Gig Economy Law in Malaysia Through Legal Perspectives

Gig Economy Law in Malaysia Through Legal Perspectives

When short-term contracts or freelance work are slowly replacing permanent jobs, gig economy law becomes increasingly crucial.

In Malaysia, participation in the gig economy has been a constantly growing trend over the recent years.

Therefore, understanding the legal framework governing gig work is crucial, given its rapid growth and the unique challenges faced by gig workers.

The Overview of the Gig Economy in Malaysia

The gig economy in Malaysia has grown significantly, with common roles including:

  • Ride-hailing drivers
  • Delivery personnel
  • Freelance programmers
  • Creative freelancers

Gig work attracts a diverse demographic, from students seeking part-time income to professionals pursuing full-time freelancing.

Furthermore, the prevalence of remote and hybrid work models, which have been booming since the pandemic, has further fuelled the gig economy’s growth in Malaysia due to the highly fixable work arrangements.

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Factors Driving the Gig Economy in Malaysia

Several factors have contributed to the quick expansion of the gig economy in Malaysia. Firstly, technological advancements have made online platforms like Grab and Foodpanda easily accessible, encouraging gig work.

Additionally, the rising cost of living and changing market demands push individuals towards additional and flexible income sources available in the gig economy.

Moreover, social trends, such as the preference for work-life balance and remote work, have also contributed to the increasing number of gig workers.

Benefits of the Gig Economy

The gig economy also offers numerous benefits. Firstly, flexible work hours and locations allow gig workers to manage their professional and personal lives better. This flexibility is also beneficial for individuals who desire to prospect a particular field as a part-time before deciding to pursue it as a full-time job.

In addition, it provides diverse opportunities, enabling individuals with various skills to find suitable work. Consequently, for highly skilled workers, the gig economy can offer a higher potential income compared to traditional jobs. The gig economy also allows individuals to generate income from various sources by juggling multiple projects simultaneously.

Moreover, the gig economy contributes significantly to Malaysia’s GDP by reducing unemployment and providing additional income sources.

Challenges and Drawbacks for Gig Workers

However, despite its benefits, the gig economy presents several challenges and drawbacks for gig workers. They often lack traditional employment benefits and essential social protections, such as:

  • Health insurance
  • Employees Provident Fund (EPF)
  • Paid leave

Because of this, financial instability becomes a significant issue, with gig work often involving inconsistent earnings and difficulties in securing loans.

Additionally, compared to traditional corporate jobs, gig workers have limited opportunities for career growth and professional development.

Due to their low bargaining power and lack of legal protections, they are vulnerable to exploitation.

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Current Legal Framework

Current Legal Framework Gig Economy Law Malaysia

Hence, to protect gig workers, the current legal framework governing the gig economy in Malaysia includes the Self-Employment Social Security Act 2017 (Act 789). It provides minimal social security protections for gig workers, with significant gaps in coverage.

Current laws do not comprehensively cover all aspects of gig work, leaving many workers without adequate protection.

In comparison, California’s Assembly Bill 5 (AB5) provides a model for more extensive gig worker protections by classifying certain gig workers as employees.

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Proposals for Legal Reforms

Thus, there is a growing call for a comprehensive gig economy law to protect workers’ rights, ensure fair compensation, and provide financial security.

Economists, legal experts, and gig workers suggest implementing laws that offer similar benefits to traditional employment.

Additionally, Malaysia could benefit from adopting a model similar to Singapore’s upcoming legislation, which provides extended work injury protection and pension coverage as well as collective representation for gig economy workers.

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The Role of the Malaysian Gig Economy Commission (SEGiM)

The Malaysian Gig Economy Commission (SEGiM) aims to safeguard the welfare and rights of gig workers by developing and enforcing regulations.

The commission’s responsibilities include ensuring fair compensation and legal recognition, as well as addressing issues faced by gig workers.

Establishing SEGiM has faced challenges, but its formation is crucial for providing structured support to gig workers by enhancing the industry ecosystem.

Public and Industry Reactions

New gig economy laws have received support from various quarters, including gig workers and economists, who see the need for better protections.

However, there are concerns about the possible negative impact on startups and the overall economy, with fears that increased costs may be passed on to consumers.

The challenge lies in balancing worker protection with maintaining the flexibility and cost-effectiveness that make the gig economy attractive.

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The Future of the Gig Economy in Malaysia

The gig economy in Malaysia is expected to continue growing, contributing significantly to the national economy by 2025.

Legal and economic adjustments will be necessary to ensure sustainable growth while protecting gig workers’ rights.

The ongoing debate centres on finding the balance between providing necessary legal protections and preserving the gig economy’s flexibility.

The Bottom Line

To conclude, the gig economy’s rapid growth necessitates a robust legal framework to protect gig workers.

Balanced regulations are essential to support both gig workers and the broader economic growth in Malaysia.

As the gig economy evolves, so too must the legal perspectives that govern it, ensuring a fair and sustainable future for everyone involved.

Explore how our tailored legal services can safeguard your business against legal challenges and support its long-term growth in the gig economy.