by Tim Leonard
PETALING JAYA (March 25, 2010) : The Malaysian Employers Federation (MEF) wants the Human Resources Ministry to reconsider its recent announcement on setting up new funds for pension and retrenchment.
MEF, in a press statement claimed that the setting up of the new funds is not favourable as it will have major impact on the cost of doing business.
"Members of the MEF Council were suprised by the announcement of the minister as there was no prior discussion conducted between the ministry and MEF, and other stakeholders on the subject matter," said its executive director Shamsuddin Bardan in the statement.
"The issue of the retrechment fund was last raised at the National Labour Advisory Council (NLAC) meeting on 23 July 2009 and MEF requested for a copy of the terms of reference issued to the consultants to undertake the study on the matter.
"Unfortunately, MEF has yet to receive the terms of reference despite the minister's promise at the meeting.
"MEF is of the position that employees are entitled to their retrenchment benefits and that failure to fulfill this requirement constitutes a serious breach of the law.
"Notwithstanding, MEF is of the view that reliable statistics should be made available to indicate the actual number of employers who had not paid their employees retrenchment benefits over the years," he said.
MEF claimed that the proposed retrechment fund will serve as a bail-out for recalcitrant and badly-managed companies.
"At the same time, the proposed retrenchment fund punishes the good and well-managed companies who have to contribute to the fund on a monthly basis and in the event of retrenchment, have to pay the retrenchment and termination benefits from their own funds.
"Such well-managed companies will never benefit from the proposed fund except being punished by contributing to it on a monthly basis," he said, adding that employers should be allowed to manage and administer their own funds for retrenchment benefits.
"There is no need to collect retrenchment funds in a separate pool as the present system works well and the labour laws are adequate to deal with the issue of delinquent employers.
MEF said the setting up of the pension fund for the old aged/ self-employed is a duplication of the fund already set up under the Employees Provident Fund (EPF).
"It is mandatory for private sector employers to contribute 12% of the employees's monthly salary, and the employee contributes 8%.
He said based on the 2007 MEF salary and benefits survey, about 50% of employers provide for retirement benefits / gratuity.
About 65% of those providing retrenchment benefits contribute about 15% to 16% of the employees' monthly salary to the EPF.
"It is pertinent to note that the government as the employers and the public servants who are under the pension scheme need not to contribute to EPF.
"It is unfair and costly for the private sector employers to be imposed with the statutory contribution to EPF and also to contribute to the proposed pension fund," he added.
Source: The Sun
