Proposed Amendment to the Employment Act 1955: Pupilage as Apprenticeship?

by | Oct 27, 2021 | Law

Mr. Marcus van Geyzel, co-founder of boutique corporate law firm Peter Ling & van Geyzel, recently highlighted that the proposed amendment to the definition of ‘apprenticeship contract’ found in the Employment (Amendment) Bill 2021 [“Amendment Bill”] could result in the following:

“… pupils will fall within the scope of the EA (they would be “employees” for the purpose of the EA provided that they are paid RM2,000/month or below), and will be entitled to the minimum wage.”[1]

The revised definition of ‘apprenticeship contract’, if passed by Parliament the way it is presently worded in the Amendment Bill, would be:

“a written contract entered into by a person with an employer who undertakes to employ the person and train or have him trained systematically for a trade for a specified period which shall be for a minimum period of six months and a maximum period of twenty four months in the course of which the apprentice is bound to work in the employer’s service.”[2]

Assuming the revised definition is adopted in its entirety, it is submitted that there still remains various obstacles in place preventing pupilages from being construed as apprenticeship for the purposes of the EA 1955.

For the purposes of this article, we will examine the following aspects of the definition of ‘apprenticeship contract’ in the context of pupilage and the legal profession:

i. Written contract;

ii. Employer; and

iii. Systematic training for a trade.

Written Contract

At the present moment, some pupils have written contracts with their masters and/or the firm while others do not.

It is important to note that Ruling 10.09 of the Rules and Rulings of the Bar Council,[3] which was introduced in February 2019, prohibits a master from “[entering] into any contract of or for service, with his/her pupil.”[4]

Some pupil masters and/or firms may rely on Ruling 10.09 to justify not entering into a written contract with a pupil.

Based on the above definition of ‘apprenticeship contract’, a written contract is a prerequisite.

The absence of a written contract would result in a pupil-master arrangement not being an ‘apprenticeship contract.’

Two possible solutions to plug the loophole immediately come to mind:

i. Expand the definition of ‘apprenticeship contract’ to cover oral contracts; and

ii. Amend or replace Ruling 10.09 to require pupil masters to enter into written contracts with pupils.

The former, however, could result in significant hardship for employers across all industries. Individuals can claim to have entered into an oral contract for apprenticeship and claim to be entitled to the rights and protections accorded under the Employment Act 1955 (“EA 1955”).

On the other hand, the latter could be contrary to public policy as the parties’ autonomy vis-a-vis freedom of contract[5] (namely whether or not to enter into a contract)[6] would be violated.

This loophole, and the best/appropriate method to close it, evidently requires further deliberation.

Employer

Section 2 of the EA 1955 defines an ‘employer’ as:

“any person who has entered into a contract of service to employ any other person as an employee and includes the agent, manager or factor of such first mentioned person, and the word “employ”, with its grammatical variations and cognate expressions, shall be construed accordingly.” (Emphasis mine)

Here, Ruling 10.09 of the Rules and Rulings of the Bar Council could prove to be an obstacle yet again.

If a pupil master refuses to enter into a contract of service with a pupil, by virtue of Ruling 10.09, the pupil master would not be an ‘employer’ for the purposes of the EA 1955.

Alternatively, a pupil master can opt to enter into a contract for services[7] with a pupil (Ruling 10.09 notwithstanding) so as to not fall into the definition of an ‘employer’ for the purposes of the EA 1955.

An employer, as defined by the EA 1955, is a prerequisite for the existence of an ‘apprenticeship contract.’

The absence of an ‘employer’ (as defined by the EA 1955) would result in a pupil-master arrangement not being an ‘apprenticeship contract.’

Similar to the written contract loophole, the employer loophole and the best/appropriate method to close it would require further consideration.

Systematic training for a trade

The EA 1955 does not define the word “trade.” As such, the Courts will likely rely on dictionary definitions of the word.[8]

Black’s Law Dictionary defines ‘trade’ as:

“the act or the business or buying and selling for money; traffic; barter. May V. Sloan, 101 U.S, 231, 25, L.Ed. 797, Purchase and sale of goods and services between businesses, states or nations. Trade is not a technical word and is ordinarily used in three senses: (1) in that of exchanging goods or commodities by barter of by buying and selling for money; (2) in that of a business occupation generally; (3) in that of a mechanical employment, in contradistinction to the learned professions, agriculture, of the liberal arts. People v. Volar vort of America, Inc., 1.0 Misc. 2d 378, 174 N.Y.S. 2d 789, 793.”[9] (Emphasis mine)

Meanwhile, Collins Dictionary of Law defines ‘trade’ as:

“operations of a commercial character involving the provision to customers of goods or services for reward; an adventure in the nature of a trade connotes a single such operation.”[10] (Emphasis mine)

In view of the above definitions, the legal profession could be considered a trade. If so, a pupilage could be construed as training for a trade.

Having said that, whether such training is ‘systematic’ is debatable. At the present moment, pupil masters are free to tailor the 9 months pupilage as they see fit.

In the event a pupilage is a training for trade but it is not considered systematic training, a pupilage would not qualify as an ‘apprenticeship contract’ for the purposes of the EA 1955.

Postscript: Mr. Donovan Cheah, co-founding partner of Messrs. Donovan & Ho, brought to my attention that some provisions in the EA 1955 use the phrase “trade, profession, or business” [Section 63A(1)(a)] and “trade, business, or profession.” [Section 2]. He argued that this would imply that “trade” is distinguished from “profession” and the legal profession being a profession, would fall under the latter rather than the former.

In light of the principle that Parliament does not legislate in vain [see e.g. Asia Pacific Higher Learning Sdn Bhd (registered owner and licensee of the higher learning institution Lincoln University College) v Majlis Perubatan Malaysia & Anor [2020] 2 MLJ 1, at paragraph 126], as well as the rule of harmonious construction [see e.g. Pihak Berkuasa Tatatertib Majlis Perbandaran Seberang Perai & Anor v Muziadi Mukhtar [2020] 1 MLJ 141, at paragraph 78], I am inclined to agree with him.

Having said that, this would in fact further support the contention in this article that there remains various obstacles in place preventing pupilages from being construed as apprenticeship for the purposes of the EA 1955.

(more…)

Minimum Remuneration for Pupils

by | Apr 14, 2021 | Law

Disclaimer: The following was written before the Malaysian Bar passed a resolution that “it accepts in principle that pupils ought to be protected with minimum remuneration.”

The Current Position

As it stands, pupils in Malaysia are only allowed to receive a remuneration from their pupil master. This is provided for in Section 12(3) of the Legal Profession Act 1976 (“LPA 1976”) which states:

“(3) No qualified person shall, without the special leave in writing of the Bar Council, hold any office or engage in any employment of any kind, whether full-time or otherwise, during his period of pupillage, but nothing in this subsection shall preclude a pupil from receiving remuneration from his master.” (emphasis mine)

Two things need to be noted at this point:

(i) The LPA 1976 is silent on the definition of “remuneration” thereby leaving it to the discretion of a master to determine how much (if any at all) a pupil should receive.

(ii) From a plain reading of the provision, it would appear that masters are not

statutorily obligated to remunerate their pupils. Though by convention pupils are remunerated, masters appear to not be required to remunerate their pupils.

Chapter 10 of the Rules and Rulings of the Bar Council, which touches on pupillage, is silent on this matter.

Item (i) has, unsurprisingly, resulted in “wage” inequality. In 2014, a survey by eLawyer revealed that some pupils in certain cities in Malaysia received as low as RM500 a month.[1] Meanwhile, in the Klang Valley, pupils were reportedly receiving around RM2,000 to RM2,800 a month.

More recent data reveals that this wide spectrum still persists – with some pupils in the Klang Valley receiving up to RM5,000 a month[2] while some, also in the Klang Valley, only receive RM400-900 a month.[3]

As at the time of writing, the minimum wage for selected locations in Malaysia is RM1,200.[4] However, this figure only applies to employees who fall under the scope of the Employment Act 1955, the Sabah Labour Ordinance, or the Sarawak Labour Ordinance.[5]

(more…)

Proposed Pupillage Allowance Formula

by | Dec 9, 2020 | Law, Misc

Recently, there has been a lot of discussion regarding pupillage allowances.[1] Most legal practitioners recognise that pupils should receive an allowance.[2] The issue, rather, is how much the said allowance should be.

It cannot be denied that there are various factors which come into play when determining how much allowance a pupil should be given.[3]

In order to contribute to the all-important discussion in a more constructive and concrete manner, I would like to propose the following formula as a guide in determining a pupillage allowance sum:

Pupillage Allowance = Pupil’s Key Expenses (A) + Top Up (B)

(A)

Formula for (A): Monthly Rental (if any) + Food* + Transportation + Loans (if any)

The purpose of (A) is to ensure the Pupil’s core needs and expenses are met.

*at a reasonable sum based on the average cost per meal in the locality[4]

(B)

Formula for (B): Approximate total number of hours the Pupil works in a month x a chosen multiplier**

The purpose of (B) is to, inter alia:

i. compensate the Pupil for his/her qualification;

ii. compensate the Pupil for time spent working for the firm;

iii. compensate the Pupil for experience gained; and

iv. provide some room for savings by the Pupil

**the multiplier should at least be 5.77 for major towns[5] and 5.29 for everywhere else.[6]

(more…)