Employers should not be made solely responsible for bearing the cost of providing protection to foreign workers, an industrial group said in calling for a fairer approach.
The Malaysian Industrial, Commercial and Service Employers Association (MICSEA) said while workers’ welfare was a priority, placing the entire cost of insurance, medical coverage, welfare, and protection schemes on employers would have a disproportionate impact on businesses, especially small and medium-sized enterprises (SMEs).
“Many companies are already under pressure from rising compliance costs. An additional one-sided obligation may threaten sustainability and future hiring,” said its president, Alvin Lai.
Lai said the protection of foreign workers was not solely an employer issue, but a matter of national interest involving multiple stakeholders.
In a statement, he suggested a shared-cost framework as a fairer solution, where government, employers and employees each contribute towards protection benefits.
He said this would ensure equity while strengthening corporate compliance.
He was responding to former Klang MP Charles Santiago’s suggestion that the government include migrant and informal workers in the 24-hour social protection plan announced on Monday.
Santiago said it was crucial that no one was left behind, and that benefits must be made “portable across borders” for migrant workers.
Lai cautioned against excessive cost burdens, saying they might discourage businesses from hiring foreign workers legally, potentially driving labour demand into unregulated channels.
“A balanced and practical system will prevent this and ensure workers remain protected under lawful employment structures,” he said.
Clear policy framework needed
Lai also called for transparent guidelines to define which type of protection is mandatory, how costs are to be allocated, and how claims will be managed.
This is to ensure that employers must not be left with ambiguous or retrospective liabilities, he said.
He proposed the establishment of a reliable reimbursement mechanism, saying employers were often required to make upfront payments for payroll, statutory contributions, or insurance.
“Without such safeguards, employers may be left exposed to cash flow disruptions and unrecoverable costs,” he said.
He also called for government subsidies or phased approaches to be introduced to allow employers, particularly those in SMEs, time to adjust to any foreign worker protection policy.
