Minimum Retirement Age Act 2012
The Minimum Retirement Age Act 2012 (the Act) was gazetted on 16 August 2012 and was enforced on 1 July 2013. The Act states that the minimum retirement age of an employee shall be upon the employee attaining the age of 60 years. The employers may fix a retirement age for their employees which is higher than 60.
Additionally, the Minister of Human Resources is allowed to gazette a minimum retirement age which is higher than 60 years. A higher minimum retirement age prescribed by the Minister will replace the minimum retirement age stipulated in the Act.
Who does it apply to?
The Act is applicable to all employers and employees in Malaysia, regardless of the amount of the employees’ salary. However, Section 2 of the Act stipulates that the minimum retirement age does not apply to the following categories of employees as specified in the Schedule:
- a person who is employed on a permanent, temporary or contractual basis and is paid emoluments by the Federal Government, the Government of any State, any statutory body or any local authorities;
- a person who works on a probationary term;
- an apprentice who is employed under an apprentice contract;
- a non-citizen employee;
- a domestic servant;
- a person who is employed in any employment with average hours of work not exceeding seventy percent of the normal hours of work of a full-time employee;
- a student who is employed under any contract for a temporary term of employment but does not include an employee on study leave and an employee who studies on part-time basis;
- a person who is employed on a fixed term contract of service, inclusive of any extension, of not more than twenty four months; and
- a person who, before the date of coming into operation of this Act, has retired at the age of fifty five years or above and subsequently is re-employed after he has retired.
Under the Act, employers shall not prematurely retire their employees before they reach the minimum retirement age.
An employer who does not comply with the Act has committed an offence. If convicted, the employer may be fined up to RM10,000.
Premature retirement, however, does not include optional retirement (see below). It also does not include termination of employees for reasons other than age.
Although the minimum retirement age has been fixed at 60 years, an employee may choose to retire earlier than 60 years of age provided it has been agreed upon in their contract of service or collective agreement.
Contracts and collective agreements
Any retirement age fixed in a contract of service or collective agreement that was made before, on or after 1 July 2012 which is lower than 60 years will be considered void. It will be replaced by the minimum retirement age stipulated by the Act.
Any term in a contract of service or collective agreement relating to retirement age will also be void if it excludes or limits the operation of any provision of the Act.
By virtue of Section 18 of the Act, the Minister has the power to exempt any employer or class of employers from all or any of the provisions of the Act.
The Application Evaluation Committee, chaired by a Government representative and comprising representatives of employers, employees and the Ministry of Human Resources, have since evaluated and considered applications from employers for exemption.
An employee who has been prematurely retired by their employer may make a complaint to the Director General1. Complaints must be made in writing within 60 days from the date of retirement.
Employees who make a complaint to the Director General under the Act, however, are not allowed to make a representation under Section 20 of the Industrial Relations Act 1967 until their complaint to the Director General has been resolved or within 30 days of the dismissal of their complaint by the Director General.
The Director General will not entertain complaints on premature retirement if an employee has made a representation under Section 20 of the Industrial Relations Act.