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Employers can deduct levy from wages

KUALA LUMPUR, 16 April 2009: There is good news for employers — they are once again allowed to deduct the levy from the wages of their foreign workers until the expiry of their present visas, Labour Director-General Datuk Ismail Abdul Rahim said today.

They had earlier been directed by the department to stop such deduction, effective 1 April, causing much uneasiness among employers as they had to bear the cost of the levy, and this upset their budget.

The directive was therefore reversed by the Human Resources Minister Datuk S Subramaniam yesterday following numerous appeals by employers, Ismail told Bernama.

However, Ismail explained that no deduction would be allowed for new employees registered after 1 April in line with the government’s policy requiring employers from all sectors to bear the full cost of the levy from that cut-off date.

The rationale to get employers to bear the levy was to discourage them from employing foreigners, he said.

Nevertheless, Ismail hoped the new decision would lessen the burden of employers during this economic downturn.

Meanwhile, the Immigration Department has yet to implement the new levy rates for foreign workers in the manufacturing and services sectors because it had not been gazetted by the Home Ministry.

The new levy had been doubled for workers in these two sectors from RM1,800 to RM3,600 a year.   

Immigration Director-General Datuk Mahmood Adam said that the department expected to implement the new rates by 1 May.

However, Bernama understands that the delay in gazetting the new rates was due to the numerous protests and appeals by employers from the affected sectors.

In fact the Indian Muslim Restaurant Owners Association had threatened to increase the price of Malaysian favourite indulgence, roti canai and teh tarik, if the new rates were implemented.

Meanwhile, the Malaysian Employers Federation executive director Shamsuddin Bardan welcomed the Human Resources Ministry’s decision to allow employers to deduct the levy from the workers’ wages, saying this was a step in the right direction.

This decision would greatly benefit employers who had thousands of foreign workers on their payroll.

He hoped the government would review the proposed new levy rate and maintain the existing one at least until the economy improved.

“This will give some breathing space for employers and help them to put back their businesses on a stronger footing,” he said.


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