Malaysia’s Gig Workers Act: A safety net with a hole in it

Ong Tze Chin

Malaysia champions its Gig Workers Act 2025 as a progressive safety net. But the reality is different.

The law cements gig workers’ second-class status. It forces them to fund their own social security through wage deductions.

At the same time, it reinforces the power asymmetry of platforms that control algorithms, pricing and account deactivations, without matching accountability.

The act is meant to be a dedicated, standalone legal framework for independent contractors. But a deep comparative analysis reveals that it gets this fundamentally wrong.

By institutionalising a “third worker category”, Malaysia sidesteps the root problem of employment misclassification. In doing so, it has inadvertently protected tech monopolies rather than the vulnerable workers navigating them.

In contrast, the EU Platform Work Directive (Directive (EU) 2024/2831) provides a masterclass in structural labour reform. It prioritises employee rights, forces data transparency and shifts the legal burden of proof onto wealthy digital platforms.

The most glaring flaw in Malaysia’s Gig Workers Act 2025 is its refusal to challenge the legal status of gig workers as independent contractors. The act explicitly defines a “service agreement” as a contract that does not include an employment contract.

By creating this permanent “third category”, the Malaysian government shields tech platforms from the costly responsibilities of traditional employers.

Gig workers remain locked out of standard employment protections. These include a legally mandated monthly minimum wage, paid annual leave, medical leave and statutory employer Employees Provident Fund (EPF) contributions.

Malaysia’s law stands in sharp contrast to the EU Platform Work Directive, which tackles this head-on with a rebuttable legal presumption of employment. If a digital platform exerts de facto managerial control over an individual, the worker is automatically presumed to be an employee. This control might include setting caps on earnings, restricting working hours or tracking performance via apps.

By forcing a structural pivot toward reclassification, the EU aims to help an estimated five million misclassified workers. They could finally claim full labour rights, stable income floors and structural parity with traditional employees.

Malaysia’s law, conversely, codifies a second-class labour tier under the guise of statutory protection.

The procedural burden in Malaysia

Under Malaysia’s Gig Workers Act, the burden of fighting unfair platform practices falls squarely on the individual worker.

If a ride-hailing driver or delivery rider faces an unfair account deactivation or a sudden cut in pay, they must launch a complex, multi-tiered bureaucratic process.

They must first submit a written complaint to the platform provider’s internal grievance mechanism. It then has up to 30 days to respond.

If unresolved, they must seek conciliation through the Ministry of Human Resources before escalating the matter to the new Gig Workers Tribunal.

For a vulnerable worker earning a subsistence wage, navigating this 30-day corporate shield is financially and logistically prohibitive.

The EU Platform Work Directive bypasses this imbalance by fundamentally shifting the burden of proof onto the digital labour platforms. Workers do not have to prove they are employees.

Instead, the multi-billion-dollar platform must legally prove that the worker is genuinely self-employed. If the platform fails to rebut the presumption of control, the worker is granted employee status.

This mechanism acts as a massive deterrent against corporate exploitation. It forces tech companies to proactively audit and restructure their workforce models to maintain compliance.

Algorithmic management

The core issue for gig workers is that platforms’ algorithms serve as the digital boss. They decide who gets work, how much people earn and who gets fired.

Both pieces of legislation acknowledge this reality, but their solutions differ radically in depth.

Malaysia’s approach is reactive. It lets the algorithm run wild. Gig workers can only ask for a “manual review” after the damage – such as a suspension pending inquiry – has already occurred.

The act introduces basic transparency, requiring platforms to inform workers when an automated system is tracking them. But it fails to challenge the underlying structural control.

The law treats algorithmic manipulation as a static administrative feature. This leaves the platform’s proprietary code free to continuously shift performance targets, manipulate behavioural nudges and penalise riders without human oversight.

By offering mere notifications rather than restricting the algorithm’s power to dictate livelihoods, Malaysia’s transparency stays superficial. The platform’s asymmetric dominance as the digital boss remains entirely intact.

In contrast, the EU Platform Work Directive is strictly proactive. It treats algorithmic management as a structural hazard to worker wellbeing. It demands a systematic review of psychological and ergonomic risks every two years.

It also bars platforms from using automated systems to spy on workers’ private beliefs or communications. This cuts off the algorithmic tools used to exploit desperate behaviour.

The myth of subsidised social security

Proponents of Malaysia’s Gig Workers Act point to its mandatory social safety net provisions as a massive victory. The act introduces a system where a 1.25% automatic deduction is stripped from a gig worker’s earnings for every accepted job, to fund the Social Security Organisation (Soscso).

However, this financial model exposes a glaring flaw. It does not impose a mandatory employer-matching social contribution on the platform providers.

Instead, the platform merely acts as a digital administrative conduit to skim the worker’s own hard-earned money.

In contrast, the EU Platform Work Directive establishes a default mechanism for employee reclassification. Once reclassified, platforms must pay full social insurance, medical leave and pension contributions as employers, directly out of company revenues.

Malaysia’s system essentially legalises wage deductions under the banner of protection. This further squeezes the profit margins of riders and drivers who are already grappling with stagnant, unreviewed base fare rates.

Ultimately, Malaysia’s Gig Workers Act does not provide real protection for gig workers. It attempts to regulate the gig economy on the tech platforms’ terms.

By officially recognising gig workers as a separate, non-employee asset class, the act helps platform monopolies insulate themselves from standard labour liabilities.

It offers transparency on paper but leaves the lopsided power dynamic completely untouched.

Dr Ong Tze Chin is a senior lecturer at the Faculty of Law, Universiti Malaya.

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