Samantha Yee & Co.

31/03/2022

New Minimum Wage – To Retain or Dismiss Employees ? 🇲🇾

The 25-35% jump in the new minimum wage to RM1,500 that is to be implemented starting 1 May 2022 can positively help lower-income earners brace through inflation and the rising prices (due COVID and the persisting Russia-Ukraine War) particularly in staples like food and household items which takes a big chunk from their paychecks. It has also been suggested that a higher minimum wage will serve as incentive to increase (low-skilled) labour productivity and reduce turnover rates.

However, a higher minimum wage may potentially lead to further inflation and price hikes in goods, higher unemployment and retrenchment. As it is, businesses are already sustaining cost spikes and with higher labour costs, some businesses may resort to the following to maintain profit margin - raising prices of their goods & services reduce new hires in particular low-skilled workers, hire high-skilled workers to replace low-skilled workers and even dismissing employees to scale down employment.

How this new policy will disrupt the country's workforce is unclear. Whether the wage growth will have a positive impact of alleviating the burden of inflation is highly dependent on the stability and recovery of the global economy from the on-going war and disruption of supply chains. Though it's foreseeable that this new policy will take a bigger hit on SMEs as compared to bigger corporations.

📌 Q & A
Can employees be dismissed because the employer can't afford to pay higher wages?

In general, an employer can only dismiss an employee with just cause and excuse.

And yes, employers can dismiss or retrench employees when there has been a significant reduction in profits or productivity and the exercise to scale down its employment is necessary for the business' survival. Nevertheless, there are certain criteria to be met in proving that the business has been incurring losses.

To avoid claims for unfair dismissal brought against employer, it is therefore cautioned to conduct such exercise fairly, objectively and as economically necessary for the sustainment of the business. Dismissal procedures such as notice period or payment in lieu of such notice etc. should also be practiced.

25/03/2022

Economic Impact & Contractual Implications of the Russia-Ukraine War

Russia's invasion on Ukraine has triggered severe volatility in the global financial market. Despite having limited direct trade with both Russia and Ukraine, Malaysians have definitely felt the rippled effects of the war in the increase of oil prices, fall in the stock market, fluctuation in commodity prices, rising inflation, supply restrictions etc.

◾️ Surge in oil prices is caused by sanctions imposed against Russia, one the world's largest oil producer, for its invasion on Ukraine. Brent crude price is now at an all-time high breaching $100 per barrel.

◾️ Food prices have also increased as a consequence of higher oil prices. Russia and Ukraine are major producers and exporters for wheat and maize - key ingredients for animal feed particularly chicken feed and the restriction in supply due to the war has caused chicken prices to go up.

◾️ Imported commodities such as raw materials for construction, auto parts and machineries has also increased due to inflation.

◾️ Inflation will exacerbate further if the war continues and stretches the disruption in the global supply chain. Let's not forget that global freight charges have already more than doubled pre-war due to Covid-19.

◾️ Due to the war, global economic recovery post-Covid will be slower than expected.

📌 Now how does the war impact commercial contracts?

As mentioned, countries such as the US, UK and Europe have imposed various sanctions - financial sanctions, trade embargoes, export controls, asset-freezes, removing Russian banks from SWIFT etc against Russia for its invasion on Ukraine. We have also seen a full scale sports boycott against Russia by international sports organisations and teams such as IOC, FIFA, UEFA, F1 and more.

Now this means that performance of contracts with Russian/Ukrainian parties or supply chain contracts that relies on routes in these geographical areas will be heavily impacted. This may lead to the declaration of force majeure (if expressly provided in the contract) to suspend contractual obligations without penalising the non-performing party. For example recently, Ecuador's state oil company, EP Petroecuador has declared force majeure on 2 cargoes of Russian diesel after banks declined to finance payment following the invasion.

📌 How does one invoke force majeure rights?

For starters, a force majeure clause must be expressly incorporated into the contract to cater for specific circumstances such as war, natural disasters or unforeseen circumstances beyond parties' control of which prevented one party from performing its contractual obligations.

Now whether one can rely on an existing force majeure clause would also depend on the following factors: -

◾️ Whether the specific event is covered in the wording of the force majeure clause?
◾️ Whether the causal link between the event and the inability to perform can be established?
◾️ Whether there is a contractual obligation to mitigate?
◾️ What's the notice requirement under the contract?

However do note that if a contract has simply become uneconomical or unprofitable to one party due to the circumstances (in this case, the war) then that in itself cannot be deemed as an inability to perform the contract.

As always, whether or not force majeure can be invoked successfully depends on the facts of each case.

Feel free to contact us if you require further advice. Take care.

-SY

22/03/2022

22/03/2022

11/11/2021

Good News

Effective 1st Jan 2022, there will be no Real Property Gains Tax imposed on individual (Malaysian Citizens & PRs) for disposing any residential property in its 6th year and beyond.

Start planning now for opportunities in 2022.

27/06/2021

Yesterday we talked about the prospects of a digital dollar coming down the pike.

19/06/2021

Deposits acts as a form of security to the Landlord for the Tenant’s due compliance of the Tenancy Agreement mainly :
- To pay rent promptly
- To pay utility bills promptly
- To keep the rented premises in good condition

By default (subject to the Tenant’s compliance), the Landlord should refund all deposits to the Tenant at the end of the Tenancy.

However in event of any breach by the Tenant, the Deposit can be deducted / forfeited in accordance with the terms stipulated in the agreement.

Note that there is no standard tenancy agreement adopted in Malaysia. Parties are free to contract as they deem suitable as long as it does not contravene the law. It is therefore advisable that both parties take note of the terms of agreement.

For further advise, feel free to contact us.
Thank you for tuning in.



押金的目的是担保租户遵守跟屋主之间的合约主要为:
- 按时支付租金
- 按时支付水电费
- 保持房产良好状态

一般情况下，(在租户不违反合约的前提下），屋主应在合约结束后将所有押金退还给租户

但如租户有任何违约，屋主可根据协议规定的条款扣除/没收押金

大马没有规定需要采用标准的租赁协议。只要不违反法律，当事人可以自由地签订他们认为合适的合约。因此，建议各方注意合约里的条款内容

如需法律建议，请随时与我们联系。
感恩
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18/06/2021

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18/06/2021

Tenancy Agreement Standard Clauses