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Economic Stimulus Package (PRIHATIN)

Our article dated  23.3.2020 discusses the right of employers to rationalise manpower.

On 6 April 2020, the Government announced an improved Stimulus Package, largely targeted towards small and medium sized enterprises (SME) that are economically affected by the COVID-19 pandemic. There are three categories:-

  1. Wage Subsidy Program, which provides subsidies to employers to continue the running of its operations so as to not go through the retrenchment process.
  2. Employment Retention Program (ERP), which aids employers who wish to retain its employees however have had to issue an unpaid leave notice to its employees.
  3. Employment Insurance System (EIS), which provides benefits directly to employees who have lost employment as a result of the company’s exercise i.e. retrenchment.

Meanwhile, on 23 March 2020, Employees Provident Fund (EPF/KWSP) has announced that through the i-Lestari Withdrawal Facility, EPF members below the age of 55 will be able to withdraw up to RM500 of savings each month, for a year. The main aim was to see a boost in private consumption and cushion the impact of the pandemic on the Malaysian economy. The Employees Provident Fund (EPF) will also be introducing its Employer Advisory Services (EAS) beginning 15 April 2020 to provide customised advisory support for employers. This would allow the employer (in consultation with EPF) to restructure its contribution under the EPF Act 1991 during the current economic downturn.

Social Security Organisation (SOCSO/PERKESO) has similarly announced it has put in place changes to aid the insured persons such as by providing benefits earlier than the scheduled dates. COVID-19 is also categorised as an ‘occupational disease’ which may be contracted during work. Employees infected by the virus is therefore eligible for benefits.

There are differing thoughts as to whether the placing of employees on unpaid leave during this unprecedented situation requires consent of the employees. The granting of the ERP for employees placed on unpaid leave may not be simply fortuitous but recognition of the rights of the employer to place the employee on unpaid leave. Can the employer, considering the mounting losses and debt, unilaterally place the employee on unpaid leave? Can an employer claim that his action was carried out in good faith to stave off the need to retrench? Will that hold up to scrutiny in the Industrial court? This requires further deliberation by the employer before cost cutting measures are carried out.

The packages available for the impacted business/individual are outlined below for ease of reference. Please do not hesitate to contact us for further advice.


Romesh Abraham


[email protected]

Mehala Marimuthoo


[email protected]


Nursabrina bte Jamaluddin


[email protected]




Economic Stimulus Package-PRIHATIN