COVID-19 in Malaysia: Restriction of Movement Order – ongoing developments and updates
Due to the nature and manner in which the Restriction of Movement Order was made and announced, the gaps and ambiguities in respect of its implementation are slowly being addressed by subsequent laws, regulations and clarifications from government departments. This is however an ongoing development, to be taken on a day-to-day basis as potential new issues or lacuna surfaces. Following such updates can be a challenge for some, even for me, a legal practitioner. To help with this, I am hoping to be able to collate all developments here in this article, which hopefully I will be able to update contemporaneously with such developments.
I also set out the core concerns individuals and businesses face, and what the legal position may be. I also refer / link to helpful articles or write ups by other legal practitioners. If you know of any other write-ups which may be helpful, send them across to me to link them. References have thus far been made to write-ups by Skrine, Donovan & Ho, Wong & Partners, Christopher Lee & Ong, Raja Darryl & Loh, Thomas Philip and JW Yeoh & Fenn.
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Edits / Updates
(i) update [18 March 2020 @ 2.40 pm]: included MNSC Press Statement on essential services and movement of people in/out of country
(ii) update [18 March 2020 @ 10:00 pm]: included FAQ issued by the Ministry of Human Resource dated 17 March 2020
(iii) update [18 March 2020 @ 10:30 pm]: included Press Statement released by Malaysian National Security Council on 18 March 2020
(iv) update [19 March 2020 @ 12:33 pm]: Removed reference to the FAQ purportedly issued by the Ministry of Human Resource dated 17 March 2020. I was made to understand at 11:43 AM today by the publishing law firm that this document has not been formally/officially announced by MOHR. Please disregard any reference or opined application you may have previously read here. I do apologise and moving forward, I will only make reference to documents I can obtain from the relevant government department's website / resource.
(v) update [19 March 2020 @ 3.45 pm]: included Ministry of Transport FAQ, Ministry of Education FAQ, Ministry of Higher Education FAQ and Inland Revenue Board's FAQ all dated 18 March 2020, as well as Ministry of Primary Industries Press Statement dated 19 March 2020.
(vi) update [19 March 2020 @ 9:50 pm]: include Ministry of Works FAQ dated 18 March 2020, and also Ministry of Human Resource FAQ and Ministry of Housing and Local Government FAQ both dated 19 March 2020.
(viii) update [20 March 2020 @ 2.00 pm]: there does not appear to be any new press statements, clarifications or FAQs for now. Have included link to PMO website, and update some references to articles by other practitioners/firms (Wong & Partners article on effect of Ministry of Works FAQ viz. construction and Lee Shih's article on AGMs of companies).
(ix) update [20 March 2020 @ 9:40 pm]: sorry, I was too optimistic and called it too early. 9 new FAQs which can be accessed at the PMO website which covers tourism and hotel cancellations, status of power supply/utilities offices/contact, update to the FAQ at 5(k) below, FAQ by Ministry of Health with general information on Covid-19/prevention (expanded below), Ministry of National Unity's events/schemes, Ministry of Human Resource FAQ No.2 (expanded below viz. employment), Ministry of Environment FAQ in relation to its scope of works and perhaps most significant of these, the Press Statement from the Minister of Home Affairs on the parameters / implementation of the RMO at Malaysian borders.
(x) update [23 March 2020 @ 5:00 pm]: quite a number of updates since, and I foresee quite a few more coming over the next few days. As most crucial matters are now more or less settled, with any further developments being towards refinement of the existing regime, I do not propose continuing with any further updates. Otherwise, this will become quite an ungainly collation. Thank you for following the updates. I also note there are a number of repeat readers from certain companies. I do apologise if you are relying on this article for updates. You can personally follow the developments here: Gazetted orders/regulations and government press statements/FAQs/clarifications, or feel free to reach out to me if there is anything you are unsure about.
In the meantime, I wish you all the very, very best.
(xi) update [24 March 2020 @ 5:10 pm]: ok... I set out some updates with the latest FAQs by Ministry of Home Affairs, Bank Negara, Ministry of Foreign Affiars and Ministry of Entrepreneur Development and Cooperation. The revised FAQ at 5(n) also linked.
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Announcement, Law and Regulations
1. On 16 March 2020, the Prime Minister of Malaysia (“PM”) announced that the Government of Malaysia has decided to implement a nationwide Restriction of Movement Order (“RMO”) beginning 18 March 2020 until 31 March 2020 (“Restriction Period”). This Order is enforced under the Control and Prevention of Infectious Diseases Act 1988 (“1988 Act”) and the Police Act 1967. In his announcement, the PM set out what the RMO encompasses.
2. On 17 March 2020, the Prevention and Control of Infectious Diseases (Declaration of Infected Local Areas) Order 2020 was gazetted. This Order effectively declared all states and federal territories in Malaysia as infected local areas as defined in the 1988 Act. The Order can be viewed / downloaded here.
3. On 18 March 2020, the Prevention and Control of Infectious Diseases (Declaration of Infected Local Areas) Regulations 2020 was gazetted. These Regulations can be viewed / downloaded here. These Regulations are effective for the Restriction Period and sets out certain aspects of the RMO in more specificity. Critically, these Regulations have the force of law pursuant to the 1988 Act. A summary of the Regulations, as follows:-
(a) Regulation 3: No persons shall make any journey from one place to another within any infected local area except for limited purposes specified in Regulation 3(1). Gatherings for religious, sports, recreational, social or cultural purposes are prohibited. The exceptions to these are found in sub-regulations (3) and (4).
(b) Regulation 4: Citizens or permanent residents of Malaysia returning from overseas are required to undergo health examination upon arrival in Malaysia before proceeding for immigration clearance.
(c) Regulation 5 and Schedule: Defines essential services. Premises providing essential services may remain open provided that the number of personnel and patron at the premises shall be kept to the minimum. Any premises involved in food supply chain or in selling food and beverages by way of drive-through, take away and delivery may be open subject to any conditions which may be imposed.
(d) Regulation 7: Any person who contravenes any provision of the Regulation commits an offence. The Regulation sets out the penalty and critically, makes clear that if an offence is committed by a body corporate, its directors and/or officers may also be held liable. Regulation 7 should be read together with Sections 24 and 25 of the 1998 Act.
4. Towards managing supply and prices of essential items, three other regulations were also Gazetted dealing with prohibition on export of masks, and in relation to the offences for breach of relevant weights and measures regulations:-
(a) Weights and Measures (Amendment) Regulations 2020
(b) Weights and Measures (Compounding of Offences) (Amendment) Regulations 2020
(c) Control of Supplies (Prohibition on Export) (Amendment) Regulations 2020
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Press Statement / Clarification / FAQ
5. The latest press statements, clarification and FAQs issued by governmental bodies/departments appear to be consolidated at the PMO webpage here. I set out below some which I have selected which I think may be of relevance to the general business community and individuals:-
(a) FAQ issued by the Malaysian National Security Council (revised as at 17 March 2020 @ 7.30 pm) towards clarifying the effect and implementation of the RMO. Of importance to companies with non-Malaysian staff is FAQ11, where only those working in essential services will be allowed re-entry into the country within the Restriction Period.
(b) FAQ by the Ministry of Domestic Trade and Consumer Affairs published on its website, which clarifies the effect of the RMO and Regulation on various businesses in F&B, departmental stores, dobby, security, online purchase / delivery i.e. essential services or exempted business may remain open, and F&B may do so too but only for take-out / delivery. Some critical clarifications are as follows:-
(i) the headquarters of businesses which supply essential services may remain open;
(ii) departmental stores are only allowed to keep their supermarket open, the other departments are to be closed;
(iii) Third party service providers which have direct impact to the security and provision of supply chains are allowed, subject to taking health safeguards.
(c) Press Statement released by the Malaysian National Security Council on 18 March 2020 (brought to my attention by Nimalan Devaraja (Mr), Partner at Skrine), which sets out the essential and non-essential services allowed to operate during the Restriction Period. It also clarifies the movement of people vis-a-vis citizens and non-citizens, in and out of the country.
(d) Press Statement released by the Malaysian National Security Council on 18 March 2020, which approved the operation of certain "sektor pembuatan" (manufacturers? suppliers?) of products deemed critical, as set out in Annexure A. Such businesses are to comply with various MITI requirements identified in the Press Statement. These critical sectors include essential food items, agriculture, fishery and home domestic cleaning products.
(e) On 16 March 2020, the Registrar of Societies announced that in light of the coronavirus pandemic, all annual general meetings for societies have been banned until 30 June 2020. Lee Shih, of The Malaysian Lawyer and Partner at Skrine, discusses the six key issues for company AGMs (deadlines, SC/Bursa announcements, extensions, use of technology, final dividends, delays) in this period of the RMO here.
(f) Inland Revenue Board announced on its website that the deadline for the filing of tax returns for employment and non-business income has been extended from 30 April 2020 (manual filing) and 15 May 2020 (e-filing) to 30 June 2020. Notification courtesy of Skrine, here.
(g) Inland Revenue Board released its FAQ dated 18 March 2020 on tax submission / treatment in relation to the Restriction Period. Raja Darryl & Loh has a write-up on the FAQ here, brought to my attention via Charlaine Chin's, Partner at Raja Darryl & Loh, post here.
(h) Ministry of Transport released its FAQ dated 18 March 2020. The FAQ deals with domestic transport, ehailing, rail services, port services and issues relating to air travel and cargo movement. Amongst others, it clarifies that ehailing services and lorries carrying essentials and food are allowed to operate. Critically, it also clarifies that ETS and KTM commuter areoperational, but there are some restrictions on Thai-Malaysia rail. MOT however stated that insofar as refunds for air ticket purchase is concerned, reference has to be made to each airline.
(i) Ministry of Education released its FAQ dated 18 March 2020. It deals with questions on the impact of the RMO on education, closure of schools and attendance of students, teachers and staff.
(j) Ministry of Higher Education released its FAQ dated 18 March 2020. It deals with questions arising from the impact of the RMO on closure of universities, polytechnics and community collages. Amongst others, it clarifies that students are to remain on premises, industrial training / learning is halted and affected examinations are postponed.
(k) Ministry of Primary Industries released its Press Statement dated 19 March 2020. It appears that exemptions are given to these businesses to continue operations: companies in oil palm, rubber tapping insofar as it goes towards supplying material for production of medical supplies and timber/logging insofar as it goes towards satisfying existing contracts. This should be read with its FAQ dated 20 March 2020.
(l) Ministry of Human Resource released its FAQ dated 19 March 2020, brought to my attention by a Facebook post of Yeoh Jit Wei, Partner at JW Yeoh & Fenn. Critically, in this FAQ, the MOHR clarified that employees in essential services are required to attend work, employers are obliged to pay wages during the Restriction Period and employers are prohibited from deducting annual leave or compelling no-pay leave.
The Ministry of Human Resource subsequently released its FAQ No.2 dated 20 March 2020. The initial few FAQs appear to be a rehash of 5(n) below. But on issues directly affecting employment, the FAQ explains steps which can be taken by employees should employers not comply with the RMO. Critically, MOHR also opined on situations which may amount to constructive dismissal (in context of question that employees face wage cut or lay-off) and retrenchment, categorically stated that employers cannot compel employees to take annual leave (FAQ18), reiterated that any wage-cut must be pursuant to negotiations and consensus between parties (FAQ20) and categorically stated that the RMO cannot amount to frustration of contract (FAQ25).
JW Yeoh & Fenn's May Fenn Lim has prepared a one-pager highlighting / translating the key points from both FAQs.
(m) Ministry of International Trade and Industry released its FAQ dated 19 March 2020. The FAQ appears to predominantly deal with questions and procedure in applying for exemptions for continuation of industrial operations.
(n) Ministry of Works FAQ dated 18 March 2020 and revised 24 March 2020, which clarifies that all construction works are to cease during the Restriction Period, with the exception of those in the construction and maintenance of "critical works" as set out in the FAQ. The FAQ also explains how contractors may apply for exemption. Wong & Partners have also prepared a helpful write up on the effect of the RMO on construction and infrastructure contracts, which also examines the FAQ as at 18 March 2020.
(o) Ministry of Housing and Local Government FAQ dated 19 March 2020, which clarifies, amongst others, the status of rubbish collection in states and that all markets are to close.
(p) Ministry of Health FAQ dated 20 March 2020. In addition to general information on Covid-19 and preventive measures to be taken by individuals and being taken by the government, this FAQ also sets out contact details of the MOH's Bilik Gerakan contact details and identifies private and public hospitals where you can get tested (with contact details).
(q) Ministry of Home Affairs issued its Press Statement dated 20 March 2020 which sets out the manner in which the RMO will be implemented at the Malaysian borders. The Press Statement sets out the treatment of citizens coming in and leaving, states that non-citizens (temporary work permit, expatriate pass, student pass, dependent pass and long-term social visit pass) are not allowed into the country, with exceptions set out in paragraph 3. The press statement also sets out the available option to non-citizens should their respective passes/permits expire during the Restriction Period.
(r) Ministry of Home Affairs FAQ dated 21 March 2020: employers in essential services industry must provide letter to employees to evidence employee’s requirement to attend work (4), Malaysian citizens with permit to work abroad are allowed to leave the country but not allowed to return within the Restriction Period (11), non-citizens with expiring work passes/permits are allowed to leave the country but not allowed to return within the Restriction Period or alternatively if their countries are in lockdown, are allowed to apply for special pass (14 & 15).
(s) Bank Negara FAQ dated 22 March 2020: defines what amounts to essential services in the financial sector (1), clarification that banks and insurance companies remain operational although services may be impeded due to preventive measures taken (2) and timing of operation of ATMs to be 7 am to 10 pm.
(t) Ministry of Foreign Affairs FAQ dated 22 March 2020: clarifies that industry viz. private security firms are classified as essential services (4), clarification on status of various diplomatic pass and permit holders, transit flights are allowed so long it does not pass through immigration checkpoints (11).
(u) Ministry of Entrepreneur Development and Cooperation FAQ dated 18 March 2020: SME Bank offering deferment of payment commitments impeded by the outbreak (1), SME Bank offering funds under the Kemudahan Bantuan Khas initiative with maximum funding of RM1 million to each company (3).
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Employment: Employee's leave and pay entitlements
6. Many employers are facing economic difficulties due to the COVID-19 situation, and the movement control during the Restriction Period may impose further hardship on businesses. A particular concern is the effect of the RMO which require business premises to close and employees to work remotely. A legitimate concern of some businesses is an employee’s pay and leave entitlement during this Restriction Period.
7. The RMO only provides that business premises are to be closed. It does not provide for a temporary cessation of work. In practical terms, the RMO makes it incumbent upon employers to close business premises and facilitate or make it possible for employees to work remotely / from home.
8. If employees are working from home, their annual leave should not be deducted since they are still working, albeit from a different location / at home.
9. For employees who are unable to work from home (for example, due to the nature of their work or simply because the employer is not able to facilitate such remote working) – the law firm Donovan & Ho has set out a succinct opinion on the matter, which I paraphrase: "the Ministry of Human Resources had previously issued guidelines to state that employers should not deduct annual leave if employees are unable to attend work due to a quarantine order or home surveillance order. The Ministry of Human Resources is likely to adopt the same view that annual leave should not be deducted during the movement control period", although this has not happened yet. In my opinion, any such guideline is not binding, but evidences best practices and will be a compelling argument in any industrial action, especially when viewed in light of the interpretation in 7 above.
10. Some businesses are also concerned whether they can opt to put their employees on unpaid leave during this period, given that the employees will not be working and the business may be facing financial difficulties. Again, the opinion set out in Donovan & Ho's write-up echoes what I have been advising my clients (quotations in this paragraph attributable to Donovan & Ho). "Unpaid leave, reduction in salary and / or reduction in working hours is generally allowed if it is done in good faith and is part of the employer’s last resort to avert or prevent retrenchment" – in practice, a high bar of proof is typically imposed for this. "However, forced unpaid leave carries a risk of claims by employees for breach of contract or unfair dismissal, so managing employee expectations and communication is crucial". Should retrenchment or severe financial difficulty be a very real possibility or concern, the company or employer may be better served opening channels of communication with employees towards achieving an agreement or consensus with the employees as to the treatment of their salaries for this period (no pay / half-pay / recognition such pay goes towards account of final bonus).
[Edit on 19 March 2020 @ 9:55 pm: The Ministry of Human Resource released its FAQ which clarified that employers are obliged to pay wages during the Restriction Period and prohibited from deducting annual leave or compelling no-pay leave.]
[Edit on 20 March 2020 @ 9:40 pm:The Ministry of Human Resource released its FAQ No.2 dated 20 March 2020. FAQ18 states that employers cannot compel employees to take annual leave and FAQ 20 reiterated that any wage-cut must be pursuant to negotiations and consensus between parties.]
11. In addition to Donovan & Ho's article which I have linked above, Wong & Partners have also prepared a helpful article relevant to queries vis-a-vis employment, which can be viewed here. Skrine's updated "e-insight" can be seen here (brought to my attention from a post by Manshan Singh, Skrine).
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Contractual: Disruption
12. Contracts and services will very likely be affected during this Restriction Period. What is your legal recourse, as a vendor and customer, in such instances? The terms that have been bandied about are "force majuere" and "frustration of contract". I have written about this here, albeit before the announcement of the RMO.
13. Very briefly, Malaysian law provides that a contract is generally said to be frustrated when there is a subsequent supervening, extraneous (i.e. not caused or brought about by or within control of parties), unpreventable (by parties) and unforeseeable change in circumstances which renders a contract legally or physically impossible of performance, or that the performance of the contract in the new situation is so fundamentally and radically different from that originally contemplated that it is no longer the same contract. Mere difficulty in performance or increase in costs do not amount to frustration. The idea here is that given the radical change in circumstance, it is no longer fair or possible to compel parties to comply with the original contract. When there exists such a frustration, the contract is said to be discharged or that it has automatically come to an end.
14. Force majeure however is conceptually quite different from frustration. A force majeure clause is principally an agreement or a term found in an agreement between parties as to how outstanding obligations should be resolved upon the onset of a foreseeable, identified event. The uncertainty and inconvenience which may arise from an unforeseeable event frustrating a contract are avoided by incorporating a well-drafted force majeure clause that clearly defines the events or circumstances that constitute force majeure. More importantly, such a clause can be crafted to provide a more nuanced response to or agreed consequence arising from events of force majeure. For example, it may be provided that, in circumstances constituting force majeure, an extension of time may be granted to the party in default, there may be cancellation of the contract at the option of one party, or the defaulting party’s duty to perform the contract will be suspended. The contract is thus not automatically brought to an end.
15. In instances when a contract has been frustrated, or arguably when a contract is discharged pursuant to a triggered force majeure clause without any agreed consequence, several outcomes may come into play, depending on the factual peculiarities of each contractual relationship. These may be re-compensation for any advantage received or sums paid (sometimes subject to set-off of expenses), refund of deposits and cessation of future obligations for payment.
16. Clinton Tan, Partner at Thomas Philip, also wrote about frustration and force majeure, here. Skrine recently on 19 March 2020 also released a helpful note on the matter.
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Other Helpful Articles
17. In addition to the articles by other firms listed above, the following may also be helpful:-
(a) Christopher & Lee Ong's article here, which deals with the above issues, with some additional helpful areas concerning control pricing on essential goods and what to do if an employee is found to exhibit symptoms of the virus.
(b) Wong & Partner's article on the key considerations for Malaysian financial institutions in light of the Covid-19 outbreak.