Malaysia - Immigration Update: Foreign Workers.

Legal News & Analysis - Asia Pacific - Malaysia - Labour & Employment

15 November, 2019


Is your company's foreign labour workforce legitimate? 


Recent times have seen a surge in unannounced raids being conducted on companies involved particularly in the construction, manufacturing, and service sector that are heavily reliant on foreign labour. Given the increased vigilance, the employer's role in ensuring that all foreign workers on its premises are legitimate must come to the fore. 


This article brings to your attention the statutory obligations imposed by the law on an employer or occupier of a premises that permits the entry of such foreign labour and the corresponding repercussions for failure to adhere to such requirements.   


Harbouring illegal foreign workers 


The presence of any foreign labour in the company's premises imposes a corresponding obligation to ensure that the foreign worker holds the requisite authorisation for such presence. This obligation extends to the presence of foreign labour that is supplied by third parties or contractors of the company engaged to render any form of services. 


The company bears the obligation to ensure that the employees of the contractors or third parties that are present on its premises hold valid work permits with the respective contractors and have the corresponding right to legitimately be present at the premises to render such services. This is provided for under section 55E(1) of the Immigration Act 1959/63 ("the Act”) which provides that no occupier shall permit any illegal immigrant to enter or remain at any premises. Under the Act, an occupier refers to any person having the charge, management or control of the premises. 


As such, even if a contractor engages foreign labour and brings them to the company's premises for the performance of such services, the presumption under the law is that the company is responsible for these foreign workers and has to ensure the legitimacy and validity of the work permits held by such foreign labour. 


Additionally, if the company does not own the premises of the land in which it is situated but is merely leasing the land or factory premises, the owner of the land or factory on which it is situated also runs the risk of being in breach of section 55 E(1). 


The word "occupier” does not import a meaning that an occupier must necessarily be the registered owner of the premises. Proof of being an occupier can also be evidenced by way of a tenancy agreement of the premises if the company is a tenant or the utilities bill in the name of the company.


Similarly for the foreign labour that the company engages directly it must also ensure that the foreign labour engaged has the name of the company reflected accurately in the work permit as well as the sector and place of work/location. If there is a different entity reflected in the work permit, specifically, a third party entity which has sourced for the foreign labour but only acts as an agent or intermediary, this is not permissible. The name of the company that employs the foreign labour must be consistent with that stated in the work permit as well as the location where the employee is to be based. 


Under the Act, the immigration officers are conferred with very wide powers similar to that exercised by police officers. This includes the power to arrest, detain or remove a person, the power to enter the premises without a warrant and with or without assistance to enter and search any premises if he has reason to believe the commission of an offence against the Act is likely


In the event of a raid by the immigration authorities, the officers have the right to detain all such foreign workers on the premises of the company if there are inconsistencies with the information contained in the work permit which extends to the position or duties undertaken by the foreign workers. 


Even if the foreign workers have permits but it is different from the company where they are found at, position stated, sector or place of work, they can be detained. These extensive powers extend to the detention for a period up to 14 days and for any period thereafter they will need to be produced before a Magistrate for a further period of detention. 




Under section 55(2) of the Act, the liability imposed on a company can range between RM5,000 to RM30,000 and/or imprisonment for up to one year for each illegal immigrant found at the premises. For a second or subsequent conviction under the Act, the financial liability can range between RM10,000 to RM60,000 and/or imprisonment for up to two years for each illegal immigrant found at the premises. The members of the board of directors or even its managers can be held liable for such offences committed by the company whom would on conviction be liable to the same punishment to which the company is liable to. 


Mitigation of risks 


As the occupier of the premises, or as an employer, the company has the duty to ensure that all foreign workers located at its premises possess valid work authorisation. 

For those engaged directly by the company this can be verified by ensuring that the name of the company which the employees have entered into the employment contract with and name of the entity that is reflected in the work permit are the same, the location of where the employees are based and the sector and position of the employee reflected in the work permit must be consistent with the factual situation.   


For all other foreign labour, namely, those not engaged directly by the company but are provided by third parties for the performance of services pursuant to contracts with third parties, in addition to the contractual provisions and indemnifications that need to be entered into, the company should also have in place a system to verify that the foreign workers of the contractor or third party have valid work passes endorsed/stamped in the passports, the name of the company that has been engaged to provide such contracting services is reflected in the work permits of the foreign labour, the sector that is stated in the work permit is consistent with that of the contractor and nature of work being requested of by the Company and, finally, the location of work. 


Random or weekly inspections should be undertaken to ensure compliance with the law. This would in turn operate as a defence to any charge under section 55 E of the Act that all reasonable precaution and due diligence was exercised to prevent the commission of such offences. Given the potential ramifications and financial implications, it is timely for all employers to take heed of such matters when hiring foreign labour.




For further information, please contact:


Sivabalah Nadarajah, Partner, Shearn Delamore & Co​

[email protected]