provident Fund (EPE)
and the Post Office Savings Board together provided about 50 per cent
of federal government financing requirements ...
In 1976, federal government domestic debt increased by a further
$1,506 million to reach $10,261 million while foreign debt increased
by $425 million to amount to $2,849 million.
Total outstanding debt
thus rose to $13,110 million (+17.3 per cent).
Government securities
accounted for 83 per cent of total domestic debt and stood at
$8,561 million in 1976, an increase of 16 per cent over 1975.
The
major portion of government securities is held by the Employees'
Provident Fund with a share of 53 per cent ($4,550 million) ...
The EPE remains the main source of domestic borrowing in 1976.
Borrowing from the Fund comprised about 41 per cent of total domestic
borrowing, with an increase in its holding of government securities
by 30 per cent to reach $620 million.
The large rise in EPF's holdings is a consequence of the impact of the increased rates of
contribution which became effective from 1 August 1975 and the increase
in the number of contributors with the growth in employment.
Income
accruing from its investments in government securities also increased
partly as a result during 1974.
In 1976, the EPF's investment income
is expected to reach $285 million accounting for about a half of its
total investible funds.
The increase in investment income coupled
with the continuing expansion in the workforce would thus provide a
steady and reliable inflow of non-inflatory funds from the EPF to
finance development expenditure during tho Third Malaysia Plan."
21.23
The table in paragraph 21.19 shows that over 94 per cent of EPF investments are invested in government securities.
21.24
The Social Security Organisation is also mentioned as a source of finance
for domestic borrowing.
The statement in the same Economic Report 1976-77 reads:
"The Social Security Organisation (SOCSO) which purchased $11 million
of government securities in 1975 purchased another $14 million in
1976.
This was due to higher contributions resulting from the expansion of SOCSO's activities into new areas and a larger investment
income."
- 55 -
21.25
The activities of EPF are being substantially expanded.
The Employees'
Provident Fund (Amendment) Act, 1977 which received Royal Assent on 16 May 1977,
enables the Fund to introduce the following measures:
(a)
A self-employed person may become a member.
Such a person may
elect to pay contributions at the monthly rate specified in a
new schedule to the Ordinance by giving one month's notice.
(b)
When a member of the Fund has entered into an agreement to
purchase a "low-cost house", the EPF Board will authorise not
more than one payment of a sum not exceeding the "prescribed
percentage" of the purchase price of a "low-cost house" or
the amount standing to the credit of such member, whichever is
less, to the vendor of the house.
(c)
Before attaining 50 years a member may opt to receive a periodical payment, instead of a lump sum payment of his balance, on
attaining 55 years.
When this option is made, a member canno I.
exercise his statutory right", to withdraw one-third of his
balance on attaining 50 years.
This provision is to come into
force on such date as the Minister of Finance may appoint by
notification in the Gazette.
The periodical payments shall be
prescribed by the Minister.
(d)
In the event of death of a member of the Fund, an amount additional to his credit is to be paid.
The amount is to be
calculated in accordance with a formula to be prescribed by the
Minister of Finance.
(e)
The Board is enabled to establish an annuity scheme for temporary
employees of statutory and local authorities under the "new
scheme".
This scheme refers to the revision of salaries and
terms and conditions of service of employees in the statutory
and local authorities pursuant to the recommendations of the
Royal Commission appointed by the Ynag di-Pertuan Agong.
Recommendations
21.26
The terms of reference in the original project document referred to in
the beginning of this part appeared to be quite straightforward.
However, subsequent developments referred to above indicated the possibility of a modification
in government policy regarding the transfer of EPF balances to social security
funds.
For this reason it was felt that government policy guidelines should be
sought on the issue.
Accordingly, on the 20 May 1977 a memorandum was submitted
to the Minister of labour and Manpower, through the Director-General of the Social
Security Organisation.
The memorandum contained proposals on which government
policy guidelines were solicited.
A copy of the memorandum including a supplementary note by the social security actuary are in Appendix III.
Briefly, the
proposals are as follows.
21.27
In the absence of government guidelines, it is assumed in the light of
recent developments, that the EPF contribution will continue to operate as in the
past, but perhaps at a lower rate.
Under this assumption the situation generally
will be as follows:
(a)
EPF members insured under the social insurance scheme will receive
their EPF balances when they qualify for them, and will be given
the option to convert their balances into life annuities based
on the amounts of such lump sums;
(b)
the same persons will earn entitlements to social security benefits
on the basis of their contributions from the date they join the
new scheme.
- 56 -
21.28
In the present circumstances, the compulsory or wholesale transfer of
EPF balances to the social insurance scheme cannot be usefully considered.
Such
an eventuality depends entirely on government policy in regard to the EPF.
The
only1 advice which can be offered is to indicate two possible alternatives both
of which are based on the purely hypothetical assumption that when the new social
security scjeme comes into force, the EPF contributions in respect of persons
insured under that scheme will cease.
The alternatives based on such an assumption! would be as follows:
Alternative (l):
Insured persons who are members of the EPF (a)
will receive their EPF balances when they qualify for them, and
they will be given the option to covert the said balances into
life annuities based on the amounts of their EPF lump-sum
benefits;
(b)
will earn entitlement to social security benefits on the basis of
thoir contributMonn from thu date they join the now nchome.
Alternative (2):
Insured persons who are members of the EPF will have their EPF balances
transferred to the new scheme.
They will be credited with contribution
periods prior to the inception of the scheme in accordance with the
amounts of their individual EPF balances.
21.29
In the interest of furthering the development of the social insurance
scheme, the proposals have been formulated on the assumption that the EPF contribution] will remain, perhaps at a reduced rate.
The proposals have been designed
to produce a relatively modest pensions scheme which will meet minimum international
standards.
t
- 57 -
PART VI
Draft Bill
Introduction
22.
The main legislation has been drafted to provide the framework for all
the social insurance benefits to be provided not only for employed persons but
also for any other gainfully occupied persons, including farmers and fishermen for
whom the Government may wish to give social insurance protection.
The draft Bill
is appended as Appendix IV.
22.1
Several new sections were inevitably required to provide for the new
benefits.
The Bill is intended to produce a consolidated Act, hence the provisions relating to the establishment of the Social Security Organisation as a
statutory body have been incorporated in the Bill.
It will be appreciated that
present provisions and related provisions in the new benefits especially invalidity
and age pension, dependants' benefit (viz. death benefit) and survivors' benefit,
had to be harmonised in substance as well as in drafting.
The Bill would be quite
long and complicated if too many details were included.
•
22.2
An endeavour has been made to make the legislation as flexible and simple
as possible.
For this purpose, emphasis has been made on enabling powers; but a
provision has been introduced requiring the Minister to place before Parliament
any regulations made and to allow the possibility for discussion in the House.
22.2.1
It is recognised that certain terms used in the present legislation have
become familiar to the staff of the Social Security Organisation and to employers
and others.
As far as possible present terras have not been changed.
However,
there would be some psychological advantage if the expression "assumed monthly
wage" were changed to "insurable monthly wage".
The proposed expression would
enable people to understand that such wage, as distinct from the actual wage, is
the wage on which the contribution is paid as well as the benefit.
The Bill
Clause 1
22.3
In preparation for its wider scope in the future, the title of the Act
has been changed to "Social Security Act".
Clause 2(5)
22.4
covered.
The definition of employee denotes insurable employment in the industries
Excepted employment is listed in the present First Schedule to the Act.
22.5
It is considered that in terms of insurable employment the definition
should be more precise and should include persons rmployod on ships, vnsanlr. and
aircraft about whom the definition in tho Act is silent:.
*
22.6
It is proposed that the substance of the present definition of employee
with the necessary changes should go into the First Schedule as Part I.
The
present list of excepted employments should constitute Part II of the Schedule.
Clause 2(31)
22.7
The definition of wages in section 2(24) of the Act is considered
inadequate by the Organisation especially because it does not include overtime.
It is also the cause of disagreement over interpretation with employers.
22.8
The definition of earnings in the Workmen's Compensation Ordinance
includes all earnings unless specifically excluded.
Overtime is not listed with
excluded items.
The definition in the Act is based on that in section 2 of the
Employees' Provident Fund Ordinance which refers to remuneration in money in respect
of the normal period of work.
58
22.9
Before including overtime it was considered necessary to establish
whether the inclusion of overtime in wages would create substantial fluctuations
in earnings and variations in relation to the wage scales.
After consultation
with ;the actuary, it was found on the basis of statistics of wages in manufacturing
industries that overtime was generally equivalent to 4 per cent or less of total
earniings.
It is therefore considered that it should be included in the definition
of wages.
Clausle 5(2)
22.10)
This clause-enables the Minister to' extend insurability to other gainfully occupied persons.
Clausle 10
22.11;
This clause enables the Minister to prescribe contribution rates on
different bases (viz. wages, income from gainful occupation) and at fixed rates.
This may be necessary in the case of certain self-employed persons.
Clause 13(2)(c)
22.12!
This clause enables provision to be made for the conversion of EPP
balances.
Clause 13(3)
22.13
This clause is intended to make it possible to make use of other agencies
and any private organisation whose officials may be in closer contact with protected persons as in rural areas.
Clause 21(5)
22.14
The period of temporary disablement benefit is not limited.
When the
present employment injury scheme was planned this was emphasised as an advantage
over jthe Workmen's Compensation Ordinance.
At the time the Ordinance provided
that the periodical payment made during the first six months of incapacity was not
to bei deducted from the lump-sum payment.
With the amendment introduced from
1 January 1977 this period has been extended to 12 months.
In practice, the
duration of the temporary disablement benefit under the Act depends to a great
extenjt on the insurance medical practitioner who recommends that the injured person
be examined by a medical board.
22.15(
Although in social insurance legislation injury benefit is generally
limited to six or twelve months, it is considered that a maximum period should not
be introduced now.
However, a provision has been made in clause 21(5)(a) to
enable the Organisation to require the injured person to be examined by a medical
boards
Clause 25
22.16:
It is observed that the widow is not required to satisfy any conditions
as regards age or family responsibility.
This is the position under the current
provisions.
22.17:
The age of dependant children has been raised to 16 years or up to
18 years if they are attending full-time education.
Clause 29(2)
22.18
A provision has been introduced so that constant attendance allowance
will not be payable when the beneficiary is hospitalised at the expense of the
Organisation or the Government.
59
Clause 33
22.19
Permanent disablement assessed at a small percentage is not automatically
commuted.
The present regulation 84 permits commutation at the request of the
beneficiary only if the rate of benefit does not exceed 50 cents a day.
22.20
In other social insurance legislations, disablement assessed at less
than 20 per cent or 30 per cent is compensated in a lump sum.
In Malaysia, this
is one of the causes of low payments.
In addition to the public criticisms, an
increasing number of small periodical payments are bound to increase the workload
and administration cost substantially.
Clause 38
22.21
This clause concerns the employers' liability for compensation under the
Workmen's Compensation Ordinance and for damages under common law to an injured
employee or his dependants.
In the present Act there are four sections involved,
namely (a)
Section 31, which bars an insured person or his dependants from
claiming compensation under the Workmen's Compensation Ordinance
and damages under any other law if an injury is an employment
injury in terms of the Act;
(b)
Section 42, which bars a person receiving any of the benefits
provided under the Act from receiving any similar benefit under
"any other written law";
(c)
Section 47, which provides that where an employment injury is
sustained by an employee by reason of the negligence of the
employer to observe safety rules or of any wrongful act of the
employer or his agent, the Organisation shall be entitled to be
reimbursed by the employer the value of benefits provided under
the Act;
(d)
Subsection (2) of section 96, which appears to give the insured
person the right to choose between benefit under the Act and
workmen's compensation.
22.22
The employment injuries provisions in the Act and the Workmen's Compensation Ordinance both provide benefit for the same contingency.
The former provides
compensation for loss of earnings in the form of a periodical payment, while the
latter provides such compensation in the form of a lump sum.
It is therefore
considered that where an employee or his dependants are entitled to benefit under
the Act, the employer should not be liable to pay compensation under the Ordinance.
22.23
When a claim for damages is made under common law, the court may award
damages not only for loss of earnings but also for suffering, loss of power to
enjoy life, etc.
It is suggested that the employer or his dependants should not
be denied this right when the employer is criminally responsible for an employment
accident; but at the same time it is felt that compensation for loss of earnings
should not be duplicated.
22.24
There is a school of thought in favour of giving the Social Security
Organisation the right to recover the value of benefits provided under the Act
from the employer when he is criminally responsible for the accident.
This is
often considered to be a useful inducement or a deterrent in favour of compliance
with safety regulations.
In this context, it is for consideration whether it
should be mandatory for the Organisation to claim reimbursement, or whether there
should be some discretion.
22.25
On the basis of the above considerations, two alternative drafts of
clause 38 are being put forward and referred to as "Alternative A" and
"Alternative B", respectively.
- 60 -
"Alternative A" bars an employer or his dependants from claiming compensation under
the Workmen's Compensation Ordinance.
It allows them full freedom to claim damages
under any law, hut if such damages are awarded the court shall be required to order
the deduction of the value of benefit under the Act.
"Alternative B" exempts the employer from all legal responsibilities under the
Workmen's Compensation Ordinance and under any other law; but where the employer
is criminally responsible there will be the right to claim damages subject to the
deduction of the value of benefit provided under the Act.
Both alternatives provide for the right of the Organisation to claim the reimbursement of the value of benefit.
In each case there is an alternative in square
brackets which, if adopted would make reimbursement automatic without any
discretion on the part of the Organisation.
Clauses 47 and 48
22.26
In these clauses it has been made clear that in the first instance
questions and claims for benefit shall be determined by the Organisation.
This
is important for the expeditious administration of the system.
Clauses 49 to 51
22.27
These clauses provide for the determination of medical aspects of claims.
In these cases it has heretofore not been clear who is actually determining claims
which also involve other statutory provisions (viz. whether an accident has arisen
out of and in the course of employment).
Clause 52
22.28
The current name of "Social Security Appellate Board" under section 83,
which is referred to as the "Board" must be changed, because under the legislation
setting up the Organisation as a statutory body the "Board" will be the Board of
Management.
It is considered that "Tribunal" is an appropriate name for an
appellate body.
Part V of the Bill
22.29
Part V of the Bill includes the draft legislation to establish the
statutory body.
Clause 78
22.30
This clause deals with the constitution of the Social Security Advisory
Council, currently the "Social Security Council".
It has always been an advisory
body in accordance with the functions prescribed in the regulations.
The word
"advisory" has been inserted mainly because of the proposed establishment of the
Board of Management as an executive body.
The provisions in regard to the constitution of the Council are in accordance with a policy decision.
Section 56(2) of the Act
22.31
This section enables the Organisation to recover from an employer any
difference in the rate of benefit payable in respect of contributions due but not
paid. The amount to be recovered will be based on the actuarial present value
of the pension.
Section 105(2)(iv) enables the Minister to impose by regulations
interest at a rate not exceeding 6 per cent but not less than $5/- per month for
non-payment of contributions.
22.32
The provisions in the two sections constitute a double levy.
After consultation with the actuaxy, it is considered that section 56(2) should bo dropped.
An actuarial rate of interest will be fixed by regulations, but subject to a
minimum levy of $1/- per month per person whose contribution remains unpaid when
due.
The present provision does not specify that the $5/- will be levied in
respect of each employee.
- 61 -
Clause 98
22.33
This clause which provides for the periodical review of benefits is
already included in the proposed statutory body legislation.
First Schedule
22.34
The proposed First Schedule will provide for insurable and excepted
employments as explained earlier.
Paragraph (l) of the present Schedule which
restricts insurability to persons earning not more than $500/- per month has been
dropped because it is being recommended that the ceiling will be removed.
22.35
Paragraph 12 of the Schedule bars insurability for invalidity of persons
over 50 years on the appointed day or employees over 55 years.
It appears that
such restrictions, mainly of a temporary nature will not be required, provided
invalidity and age pensions are harmonised.
Second Schedule
22.36
It is proposed that the contents of the Second Schedule which provide
for the list of injuries and relative assessment of earning capacity will be
transferred to the regulations.
Third Schedule
22.37
The Third Schedule provides for three categories of contributions.
It
is proposed in the Bill that contribution rates be provided for by regulations.
There will be only one contribution rate, but separate accounts will be kept for
each branch of insurance as will be recommended by the actuary.
Fourth Schedule
22.38
The Fourth Schedule provides for the disablement benefit rates and the
apportionment of dependants' benefits.
The provisions will be reviewed and
included in the benefit regulations.
Fifth Schedule
22.39
The Fifth Schedule contains the list of occupational diseases.
It is
proposed that they be called prescribed diseases and be included in the regulations.
New Schedules
22.4-0
It is proposed that the Second Schedule in the Bill contain the rules of
procedure of the Board of Management.
The Third Schedule will provide for the
staff rules to be made by the Board of Management.
These two Schedules are
included in the legislation regarding the statutory body.
- 62 -
PART VII
Social Insurance and the Proposed Motor
Vehicle Accident Compensation Scheme
23.
The Malaysian Government is taking steps to introduce a scheme to compensate victims of all motor vehicle accidents and their dependants.
The scheme
is intended to provide for periodical payments to victims and in the event of
death to the victim's dependants.
It is also intended that the scheme include
lump-sum payments in addition to • the periodical payments.
23.1
The scheme will probably be financed from levies on items connected with
motor vehicles such as the vehicle licence (road tax) and driving licence.
23.2
The proposed scheme appears to be largely based on the motor vehicle
part of the all-embrancing New Zealand Accident Compensation Act, 1972.
23.3
The expert was invited to offer his observations on the position of the
Employee's Social Security Act in relation to the Motor Vehicle Accident Scheme.
These observations are appended in Appendix V to this report.
The memorandum in
the appendix includes some details of the proposed benefits.
- 63 -
APPENDIX I
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64
APPENDIX I
Table 2
Expectation of Life in Certain Countries
Age
50
Sex
M
F
M
P
M
P
M
F
22.90
27.10
19.40
23.40
16.10
19.80
13.80
17.20
Philippines (1946-49)
Japan (1972)
Iraq
Iran
People's Republic
of China
North Viet Nam
Saudi Arabia
USSR (1971-72)
24.09
24.85
25.15
28.85
20.80
20.68
21.75
24.42
17.72
16.78
18.45
20.17
14.69
13.23
15.22
16.14
-
-
- -
-
-
-
-
-
_
_
_
_
_
_
_
_
-
-
-
-
-
-
-
-
Australia (1965-67)
Algeria
Egypt
Tunisia
New Zealand (1960-62)
Morocco
Libya
Italy (1970-72)
Hungary (1972)
Prance (1972)
Norway (1971-72)
Denmark (1971-72)
22.76
27.83
18.83
23.58
12.16
15.70
Sweden (1973)
United States (1972)
Peninsular Malaysia^ '
(1972)
(2}
Other oountriesv '
60
55
65
Asian countries:
Sources:
15.77. 19.50
-
-
-
-
-
-
-
-
22.40
26.30
18.60
22.10
15.10
18.00
11.90
14.10
-
-
-
-
-
-
-
-
23.71
27.66
19.69
23.35
16.00
19.27
12.78
15.47
-
-
-
-
-
-
-
-
24.41
23.25
23.70
25.38
24.90
28.81
27.01
29.60
20.39
19.28
19.90
24.41
22.73
25.30
16.66
13.30
16.15
14.76
17.10
29.87
29.10
25.35
24.90
17.39
17.00
25.73
23.30
30.09
29.00
21.23
20.80
21.52
19.50
20.16
18.61
21.10
21.00
20.70
25.63
24.00
17.50
16.10
21.28
20.80
13.97
13.10
15.59
16.30
12.29
13.10
13.90
13.70
17.13
17.00
(1) Social Statistics Bullet in - Peninsular Malaysia, 1972 (table 14).
(2) United Nat ions Demographic Year Book 1974 (table 33) •
/
16.85
16.80
- 65 -
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- 66 -
APPENDIX II
Table 2
Employed Persons in First and Second Half
of 1975 by Wage Range
Wage r a n g e
1
F i r s t
half of 1 9 7 5 2 n d
half of 1975
50 - 99
454 404
260 701
100 - 149
314 278
202 334
150 - 199
179 274
198 111
200 - 249
115 543
164 987
250 - 299
68 079
79 262
300 - 349
43 607
62 082
350 - 399
28 789
36 108
400 - 599
62 892
(38 614 + 24 278)
74 296
(44 611 + 29 685)
21 454
29 .898
. 11 831
16 106
24 230
30 067
1 324 381
1 152 952
600 - 799
1
800 - 999
1,000 and over
Total
Annual bonus, overtime and special relief allowance are not
included.
On the basis of the same data average wage in 1975 were found to be as
follows:
Source:
First half
Second half
Average wage all members
(taking over $1,000 as
$1,000)
193
238
Average wage of those
below $500
154
183
Average wage of all
if over $500 is taken
as $500
176
212
EPF data.
- 67 -
APPENDIX II
Table 3
Employment and Salaries in Manufacturing Sector
No. of employees in December
Year
Fulltime
Parttime
FT+1/2 PT
Salaries
and wages
for year
($•000)
Average
monthly
salary
($)
1963 1
81 Oil
6 439
84 231
153 789
152.15
1964
64 510
3 052
66 036
132 191
166.82
1965
76 002
3 666
77 835
166 705
178.48
1966 2
81 163
4 184
83 255
182 807
182.98
1971 3
87 130
5 159
89 710
201 022
186.73
1968^
120 807
9 450
125 532
266 957
177.22
1969
116 101
5 551
118 877
260 800
182.82
1970 4
148 305
4 920
150 765
324 144
179.17
1971 4
165 027
4 175
.167 115
362 867
180.95
197 2 4
197 279
4 064
199 311
429 243
179.47
19755
n.a.
n.a.
212 2046
584 007
229-34
Sources:
Survey of Manufacturing Industries, Peninsular Malaysia,
1972.
Monthly Industrial Statistics, Peninsular Malaysia,
September 1976.
1963 and 1968 census data;
data (annual).
other years up to 1972 survey
.0
Coverage widened to include textile industry from 1966.
3
Coverage widened to include assembly of automobiles and
lorries since 1967.
Since 1970, employment cut-off of five or more full-time
workers has been used in some industries.
5
1975 monthly survey data.
c
Full-time + part-time employees.
- 68 -
APPENDIX II
Table 4
Manufacturing Survey 1972 - Wage-Class Distribution
of Pull-Time Employees in the Last -Fay -Period of 1972, by Sex
Monthly wage range
Male
Female
Total
Under $100
31 454
41 022
72 476
$100-199
58 609
19 086
77 695
$200-399
32 095
3 011
35 106
6 756
$400-599
6 339
(3 977 + 2 262)
$600-799
1 753
115
1 868
$800-999
906
50
956
$1,000-1,199
642
32
674
$1,200-1,999
993
28
1 021
$2,000+
725
2
727
133 516
63 763
197 279
126 135
63 381
7 381
382
Average wage of those
earning less than $500
173
94
Average wage, if those
earning $7,500 are taken
as earning $500
191
96
(taking those more than
$2,000 as $2,000)
216
98
(taking those more than
$2,000 as $2,500)
219
Average wage, if those
earning more than $1,000
are taken as $1,000.
206
Total
(1)
No. under $500
(2) No. over $500
417
(262 + 155)
Actual average wage
Source:
98
Survey of Manufacturing Industries, Peninsular Malaysia, 1972.
- 69 -
APPENDIX II
Table 5
Manufacturing Industries
Average Wages by Category of- Employed Persons - 1972
Category of worker
Average No.
Cash payments
1972
($•000)
. „,„.,,,„
y
„I; a
as
(1) Management staff (a) professional
2 994
50 985
1 419
(b) non-professional
1 502
14 906
827
(2) Technical and supervisory
0 830
44 294
410
(3) Clerical, etc.
13 442
43 101
267
(4) General workers (i.e.
office boys, drivers,
etc.)
12 813
25 166
164
(a) skilled
60 871
114 410
157
(b) unskilled
70 250
85 624
102
20 858
46 966
188
191 560
425 452
185
3 416
2 915
71
435
876
168
3 851
3 791
82
(5) Factory workers directly
employed -
(6) Factory workers employed
through contractors
TOTAL FULL-TIME
(7) Part-time workers (a) factory workers
(b) other workers
TOTAL PART-TIME
GRAND TOTAL
195 411
429 243 2
183
FT + 1/2 PT
193 486
429 243
185
Source;
Department of Statistics - Survey of Manufacturing Industries,
1972.
i.e. wages + salaries, bonuses + overtime payments paid to
employees, gross of employees' EPF contributions.
Includes $20,085,000 in overtime payments.
Full-time worker = one who works more than six hours a day and more
than 20 days a month.
Part-time worker = one who works less than six hours a day and less
than 20 days a month.
- 70 -
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APPENDIX I I
- 71 -
APPENDIX III
THE SOCIAL SECURITY SCHEME AND THE
EMPLOYEES' PROVIDENT E M D
(Memorandum by the Social Security Planning
and Legislation ExpertJ
Background Information
1. At; the ond of February 1977, "li>i*"> .number of employed persons re^ial.eriMl
under the Employees' Social Security Act 1969 was over '328,000.
The number ol*
registered employers was 22,839Considering the physical difficulties which
have to be surmounted and the complex nature of social insurance administration,
the extension of coverage of the two existing schemes (employment injury and
invalidity) has made remarkable progress.
2. The provisions of the EPF Ordinance are applicable to all employed persons
all over the country, with the exception of certain classes of employed persons,
such as casual workers.
The latest known total number of members is 2.8 million.
However, as under the Ordinance a person is considered to be a member as long as
he has a balance in the Fund, the total number of members includes persons who for
several years may not have had a single monthly contribution in their name.
3. Statistics compiled by EPF in respect of 1973, where an inactive member
was considered to be one whose account had not been operated on up to 12 months,
showed that out of a total of approximately 2.288 million members only 1-317
million, that is 58 per cent were considered active.
If the same proportion is
applied to the latest known figure of 2.8 million, the number of active members
would be in the region of 1.6 million.
This figure, when compared to SOCSO's
828,000 points to the prospect that in the not too distance future nearly all
workers will be concurrently covered by both EPF and the social security scheme.
4. At the moment contributions are being paid both under the Employees' Social
Security Act and the EPF Ordinance in respect of SOCSO's 828,000 insured persons.
Employers are paying 7 per cent to the EPF and 1.75 per cent of wages to the social
security scheme.
Employed persons are paying 6 per cent and 0.5 per cent to EPF
and SOCSO, respectively.
5- It is noted that the present social security contribution is relatively
very small.
However, this situation will change when the proposed social security
scheme will be introduced.
6. The proposed social security scheme is to provide benefit in the event of
sickness, maternity, invalidity, old age, survivorship and employment injury.
The
existing employment injury scheme and the invalidity scheme (the invalidity scheme
does not at present provide for benefit to survivors) will be incorporated in the
proposed social security scheme.
For the sake of convenience in this paper this
is being referred to as the "new scheme", and the persons so covered "insured
persons".
7. Special provisions will also be recommended to extend social security to
farmers and fishermen.
8. The ILO actuary who took up his assignment in February 1977 on the social
security project will in due course work out the cost of the new scheme for employed
persons and the additional contribution required to finance it.
9. It will be up to the Government to determine the limit of total contribution which employers and insured persons, respectively, may reasonably be expected
to bear.
- 72 -
The New Social Security Scheme and EPF
10. The project document requires the social security legislation expert
to make recommendations on the co-ordination of the new scheme with the Employees'
Provident Fund, and on the method of conversion of EPF balances.
However, it
appears to the expert from published official statements, that there is little
possibility of the transfer of balances of the new scheme except, perhaps, when
individual members qualify to withdraw their balance under existing statutory
provisions.
At that stage it is hardly reasonable to expect any large-scale
transfer.
11. In the absence of policy guidelines, the expert assumes that the EPF
contribution will continue to operate as in the past with perhaps a lower contribution rate.
Under this assumption, the situation generally will be as follows:
(a)
EPF members insured under the new scheme will receive their EPF balance
when they qualify for it, and will be given the option to convert the
balance into a life.annuity based on the amount of such lump sum;
(b)
the same persons will earn entitlement to social security benefits on
the basis of their contributions from the date they join the new scheme.
12. In regard to the situation which would apply under this assumption
(viz. concurrent contributions to EPF and under the new scheme), the following
aspects are put forward for consideration.
13. The level of social security benefits determines the rate of contribution
required.
As far as possible the rates should not be less favourable than those
adopted in social security Conventions, particularly the Minimum Standards Convention (No. 102). The attainment of adequate standards will no doubt depend
upon the financial resources (mainly contribution income) which can bo made
available.
14. The total cost of the proposed long-term benefit scheme (pension) plus the
EPF contribution may be an excessive burden if the new scheme is to provide reasonable levels of benefits.
The only means of avoiding this excessive total cost
in the short run would be to start the new scheme on a relatively low contribution
rate which would defer the excessive cost for a period and magnify it thereafter.
This is explained in some detail in the Note by the actuarial expert attached as
Appendix A (paragraph 3 ) .
15. One may be tempted to suggest that the liability to contribution to EPF
will not apply in respect of persons who will become employed for the first time
when the new scheme comes into force.
However, if this idea were to be adopted
the situation will then be that employers and employees in the same undertaking
receiving the same earnings (or in the same grade) will pay a different total
contribution namely:
(i)
v
(ii)
"X" units of contribution to the new scheme by employers and employees
in respect of new employees; and
"X" and "Y" units of contribution to the new scheme and to EPF,
respectively, in respect of other employees in the same undertaking
receiving same earnings.
Such arrangement does not seem to be practicable, and would be likely to confuse
all parties concerned, including the administration.
Furthermore, employers would
pay different amounts of contribution in respect of employees in the same wage
scale or grade.
16. It is important to explain here that there should be no possibility of an
option in regard to new employees as between contribution to EPF or contribution to
the new scheme.
A social insurance scheme can only operate successfully and
achieve its objectives if it is a compulsory scheme.
17. Although the expert is assuming that the contribution to EPF will continue
at the present or a reduced rate, he feels that when the relative policy issues are
considered it may be useful for the policy planners to know what would be the
implications of an alternative approach.
- 73 -
18. The main alternative would be that when the new scheme comes into force,
employed persons covered by the scheme will no longer be liable to pay contributions to EPF.
It is emphasised that in the present circumstances this is being
put forward only as a hypothetical possibility, and not as a recommendation.
This
assumption presents the following two principal alternatives:
Alternative (1):
Insured persons members of EPF (a)
will receive their EPF balance when they qualify for. it and they will
be given the option to convert the said balance into a life annuity
based on the amount of the EPF lump-sum benefit:
(b) will earn entitlement to social security benefits on the basis of
their contributions from the date they join the new scheme.
This alternative needs no explanation except in regard to the annuity which
is explained in paragraph 27 below.
Alternative (2):
Insured persons members of EPF will have their EPF balance transferred to the
new scheme.
They will be credited with contribution periods prior to the
inception of the scheme in accordance with the amount of their individual
EPF balance.
19. This alternative (2) would enable the persons concerned and their
survivors to earn social security pensions at a higher rats,, as these benefits
Will be related to periods of contribution.
The effect of this arrangement is
illustrated in very general terms in the examples which follow.
20. The "credited contribution" to which reference is made hereinafter will
be contributions credited to the insured person when he is exempted from liability
to pay.
Such exemption will apply when a person is incapacitated for work for a
whole contribution period, viz. one month.
Age Pension
21. In the new scheme it will be proposed that normally (see paragraph 22(c)
below) an insured person becomes entitled to a minimum rats of age pension on completing a period of 15 years' insurance.
This minimum rate may be 40 per cent or a higher rate if the financial
resources of the scheme will permit.
For every 12 monthly contributions paid or
credited thereafter, the insured person will earn an additional 1 per cent over
the minimum rate of 40 per cent (or any other minimum rate) up to a maximum of
<>0 per cent.
22. It is proposed that the .KFF balance of an insured purson will be converted into contributions under the scheme on the basis of a simple practical
formula to be devised.
Assuming that the balance of an insured person is
converted into 120 monthly contributions (viz. ten years), the resulting pension
rates will be as follows:
(a)
The person who completes just 15 years' insurance will have a pension rate
of 50 per cent made up of 40 per cent earned from 15 years' insurance, and
10 per cent yielded by the EPF balance.
(b) Another person who completes 20 years' insurance will have a pension rate
of 55 per cent (viz. 45 per cent from 20 years' insurance and 10 per cent
from the EPF balance).
(c)
Transitional provisions will be proposed to enable persons who join the
new scheme at a high age, which leaves them less than 15 years to pensionable age, to qualify for the minimum pension rate.
For instance, it may
be made possible for a person who joins the new scheme at an age which is
between three and four years before pensionable age to qualify for a minimum
pension at 40 per cent if he pays only 36 monthly contributions.
An EPF
member who qualifies under these transitional provisions may have this rate
of 40 per cent increased by another 10 per cent in respect of his EPF balance.
- 74 -
(d)
A person who completes say only five years' insurance because of a long
non-insurance period and therefore' does not qualify for special consideration under subparagraph (c) above, may still earn a minimum pension of
40 per cent if he transfers an EPP balance which gives him the equivalent
of ten years' insurance.
23. It is explained that the methods of converting EPP balances under this
second alternative would not provide strict individual equivalence, as the past
accumulation of balances is being pooled, to some extent, as future contributions
will be.
Special provisions may be devised to provide for cases where large
balances would be transferred.
Survivors
24. The pension payable to a widow and the children will be a percentage of
the pension which the deceased insured person was receiving or would have been
entitled to receive at the time of his death.
Thus, if the widow's pension will
be 60 per cent of the pension and 20 per cent for each child under 16 years, a
widow and two children would receive between them the full pension which would .
have been payable to the deceased insured person.
Therefore, where the i-nsurance
period is enhanced by the conversion of the lump sum, the survivors would also
benefit.
Invalidity Pension
25. An insured person who becomes an invalid after paying three years'
insurance contribution would similarly benefit.
His survivors would also benefit
in'the same way.
Short-Term Benefits
26. Persons who transfer their EPP balance may become entitled to sickness
and maternity benefit immediately after.
Annuity
27. The annuity to which reference is made in the foregoing paragraphs will
be an annuity for life.
It may also include an annuity for survivors.
It will
be distinct from the pensions earned from contributions to the new scheme.
General Observations
The Merits of Social Insurance
28. The system of social insurance under which existing and proposed benefits
will be provided has certain outstanding merits which include the following:
(a)
The system can be effectively used to pool the resources of higher and
lower income groups and to share the risks of workers in the different
sectors of economic activity .and in different occupations;
(b)
It can make better provision for social needs on a national basis in the
event of the common contingencies of life (sickness, invalidity, old age,
etc.) without any loss of human dignity.
(c)
It permits the periodical revaluation of pensions in relation to any rise
in the general level of earnings resulting from increases in the cost of
living.
(d)
It offers the possibility of making special transitional provisions in
favour of aged entrants into insurance, as explained above.
- 75 -
Reserves
29. The new scheme will build up reserves which constitute an important
aspect of the financing of pensions schemes.
The rate of growth of the reserves
will depend upon the financial system adopted as explained in Appendix A
(paragraph 4 ) .
Conclusion
30. Any policy guidelines which can be given at this stage will enable the
experts to make more definite recommendations in regard to the new scheme.
17 May 1977.
J. Vella-Bonnici,
Social Security Planning and
Legislation Expert.
- 76 -
APPENDIX A
SUPPLEMENTARY NOTE BY THE SOCIAL SECURITY ACTUARY
1.
Characteristic Feature of a Pension
Scheme's Benefit Outgo
In the case of a newly introduced pension scheme, the annual expenditure on
benefits will begin at a very low level - unless the scheme assumes pension
liabilities in respect of those who are already retired, widowed, etc. on the
starting date - and will increase continuously for a very long period.
This is
because not only will there be more and more surviving pensioners, but each new
crop of pensioners will be drawing higher rates of pension due to longer insurance
periods compared to previous generations of pensioners.
This is true even if
transitional provisions are incorporated enabling older entrants into the scheme
at the outset to draw benefits after shorter contribution periods, although in
this case the benefit expenditure may build up at a steeper rate.
This feature of a pension scheme leads to the situation that theoretically
a variety of methods is available to finance the scheme.
The main systems of
financing applied in social insurance are described in the following section.
2.
Financial Systems
2.1
The Pure Assessment System
Under this system, also known as the "pay-as-you-go" system, the contribution
rate is assessed for a short period - e.g. one year (annual assessment) - so as
to be sufficient to meet the expenditure of the scheme in that period, possibly
with a small margin for contingencies.
However, if this method of financing is applied to a new pension scheme, the
contribution rate will begin at a very low level and will need to be revised
upwards very frequently - even annually under the annual assessment system.
Further, no sizeable reserve will accumulate under this system, apart from a small
contingency reserve whose purpose is to enable the scheme to face the strain of
adverse experience or random fluctuations in the experience.
2.2
The General Average Premium System
Under this system, a rate of contribution is assessed so as to be sufficient
to ensure indefinitely the stability of the contribution rate.
This rate is
obtained by equating the discounted probable value of contributions of persons
insured at the start of the scheme and of future entrants into the scheme, to
the discounted probable value of benefits to both initial and future entrants.
This system promises the most stable level of the contribution rate, but in
practice there may be changes requiring a review of the contribution rate because
the actual experience under the operation of the scheme may diverge from the
assumptions under which the contribution rate was initially calculated.
This system will lead to the accumulation of a substantial reserve fund.
However, a relatively very high contribution rate will have to be applied from the
very beginning.
2.3
Intermediate Systems
Among the variety of available systems intermediate between the two extreme
systems described above, particular mention should be made of the scaled-premium
system of financing social insurance pension schemes.
This system was considered
by the Actuarial Subcommittee of the ILO Committee of Social Security Experts (1964)
as being most appropriate for financing social security pension schemes in developing countries.
- 77 -
The scaled-premium system seeks to ensure that within a limited period of
say 15, 20 or 25 years called a period of equilibrium, the contribution rate remains
constant and the reserve fund never decreases.
This means that within each period
of equilibrium the contribution Income plus the interest from investments will
exceed the expenditure of the scheme.
The system is so designed that the contribution rate is revised before the moment is reached when contribution income plus
interest on investments will no longer be sufficient to cover the expenditure;
the enhanced contribution rate will operate over a new period equilibrium until it
is revised in its turn, and so on.
The rate of accumulation of reserves under this system will depend upon the
length of the period of equilibrium.
Thus, short periods of equilibrium would
result in a low initial contribution rate needing to be revised rather frequently
and also in a low degree of accumulation of funds, thereby approaching the system
of annual assessment.
On the other hand, long periods of equilibrium would result
in a relatively higher initial contribution rate and a higher degree of accumulation of funds, consequently approaching the general average premium system.
It
may be added that the successive periods of equilibrium need not necessarily be
of equal durations, so that a further variety of possibilities exists within this
framework.
3.
Choice of Financial System
The main considerations which arise in connection with the choice of the
financial system for a social insurance pension scheme are the following:
(i)
(ii)
(iii)
the rate of accumulation of reserve funds which i3 necessary and
desirable;
the concern to keep contribution rates as stable as possible;
the extent to which insured persons and employers may bo expected
to contribute, given their economic condition and taking into account
any contributions they already pay to existing provident funds or
other schemes.
The scaled-premium system provides a flexible method of financing social
insurance pension schemes which can be adapted to the initial conditions in the
country as well as to changing conditions, giving due weight to the factors
outlined above.
The long-term implications of any given financial system should however be
appreciated.
If a pension scheme is started with low contribution rates in the
initial stages it is inevitable that the ultimate costs in the long run will be
higher than what they would have been, if higher contribution rates had been
applied in the earlier years.
This is because in the latter case higher reserves
would have accumulated and the corresponding higher interest income would cease
the burden of contributions in the long run.
4.
Accumulation of Reserves
As explained above, the pattern of accumulation of reserves will depend upon
the financial system adopted.
The highest accumulation occurs under the general
average premium system.
The rate of accumulation of reserves under the scaledpremium system depends upon the length of the periods of equilibrium - the longer
the periods, the higher the accumulation.
Finally, there is practically no
accumulation under the pure assessment system.
One point should be emphasised here: a fundamental principle underlying the
scaled-premium system described above is that the reserves are not to be used to
meet the current expenditure-of the scheme.
The function of the reserve fund is
to produce income by way of interest, which along with current contributions, is
used to meet the current expenditure; the balance, if any, is again invested.
This principle enables the reserves to be invested in suitable long-term securities, which in the normal course need never be realised.
- 78 -
5.
Financing of the Pensions Scheme on
the Assumption of Transfer oT
Employees' Provident Fund BaTances
In alternative (2) presented in paragraph 18 of the memorandum by the Social
Security Planning and Legislation Expert, it is envisaged that balances of EPF members
who are subject to the social insurance pension scheme will be transferred to the
scheme, and appropriate periods of pre-scheme contribution will be credited to
individual members.
Due to the effect of pre-scheme credits, the pension rates will be high right
from the start, so that annual benefit expenditure will grow vory steeply.
However, the substantial reserve fund which will be available from the start
(specifically, the interest income from this fund) would ease the contributory
burden at the outset.
It is possible to develop a scaled-premium system of financing for the scheme
with any desired level of the initial contribution rate, taking due account of the
interest income from the initial reserve fund.
On the other hand, the precedent
set by the EPF by applying a combined employer-employee contribution rate of
10 per cent of wages or salaries from its inception, which was recently raised to
13 per cent, may oblige the pension scheme to continue to apply a contribution rate
of this order.
If this should be case, it is likely that the reserve fund will continue to
accumulate for several years at a rate which may not compare unfavourably with the
accumulation which would have resulted had the EPF continued unchanged. Naturally,
if the scheme is started on a lower scaled-premium contribution rate, it would
need to be revised earlier, and the reserve fund would also accumulate at a lower
rate.
The point is however stressed that whatever the system of financing applied,
provided the principle of not using the reserves to meet current expenditure is
followed, existing investments need not be disturbed.
17 May 1977.
S.N. Iyer
Social Security Actuary.
- 79 -
APPENDIX IV
DRAFT BILL
AGREEMENT OF SECTIONS
PART I
PRELIMINARY
ection
1.
2.
Short title, extent, commencement and application.
Definition.
PART II
f
INSURABILITY AND CONTRIBUTIONS
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Applicability.
Registration of industries. .
Persons to be insured.
Contributions payable in respect of employees.
Employment by more than one employer.
Recovery of contribution from immediate employer.
Employers to maintain and furnish prescribed information.
Rates of contributions.
Voluntary insurance.
Voluntary annuity scheme.
General provisions as to payment and collection of contributions.
PART III
BENEFITS
14.
15.
Description of benefits.
Entitlement to and rate of benefit.
Sickness Benefit
16.
Sickness Benefit.
Maternity Benefit
17.
Maternity Benefit.
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Invalidity Benefit
Invalidity Benefit.
Age Benefit
Age Benefit.
Survivors' Benefit
Survivors' Benefit.
Benefit for Employment Injuries
Benefit for employment injuries.
Presumption as to accident arising in the course of employment.
Accidents happening while travelling in employer's transport.
Accidents happening while meeting emergency.
Dependants' benefit.
\
Prescribed Diseases and Injuries
Prescribed diseases and employment injuries not caused by accident.
Conditions for receipt of benefit in respect of prescribed disease
or injury.
Adjustment for successive employment accidents.
Other Benefit Provisions
Constant-Attendance Allowance.
Medical benefit in respect of employment injury or prescribed disease.
Other medical care.
Benefits not payable where work is performed.
Persons not to commute cash benefits.
Benefit and contribution not to be assigned or attached.
Overlapping benefits.
Deduction from wages.
Employer not to dismiss or punish employee during period of temporary
disablement.
(to be drafted)
Facilities for physical or vocational rehabilitation.
Organisation's power to cooperate with existing institutions or promote
measures for health, welfare, etc. of insured persons.
Establishment and maintenance of hospitals, clinics, etc.
Time and manner of making claims.
Payment of benefit.
Matters affecting entitlement to benefit to be reported to Organisation.
Repayment of benefit improperly received.
Disqualification for benefit.
- 81 -
ection
PART IV
DETERMINATION OF CLAIMS AND QUESTION
AND AtPElLS
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
Determination of questions as to insurability and contributions.
Determination of claims.
Determination of invalidity and permanent disablement questions.
Appeal from decision of medical board to appellate medical board.
Review of decisions by medical boards and appellate medical boards.
Constitution of Social Security Tribunal.
Appeals, questions and disputes to be determined by the Tribunal.
Institution of proceedings, etc. before the Tribunal.
Powers of the Tribunal.
Right to appear before the Tribunal and to act.
Reference to High Court.
Appeal to High Court.
Stay of payment pending appeal.
Review of decisions.
PART V
ADMINISTRATION, FINANCE AND AUDIT
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
76.
77.
78.
79.
80.
Administration of the Social Security Scheme.
Chief Executive Officer.
The Social Security Organisation.
Appointment of Board of Management.
Deputy Chairman to act as Chairman.
Sixth Schedule.
Cessation of membership of the Board.
Disqualification for membership of the Board.
Public Authorities Protection Ordinance 1948.
Public servants and public officers.
Board to give effect to Minister's directions.
Delegation of powers of the Board.
Administrative control of officers and servants by Director-General
Appointment of officers and servants.
Setting up Divisions, Regional Offices, etc.
Power to dispose of staff questions.
Power to make staff rules.
Social Security Advisory Council.
Cessation of membership of Council.
Disqualification for membership of Council.
- 82 -
Section
81.
82.
83.
84.
85.
86.
87.
88.
89.
90.
91.
92.
93.
94.
95.96.
Appointment may be revoked.
Fees and allowances.
Resignation of membership.
Functions of the Council.
Local Committees.
-Social Security Fund.
Purpose for which the Fund may be expended.
Expenditure and administration.
Holding of property etc.
Investment of Funds.
Raising of loans.
Budget estimates.
Accounts.
Audit.
Annual report.
Annual report to be laid before the House of Representatives.
97.
98.
Actuarial review.
Duty of Board to review benefits.
PART VI
ENFORCEMENT PENALTIES AND LEGAL PROCEEDINGS
ENFORCEMENT
99.
100.
101.
102.
Appointment of inspectors.
Duty to submit to inspection.
Recovery of contributions.
Offences and penalties.
103.
104.
Prosecution.
Civil proceedings.
PART VII
MISCELLANEOUS PROVISIONS
105.
106.
107.
108.
109.
110.
Exercise of powers and functions of the Organisation.
Exemption from stamp duty.
Persons employed aboard ships, vessels or aircraft.
Reciprocity agreements.
Exemption of industries and persons, etc.
Exemption of industries belonging to Government or Local Authority.
- 85 -
111.
112.
113.
114.
115.
116.
i
Contributions etc. due to Organisation to have priority over other debts.
Recovery of debt due to Organisation.
Power to remove difficulties.
Power of the Minister to make regulations.
Regulations to be laid before House of Representatives.
Repeal.
FIRST SCHEDULE.
- 84 -
DRAFT BILL
PART I
PRELIMINARY
Short title,
extent,
commencement and
application.
(1) This Act may be cited as the Social Security Act 1978.
(2) Subject to sub-section (3) below, this Act shall apply
throughout Malaysia.
(3) This Act shall come into force on such date or dates as the
Minister may, by Order published in the Gazette, appoint and
different dates may be appointed for different provisions or
different purposes of the Act and for the same provision for the
same purpose in relation to different cases or classes of cases,
and for different States or for different parts thereof.
(4) Any order made under sub-section (3) above may contain such
incidental or supplementary provisions as appear to the Minister
to be necessary or expedient for the orderly implementation of
the provisions and purposes of the Act.
Definition.
In this Act unless the context otherwise requires (1) "adopted" means in reference to any child, a child adopted
in accordance with the provisions of the Adoptions Ordinance,
1952, or a child who has been registered under the provisions
of the Registration of Adoptions Ordinance, 1952;
(2)
"beneficiary" in relation to any benefit, means the person
entitled to that benefit;
(3) "benefit" means benefit under this Act;
(4) "Board" means the Board of Management established under
section 64;
(5) "claimant" means a person claiming any benefit under this
Act;
(6) "contribution" means contribution payable under this Act;
(7) "Council" means the Social Security Advisory Council
established under section 78;
(8) "dependant" means any of the following relatives of a
deceased insured person, namely (a) a widow, minor legitimate or adopted son, an unmarried
legitimate or adopted daughter or a widowed mother; and
(b) if wholly dependent on the earnings of the insured
person at the time of his death, a legitimate or adopted
son or daughter who is over sixteen years of age and is
infirm and is incapable of earning any wages; and
(c) if wholly dependent on the earnings of the insured
person at the time of his death (i)
a parent other than a widowed mother;
(ii) a minor illegitimate son, an unmarried illegitimate daughter or a daughter legitimate or
adopted or illegitimate if married and a minor
or if widowed and a minor;
(iii) a minor brother or an unmarried sister or a
widowed sister if a minor;
(iv) a widowed daughter-in-law;
a minor child of a pre-deceased son;
(v)
(vi) a minor child of a pre-deceased daughter where no
parent of the child is alive; or
(vii) a paternal grandparent if no parent of the
insured person is alive.
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(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
"Director-General" means the Director-General of the
Organisation;
"duly appointed" means appointed in accordance with the
provisions of this Act or with regulations made thereunder;
"employee" has the meaning assigned to it in Part I of the
First Schedule but does not include a person of the description specified in Part II of the Schedule;
"employment injury" means a personal injury to an employee
caused by accident arising out of and in the course of an
employee's employment and includes a prescribed disease or
personal injury due to the nature of that employment and
developed after the appointed date in relation to that
employee;
"Government" means the Government of Malaysia;
"immediate employer" in relation to employees employed by or
through him, means a person who has undertaken the execution
on the premises where the principal employer is carrying on
his trade or business, profession, vocation, occupation or
calling, or under the supervision of the principal employer
or is preliminary to the work carried on in, or incidental
to the purpose of, any such trade or business, profession,
vocation occupation or calling, and includes a person by
whom the services of an employee who has entered into a
contract of service with him are temporarily lent or let on
hire to the principal employer;
"industry" means any business, trade, undertaking,
manufacture or calling of employers, and includes any calling,
service, employment, handicraft or industrial occupation or
avocation of employees;
"insured" means insured under this Act;
"Minister" means the Minister charged with responsibility for
labour;
"minor" means a person who is under sixteen years of age;
"month" means a month reckoned according to the Gregorian
calender;
The expressions "occupier" and "factory" shall have
respectively the meanings assigned to them in the Factories
and Machinery Act, 1967;
"Organisation" means the Social Security Organisation;
"permanent partial disablement" means such disablement of a
permanent nature, as reduces the earning capacity of an
employee in every employment which he was able to undertake
at the time of the accident resulting in the disablement;
"permanent total disablement" means such disablement of a
permanent nature, as disables an employee for all work which
he was capable of performing at the time of the accident
resulting in such disablement;
"prescribe" means prescribed by regulations;
"principal employer" means the owner of an industrie or the
person with whom an employee has entered into a contact of
service or apprenticeship and includes (a) the occupier of a factory;
(b) the legal representative of a deceased owner or
occupier;
(c) any government in Malaysia, department of any such
government, local authority or statutory body, and,
where an employee is employed with any such government,
department, authority or body or with any officer on
behalf of any such government department, authority or
body, the officer under whom such employee is working;
- 86 -
Provided that no such officer shall be personally liable
under this Act for anything in good faith done or omitted to
be done by him as an officer of ouch employer;
(26)
"registered medical practitioner" means a medical practitioner
registered under the provisions of the Medical Registration
Ordinance, 1952, and unless otherwise specified, medical
practitioner shall be construed accordingly;
(27)
"regulations" means regulations made by the Minister under
this Act;
"relevant accident" and "relevant injury" mean respectively,
in relation to disablement benefit or dependants' benefit,
the accident and injury in respect of which any of the said
benefits is claimed or payable;
(28)
(29)
(30)
"Schedule" means a Schedule to this Act;
"temporary disablement" means a condition resulting from an
employment injury which requires medical treatment and
renders an employee, as a result of such injury, temporarily
incapable of doing the work which he was doing prior to or
at the time of the injury;
(31)
"Tribunal" means the Social Security Tribunal appointed under
section 52 of this Act;
"Wages" means all remuneration payable in money by an
employer to an employee including any payment in respect of
leave, holidays, overtime and extra work on holidays but
does not include -
(32)
(a)
any contribution paid by the principal employer or the
immediate employer to any pension fund or provident
fund, or under this Act;
(b) any travelling allowances or the value of any travelling
concession;
(c) any sum paid to an employee to defray special expenses
incurred as a result of his employment;
(d) any gratuity payable on discharge or retirement;
(e) annual bonus;
(f) any other remuneration as may be prescribed;
(33) For the porposes of this Act (a) a person shall be deemed to be over or under a
particular age if he has or, as the case may be, has
not attained that age;
(b) a person shall be deemed to be between two particular
ages if he has attained the lower, but not attained
the upper of those two ages.
PART II
INSURABILITY AND CONTRIBUTIONS
Applicability.
3.
This Act shall apply to all industries other than industries
employing less than five employees:
Provided that the Minister may, subject to the condition of
previous publication in the Gazette, extend the provisions of this
Act to industries employing less than five employees.
Registfation of
Industries.
4.
Every industry to which this Act applies shall be registered
with the Organisation within such time and in such manner as may
be specified in the regulations.
- 87
Persons
to be
insured
(1)
Subject to the provisions of this Act, all employees over
the age of fourteen years in industries to which this Act applies
shall be insured in the manner provided by this Act.
(2)
Regulations may provide (a) for the circumstances in which an employee working
outside Malaysia in continuation of his employment in
Malaysia shall continue to be insured subject to such
conditions as may be prescribed;
(b) that specified classes of gainfully occupied persons
other than those mentioned in sub-section (1) above
shall be insured.
Contributions
payable
in respect of
employees.
(1). Subject to the provisions of this Act, contribution payable
in respect on an employee shall comprise the contribution payable
by the employer (hereinafter referred to as the "employer's
contribution") and contribution payable by the employee (hereinafter referred to as the "employee's contribution") and shall be
paid to the Organisation.
(2)
Except where regulations otherwise provide, a month shall be
the unit in respect of which contributions shall be payable under
this Act.
(3)
Except where regulations otherwise provide, the principal
employer shall pay in respect of every employee, whether directly
employed by him or through an immediate employer, both the
employer's contribution and the employee's contribution for each
month in respect of the whole or part of which wages are payable
to the employee, and for the purposes of this Act contributions so
paid by an employer shall be deemed to be contributions paid by
such employee.
(4)
Notwithstanding anything contained in any other written
law but subject to the provisions of this Act and the regulations,
the principal employer shall, in the case of an employee directly
employed by him, be entitled to recover from the employee the
employee's contribution by deduction from his wages and not otherwise.
Provided that no such deduction shall be made from any wages other
than such as relate to the period or part of the period in respect
of which the contribution is payable, or in excess of the sum
representing the employee's contribution for the period.
(5)
Notwithstanding any contract to the contrary, neither the
principal employer nor the immediate employer shall be entitled
to deduct the employer's contribution from any wage payable to an
employee or otherwise to recover it from him.
(6)
Any sum deducted by the principal employer from wages under
this Act shall be deemed to have been entrusted to him by the
employee for the purpose of paying the contribution in respect of
which it was deducted.
Employment by
more
than one
employer.
Recovery
of contribution
from
immediate
employer.
7.
(1)
Where an employee is employed successively or concurrently
in a month or part of a month by more than one employer, each
employer shall be liable to pay contributions with respect to the
wages paid by him to that person.
(2)
The provisions of sub-section (l) may be modified by
regulations.
(1)
A principal employer, who has paid contribution in
respect of an employee employed by or through an immediate
employer shall be entitled to recover the amount of the contribution so paid (that is to say the employer's contribution as well
as the employee's contribution, if any) from the immediate
employer, either by deduction from any amount payable to him by
the principal employer under any contract, or as a debt payable
by the immediate employer.
- 88 -
(2)
In the case referred to in sub-section (1), the immediate
employer shall be entitled to recover the employee's contribution
from the employee employed by or through him by deduction from
wages and not otherwise, subject to the conditions specified in
the proviso of sub-section (4) of section S.
Employers
to maintain and
furnish
prescribed
information
9.
(1)
Every principal and immediate employer shall submit to the
Organisation or to such officer of the Organisation as it may
direct such returns in such form and containing such particulars
relating to persons employed by him or to any industry in respect
of which he is the principal or immediate employer as may be
specified in the regulations made in this behalf.
(2)
Where in respect of any industry the Organisation has reason
to believe that a return should have been submitted under sub-section (1) but has not been so submitted, the Organisation may
require any person in charge of the industry to furnish such
particulars as it may consider necessary for the purpose of
enabling the Organisation to decide whether the industry is an
industry to which this Act applies.
(3)
Where the information specified in sub-section (1) and in the
regulations are not maintained, furnished or submitted to the Organisation or to any officer of the Organisation duly authorised
for the purpose the Organisation may, on the basis of information
available to it, by order determine the amount of contributions
payable in respect of any employer of that industry.
(4)
The order made by the Organisation under sub-section (1)
shall be sufficient proof of the claim of the Organisation under
section 53 or for recovery of the amount determined by such order
as a debt due to the Organisation under section 101.
Rat-es of
contributions.
10.
Voluntary
insurance.
11.
Regulations may provide (a) the conditions under which a person who ceases to be
liable to be insured may be insured as a voluntary
contributor;
(b) the circumstances in which a voluntary contributor may
cease to be entitled to be so insured;
(c) the rate of contributions payable by a voluntary
contributor;
(d) the conditions for entitlement to benefit; and
(e) the type and rate of benefit.
Voluntary
annuity
scheme
12.
Regulations may provide for the establishment of an annuity
scheme on a voluntary basis for specified classes of persons and
any such regulations may in particular provide (a) for determining the classes of persons who may become
members of the scheme;
(b) for different types of annuities including annuities
payable to survivors;
(1)
Regulations shall provide from time to time, for rates of
contribution payable by employers and such different classes of
insured persons as may be prescribed.
(2)
Regulations may provide for the fixing of contribution rates
on the basis of wages, income from any gainful occupation or in any
gainful occupation or in any other manner, and such regulations
may make different provisions for different classes of insured
persons.
(c)
for fixing from time to time the amount to be paid by
a person to become entitled to a specified type of
annuity;
(d) the period for which different types of annuities may
be payable.
- 89 -
13.
General
provisions
as to
payment and
collection
of contributions.
(1)
Subject to the provisions of this Act, regulations may provide for any matter relating or incidental to the insurability of
persons under this Act and without prejudice to the generality of
the foregoing power such regulations m;iy provide (a)
for the registration of employees and other persons
liable under this Act;
(b) for the payment and collection of contributions including
the time within which contributions are to be paid and
the procedure to be followed in remitting contributions
to the Organisation;
(c) for securing that liability to contribution is not
avoided or reduced by a person following in the payment
of wages or other form of remuneration any practice
which is abnormal for the employment in respect of
wages or other remuneration is paid;
(d)
(e)
(f)
(g)
(h)
for the maintenance of registers and records and the
particulars to be shown in such records;
for requiring employers and other persons to supply to
the Organisation, in such form and manner as may be
prescribed, records of wages and contributions paid,
and such information as may be required to determine
liability to contributions and entitlement to benefit;
the issue, sale, custody, production, inspection and
delivery of books or cards used for the purpose of
registration, contributions or benefit and for the
replacement of any such documents lost, destroyed or
defaced;
treating, for the purpose of any right to benefit
contributions paid after the due dates as paid on such
dates as may be prescribed, or as not having been paid;
for treating, as paid for the purpose of any right to
benefit, contributions payable by an employer on behalf
of an insured person but not paid when the failure to
pay is shown not to have been with the consent or
connivance of or attributable to any negligence on the
part of the insured person;
(i) for treating contributions of the wrong class or category
or at the wrong rate as paid on account of contributions
properly payable;
the return of contributions paid either in error or in
such circumstances that under any provision of this Act
or regulations, they fall to be repaid subject to the
deduction of any amount of benefit paid as a result of
such contributions;
requiring persons to apply for registration under this
00 Act.
Regulations may provide (a) for exempting insured persons and their employers from
liability to pay contributions under such conditions and
for such periods as may be prescribed and for crediting
contributions to insured persons in respect of such
periods;
(d)
(2)
(b)
(c)
for treating, subject to such conditions as may be
prescribed, contributions of a class or category paid
by or in respect of an insured person as if they wore
contributions of the same or another specified va'.lue in
another class or category;
for converting into contributions paid under this Act
under such conditions and for such benefits as may be
prescribed, balances standing to the credit of insured
persons under the Employees' Provident Fund Ordinance,
1951.
- 90 -
(3)
Regulations made with the concurrence of a competent
authority (being a Federal Government or a State Authority or a
statutory body) or any organisation approved by the Minister, may
provide in relation to prescribed classes of insured persons, for
the collection and payment of contributions and the payment of
benefits.
PART III
BENEFITS
Descriptions of
benefits.
14.
(l)
The benefits provided unter this Act shall be the following (a) sichness benefit;
(b) maternity benefit;
(c) invalidity benefit;
(d) retirement benefit;
(e) survivors' benefit;
(f) benefit in respect of employment injury.
(2)
Subject to the provisions of this Act, regulations may
provide (a) that all or any of the benefits specified in sub-section
(1) above shall be provided in respect of one or more
classes of insured persons and contributions;
(b)
Entitle15.
ment to,
and rate
of benefit.
(1)
(2)
for additional benefits.
Regulations shall provide (a) for the conditions to be satisfied for entitlement to
benefit by insured persons and persons claiming benefit;
(b) for the amount of or the rate at which any benefit
shall be payable;
(c) for the method of calculating the amount or rate of cash
benefit payable;
(d) for the date from which and the period up to which benefit shall be payable;
(e) for the circumstances in which entitlement to benefit
shall cease.
Regulations may provide (a) for a minimum and maximum rate of benefit and may
prescribe different minimum and maximum rates for
different benefits and for different classes of insured
persons;
(b) for the conditions subject to which the payment of benefit shall be made;
(c) for the circumstances in which the payment of benefit
shall be suspended or discontinued.
(3) In relation to persons in receipt of sickness benefit,
maternity benefit, invalidity benefit or disablement benefit regulations may (a) prescribe rules of behaviour to be observed by such
persons;
(b) provide that such persons shall attend for, or submit
themselves to any medical or other examination required
for the purposes of this Act;
(c) prescribe the medical certificates and other evidence to
be furnished to the Organisation.
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Sickness Benefit
Sickness
benefit.
16.
(1)
Subject to the provisions of this Act a person who satisfies
the prescribed conditions shall be entitled to sickness benefit at
the rate specified in the regulations in respect of any day of
incapacity for work.
(2)
For the purpose of this section a day shall not be treated
as a day of incapacity for work unless the persons concerned shows
in accordance with the regulations i)
that he is incapable of work on that day by reason of some
specific disease or bodily or mental disablement; or
ii)
that he has been advised by a registered medical practioner
or by a prescribed person to abstain from work on that day
because he is under observation by reason of his being a
carrier, or having been in contact with a case of infectious
'disease;
. (3)
Subject to sub-section (4) below, an insured person who has
attained pensionable age shall not be entitled to sickness benefit.
(4)
Regulations may provide (a) that an insured person over pensionable age shall be
entitled to sickness benefit;
(b)
(c)
for the conditions for entitlement to such benefit;
for the rate at which the benefit shall be payable.
Maternity Benefit
Maternity
benefit.
17.
(1)
A woman shall be entitled to maternity benefit by way of a
periodical payment at the rate specified in the regulations if (a) she is pregnant and has reached a stage in her pregnancy
which is not more than the prescribed number of weeks
before that in which it is to be expected that she will
be confined (hereinafter referred to as "the expected
week of confinement"); and
(b) she satisfies the prescribed conditions.
(2)
Except where regulations otherwise provide (a) if a woman dies during the period in which she is in
receipt of maternity benefit, the benefit shall not be
payable from the day subsequent to the day of her death
or from any other date as may be prescribed;
(b) a woman who has become entitled to maternity benefit
shall cease to be entitled to that benefit i)
if the pregnancy is terminated otherwise
than by confinement; or
ii)
if at any time before her confinement occurs
she fails without good cause to attend for,
or to submit herself to, any medical examination which may be required by the Organisation.
Invalidity Benefit
invalidity
benefit.
18.
(l)
Subject to the provisions of this Act, an insured person
shall be entitled to invalidity benefit if (a) he satisfies the prescribed conditions;
(b) ho is suffering from invalidity; and
(c) he shows to the satisfaction of the Organisation that he
has suffered from invalidity for such continous period
as may be prescribed.
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(2)
An insured person shall be considered as suffering from
invalidity, if by reason of a specific disease or bodily or mental
disablement of a permanent nature, he is incapable of engaging in
any substantially gainful activity.
(3)
For the purpose of sub-section (2) (a) a disease or disablement shall be deemed to be of a
permanent nature if it is either incurable or is not
likely to be cured;
(b)
a person shall be deemed to be incapable of engaging in
substantially gainful activity, if in consequence of the
specific disease or disablement, he is no longer capable
of earning, by work corresponding to his strength and
physical ability which, in view of his training and
former occupation, might reasonably be assigned to him
at the place of his employment or at a similar place
in the neighbourhood or in the same district, one-third
of the customary earnings of a mentally and physically
sound person with similar qualifications and training;
(c) in determining whether the claimant is suffering from
invalidity, account shall be taken of any permanent
improvement in the state of his invalidity which
results or is expected to result from such measures of
physical or vocational rehabilitation as may be offered
to him free of charge by the Organisation.
(4)
Subject to the provisions of this section and the regulations,
invalidity benefit provided under this section shall be (a) an invalidity pension payable throughout the duration
of invalidity at the prescribed rate; or
(b) an invalidity grant of an amount calculated as prescribed.
t
(5)
Subject to the provisions of this Act, the Organisation may
review the payment of an invalidity pension consequent upon the
improvement in the state of invalidity or a change in earning
capacity of the beneficiary, and as a result of such review the
pension may be discontinued or reduced as the case may be.
(6)
Without prejudice to other provisions in this Act and the
regulations relating to disqualification for receiving benefit,
the Organisation may suspend invalidity pension (a) for a period not exceeding twelve months if the
pensioner has acted fraudulently towards the Organisation in connection with any claim which he has made or
any payment which he has received;
(b) if and so long as the invalid pensioner i)
engages in any employment by virtue of which he
is liable to be insured or in any substantially
gainful activity without prior notice to the
Organisation;
ii)
fails without good cause to appear, as may be
directed by the Organisation, before a medical
board, a medical practitioner or any other
authority for verification of the existence or the
continued existence of his invalidity;
iii) refuses or neglects without good cause to comply'
with any directive issued to him by or on behalf
of the Organisation in regard to any process of
physical or vocational rehabilitation or vocational
training which he is required to undergo free of
charge; or
iv)
fails without good cause to submit himself to any
free medical treatment including fitting of
prosthetic appliances offered by the Organisation
for his invalidity or fails to carry out any
instructions of the medical practitioner in whose
care he is placed:
Provided that he shall not be required to undergo
any operation that is capable of endangering his
Life or health.
- 93 -
Retirement Benefit
Retirement
benefit.
19.
(1)
Subject to the provisions of this section, an insured person
shall be entitled to retirement benefit if (a) he has attained pensionable age; and
(b) satisfies the prescribed conditions.
(2)
The retirement benefit provided under this section shall be -
(a) retirement pension at the prescribed rate; or
(b) age grant of a prescribed amount.
(3)
Subject to the provisions of this section and the regulations,
pensionable age in relation to an employee under this Act shall be
the age of sixty years.
(4)
Subject to sub-section (8) below, retirement pension shall
not be payable to a person as long as he is or is deemed to be, an
employee under this Act.
(5)
Regulations may provide for a lower pensionable age in respect
of categories or classes of insured persons who have completed
prescribed periods of insurance or employment in such ardous or unhealthy occupations as may be specified in the regulations.
(6)
Without prejudice to sub-section (4) above, regulations may
provide for different pensionable age in relation to different
classes of insured persons.
(7)
Regulations may provide that retirement pension shall be payable to an employee or classes of employees, who have attained a
specified age below pensionable age, and any such regulations shall
prescribe the rate of pension and the conditions subject to which
the pension shall be payable.
(8)
Regulations may provide for the circumstances in which a
person who is, or is deemed to be an employee under this Act shall
be entitled to receive retirement pension.
(9)
Regulations may provide for the circumstances in which retirement pension shall not be payable to persons other than those
specified under sub-section (8) above, who are engaged in a gainful occupation of such kind or to or beyond such extent as may be
prescribed.
(10) Regulations may provide for (a) the deferment of claim for retirement pension to which
an insured person is entitled on attaining pensionable
age;
increments to be earned to the rate of pensionable
00 the
age in respect of contributions paid after that age;
(c) the conditions subject to which a claim for retirement
pension shall be deferred.
Survivors' Benefit
Survivors'
benefit.
20.
(1)
Subject to the provisions of this Act, survivors' benefit
shall be (a) a periodical payment where the deceased insured person
at the time of death (i)
was in receipt of an invalidity or retirement
pension; or
(ii) would have been entitled to receive invalidity
pension or retirement pension had he claimed
such benefit.
(b) a grant (that is to say lump sum payment) where the
deceased insured person at the time of his death would
have been entitled to invalidity grant or age grant had
he claimed such benefit.
- 94 -
(2)
Subject to the provisions of the regulations, the benefit
provided under sub-section (l) above shall be payable in relation
to the deceased insured person (a) to his widow;'
(b) to a legitimate or adopted unmarried son or daughter
who at the time of the death of the insured person (i)
(ii)
is under sixteen years of age; or
is between the age of sixteen and eighteen years
and shows to the satisfaction of the Organisation
that he is attending full-time education; or
(iii) is infirm and is wholly dependent on the earnings
of the deceased insured person as long as such
infirmity lasts or until marriage whichever is
earlier.
:
(3)
Regulations may provide for the circumstances in which the
widower of a deceased insured person who at the time of such
person's death (a)
is permanently incapable of work by reason of physical
or mental disablement; and
(b) is wholly dependent on the earnings of the deceased
insured person,
shall be entitled to survivors' benefit.
(4)
Where on the date of the death of the deceased insured
person no person specified in sub-sections (2) and (3) above is
entitled to survivors' benefit, such benefit shall be payable to
other dependants of the insured person as follows (a)
(b)
to a parent or grandparent;
to any other dependant until he attains his sixteenth
year of age.
Benefit for Employment Injuries
Benefit
for
employment
injuries.
21.
(1)
Subject to the provisions of this Act, where an employee
suffers an employment injury (a) temporary disablement benefit shall be payable to the
employee if he is as a result of the injury, incapable
of work;
(b) permanent disablement benefit shall be payable to an
employee if he suffers as a result of the injury permanent partial disablement or permanent total disablement:
Provided that where permanent disablement total or
partial, has been assessed provisionally for a limited
period or finally, the benefit provided under this
paragraph shall be payable for that limited period or,
as the case may be, for life;
(c) dependants' benefit shall be payable where an insured
person dies as a result of an employment injury;
(d) funeral benefit shall be payable where an insured
person dies as a result of an employment injury.
(2)
Except as may be provided in the regulations, benefit provided under this section shall not be available in respect of an
employment injury caused by an accident arising out of an in the
course of employment outside Malaysia unless such employment is
specified in Part I of the First Schedule.
(3)
Permanent disablement benefit shall not be payable if the
degree of disablement assessed in accordance with the provisions
of this Act or the regulations is less than one per cent.
- 95 -
(4)
Regulations shall provide for the person or persons to whom
funeral benefit shall be payable.
(5)
Regulations may provide (a) that where a person has received temporary disablement
benefit in respect of the same injury for an aggregate
period of six months, the Organisation shall require
such person to be examined by a medical board who shall
determine whether the disablement is permanent and in
such case to assess the degree of permanent disablement
in accordance with this Act;
(b)
for the circumstances and conditions under which
permanent disablement benefit and dependants' benefit
may be commuted into lump sum payments and the method
of calculating such commutation;
(c)
for the circumstances and conditions under which benefit
may be provided in respect of an employment injury
caused by accident arising out of and in the course of
employment outside Malaysia;
(d) for such matters as are incidental to the assessment of
the degree of disablement.
Pre22.
sumption
as to
aocident
arising in
the course
of employment.
Accidents
23.
happening
while travelling in
employer' s
transport.
For the purposes of this Act, an accident arising in the
course of an employee's employment shall be presumed, in the absence of evidence to the contrary, also to have arisen out of that
employment.
(1)
An accident happening while an insured person is, with the
express or implied permission of his employer, travelling as a
passenger by any vehicle to or from his place of work shall, notwithstanding that he is under no obligation to his employer to
travel by that vehicle, be deemed to arise out of and in the course
of his employment if (a) the accident would have been deemed so to have arisen
had he been under such an obligation; and
(b) at the time of the accident, the vehicle (i)
is being operated by or on behalf of his employer
or some other person by whom it is provided in
pursuance of arrangements made with his employer;
and
(ii)
(2)
Accidents
happening
while
meeting
emergency.
is not being operated in the ordinary course of a
public transport service except when the insured
person is himself an employee of the public
transport service concerned.
In this section "vehicle" includes a vessel and aircraft.
24.
An accident happening to an insured person in or about any
premises at which he is for the time being employed for the
purpose of his employer's trade or business, profession, vocation,
occupation or calling, shall be deemed to arise out of and in the
course of his employment, if it happens while he is taking steps,
on an actual or supposed emergency at those premises, to rescue,
succour or protect persons who are, or are thought to be or
possibly to be, injured or imperilled, or to avert or minimise
serious damage to property.
Dependants' 25.
Benefit.
(1)
If an insured person dies as a result of an employment injury sustained as an employee under this Act (whether or not he
was in receipt of any periodical payment for temporary disablement
in respect of the injury) dependants' benefit at the prescribed
rates shall be payable to his dependants as follows: -
- 96 -
(a)
to his widow during life or until remarriage and, if
there are two or more widows, the widow's share of
dependants' benefit specified in the regulations shall
be divided equally between the widows;
(b)
to each legitimate or adopted son until he attains his
sixteenth year of age: Provided that in the case of a
legitimate or adopted unmarried son over sixteen years
who is infirm and is wholly dependent on the earnings
of the insured person at the time of his death,
dependants' benefit shall continue to be paid while the
infirmity lasts;
(c) to each legitimate or adopted unmarried daughter until
she attains her sixteenth year of age or until marriage,
whichever is earlier:
Provided that in the case of a legitimate or adopted
unmarried daughter over sixteen years who is infirm and
is wholly dependent on the earnings of the insured
person at the time of his deaths dependants' benefit
shall continue to be paid while the infirmity lasts and
she continues to be unmarried:
And provided further that where it is shown to the
satisfaction of the Organisation that a person specified
in paragraph (b) or (c) of this subsection is attending
full-time education, benefit shall be payable until such
person continues such education or attains the age of
eighteen years, whichever is earlier.
(2)
If an insured person who dies as a result of an employment
injury does not leave (a) a widow;
(b) legitimate or adopted child, or
(c) a widower entitled to dependants' benefit in accordance
with any regulations made under sub-section (3) below;
Dependants' benefit shall be payable to the other
dependants specified in paragraph (c) of sub-section (3)
of section 2 of this Act at the rates and for the
duration specified in the regulations.
(3)
Regulations may provide that the widower of a deceased
insured person who has died as a result of employment injury
sustained as an employee under this Act, shall be entitled to
dependants' benefit at such rate and for such period as may be
prescribed if at the time of wife's death he (a)
is permanently incapable of self-support by reason of
physical or mental disablement; and
(b) is wholly dependent on her earnings and but for the
relevant accident would have been so dependent.
(4)
Regulations may provide that other specified relations of
the deceased insured person shall be entitled to dependants' benefit as may be prescribed.
Prescribed Diseases and Injuries
Prescribed 26.
diseases
and employment
injuries
not caused
by accident.
(1)
Subject to and in accordance with the provisions of this
section and of section 27 below a person who is insured under this
Act against personal injury caused by accident arising out of and
in the course of his employment shall be deemed to be insured also
against any personal injury not so caused, being a disease or
injury directly attributable to the nature of the employment and
developed on or after the appointed day.
- 97 -
(2)
A disease or injury may be prescribed for the purposes of
this Act in relation to any insured persons ±2 the Minister is
satisfied that (a) it ought to be treated, having regard to its causes
and incidence and any other relevant considerations, as
a risk of their occupations and not as a risk common to
all persons; and
(b)
it is such that in the absence of special circumstances,
the attribution of particular case3 to the nature of
the employment can be established or presumed with
reasonable certainty.
(3)
Regulations prescribing any disease or injury for the
purposes of this Act may provide that a person who developed the
disease or injury on or at any time after a date specified in the
regulation (being a date before the regulations came into force
but not before the appointed day) shall be treated for the
purposes of this Act, subject to any prescribed modifications as
if the regulations had been in force when he developed the disease
or injury.
(4)
Provision may be made by regulations for determining (a) the time at which a person is to be treated as having
developed any prescribed disease or injury; and
(b) the circumstances in which such a disease or injury is,
where the person in question has previously suffered
from it, to be treated as having recrudesced or as
having been contracted or received afresh.
(5)
Nothing in this section shall affect the right of any person
to benefit in respect of a disease which is a personal injury by
accident within the meaning of this Act, except that a person
shall not be entitled to benefit in respect of a disease as being
an injury by accident arising out of and in the course of his
employment if at the time of the accident the disease is in relation to him a prescribed disease by virtue of the occupation in
which he is engaged in that employment.
(6)
The provisions of section 22 above shall not apply to the
cases to which this section applies.
(7)
Except where regulations otherwise provide, benefit shall
not be provided under this section in respect of a disease which
is due to the nature of an employment in which the insured person
has been engaged only outside Malaysia.
Conditions
for receipt of
benefit in
respect of
prescribed
disease or
injury.
27.
(1)
Subject to any special provisions in this Act and to the
power to make different provisions by regulations, benefit payable
under section 26 in respect of a prescribed disease or injury, and
the conditions for receipt of benefit, shall be the same as in the
case of personal injury by accident arising out and in the course
of employment.
(2)
In relation to prescribed diseases and injuries, regulations
may provide (a) for modifying provisions of this Act relating to disablement benefit, and.the administration of such benefit;
and
(b) for adapting references in this Act to accidents.
(3)
Without prejudice to the generality of subsection (2) above,
regulations thereunder may in particular include provision (a) for presuming any prescribed disease or injury (i)
to be due, unless the contrary is proved, to the
nature of a person's employment where he was
employed in any prescribed occupation at the time
when, or within a prescribed period or for a
prescribed length of time (whether continuous or
not) before, he developed the disease or injury;
- 98 -
(ii) not to be due to the nature of a person's employment unless he was employed in some prescribed
occupation at the time when,, or within a prescribed
period or for a prescribed length of time (whether
continous or not) before, he developed the disease
or injury;
(b) for such matters as appear to the Minister to be
incidental to or consequential on provisions included
in the regulations by virtue of this section.
(3)
Regulations may make provision for the medical examination
of insured persons employed or about to be employed in specified
occupations.
Adjustment
for
successive
employment
accidents.
28.
(1)
Where a person suffers two or more successive accidents as
an employee under this Act he shall not for the same period be
entitled to receive disablement benefit in respect of the different
accidents at an aggregate daily rate exceeding the rate of disablement benefit to which he would be entitled in respect of disablement which was assessed at one hundred percent.
(2)
Regulations may provide for adjusting disablement benefit
payable in respect of successive accidents or the conditions for
the receipt of such benefit in any case where disablement benefit
has been commuted into a lump sum.
Other Benefit Provisions
Constantattendance
allowance.
29.
(1)
An insured person who is entitled to invalidity pension or
permanent total disablement benefit shall also be entitled to
constant-attendance allowance at the prescribed rate and so long
as he is so severely incapacitated as to constantly require the
personal attendance of another person:
Provided that the existence of the degree of incapacity qualifying
an insured person for cori3tant-attoiukuico allowance oha.ll bo
verified by a medical board or the appelate medical board or by
any other person as may be prescribed.
(2)
Except as regulations may otherwise provide, constantattendance allowance shall not be payable to an insured person for
any period during which he receives treatment as an inpatient free
of charge at a hospital or if the cost of such treatment is paid
in whole or in part by the Organisation.
Medical
30.
Benefit
in respect
of employment injury
or prescribed disease.
(1)
An insured person whose condition requires as a result of
employment injury, medical treatment and attendance shall be
entitled to receive such treatment and attendance hereinafter
referred to as "medical benefit".
(2)
Such medical benefit may be given either in the form of
outpatient treatment and attendance in a hospital or dispensary,
clinic or other institution or by visits to the home of the insured person or treatment as inpatient in hospital or other
institution.
(3)
An insured person shall be entitled to receive medical benefit only of such kind and on such scale as may be provided by the
Organisation, and the insured person shall not have a right to
claim any medical treatment except such as is provided by the
dispensary, clinic, hospital or other institution to which he is
allotted, or as may be provided by the regulations.
(4)
Nothing in this section shall entitle an insured person to
claim reimbursement from the Organisation of any expense incurred
in respect of any medical treatment, except as may be provided by
the regulations.
Other
medical
care.
(1)
Without prejudice to the provisions of section 30 of this
Act, regulations may make provision for medical care to prescribed
classes of persons.
31.
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(2)
Regulations made under sub-section (1) may provide (a) for the type and extent of medical care to be made
available;
(b) for the conditions for entitlement to medical care;
(c) for the period for which medical care shall be available;
(d) for the arrangements under which medical care shall be
provided.
Benefit
32.
not payable
where work
ia performed.
(1)
No person shall be entitled to sickness benefit, maternity
benefit or temporary disablement benefit in respect of any day on
which he performs remunerative work.
(2)
For the purpose of this section "remunerative work" mean3
any work performed as an employed or self-employed person from
which wages or profit would normally be derived and includes any
work for the purpose of trade, business or profession.
Persons
not to
commute
cash benefits.
(1)
Subject to sub-section (2) below, no person shall be entitled
to commute for a lump sum any periodical payment admissible under
this Act.
(2)
Regulations may prescribe the circumstances in which and the
extent to which commutation of permanent disablement benefit may
be allowed and the method of calculating the commutation value.
33.
Benefit and 34.
contribution
not to be
assigned or
attached.
(1)
Subject
or charge on,
benefit shall
benefit shall
behalf of the
to the provisions of this Act, every assignment of,
benefit and every agreement to assign or charge
be void; and, on the bankruptcy of.a beneficiary, the
not pass to any trustee or other person acting on
creditors of the beneficiary.
(2)
No cash benefit or contribution payable under this Act shall
be liable to attachment, sequestration or transfer in respect of
any debt or claim whatsoever or in execution of any decree or'
order of any court.
Overlapping
benefits.
35.
Deduction
36.
from wages,
(1)
Except where regulations otherwise provide, a person shall
not be entitled to the payment of more than one benefit under this
Act for the same period; but he shall be entitled to the benefit
which was first awarded or if the other benefit is payable at a
higher rate, to that other benefit as long as entitlement to such
other benefit continues.
(2)
Sub-section (1) above shall apply to any benefit payable to
or in respect of (a) the insured person; or
(b) the wife, husband or other dependant of that insured
person.
(3)
Regulations may provide for adjusting benefit payable to
persons specified in subsection (2) above and the conditions for
its receipt.
(1)
Subject to the provisions of section 6 and of this Act and
of sub-section (2) below, no employer by reason only of his
liability for any contributions payable under this Act shall (a)
(b)
directly or indirectly reduce the wages of any employee;
discontinue or reduce benefits to which an employee is
entitled under his contract of service which are similar to benefits conferred by this Act;
(2)
Notwithstanding the provisions of any other written law,
regulations may provide that where an employee is entitled to any
specified benefit under this Act similar to any benefit payable to
him under any other written law or under his contract of service,
the employer may discontinue or reduce the benefit payable under
such other enactment or contract of service by an amount not exceeding the amount of benefit paid or payable under this Act.
- 100 t
(3)
For the purpose of sub-section (2) above, a person who has
not claimed benefit but would have been entitled to the benefit if
he had claimed it shall, unless or except so far as regulations
provide otherwise, be deemed to be entitled to the benefit for all
the purposes of this Act (except so as to confer a right to payment of the benefit).
Employer
37.
not to
dismiss
or punish
employee
during
period of
temporary
disablement.
38.
Employer's
liability
in the
case of
employment
injury.
38.
(1)
No employer shall, except as provided in the regulations,
dismiss, discharge, or reduce or otherwise punish an employee
during the period he is in receipt of temporary disablement
benefit.
(2)
No notice of dismissal or discharge or reduction given to an
employee during the period specified in sub-section (1) shall be
valid or operative.
^
A clause is to be drafted to take the place of the following
provisions in the present Act.
Alternative "A"
(1)
A person who suffers an employment injury as an employee
under this Act or his dependants shall not be entitled to obtain
compensation under the Workmen's Compensation Ordinance.
(2)
Where an employee or his dependants are awarded damages under
any law in respect of an injury which is an imployment injury under
this Act, the Court awarding such damages shall order the deduction of equivalent value of cash benefits paid or payable under
this Act from the total amount of damages so awarded.
(3)
Where benefit is paid or payable under this Act in respect
of an employment injury for which the employer is criminally responsible or which is due to his wilful action or to an offence
committed by him, the Organisation shall have the right to claim
from the employer reimbursement of (or "shall be reimbursed by the
employer") .the equivalent value of any benefit provided under this Act.
(4)
In subsections (2) and (3) above, the expression "equivalent
value" means in the case of
(a) cash benefit paid or payable as a periodical payment,
the capital value of such periodical payment assessed
in accordance with the regulations made under this Act.
(b) cash benefit - paid or payable as a hump sum benefit,
the amount of such benefit;
(c) benefit in kind, the value of such benefit as determined
by the Organisation.
Employer's 38.
hability in
the case
of employment injury.
Alternative "B"
(1)
Subject to subsection (2) below, employers covered by this
Act shall be exempt from other legal responsibilities for the
consequences of employment accidents and occupational diseases
arising out of the Workmen's Compensation Ordinance and any other
written law.
(2)
The provisions of subsection (1) above shall not apply to
the consequences of employment accidents and occupational diseases
for which the employer is criminally responsible or which are due
to his wilful action or to an offence committed by him.
(3)
An insured person who has suffered an employment injury as
a result of an accident referred to in subsection (2) above, or
his surviving dependants, may claim from the employer all damages
due under any law other than the Workmen's Compensation Ordinance,
without prejudice to their right under this Act:
Provided that the Court awarding damages under such law shall
order the deduction of the equivalent value of cash benefits paid
or payable under this Act from the total amount of damages so
awarded.
(4)
In the case of an employment accident specified in subsection
(2) above the Organisation shall have the right to claim (or "shall
be reimbursed by the employer") the equivalent value of any benefit
provided under this Act.
*
*
- 101 -
(4)
In subsections (3) and (4) above, the expression "equivalent
value" in the case of (a) cash benefit paid or payable as a periodical payment,
the capital value of such periodical payment assessed
in accordance with the regulations made under this Act;
(b) cash benefit paid or payable as a hump sum benefit, the
amount of such benefit;
(c) benefit in kind, the value of such benefit as determined
by the Organisation.
Facilities 39.
for physical or
vocational
rehabilitation.
(1)
An insured person suffering from or claiming to suffer from
invalidity or permanent disablement may be provided by the Organisation, froo of charge :fao.i '1 itiou for physical or vocational
rehabili tation.
Organisa40.
tions' s
power to
cooperate
with
existing
institutions
Or promote
measures for
health,
welfare, etc
of insured
persons.
(1)
The Organisation may, in addition to the scheme of benefits
specified in this Act, promote measures or cooperate with ex.i u t.i n<;
institutions for the improvement of the health, occupational
safety and welfare of insured persons and for the rehabilitation
and re-employment of insured persons who have been disabled or injured and may incur in respect of such measures expenditure from
the funds of the Organisation within such limits as may be
determined by the Minister.
Establish- 41.
ment and
maintenance
of hospitals,
clinics, etc.
(1)
The Board may establish and maintain such hospitals, clinics,
dispensaries and other medical and surgical services as it may
think fit for the benefit of insured persons.
(2)
The Board may enter into agreement with any Government,
local authority, private organisation or person, in regard to the
provision of medical treatment and attendance for insured persons,
in any area and payment of the cost thereof in full or in part.
Time and
manner of
making
claims.
42.
(2)
Facilities under sub-section (1) shall be of such nature and
scale and shall be provided to such insured persons and on such
conditions as may be specified by the regulations.
(3)
An insured person suffering from or claiming to suffer from
invalidity or permanent disablement may if the regulations so provide and if his condition so requires, be provided and renewed
when considered necessary free of charge prosthetic appliances of
such nature and scale and on such conditions as may be specified
by the regulations.
(4)
An insured person who undergoes measures of physical or
vocational rehabilitation or who is or is to be fitted with
prosthetic appliances may, where he is required to go outside his
place of residence be paid or reimbursed expenses reasonably incurred or to be incurred by him on travelling or maintenance in
connection with such'measures, or the fitting of prosthetic
appliances, on such scale and on such conditions as may be
prescribed in the regulations.
(2)
Measures under sub-section (1) may include provision of
artificial limbs and appliances, utilisation or creation of
opportunities for gainful employment under suitable conditions and
participation in the establishment or maintenance of convalescent
homes.
(1)
Subject to the provisions of this Act, it shall be a
condition of a person's right to any benefit (a) that he makes a claim therefor to the Organisation or
any prescribed authority within the prescribed time
in such form, in any manner and at any place as may be
required by the Organisation; and
(b) that he furnishes particulars and produces such
certificates, documents, information and evidence as
the Organisation may from time to time require for the
purpose of determining entitlement to benefit and for
that purpose attends at such office or place as the
Organisation may appoint.
- 1 0 2-
Payment
43.
of benefit.
(l) , Subject to the provisions of sub-section (2) below, where
any person is entitled to benefit (a) he shall receive payment in the manner and at the office
of the Organisation or at any other place as the
Organisation may from time to time determine or as may
be prescribed;
(b) the beneficiary or a person authorised to receive payment shall produce any documents and proof of identity
and entitlement as the Organisation may require.
(2)
Regulations may provide (a)
in respect of different benefits for the period to be
covered by each payment and that such payment shall be
made in arrears or in advance;
(b)
for determining the date of commencement and termination
of benefit and the date of commencement of any change in
the rate of benefit;
(3)
An insured person suffering from or claiming to suffer from
or claiming to suffer from invalidity or permanent disablement may
if the regulations so provide and if his condition so requires, be
provided and renewed when considered necessary free of charge prosthetic appliances of such nature and scale and on such conditions
as may be specified by the regulations.
(4)
An insured person who undergoes measures of physical or
vocational rehabilitation or who is or is to be fitted with
prosthetic appliances may, where he is required to go outside his
place of residence be paid or reimbursed expenses reasonably incurred or to be incurred by him on travelling or maintenance in
connection with such measures, or the fitting of prosthetic
appliances, on such scale and on such conditions as may be prescribed in the regulations.
Organisa40.
tion' s
power to
cooperate
with
existing
institutions
or promote
measures for
health,
welfare, etc
of insured
persons.
(1)
The Organisation may, in addition to the scheme of benefits
specified in this Act, promote measures or cooperate with existing
institutions for the improvement of the health, occupational safety
and welfare of insured persons and for the rehabilitation and reemployment of insured persons who have been disabled or injured
and may incur in respect of such measures expenditure from the
funds of the Organisation within such limits as may be determined
by the Minister.
(2)
Measures under sub-section (1) may include provision of
artificial limbs and appliances, utilisation or creation of
opportunities for gainful employment under suitable conditions and
participation in the establishment or maintenance of convalescent
homes.
Establish- 41.
ment and
maintenance
of
hospitals,
clinics, etc.
(1)
The Board may establish and maintain such hospitals, clinics,
dispensaries and other medical and surgical services as it may
think fit for the benefit of insured persons.
(2)
The Board may enter into agreement with any Government,
local authority, private organisation or person, in regard to the
provision of medical treatment and attendance for insured persons,
in any area and payment of the cost thereof in full or in part.
Time and
manner
of making
claims.
(l)
Subject to the provisions of this Act, it shall be a condition
of a person's right to any benefit (a) that he makes a claim therefor to the Organisation or
any prescribed authority within the prescribed time in
such form, in any manner and at any place as may be
required by the Organisation; and
(b) that he furnishes particulars and produces such
certificates, documents, information and evidence as
the Organisation may from time to time require for the
purpose of determining entitlement to benefit and for
that purpose attends at such office or place as the
Organisation may appoint.
42.
- 103 -
Payment of
benefit.
43.
Matters
44.
affecting
to benefit
to be
Organisation
s
" a
(1) Subject to the provisions of sub-section (2) below, where any
person is entitled to benefit (a) he shall receive payment in the manner and at the office
the Organisation or at any other place as the Organisation may from time to time determine or as may be
prescribed;
(b) the beneficiary or a person authorised to receive payment shall produce any documents and proof of identity
and entitlement as the Organisation may require.
(2) Regulations may provide (a) in respect of different benefits for the period to be
be covered by each payment and that such payment shall
be made in arrears or in advance:
(b) for determining the date of commencement and termination of benefit and the date of commencement of any
change in the rate of benefit;
(c) for extinguishing the right to payment of any sum by
way of benefit if payment is not obtained within a
prescribed period from the date on which the right is
to be treated under the regulations as having arisen;
(d) for enabling a person to be appointed to exercise, on
behalf of a claimant or beneficiary who is legally or
otherwise unable to act for the time being, any right
or power which the claimant or beneficiary may be
entitled to exercise under this Act and for authorising
a person so appointed to receive and deal with any sum
payable by way of benefit, on behalf of the claimant
or beneficiary;
(e) as to the circumstances in which any benefit which is
payable to one person may be paid to another person on
behalf of the former;
(f) for enabling an insured person or beneficiary to
nominate in writing in such form and subject to such
condition as may be specified in the regulations any
other person or persons to receive any cash benefit to
which the insured person or beneficiary himself may be
entitled at the time of his death;
(g) in connection with a person's death (i) for enabling a claim for benefit to be
made or proceeded with in his name;
(ii) for authorising payment or distribution of
benefit to or amongst persons claiming as
his personal representatives, legatees,
next-of-kin or creditors (or in cases of
illegitimacy of deceased persons, to or
amongst others); and
(iii) for dispensing with strict proof of title
of persons so claiming.
(3) Regulations may provide for such other matters as may be
necessary for the proper administration of benefit including (a) the adjustment of amounts payable by way of benefit to
avoid fractional amounts or to facilitate computation;
(b) the obligations of claimants and beneficiaries, persons
authorised to claim or receive benefit on behalf of
other persons, and employers.
(1) A person in receipt of any benefit under this Act shall report to the Organisation as soon as possible every event or fact
which affects or is likely to affect the continuance of the right
to benefit or the rate thereof.
The
^
Provisions of sub-section (1) above shall apply also to
person authorised to receive payment of benefit on behalf of
some other person.
- 104 -
Repayment
of benefit
improperly
received.
45.
(1)
Without prejudice to other provisions in this Act, if any
person by reasons of the non-disclosure or misrepresentation by him,
or by some other person acting on his behalf, of a material fact
(whether such non-disclosure or misrepresentation was or was not
fraudulent) has received any benefit to which he was;not entitled
he shall be liable to repay to the Organisation the value of the
benefit received and in the event of death of the beneficiary his
representative shall be liable to repay the value of the benefit
from the assets of the deceased, if any, in his hands:
Provided that where the beneficiary received the benefit as a
result of the non-disclosure or misrepresentation of another person, the Organisation may recover the value of the benefit from
such other person.
(2)
The amount recoverable under this section may be recovered
as a debt due to the Organisation.
(3)
Without prejudice to sub-section (2) above or any other
remedy, where any person is liable to repay any sum received by
him by way of benefit, that sum may be recovered by way of
deduction from any payment or benefit to which thereafter he may
become entitled.
(4)
The value of any benefits received, other than cash payments
shall be determined by the Organisation and its decision shall be
final.
(5)
Any sums paid on account of benefit to or on behalf of persons not lawfully entitled thereto, so far as not recovered, shall
be treated as expenditure on benefits and charged to the Social
Security Fund, hereinafter established.
Disquali46.
fication
for benefit
(1)
A person shall be disqualified for receiving sickness benefit
for a period not exceeding forty-two days if (a) he has become incapable of work through his own misconduct; or
(b) after he has been required by the Organisation to busmit himself to a medical or other examination, or to
medical treatment, he has without good cause refused
or failed to attend for, or to submit himself to, such
examination or treatment; or
(c) he has behaved in a manner likely to retard his recovery:
Provided that no person shall be disqualified for
receiving any benefit for refusal to undergo a surgical
operation not being one of a minor character.
(2)
A person in receipt of sickness benefit, maternity benefit
or temporary disablement benefit shall be disqualified for
receiving such benefit for a period not exceeding forty-two days
if he fails without good cause to observe prescribed rules of
behaviour:
Provided that benefit may be suspended until the beneficiary
complies with such rules.
(3)
Regulations may provide for disqualifying a person, for the
receipt of any benefit if he fails to make a claim therefor within
the prescribed time; but any such regulations shall provide for
extending, subject to any prescribed conditions, the time within
which the claim may be made in cases where good cause is shown for
the delay:
Provided that such regulations shall not provide for the payment
of any sum to any person on account of any benefit in respect of
any period more than six months before the date on which the claim
is made.
(4)
Except where regulations otherwise provide, but subject to
sub-sections (5) and (6) below, a person shall be disqualified for
receiving benefit for any period during which -
- 105 -
(a) he is absent from Malaysia; or
(b) is undergoing imprisonment or detention in legal
custody.
(5)
A person who is absent from Malaysia for any period shall not
be disqualified for receiving (a) retirement pension; or
(b) permanent disablement benefit, if the extent of the
disablement has been finally assessed.
(6)
Regulations may provide that where an insured person is disqualified for receiving a specified benefit under sub-section (4)
above, payment of the whole or any part of the benefit may be made
in such circumstances and subject to such conditions as may be
prescribed for the maintenance of the wife, or a legitimate or
adopted son or daughter of the insured person.
(7)
Regulations may provide for suspending or reducing benefit
payable to or in respect of a person during any period in which
he (a) is undergoing medical or other treatment as an inpatient in a hospital or other similar institution; or
(b) is being maintained in a home for elderly or handicapped
persons or at any other place, wholly or mainly at the
expense of the Organisation or the Government.
PART IV
DETERMINATION OF CLAIMS AND QUESTIONS
AM) APPEALS
Determina- 47.
tion of
question as
to insurability and
contributions
Determination of
claims.
48.
If any question arises as to (a) whether any person is or was an employee or is in a
class of persons who are liable to be insured under
this Act;
(b) whether a contribution is or was payable by or in
respect of any person under Part II of this Act and
the rate of contribution payable;
(c) the rate of wages or average daily wages of an employee
for the purposes of this Act;
(d) who is or was the principal employer of any employee;
(e) whether any person is entitled to have a contribution
credited to him for any period;
that question shall be determined by the Organisation after
such inquiry as the Organisation may deem necessary:
Provided that if the Organisation deemts fit, it may refer
such question to the Tribunal after ,",i.vi.n^ notice to any
person appearing to the Organisation to be interested.
Subject to the provision in this Part of the Act every claim
for benefit shall be considered by the Organisation who may (a) decide the claim in favour of the claimant; or
(b) decide the claim adversely to the claimant; or
(c) after giving notice in writing to the claimant refer
the claim to the Tribunal.
- 106 -
Determina- 49.
tion of
Invalidity
and
permanent
disablement
questions.
(1)
Subject to sub-section (3) below, the Organisation shall
refer a claim for invalidity or permanent disablement benefit to
a medical board appointed by the Minister to determine the medical
aspects of the claim, hereinafter referred to as the "invalidity
question", and the "permanent disablement question" in the case of
a claim for permanent disablement.
(2)
Subject to sub-section (3) below, any question whether an
employment injury is caused by a prescribed disease hereinafter
referred to as the "prescribed disease question" shall be referred
by the Organisation to a medical board to determine the medical
aspects of the claim.
(3)
(4)
Regulations may provide (a) for the aspects to be determined by a medical board in
the case of an invalidity question permanent disablement
question and prescribed disease question respectively;
(b) that in the case of a disablement question (i)
the degree of disablement shall be assessed in
the form of a percentage as shall be prescribed;
(ii) the period taken into account shall be specified;
and
(iii) where the assessment is limited to a definite
date, whether the assessment is provisional or
final shall be specified;
(c) for subsequent reference to a medical board of an
invalidity permanent disablement or prescribed disease
question in the case of a provisional assessment.
Regulations may provide (a) for the appointment constitution, functions and procedure of medical boards;
(b) that where a claim for invalidity benefit or permanent
disablement benefit fails on other statutory conditions
it shall not be referred to a medical board.
Appeal
50.
form
decision of
medical
board to
appellate
medical
board.
(1)
If the claimant or the Organisation is not satisfied with the
decision of a medical board such person or the Organisation may
appeal in the prescribed manner and within the prescribed time to
the appellate medical board appointed by the Minister.
(2)
Subject to the provisions of section 51 of this Act, any
decision of the appellate medical board shall be final.
(3)
Regulations may provide for the appointment of one or more
appellate medical boards as the Minister may deem necessary, and
for their procedure.
(4)
Regulations may provide that where a claimant for invalidity
benefit or permanent disablement benefit is called to appear before a medical board or, in the event of .an appeal by the Organisation, before the appellate medical board, in connection with the
determination of a relevant question he may be paid travelling and
other expenses incurred by him in connection with such appearance
in such cases and on such scale and subject to such conditions as
may be prescribed.
Review of
decisions
by medical
boards and
appellate
medical
boards.
(1)
Any decision under this Act of a medical board or the
appellate medical board may be reviewed at any time by the medical
board or the appellate medical board, as the case may be, if it
is satisfied by fresh evidence that the decision was given in
consequence of the non-disclosure or misrepresentation by the
employee or any other person of a material fact (whether the nondisclosure or misrepresentation was or was not fraudulent).
51.
- 107 -
(2)
Any assessment of the extent of the disablement resulting
from the relevant employment injury may also be reviewed by a
medical board, if it is satisfied that since the making of the
assessment there has been a substantial and unforeseen aggravation
of the results of the relevant injury:
Provided that an assessment shall not be reviewed under this subsection unless such board is of the opinion that, having regard to
the period taken into account by the assessment, substantial injustice will be done by not reviewing it.
(3)
Except with the leave of the appellate medical board, the
assessment shall not be reviewed under sub-section {?.) on any
application made less than five years, or in the case of a provisional assessment, six months, from the date thereof and on
such a review the period to be taken into account by any revised
assessment shall not include any period before the date of the
application.
(4)
Subject to the provisions of sub-section (3) above, a medical
board may deal with a case of review in any manner in which it
could deal with it on an original reference to it, and in
particular may make a provisional assessment notwithstanding that
the assessment under review was final; and the provisions of
section 49 shall apply to an application for review under this
section and to a decision of a medical board in connection with
such application as they apply to a case for disablement benefit
under that section and to a decision of a medical board in connection with such case.
Constitution of
Social
Security
Tribunal.
52.
(1)
The Minister shall, by notification in the Gazette appoint a
Social Security Tribunal (hereinafter referred to as the "Tribunal")
for such State or States or area or areas as may be specified in
the notification.
(2)
The Tribunal shall consist of a Chairman and two assessors.
(3)
Any person who is or has been a legal officer, a judicial
officer or is a legal practitioner of not less than ten years'
standing shall be qualified to be a Chairman of the Tribunal.
(4)
The assessors shall represent employers and insured persons,
respectively, and shall be nominated by the Minister in consultation with such organisations representing employers and insured
persons respectively as he may think fit.
(5)
The Chairman and assessors shall be appointed by the Minister
for such period and on such terms and conditions as he may
determine.
(6)
The Minister may in his discretion, appoint a panel of
persons to represent employers and a panel to represent insured
persons from among whom persons may be drawn to serve as assessors
as the Minister may direct, and such panels may be reconstituted
by him at intervals as he deems fit.
(7)
The Minister may, if he considers it expedient so to do,
revoke the appointment of the Chairman and of any assessor of the
Tribunal or on its panel.
(8)
A member of the Board shall not be eligible for appointment
as a Chairman or assessor of the Tribunal.
Appeals,
53.
questions
and disputes
to be determined by the
Tribunal.
(1)
An appeal shall lie to the Tribunal from any decision of the
Organisation (a) at the instance of the aggrieved person on any
question of law determined under section 47;
(b) at the instance of the claimant in the case of a
decision under section 48 of this Act.
- 108 -
(2)
Subject to the provisions of this Act, the Tribunal shall
determine (a) any question or dispute connected with (i)
the recovery of contributions under section 101;
(ii)
(to)
the recovery of contributions by a principal
employer from any immediate employer;
(iii) claim under section 45 for the recovery of the
value of amount or the benefits received by a
person when he is not lawfully entitled thereto;
and
(vi) any claim for the recovery of any benefit admissible under this Act.
any other matter which is in dispute between a principal employer and the Organisation, or between a
principal employer and an immediate employer, or between a person and the Organisation, or between an
employee and a principal or immediate employer, in respect of any contribution or benefit or other dues
payable or recoverable under this Act, or any other
matter required to be or which may be decided by the
Tribunal under this Act.
(3)
If in any proceedings before the Tribunal an invalidity or
disablement question arises and the decision of a medical board or
appellate medical board has not been obtained on the same and the
decision of such question is necessary for the determination of
the claim or question before the Tribunal, the Tribunal shall
direct the Organisation to have the question decided in accordance
with this Act and shall thereafter proceed with the determination
of the claim or question before it in accordance with the decision
of the medical board or the appellate medical board, as the case
may be.
(4)
No Civil Court shall have jurisdiction to decide or deal with
any question or dispute mentioned in sub-sections (1) and (2)
above or to adjudicate on any liability which by or under this Act
is to be decided by the Tribunal.
(5)
No Civil Court shall have jurisdiction to decide or deal with
any question or dispute which by or under this Act is to be decided
by a medical board or by an appellate medical board.
(6)
Regulations may provide for (a) the period within which notice of appeal is to be given
or application made under this section;
(b) the procedure of the Tribunal and the execution of its
decisions;
(c) the fee payable in respect of an application:
provided that no fee shall be payable in respect of an
appeal under section 47 or 40, or an application made
by the Organisation.
Institution 54.
or proceedings, etc.
before the
Tribunal.
(1)
Subject to the provisions of this Act and the regulations,
all proceedings under section 53 shall be instituted before the
Tribunal appointed for the area in which the insured person was
working at the time the question or dispute arose.
(2)
The Minister may transfer any matter pending before any
Tribunal in a State or area to any such Tribunal in another State
or area.
(3)
The Tribunal to which any matter is transferred under subsection (2) shall continue the proceedings as if they had been
originally instituted before it.
- 109 -
Powers
of the
Tribunal.
55.
(1)
The Tribunal shall have all the powers of a President of a
Sessions Court in respect of West Malaysia or a Magistrate of the
First Class in respect of East Malaysia, for the purpose of
summoning and enforcing the attendance of witnesses, compelling
the discovery and production of documents and material objects,
administering oath and recording evidence.
(2)
The Tribunal shall follow such procedure as may be prescribed.
(3)
All costs incidental to any proceedings before a Tribunal
shall, subject to such regulations as may be made in this behalf,
be in the discretion of the Tribunal.
(4)
A decision of the Tribunal shall be enforceable as if it
were a judgement of a Sessions Court in respect of West Malaysia
or a Court of a Magistrate of the First Class in respect of East
Malaysia, notwithstanding that the same may be in respect of
amount in excess of the ordinary jurisdiction of the said Court.
Right to
appear
before the
Tribunal
and to
act.
56.
(1)
The Director-General, an officer of the Organisation delegated by him or any prescribed person -
Reference
to High
Court.
57.
A Tribunal may submit any question of law for the decision
of the High Court and if it does so shall decide the question
pending before it in accordance with such decision.
58.
Appeal to
High Court.
(1)
Subject to sub-section (2) below, no appeal shall lie from
a decision of a Tribunal set up under this Act.
(2)
An appeal shall lie to the High Court from a decision of a
Tribunal if it involves a substantial question of law.
(3)
The period of limitation for an appeal under this section
shall be sixty days from the date the decision is made.
(a)
shall be enabled to make any application or do any act
which is required to be done;
(b) shall be entitled to appear before the Tribunal and
be heard.
(2)
Any application, appearance or act required to be made or
done by any person to or before a Tribunal (other than appearance
of a person required for the purpose of his examination as a
witness) may be made or done by a legal practitioner or by an
officer of a registered trade union authorised in writing by such
person, or with the permission of the Tribunal, by any other
person so authorised.
Slay of
payment
pending
appeal.
V).
Whort; (.he Organisation hus pri'Scn tod. an appeal, a^ai us I. a
decision of the Tribunal, that Tribunal may, and if so directed
by the High Court shall, pending the decision of the appeal,
withhold the payment of any sum directed to be paid by the
decision appealed against.
Review of
decisions.
60.
(1)
The Organisation, having given a decision on any claim or
question may review that decision at any time if it is satisfied (a) that the decision was given in ignorance of or was
based on a mistake as to some material fact; or
(b) that there has been a relevant change of circumstances
since the decision was given; or
(c) by fresh evidence that the decision was given in
consequence of non-disclosure or misrepresentation by
the claimant or any other person of a material fact
(whether the non-disclosure was or was not fraudulent);
or
(d) that the decision is no longer in accordance with the
provisions of the Act or the regulations as a result
of a change in relevant circumstances; or
(e) the decision was based on the determination of a
question by a medical board or an appellate medical
board and such determination is revised under
section 51 of this Act.
- 110 -
(2)
Subject to the provisions of this Act and the regulations,
the Organisation on such review as aforesaid, may direct that the
benefit he continued, discontinued, increased or reduced as
appropriate.
(3)
The Organisation shall not review a decision pending before
a Tribunal except with the permission or at the request of such
Tribunal.
(4)
A decision of a Tribunal given on a claim or question may be
reviewed by the Tribunal on reference from the Organisation if the
Tribunal is satisfied by fresh evidence that any of the circumstances specified in sub-section (l) above exist.
(5)
Regulations may provide for the procedure to be followed for
review of decisions under this section.
PART V
ADMINISTRATION, FINANCE AND AUDIT
Administration
of the
Social
Security
Scheme.
61.
(1)
The Scheme of Social Security embodied under the Act shall
be administered by the Social Security Organisation in accordance
with the provisions of this Act.
(2)
The general direction and superintendence of the Organisation shall vest in the Board of Management which shall be
established in accordance with the provisions of this Act from
such date as the Minister may appoint in this behalf by notification in the Gazette.
Chief
Executive
Officer.
62.
(l)
The Minister shall appoint a Director-General who shall be
the Chief Executive Officer of the Organisation.
(2)
The Minister may also appoint one or more Deputy DirectorGenerals.
(3)
The terms and conditions of service of the Director-General
and of the Deputy Director-General(s) shall be determined by the
Minister in consultation with the Minister of Finance.
The Social 63.
Security
Organisation
The Organisation shall be a body corporate with perpetual
succession and a common seal and may sue and be sued in its name
and, subject to and for the purposes of this Act, may enter into
contracts and may acquire, purchase, take, hold and enjoy movable
and immovable property of every description, and may convey,
assign, surrender, yield up, charge, mortgage, demise, reassign,
transfer or otherwise dispose of, or deal with, any movable or
immovable property or any interest therein vested in the Organisation upon such terms as it deems fit.
Appoint64.
ment of
Board of
Management.
(l)
There shall be appointed a Board of Management, hereinafter
referred to as the Board.
(2)
The Board shall be composed as follows (a) the Secretary-General, Ministry of Labour and Manpower
as Chairman;
(b) the Director-General of the Organisation as Deputy
Chairman;
(c) an officer representing the Ministry of Finance;
(d) two persons representing employers to be appointed by
the Minister in consultation with such organisations
representing employers as may be deemed fit for the
purpose by the Minister;
(e) two persons representing insured persons to be appointed
by the Minister in consultation with such organisations
representing insured persons as may be deemed fit for
the purpose by the Minister.
- Ill -
(3)
The appointment of members of the Board shall be notified in
the Gazette.
(4)
Members of the Board appointed under sub-sections 1(d) and (e)
shall hold office for such term and subject to such conditions as
the Minister may specifiy in the instrument appointing them.
(5)
The Board shall not be prevented from performing all its
functions, duties and obligations under this Act by any vacancy in
its membership:
Provided that the Minister shall take all possible steps so that
any vacancy among persons appointed in accordance with sub-sections
1(d) and (e) shall be filled as soon as practicable.
(6)
The Minister may nominate a Deputy Director-General to perform all the duties and functions of Deputy Chairman of the Board
in the absence of the Director-General.
(7)
The Minister may appoint an officer of the Organisation to
perform the duties of Secretary of the Board. The Minister may
also appoint an Assistant Secretary.
Deputy
Chairman
to a c t as
Chairman.
65.
(1)
If for any period the Chairman of the Board is temporarily absent from Malaysia or temporarily incapacitated through
illness, or for any other sufficient reason is unable to perform
his duties the Deputy Chairman shall perform the duties of Chairman during such period.
(2)
Should the office of Chairman become vacant for any reason,
the Deputy Chairman shall perform the duties of the Chairman until
such time as the vacancy is filled.
Sixth
Schedule.
66.
The provisions of the Second Schedule to this Act shall
apply to the Board.
Cessation
of
membership
of the
Board.
67;
(1)
Disqualifi- 68.
cation for
membership
of the
Board.
A member of the Board shall cease to be a member thereof (a) if he fails to attend three consecutive meetings without leave of the Board; or
(b) his appointment is revoked by the Minister.
(2)
A member of the Board appointed by the Minister under
Section 64(2)(d) and (2)(e) may resign his office by notice in
writing to the Minister.
A person shall be disqualified from being a member of the
(1)
Board
(a) if he is declared to be of unsound mind by a competent
court; or
0>) if he is an undischarged bankrupt; or
(c) if he has directly or indirectly by himself or by his
Partner any interest in a subsi.sting contract with or
any work being done for the Organisation except as a
medical practitioner or as a shareholder (not being a
Director) of a company; or
(d) if before or after the commencement of this Act, he has
been found guilty by a competent court in Malaysia or
outside Malaysia, of an offence involving fraud,
dishonesty or moral turpitude; or
if a member owes the Organisation past due contributions;
or
(f) if he subsequently becomes an officer or servant of the
Organisation other than the Director-General and the
Deputy Director-General(s); or
(e)
(g) if a member has become a member of a legislature.
(2)
Any cessation of membership of the Board in accordance with
the provisions of this section or of section 67 shall be notified
in the Gazette.
- 112 -
Public
69.
Authorities
Protection
Ordinance
1948.
Public
70.
servants and
public
officers.
The Public Authorities Protection Ordinance, 1948 shall apply to
any action, suit, prosecution or proceedings against the Board, or
against any of its members, any officer, servant or agent of the
Organisation in respect of any act, neglect or default done or
committed by him in such capacity.
Board to
71.
give effect
to Minister's
directions.
(1)
In the exercise of its powers and the performance of its
duties and functions under this Act, the Board shall be responsible
to the.Minister who may, from time to time, give directions not
inconsistent with the provisions of this Act, and the Board shall
as soon as possible, give effect to all such directions.
All members of the Board and officers and servants of the
Organisation while discharging their duties as such members,
officers or servants shall be deemed to be public servants within
the meaning of the Penal Code, and public officers for the purposes
of any written law for the time being in force.
(2)
The Minister may at any time require the Board to submit to
him proposals for the introduction of new social security schemes
or the modification or extension of the existing scheme as may be
necessary for the fulfilment of the Government's social policy
programmes.
Delegation
of powers
of the
Board.
72.
(1)
The Board may, subject to such conditions, limitations or
restrictions as it thinks fit, delegate to the Chairman, DirectorGeneral or any other person the power and authority to carry out
on its behalf such powers, duties or functions by this Act vested
or imposed on the Board as it may determine, except the power to
borrow money and raise loans, and the power or funktions so
delegated may be exercised or performed by the Chairman, DirectorGeneral or such other person as the case may be, in the. name and
on behalf of the Board.
(2)
Without prejudice to the generality of sub-section (l) above,
the Board may delegate to the Chairman, Director-General, any of
its members or any person, authority to sanction expenditure from
social security funds or any other monies under the control of
the Board, up to such limit as.it shall in such case specify.
Adminis73.
trative
control of
officers and
servants by
DirectorGeneral .
(1)
Subject to the directions of the Chairman of the Board, the
Director-General shall have administrative control of the officers
and servants of the Organisation.
(2)
The Director-General shall perform such other or further
duties as the Minister or the Board may from time to time
determine.
Appoint74.
ment of
officers
and servants.
(1)
Subject to the provisions of section 62, the Board may
appoint such other officers and servants cf the Organisation as
may be necessary for carrying out the purposes of this Act.
(2)
No person shall be eligible for employment as officer or
servant of the Organisation who has, directly or indirectly, by
himself or his partner, any share or interest in any contract or
proposed contract with, for or on behalf of the Organisation.
(3)
Any officer or servant of the Organisation who has or
acquires directly or indirectly by himself or his partner any
such share or interest shall be liable at the discretion of the
Board to summary dismissal without notice.
Setting up 75.
Divisions,
Regional
Offices,
etc.
76.
Power to
dispose of
staff
questions.
The Board may set up within the Organisation such Divisions
and regional and local offices as it may consider necessary for
the efficient functioning of the Organisation.
(1)
Subject to any other provisions in this Act and in staff
rules, the Director-General -
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(a)
shall dispose of all questions relating to the service,
pay, privileges and allowances of officers and servants
of the Organisation; and
(b) shall exercise the power of promoting, suspending, dismissing, fining, reducing in rank and granting leave to
officers and servants of the Organisation:
Provided that in the case of officers and servants whose
monthly salary exceeds five hundred dollars, such
powers, with the exception of granting or suspending
leave, shall not be exercised without the previous
approval of the Board.
(2)
The power of dispensing with the services of any officer or
servant of the Organisation for any reason other than the misconduct of such officer or servant shall be exercised by the Board
alone.
(3)
Any officer or servant aggrieved by a decision of the
Director-General in the exercise of his powers under this section
may appeal to the Board within such period as may be determined in
staff rules.
Power to
77.
make
staff rules.
(1)
With the approval of the Minister, the Board may, from time
to time, make staff rules relating to the conditions of service of
officers and servants (other than than the Director-General and
Deputy Director-General) of the Organisation:
Provided that in making such rules, the Board shall have regard to
rates of pay and other conditions of service applicable to officers
and servants of statutory bodies.
(2)
Without prejudice to the generality of the provisions of subsection (1) above, such rules may provide for matter:; specified .in
the Third Schedule.
Social
Security
Advisory
Council.
78.
(1)
The Minister may appoint a Social Security Advisory Council,
hereinafter referred to as the "Council",. consisting of (a) the Secretary-General, Ministry of Labour and Manpower
as Chairman;
(b) a number of officials and other persons as the Minister
may deem necessary, as members; and
(c) the Director-General of the Organisation as Secretary,
or any other officer of the Organisation authorised
by him in this behalf.
(2)
The members of the Council, other than a member in paragraphs (a) and (c) of sub-section (1) above, shall hold office' for
such term and subject to such conditions as the Minister may
specify in the instrument appointing them.
(3)
The appointment of members of the Council shall be notified
in the Gazette.
Cessation
of membership of
Council.
79.
Disquali80.
fication
for membership of
Council.
A member of the Council shall cease to be a member of that
body if he fails to attend three consecutive meetings thereof;
Provided that the Council may, subject to any regulations made
by the Minister in this behalf restore him to membership.
A person shall be disqualified from being appointed as or
for being a member of the Council (a) if he is declared to be of unsound mind by a competent
court; or
(b) if he is an undischarged bankrupt; or
(c) if he has directly or indirectly by himself or by his
partner any interest in a subsisting contract with, or
any work being done for, the Organisation except as a
medical practitioner or as a shareholder (not being a
Director; of a company; or
- 114 -
(d)
if before or after the commencement of this Act, he has
been convicted of an offence involving fraud, dishonesty
or moral turpitude.
81.
Appointment may
be revoked.
(1)
The Minister may at any time revoke the appointment of a
member of the Council.
(2)
All cessations of membership of the Council in accordance
with this section or with sections 79 and 80 shall be notified in
the Gazette.
82..
Members of the Board and the Council shall receive such fees
Fees and
and allowances as may from time to time be determined by the
allowances.
Minister in the instrument appointing them.
83.
Resignation of
membership.
A member of the Council may resign his office by notice in
writing to the Minister.
Functions
of the
Council.
(1)
84.
The functions of the Council shall be (a) generally to advise the Minister on matters relating to
social security; and
(b) to advise the Minister on any matter referred to it for
advice.
(2)
The Council shall perform such other functions as may be
specified by regulations.
Regional
Social
Security
Advisory
Councils
and Local
Committees.
85. (1)
The Minister may appoint one or more Regional Social Security
Advisory Councils, hereinafter referred to as Regional Councils,
consisting of (a) such persons including one officer of the Organisation
as the Minister may deem necessary; and
(b) a secretary nominated by the Director-General.
(2)
Members of the Regional Councils shall hold office for such
term and subject to such conditions as the Minister may specify in
the instrument appointing them.
(3)
The appointment of a Regional Council shall be notified in
the Gazette and shall operate in respect of such region or area as
shall be specified in the Gazette.
(4)
A Regional Council shall perform such functions and shall
follow such procedure as may be prescribed.
(5)
The Minister may appoint Local Committees and the provisions
of sub-sections (1) to (4) above shall apply mutatis mutandis.
(6)
The Minister may at any time revoke the appointment of any
person appointed on a Regional Council or Local Committee.
(7)
Members of a Regional Council and Local Committee may receive
such fees and allowances as the Minister may from time to time
determine.
(8)
Without prejudice to sub-section (6) above the appointment of
a member of a Regional Council or a Local Committee shall cease in
such circumstances as may be prescribed.
Social
Security
Fund.
86.
For the purposes of this Act, there shall be established,
under the control and management of the Organisation, the Social
Security Fund hereinafter referred to as the "Fund" into which
shall be paid (a) all contributions payable by or in respect of insured
persons;
(b) all rent, interest, dividend or other income derived
from the assets of the Fund;
(c) all sums properly accruing to the Fund under this Act,
including the re-payment of benefits;
- 115 -
(d) all sums recovered under this A.ct, ;i.s f.Lnou, loon,
penalties or costs and any interest on arrears of
contribution;
(e) such sums as may be provided by the House of Representatives from time to time to maintain the financial
equilibrium of the Fund having regard to the rate of
contribution required and benefits provided;
(f) such sums by way of grants, donations and gifts from the
Federal Government, a State Government, Local Authority,
or any individual or body whether incorporated or not,
for all or any of the provisions of this Act.
(2) The Minister, in consultation with the Minister concerned,
may authorise any Government Department or Statutory Body to receive on behalf of the Organisation contributions and other monies
payable or accruing to the Fund subject to such conditions as may
be prescribed.
(3) Regulations may provide that contributions payable under this
Act by certain classes of insured persons sha.11 be received on behalf of the Organisation by such other Organisations or persons and
subject to such conditions as may be specified in the regulations.
Purposes
87.
Subject to the provisions of this Act and the regulations,
for which the
the Fund shall be expended only for the following purposes,
Fund may be
namely e
Pn
"
(a) payment of benefits and provision of medical treatment
and attendance to insured persons or to their dependants,
as the case may be;
(b) establishment and maintenance of hispitals, clinics,
dispensaries and other institutions and the provision
of medical and other ancillary services for the benefit
of insured persons;
(c) payment of contributions to the Government, Local
Authority or any private body or individual towards
the cost of medical treatment and attendance provided to
insured persons and others including the cost of any
building and equipment, in accordance with any agreement entered into by the Organisation;
(d) defraying the cost of the Board, the Council, the
Tribunal, medical boards (including appellate medical
boards) Regional Councils and committees set up under
this Act and the payment of fees and allowances to
members thereof as may be determined by the Minister;
(e) payment of sums under any decree, order or award of
any court or tribunal against the Organisation or any
of its officers or servants for any act done in the
execution of his duty or under a compromise or settlement of any suit or other legal proceedings or claim
instituted or made against the Organisation;
(f) defraying the cost and other charges of instituting or
defending any civil or criminal proceedings. ar.Lr.i n/i
out of any action taken under this Act;
(g) defraying expenditure, within the limits prescribed, on
measures for the improvement of the health and welfare
of insured persons and for the rehabilitation and reemployment of insured persons who have been disabled or
injured;
(h) such other purposes as may be authorised by the Minister
in consultation with the Minister of Finance.
Expenditure 88.
Notwithstanding the provisions of the foregoing section, exon administpenditure may be incurred by the Organisation out of the Fund up
ration.
to such amount as may be authorised by the Minister for any one
year for carrying on the administration of the scheme of social
security provided under this Act including -
- 116 -
(a)
the payment of salaries, leave and transfer expenses,
travelling and compensatory allowances, pensions,
contributions to provident or other benefit funds for
officers and servants of the Organisation and meeting
expenditure in respect of offices and other services
set up for the purposes of giving effect to the provision of this Act;
(b)
the payment of fees and other remuneration to auditors,
experts, actuaries, agents, technical advisers, including
advocates and solicitors, bankers, stock brokers,
surveyors, or other persons employed on a temporary or
part-time basis to carry into effect the purposes of
this Act; and
(c) the purchase or hire of equipment.
Holding
89.
of
property etc.
The Organisation may, subject to such conditions as may be
determined by the Minister in consultation with the Minister of
Finance acquire and hold property both movable and immovable, sell
or otherwise transfer any movable or immovable property which has
become vested in or has been acquired by it and do all things
necessary for the purposes for which the Organisation is established.
Investment
of Funds.
90,
The Board may, subject to such conditions as may be determined by the Minister of Finance (a) invest any monies which are not immediately required
for expenses properly defrayable under this Act and may,
subject as aforesaid, from time to time, re-invest or
realise such investments;
(b) deposit other monies in a bank or banks.
Raising
of loans.
91.
The Board may, with the previous sanction of the Minister of
Finance and on such terms as may be prescribed by him, raise loans
and take measures for discharging such loans.
Budget
estimates.
92.
The Organisation shall in each year frame a budget showing
the probable receipts and the expenditure which it proposes to
incur during the following year and shall submit a copy of the
budget for the approval of the Minister before such date as may
be fixed by him in that behalf and such budget shall contain
provisions as may be prescribed.
Accounts.
93.
(1)
The Organisation shall maintain proper accounts and records
and shall prepare a statement of account in respect of each year
or of such other period as the Minister may direct.
(2)
Regulations may provide that separate accounts shall be
maintained in respect of each branch of insurance under this Act
as may be specified and in respect of administrative and other
expenses which may be incurred in accordance with the provisions
of the Act and the regulations.
Audi t.
94.
(1)
The accounts of the Organisation shall be audited annually
by the Auditor-General.
(2)
The Auditor-General or an officer delegated by him shall at
all reasonable times have access to the books, accounts and other
documents of the Organisation and may, for the purposes of an
audit, call for such explanation and information as he may require
or examine any principal or other officer of the Organisation.
(3)
The Board shall forward to the Minister a copy of the
auditor's report and any observations together with an audited
copy of the accounts of the Organisation. The Minister may direct
the Board to send a copy of the auditor's report and of any
statement of accounts to any Government Department.
- 117 -
Annual
report.
95.
The Board shall submit to the Minister an annual report; of
the work and activities of the Organisation.
Annual
96.
report
to be laid
before the
House of Representatives.
The annual report and the audited accounts of the Organisation
shall be laid before the House of Representatives.
Actuarial
review.
97.
The Board shall, at intervals of five years, cause an
actuarial review to be carried out on the working of the scheme
provided under this Act and the report of such review shall be
submitted to the Minister.
Provided that it shall be open to the Minister or the Board to
direct that such actuarial review be made at such other times as
may be considered necessary.
Duty of
Board to
review
benefits.
98.
Without prejudice to the provisions of section 71 of this Act,
when substantial changes in the general level of earnings result
from substantial changes in the cost of living, the Board shall
examine the situation on the basis of an actuarial review under
section 97 and shall make recommendations to the Minister to adjust
the scheme of social insurance in order to maintain the real value
of certain cash benefits. The recommendations of the Board, which
shall be accompanied by the actuarial report and shall take account
of Government social policy, may include proposals (a) for the revision of current periodical payments in
respect of disablement caused by employment injury, oldage, invalidity and death of breadwinner;
(b)
(c)
for the extension of benefit;
for the revision of contribution rates and the basis for
the calculation of contribution and benefit in relation
to earnings from any gainful occupation or in any other
manner.
PART VI
ENFORCEMENT PENALTIES AND LEGAL PROCEEDINGS
ENFORCEMENT
Appointment 99.
of
inspectors.
(1)
For the purpose of this Act the Board may appoint officers
of the Organisation as inspectors as it deems fit:
Provided that with the approval of the Minister the powers and
duties of inspectors may also be ve;;tod by the Board in any other
officer other than an officer of the Organisation, already in the
service of the Government or a Statutory body.
(2)
An inspector appointed under this section shall for the
purpose of the execution of this Act, have the following powers (a) to enter at all reasonable times any premises liable to
inspection under this Act;
(b) to make such examination and inquiry as may be
necessary (i)
for ascertaining whether the provisions of this
Act are being, or have been complied with in any
such premises;
(ii) for investigating the circumstances in which any
injury or disease which has given or may give
rise to a claim for disablement benefit was or
may have been received or con+.racted; or
(iii) to ascertain the correctness of any particulars
furnished to the Organisation.
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(c)
To examine either alone or in the presence of any
other person, as he thinks fit, in relation to any
matters under this Act on which he may reasonably
require information, every person whom he finds in any
such premises or whom he has reasonable cause to
believe to be or to have been a person liable to pay
contributions under this Act, and to require every
such person to be so examined;
(d) to make copies of, or take extracts from any register,
account book or other document maintained in the
premises;
(e) to exercise such other powers and perform such other
duties as may be necessary for carrying this Act
into effect, or as may be prescribed.
(3)
The premises liable to inspection under this Act are any
where an inspector has reasonable ground for supposing that any
persons are employed but do not include any private dwelling
house not used by, or by permission of, the occupier for the
purpose of a trade or business.
(4)
Every inspector shall be furnished with a certificate of his
appointment signed by the Director-General, and on applying for
admission to any premises for the purpose of this Act, if so
required, produce the certificate and his national identity card.
(5)
In this section and in section 100 below, "premises" includes
any place.
100. (1)
The following persons are under the duty to assist the
Duty to
submit to
inspector to exercise his powers inspection.
(a) the occupier of any premises liable to inspection under
this Act;
(D) any person who is or has been employing another;
(c) the servants or agents of any such person as is
specified in paragraphs (a) and (b) above;
(d) any person who is or has been liable to pay contributions;
but no one shall be required under this section to answer any
question, or to give any evidence tending to incriminate himself
or, in the case of a person who is married, his spouse.
(2)
If a person (a) wilfully delays or obstructs an inspector or other
officer of the Organisation in the exercise of any
power under this Act; or
(b) refuses or neglects to answer any question or to
furnish any information or to produce any document
when required so to do under this Act;
he shall be guilty of an offence and shall be liable on conviction
to a fine not exceeding two thousand ringgit or to a term of
imprisonment not exceeding six months or, to both fine and
imprisonment.
Where a person is convicted of an offence under sub-section
(b) above and the refusal or neglect is continued by him after
his conviction, he shall be guilty of a further offence and liable
on conviction to a fine not exceeding one hundred ringgit for each
day on which it is so continued.
It
If a person liable to pay any contribution in accordance
Recovery
101. (1)
with the provisions of this Act and the regulations in respect
of contribuof some other person or in his own behalf fails to pay such
tions.
contribution within the prescribed time, he shall be liable to
pay to the Organisation the full amount of contribution due and
interest thereon at the rate and subject to such minimum amount
of interest as shall be prescribed.
- 119 -
(2)
Any Bum paid by on employer under thiu section shall bo
treated as a payment in satisfaction of the unpaid contribution
and any part of such sum which represents an employee's share of
the contribution shall not be recoverable by the employer from the
employee.
(3)
If an employer being a body corporate fails to pay to the
Organisation any sum which he is liable to pay under this section
such sum or part thereof as remains unpaid shall be a debt due to
the Organisation jointly and severally from any directors or
officers of the body corporate who knew or could reasonably be
expected to have known of the failure to pay the contribution in
question.
(4)
Without prejudice to any other method of recovery of
contribution or other sum payable or recoverable under the provisions of this Act, any debt due to the Organisation may be
recoverable as if it is an arrear of land rent or an arrear of a
sum payable to a local authority:
Provided that this sub-section shall not become operative in a
State until adopted by the Legislature of that State.
(5)
Nothing in this section shall be construed as preventing the
Organisation from recovering any sums due to it by means of legal
proceedings.
*
Offences
and
penalties.
102.
(1) If any person (a) fails to pay to the Organisation any contribution and
interest thereon which under this Act he is liable to
pay; or
(b) deducts or attempts to deduct from the wages of an
employee the whole or any part of the employer's
contribution; or
(c) in contravention of section 36 or the regulations
reduces the wages or any privileges or benefits
admissible to an employee; or
(d) in contravention of section 37 or any regulations
dismisses, discharges, reduces or otherwise punishes
an employee; or
(e) fails or refuses to furnish any information (including
any statement or return) required under this Act or the
regulations or furnishes false information; or
(f) is guilty of any contravention of or non-compliance with
any of the requirements of this Act or the regulations
in respect of which no special penalty is provided,
he shall be guilty of an offence and shall be liable on conviction
to a fine not exceeding two thousand ringgit or to imprisonment for
a term not exceeding six months, or to both fine and imprisonment.
(2)
The Court before which any person is convicted of an offence
under paragraph (a) of subsection (1) above may, without prejudice
to any other remedy, order such person to pay to the .Fund the
amount of any contribution, together with any interest thereon,
certified by the Organisation to be due from such person to the
Fund at the date of such conviction, and such amount may be
recovered in the same manner as a fine.
(3)
Where any person i;; charged with .-m offence under pa.rwi^rah (a)
of sub-section (1) above and a probation order is made in respect
of such offence the provisions of that sub-section shall apply as
if the making of the order were a conviction.
(4)
Any person who for the purpose of obtaining any benefit or
increase in such benefit under this Act, whether for himself or
some other person, or for any other purpose connected with this
Act (a)
knowingly makes any false statement or false representation; or
- 120 -
(t>) produces or furnishes, causes or knowingly allows to be
produced or furnished, any document or information which
he knows to be false in a material particular, shall be
liable on summary conviction to a fine not exceeding
two thousand ringgit or imprisonment for a term not
exceeding six months or to both fine and imprisonment.
(5)
Notwithstanding anything contained in any written law,
regulations may provide that any person guilty of an offence or
contravening any regulation or order made under this. Act for which
no special penalty is provided shall on conviction be liable to a
fine not exceeding two thousand ringgit and. to a further fine not
exceeding ten ringgit a day for every day of default thereafter in
respect of the same offence.
Prosecution. 103.
(1) Subject to the Article 14-5(3) of the Federal Constitution, no
prosecution under this Act shall be instituted except by or with
the previous sanction of the Director-General or of such other
officer of the Organisation as may be authorised in this behalf by
the Director-General.
(2)
Proceedings under sub-section (l) above may be conducted by
an officer of the Organisation authorised in that behalf by special
or general directions of the Director-General and such officer may
not be a barrister or a solicitor.
(3)
No Court inferior to that of a Sessions Court or a Magistrate
of the First Class shall try any offence under this Act.
(4)
Notwithstanding any provision in any enactment fixing the
period within which summary proceedings may be commenced,
proceedings for an offence under this Act may be commenced at any
time within the period of six months from the date on which
evicence sufficient in the opinion of the Director-General to
justify a prosecution for the offence comes to his knowledge or
within the period of three years after the commission of the
offence whichever period last expires and for the purpose of this
sub-section a certificate signed by the Director-General as to the
date on which such evidence came to his knowledge shall be
conclusive evidence thereof.
(5)
Where an offence under this Act which has been committed by
a body corporate is proved to have been committed with the consent
or concurrence of or to be attributable to any negligence on the
part of any directors, manager, secretary or other officer of the
body corporate, they as well as that body shall be deemed to be
guilty of that offence and shall be liable to be proceeded against
and penalised accordingly.
Civil
104. (1)
All sums due to the Fund under this Act shall be recoverable
proceedings.
as debts due to the Organisation and, without prejudice to any
other remedy may be recovered summarily as a civil debt.
(2)
Proceedings for the summary recovery as civil debts of sums
due to the Fund may, notwithstanding anything in any enactment to
the contrary, be brought at any time within five years from the
time when the matter complained of arose.
(3)
Proceedings under this section for the summary recovery of
sums due to the Fund may be instituted by an officer of the
Organisation authorised in that behalf by special or general
directions of the Director-General, and any such officer may
although not a barrister or a solicitor conduct such proceedings.
(4)
The provisions of sub-sections (1) and (2) of section 102
shall apply mutatis mutandis to proceedings under this section.
- 121 -
PART VII.
MISCELLANEOUS PROVISIONS
Exercise
105.
of powers
and
functions
of the
Organisation.
(1)
All powers and functions which may he exercised by the
Organisation under this Act shall he exerciseably hy the DirectorGeneral or by any officer of the Organisation authorised by him.
(2)
The Director-General may authorise an officer of the
Organisation to exercise powers and functions under sub-section (1)
above by special or general directions.
(3)
The Minister may, in consultation with the Board, authorise
in writing or by Order, as he may deem appropriate, any public
organisation or private recognised organisation or any officer or
servant of such organisation or any person to exercise specified
functions for the purpose of this Act on behalf of the Organisation:
Provided that where an officer or servant of a organisation is to
be so designated the Minister shall, before making the Order,
consult the organisation concerned.
Exemption 106.
from stamp
duty.
The Organisation shall be exempted from the payment of stamp
duty under the Stamp Ordinance, 1949.
Persons
107.
employed
abroad
ships,
vessels or
aircraft.
(1)
Without prejudice to the generality of any other power to
make regulations, the Minister may make regulations modifying in
such manner as he thinks proper the provisions of the Act in their
application to persons who are or have been or are to be employed
on board any ship, vessel or aircraft registered in Malaysia.
(2)
Regulations made under sub-section (1) above may in particular
provide (a) for the registration under this Act of persons who are
or have been employed on board ships, vessels, or
aircraft;
(b) for excepting from insurance under this. Act or from
liability to pay contribution any persons employed as
aforesaid who neither are domiciled nor have a place of
residence in Malaysia;
(c) for the taking of evidence (including medical certifikation) for the purpose of any claim for benefit in any
place outside Malaysia;
(d) for the payment of temporary disablement benefit to or
in respect of persons employed aboard ships, vessels or
aircraft in respect of accidents happening in the course
of, or of prescribed diseases which are due to the
nature of, such employment;
(e) for treating an accidents arising out of and in the
the course of employment aboard any ship, vessel or
aircraft accidents happening while the employee is
proceeding to or from such employment, or in other
prescribed circumstances; ami
(f)
Reci108.
procity
agreements
for withholding any benefit which may be payable to a
mariner for any period while the owner of his ship or
vessel is under a statutory obligation to pay him wages.
For the purpose of giving effect to any agreement with
Government of any country, being an agreement which provides for
reciprocity in matters of social security, it shall be lawful for
the Minister by Order published in the Gazette, to modify or
adapt the provisions of this Act in their application to cases
affected by the agreement.
- 122 -
Exemption 109.
of
industries
and persons,
etc.
(1)
The Minister may, after consultation with the Board, exempt
from the application of this Act (a) any industry or class of industries for a period not
exceeding one year which may be renewed from time to
time for periods not exceeding one year at a time;
(b) any person or class of persons employed in any industry
or class of industries.
(2)
Exemptions under sub-section (1) shall be made by notification
in the Gazette and shall be subject to such conditions as may be
specified in the notification.
Exemption 110.
of
industries
belonging to
Government
or Local
Authority.
The Minister may, by notification in the Gazette and subject
to such conditions as may be specified in the notification, exempt
any industry or class of industries belonging to the Federal
Government or any State Government or any local authority, from
the operation of this Act, if the employees in any such industry
or class of industries are otherwise in receipt of benefits
substantially similar or superior to the benefits provided under
this Act.
Contri111.
butions
etc. due to
Organisation
to have
priority
over other
debts.
Sums due on account of contributions payable under this Act
and any other amount payable to the Organisation shall be included
among debts accorded priority under any written law in force in
the country (being any law relating to personal insolvency,
companies' winding-up and the remedies of debenture holders and
charges) where such liability accrued before the date of the order
of adjudication of the insolvent or the date of the winding up, as
the case may be.
Recovery
112.
of debt
due to
Organisation.
Without prejudice to any other method of recovery of
contribution or other sum payable or recoverable under the provisions of this Act, any debt due to the Organisation may be recoverable as if it is an arrear of land rent or an arrear of a sum payable to a Local Authority:
Provided that this section shall not become operative in a State
until adopted by the Legislature of that State.
Power to
113.
remove
difficulty.
(1)
If any difficulty arises in giving effect to the provisions
of this Act, the Minister may, by Order published in the Gazette,
make such provisions or give such directions, not inconsistent
with the provisions of this Act, as appear to him to be necessary
or expedient for removing the difficulty.
(2)
Any Order made under this section shall have effect notwithstanding anything inconsistent therewith in any regulations made
under this Act.
Power of
114.
the Minister
to make
regulations.
(1)
The Minister may make regulations, not inconsistent with
this Act, for the administration of the affairs of the Organisation
and for carrying into effect the provisions of this Act.
(2)
In particular and without prejudice to the generality of the
foregoing power, such regulations may provide for all or any of
the following matters, namely (a)
the levy of interest at a prescribed rate on contributions
due but not paid subject to the minimum of one ringgit
per month or part thereof in respect of each employee
whose contribution is in default beyond the due date and
the conditions under which such levy may be waived;
(b) the method of determining the actuarial present value
of periodical payments;
(c) the assessing of the money value of any benefit which
is not a cash benefit;
(d) the circumstances in which an employee in receipt of
disablement benefit may be dismissed, discharged,
reduced or otherwise punished;
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(e)
(f)
the visiting of disabled persons;
the appointment of medical practitioners for the
purpose of this Act, the duties and functions of such
practitioners;
(g) the medical and other examination to which an insured
person or claimant may be required to submit himself for
the purposes of the Act;
(h) the duties and powers of Inspectors and other officers
and servants of the Organisation;
(i) the fee payable in respect of applications made to the
Tribunal, the cost incidental to the proceedings before
it, the form in which applications should be made and
the particulars to be specified in such applications;
(j)
the establishment
institutions, the
hospital, clinic,
consultation with
of hospitals, dispensaries and other
allotment of insured persons to any
dispensary or other institution in
the Ministry of Health;
(k)
the scale of medical benefit which shall be provided at
any hospital, clinic, dispensary or other institution,
the keeping of medical records and the furnishing of
statistical returns;
(1) the registration of industries;
(m) matters which must be covered by the periodical
valuation of the assets and liabilities of the
Organisation;
(n) the investment of monies of the Fund and their transfer
or realisation, the bank or banks in which such monies
may be deposited, the raising and repayment of loans and
financial control and proceduresin consultation with the
Minister of Finance; and
(o) any matter in respect of which regulations are required
or permitted to be made by this Act.
(3)
Any power conferred by this Act to make regulations may be
exercised (a) either in relation to all cases to which the power
extends or in relation to all such cases subject to
specified exceptions or in relation to any specified
cases or class of cases;
(b)
so as to make as respects the cases in relation to which
it is exercised (i)
the full provision to which the power extends or
any less provision;
(ii) the same provision for all cases to which the
power is exercised, or different provision for
different cases, or different provision as
respects the same case for differend purposes of
this Act;
(iii) any such provision either unconditionally or
subject to any specified conditions.
(4)
Without prejudice to any specific provision of this Act, any
regulation may contain such incidental or supplementary provisions
as appear to the Minister to be expedient for the purposes of the
regulations.
(5)
Regulations shall come into operation .on such day or days ;i.3
the Minister may appoint by order published in the Gazette.
- 124 -
Regula115.
tions to
be laid
before
House of
Representatives.
(1)
All regulations made under this Act shall be published in the
Gazette and shall be laid before the House of Representatives as
soon as may be after they are made and if within a period of forty
days beginning with the day on which any such regulations are so
laid the House of Representatives resolves that the regulations
or any part thereof be annulled or amended such Regulations or such
part thereof shall thereupon cease to have effect or shall be so
amended as the case may be, as from such date, but without
prejudice to the validity of anything previously done thereunder
or to the making of new regulations.
(2)
In reckoning any period of forty days specified in subsection (1) above, no account shall be taken of any time during
which the House of Representatives is dissolved or prorogued or
during which the House is adjourned for more than fourteen days.
Repeal.
116.
The Employees' Social Security Act, 1969, shall be repealed
from the date on which this Act shall come into force in accordance
with the provisions of section 1 of this Act in relation to
employees in respect of whom the Employees' Social Security Act,
1969 applies, and from that date all assets and liabilities of the
Invalidity Pension Fund and Employment Injury Fund shall become
the assets and liabilities of the Fund.
- 125 -
FIRST SCHEDULE
(Section 2)
PART I
1.
Subject to Part II of this Schedule, "employee" means any person who is
employed for wages under a contract of service or apprenticeship with an employer,
whether the contract is expressed or implied or is oral or in writing, on or in
connection with the work of an industry to which this Act applies and (a)
being a person employed as aforesaid in Malaysia (i)
who is directly employed by the principal employer on any
work of, or incidental or preliminary to or connected with
the work of, the industry, whether such work is done by the
employee on the premises of the industry or elsewhere; or
(ii) who is employed by or through an immediate employer on the
premises of the industry or under the supervision of the
principal employer or his agent on work which is ordinarily
part of the work of the industry or which is preliminary to
the work carried on in or incidental to the purpose of the
industry; or
(iii) whose services are temporarily lent or let on hire to the
principal employer by the person with whom the person whose
services are so lent or let on hire has entered into a
contract of service;
(b)
who is domiciled in Malaysia employed as aforesaid outside Malaysia (i)
as master or member of the crew of any ship registered in
Malaysia or in any other capacity on board any such ship; or
(ii) as pilot, commander, navigator or member of the crew of any
aircraft registered in Malaysia, or in any other capacity on
board any such aircraft:
Provided that, in either case, the employment jn that other capacity
is for purpose of the ship or aircraft, or the crew, or of any
passenger or cargo or mails carried thereby.
(2)
"Employee" does not include a person of the descriptions
specified in Part 11 of this Schedule.
(3)
The Minister may by order published in the Gazette amend this part,
of the schedule to include other persons who are, or are to be deemed to
be employees.
PART II
(1)
Any person whose employment is of casual nature and who is
employed otherwise than for the purposes of the employer's industry.
(2)
A domestic servant, that is, a person employed exclusively in the
work or in connection with work of a private dwelling house and not of
any trade, business or profession carried on by the employer in such
dwelling house and includes a cook, house servant (including bedroom and
kitchen servants), waiter, butler, child's or baby's nurse, valet,
footman, gardener, washerman or washerwoman, watchman, groom and driver
or cleaner of any vehicle licensed for private use.
- 126 -
(3)
A tributer, that is, a person who is permitted to win minerals or
produce of any kind from or on the land of another and who, in
consideration of such permission, gives a proportion of the minerals
or produce so won to that other person or pays to him the value of such
proportion.
(4)
The spouse or spouses of the principal employer or the immediate
employer.
(5)
Any member of the Malaysian Armed Forces or of any Local Forces
established under any written law or of any Visiting Force lawfully
present in Malaysia under any written law relating to Visiting Forces.
(6)
Any police officer, and any other person engaged to perform police
duties in accordance with the provisions of any written law while so
performing such duties.
(7)
Any person detained in any prison, Henry Gurney School, approved
school, detention camp, mental hospital, or leper settlement.
(8)
All nomadic aborigines unless in any particular case the
Commissioner for Aboriginal Affairs otherwise recommends.
(9)
Any person who is employed principally for the purpose of catching
fish in maritime waters or employed in any capacity on board any vessel
used principally for such purpose.
(10) All agricultural workers who are employed for the purpose of
cultivating, upkeeping and harvesting paddy.
(11) Any class or classes of persons whom the Minister may declare by
notification in the Gazette not to be employees for the purposes of this
Act.
*
«
- 127 -
APPENDIX V
MALAYSIA
Social Insurance and The Proposed Motor Vehicle
Accident Compensation Scheme"
1.
The Director-General of the Social Security Organisation has invited me
to offer my comments on the proposed Motor Vehicle Accident Compensation Scheme in
relation to the social insurance programme. Reference has been made to the
New Zealand Accident Scheme and its effect on the Workmen's Compensation Legislation
in that country.
2.
I have had a quick look at the New Zealand Legislation and at Parts 1
and 11 of the Treasury Memorandum dated 30 th March and 21 April, 1977, respectively.
At this stage I cannot undertake more than that. I cannot therefore claim to be an
expert in the New Zealand Scheme or Malaysia's proposed Motor Vehicle Accident
Scheme (hereinafter referred to as the "Motor Vehicle Accident Scheme"). The
observations which follow should be treated in the context of this premise. It is
also appreciated that the Treasury Memorandum gives only an outline of the proposed
scheme.
3.
I have also tried to be as brief as possible, to save time for all.
New Zealand Scheme
4.
The principal Act is the "Accident Compensation Act, 1972",
5.
The following amendments were made Two in 1973
One in 1974
One in 1975.
Funds
6.
Section 31 of the Act established four Funds, namely
(a)
An account to be known as the Motor Vehicle Compensation Fund:
(b)
An account to be known as the Accident Compensation Fund:
(c)
An account to be known as the Accident Compensation Commission's
General Fund:
(d)
7.
An account to be known as the Active Service Compensation Fund:
In my view we are interested in two main schemes namely
(a)
the Earners' Compensation Scheme; and
(b)
the Motor Vehicle Accident Compensation Scheme.
Earners Scheme
8.
The scheme provides cover to all earners, employed or self-employed, who
suffer personal injury by accident in New Zealand. This includes all accidents,
including accidents at work.
- 128 -
9.
This scheme therefore supersedes the Workmen's Compensation Scheme. In
fact, the "Accident Compensation Amendment Act, 1975 (Section 31) dissolved the
Workmen's Compensation Board. The Schedule to the same amending Act repealed
specified sections of the Workmen's Compensation Act, 1956, and several subsequent
amendments to that Act. Therefore, I think it would be correct to assume that the
New Zealand Workmen's Compensation Scheme ceased to operate. In any case, the
accident scheme does cover employment accidents.
10.
It does not appear that the New Zealand Social Security Act has been
affected; but there may be provisions to prevent overlapping of benefits. In general
compensation under Earnings Scheme stops at the age of 65, presumably because the
beneficiary becomes entitled to an age pension.
New Zealand Motor Vehicle Scheme
11.
The Motor Vehicle Scheme provides cover (a)
to all persons, earners or non-earners;
(b)
in respect of personal injury by accident in New Zealand if
accident is caused by or through or in connection with the use of
the vehicle if that vehicle is registered in New Zealand.
12.
A Motor Vehicle Accident arising out of and in the course of employment
of a person becomes a work accident and falls also under the Earners' Scheme.
Malaysia's Scheme
13.
In paragraph 5 on page 3 or Part 11 of the Memo it is stated that the
scheme is intended to cover only personal injury suffered as a result of a motor
vehicle accident.
14.
My interpretation of this is that if a person suffers an accident on a
vehicle and the accident arises out of and in the course of his employment, the
accident would be an employment accident in relation to that person. At the moment
such a person is covered both by the Employers' Social Security Act (E.S.S. Act)
and by the Workmen's Compensation Ordinance. A clear case would be that of a
driver or attendant employed on a truck, a bus driver or conductor etc.
Proposed Benefits
Compensation for loss of Earnings
15.
This is understood to mean temporary incapacity for work and it is
referred to as "Earnings Related Compensation" (E.R.C.).
16.
The benefit is 60$ of average earnings over last 6 months, subject to (a)
Maximum of earnings of $1000 per month tc give maximum benefit
of $600;
(b)
Minimum monthly earnings of $150 to guarantee minimum benefit of
$90 per month.
17.
Under E.S.S. Act, there is an earnings ceiling of $500. After consultation
with the Actuary, I am proposing that this will be removed; but for persons earning
over $1000 per month the assumed monthly wage would be $1050, and contributions and
benefits will be payable on that basis.
18.
The minimum monthly earnings of $150 per month proposed by the Committee
is far above the minimum earnings under the E.S.S. Act. The Fourth Schedule to the
Act provides that where the wage cannot be determined, the method provided in
section 9 of the Workmen's Compensation Ordinance is to be adopted. The minimum
earnings under the Ordinance are related to age thus -
- 129 -
Age over 18 years $105 per month
Age between 16 and 17 years $90 per month
Age under 16 years #70 per month.
19.
After consultation with the Actuary, I am proposing that the wages of a
person over 18 years would not be deemed to be less than $125 per month. This would
have compared well with Workmen's Compensation Ordinance, but not with the Motor
Vehicle.Accident Scheme. A higher minimum wage for the purpose of computing
disablement benefit may bring about the situation where benefit is higher than
normal pay, especially where casual and part-time workers are involved. There are
probably many whole-time employees earning less than $125 per month. This is
confirmed in paragraph 8 of Part 11 of the Treasury Memo where it is stated that in
the year of assessment 1972, there were only 211,788 resident individual tax payers
out of a population of about 10 million, whose income was not less than the lowest
tax bracket in Malaysia which begins at $2,500 per annum that is, about $208.per
month.
Permanent Incapacity
20.
It appears from paragraph 11 of Part 11 of the Treasury Memo that Earnings
Related Compensation will continue as a periodical payment in the event of permanent
incapacity. In fact, it is to go beyond the age of 65, and in paragraph 12 it is
indicated that the Earnings Related Compensation will also be revalued to take
account of changes in the level of earnings and cost of living.
21.
It is recalled that a provision for revaluation of pensions was included
in the draft legislation to set up SOCSO as a Statutory Body.
22.
If my understanding is correct, the Earnings Related Compensation becomes
similar to Permanent Disablement Benefit under the ESS Act; but even so, a straight
forward comparison is not possible. There is no provision in the Act to limit the
period of Temporary Disablement Benefit to say 6 or 12 months after which the degree
of permanent disablement has to be assessed. However, in practice SOCSO may take
steps at some stage in the Temporary Disablement period to assess the degree of
permanent disablement if this is not recommended by the general practitioner. When
this is done, it may only compare with Earnings Related Compensation if the
assessment is permanent total disablement.
Loss of Bodily Function
23.
Paragraph 13 of Part 11 of the Treasury Memorandum indicates that under
the Motor Vehicle Accident Scheme there will be a lump sum payment in respect of
"permanent loss of bodily function" in addition to loss of earnings". This appears
to be payable in addition to Earnings Related Compensation.
24.
There is nothing to compare with this benefit under the ESS Act, nor in
my proposals.
25.
The Motor Vehicle Accident Scheme will also provide for an additional
lump sum payment for "non-economic loss". Again there is nothing similar under the
ESS Act, nor in my proposals.
Dependants
Definition
26.
It is noted that the definition of "dependants" in section 2(3) of the
ESS Act is being adopted.
- 130 -
Periodical Payments
Widow
27.
A widow will receive (a) 50 $ of the Earnings Related Compensation if at
the time of husband's death she is "totally
dependent" on him; or
(b) a lesser rate at the discretion of the Board if
not totally dependent.
This periodical payment as at (2) or (b) is to cease on the widow's remarriage.
It is therefore inferred that the pension will be for life.
28.
Under the ESS Act, the widow of an insured person who dies as a result of
an employment accident receives 60$ even, if not dependent at all on her husband,
and without any conditions.
29.
In my proposals, if the widow is under 50 years there are conditions
based on responsibility for children or permanent incapacity for self-support. The
Director-General, SOCSO, is aware of the details of my proposals on this point.
30.
Under the proposed Motor Vehicle Accident Scheme a parent will be entitled
to receives 50$ of the Earnings Related Compensation if totally dependent on the
deceased "at the time of death". It is not clear whether:
31.
32.
(a)
two surviving parents would each be entitled to 50$;
(b)
what happens if the deceased is survived by a totally dependent
widow and one or two parents.
Under the ESS Act (a)
a parent or grandparent may only receive threetenths- (30$), but if
there are more than one, the rate is shared among them. A grandparent is only entitled if there is no parent.
(b)
a parent or grandparent is entitled if there is no widow or
children of the deceased. It is not clear whether this will be the
case under the Motor Vehicle Accident Scheme.
In my proposals for survivors' benefit I am suggesting that (a)
a parent, including a widowed mother, will be entitled to survivors'
benefit at the rate of 40$ (two parents 80$ between them) if wholly
dependent on the earnings of the deceased insured person, and
(i)
is over pensionable age; or
(ii) if under that age, is permanently incapable of self-support;
33.
Under the ESS Act, parents and grandparents fall under what I call a
"secondary group" and will only be entitled to benefit if there are no wife and/or
children.
34.
In my proposals this condition will also apply.
35.
Under the Motor Vehicle Accident Scheme a totally dependent child will
receive one-sixth. It is not clear what will happen -•
(a)
if there are, say, seven children;
(b)
if there is a widow and four or five children.
36.
Under the ESS Act, a child's share is two-fifths which will have to be
reduced if there is a widow and more than one child.
37.
In my proposals this will be the same.
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Lump Sum Payment to Dependents
38.
The Motor Vehicle Accident Scheme will also pay in addition to Earnings
Related Compensation a lump sum to (a)
a totally dependent widow up to #2,500;
(b)
up to $1,250 for each totally dependent child;
(c)
apparently, a totally dependent parent up to $1750.
39.
There are no comparative payments under the ESS Act, and I am not
proposing such payments.
Overlapping with Invalidity Pensions
40.
Under the ESS Act a pension is payable to an insured person who becomes
an invalid through any cause, if he satisfies the contribution conditions. The rate
will vary according to number of contributions. It is being proposed that such
pension should be over eighteen years and under pensionable age.
41.
Under my proposals survivors' benefit will be payable in the event that.
such a person dies.
Conclusion
42.
The method or methods of financing of the Motor Vehicle Accident Scheme
are going to be very different from that of the Social Insurance Scheme. This must
be taken into account when any comparison is made between the two systems. There is
also going to be some overlapping. For these reasons I am of the opinion that a
detailed study is required.
22nd June, 1977.
J. Vella-Bonnici,
Social Security Planning and
Legislation Expert!