Section 90B of the Employment Act 1955 makes it an offence for an employer to threaten, deceive or force an employee to work and to prevent that employee from leaving the place where the work is done — a fine up to RM100,000, two years imprisonment, or both. Passport retention is prohibited separately, by s.12(1)(f) of the Passports Act 1966. The commercial exposure sits offshore, in US import bans and the EU forced labour regulation.
- s.90B requires coercion or deception AND prevention of movement — the confinement limb is joined by and, not or
- s.90B was inserted by Act A1651 and came into force on 1 January 2023 by P.U.(B) 394/2022, not in 2012 as the Act's own amendment table states
- Passport retention is an offence under s.12(1)(f) of the Passports Act 1966 — nothing in the Employment Act mentions passports at all
- The Employer Pays Principle is not Malaysian law — the Private Employment Agencies Act 1981 expressly permits charging a migrant worker up to one month's basic wages
- CBP has issued eight withhold release orders and findings against Malaysian glove and palm oil producers since 2019, all now modified or revoked
- The EU forced labour regulation applies from 14 December 2027
Who this applies to: Exporters in gloves, palm oil, electronics and garments, employers of migrant workers, and compliance and ESG teams.
On this page
Between 2019 and 2022, US Customs and Border Protection blocked imports from eight Malaysian glove and palm oil producers. Companies repaid more than USD85 million in withheld wages to get the orders lifted. That is the commercial reality of forced labour compliance in Malaysia, and it is why this is a trade question before it is an HR one.
The Malaysian offence
Section 90B of the Employment Act 1955 catches an employer who “threatens, deceives or forces an employee to do any activity, service or work and prevents that employee from proceeding beyond the place or area where such activity, service or work is done”. Fine up to RM100,000, imprisonment up to two years, or both.
Read the conjunction carefully, because it is the whole section. The means limb is disjunctive — threatening, deceiving or forcing will each suffice. The confinement limb is joined by “and”. Coercion alone is not s.90B; coercion plus restriction of movement is.
One correction worth making loudly: s.90B was inserted by s.41 of the Employment (Amendment) Act 2022 (Act A1651) and came into force on 1 January 2023 under P.U.(B) 394/2022, which revoked an earlier order that had set 1 September 2022. The “List of Amendments” table printed in the Act’s own updated text attributes s.90B to Act A1419 with effect from 1 April 2012. That table row is wrong — A1419 inserted s.90A, protection of officers. Anyone dating the offence to 2012 has read the index rather than the amending Act.
Above s.90B sits the Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act 2007 (Act 670), where “exploitation” includes forced labour or services, and s.12 carries up to twenty years’ imprisonment. Two features matter in practice: s.16 makes the victim’s consent no defence, and s.17A removes any need to prove movement or conveyance. Act A1644, in force 22 February 2022, widened the definition from “means” to “includes” and deleted the definition of “coercion” altogether.
Passport retention
Every ESG questionnaire asks about it; almost every Malaysian article cites the wrong law. The Employment Act 1955 does not mention passports. Not once.
The prohibition is s.12(1)(f) of the Passports Act 1966: possessing, without lawful authority, a passport issued for the use of another person. Fine up to RM10,000, imprisonment up to five years, or both. Section 12(1)(e) closes the consent route by making it an offence to let another person hold your own passport where you know it may be used by them. JTKSM states the position directly in its foreign worker FAQ.
The soft spot is the phrase “without lawful authority”, which no reported decision appears to construe in the safekeeping context. Voluntary employer custody is legally untested — which is a reason to provide individually keyed lockable storage instead, and Act 446 already requires exactly that.
Recruitment fees
Here Malaysian law runs against the international standard rather than with it. The Employer Pays Principle is not law in Malaysia. The Private Employment Agencies Act 1981 (Act 246) caps worker-paid fees rather than banning them: a placement fee of up to 25% of the first month’s basic wages from a job seeker, and up to one month’s basic wages from a non-citizen employee, with registration fees of RM50 outside Malaysia and RM30 within. Section 14B(2) permits the employer to pay instead, and where it does, nothing may be demanded from the worker — permissive, not mandatory. Charging above the schedule is an offence under s.28, up to RM50,000 or one year.
So an employer can be entirely compliant with Malaysian law and still fail a buyer’s audit, because recruitment fees charged to workers are ILO indicator territory — debt bondage — regardless of what Act 246 permits. The eleven ILO indicators are: abuse of vulnerability, deception, restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime. The ILO’s own caveat is that a single indicator may in some cases imply forced labour.
Malaysia ratified ILO Convention 29 in 1957 and its 2014 Protocol on 21 March 2022. It denounced Convention 105 in 1990 and has not re-ratified.
The export exposure
Section 307 of the US Tariff Act of 1930 (19 U.S.C. 1307) bars goods made wholly or in part by forced labour. Until 2016 a “consumptive demand” exception let such goods in where domestic supply was short; the Trade Facilitation and Trade Enforcement Act of 2015, signed 24 February 2016, repealed it. CBP now detains under a withhold release order and seizes under a Finding.
Malaysia’s record since then: WRP Asia Pacific (2019, gloves), Top Glove (2020, escalated to a Finding in March 2021), FGV Holdings (2020, palm oil, modified 15 January 2026), Sime Darby Plantation (2020, escalated to a Finding in January 2022), Supermax (2021), Smart Glove (2021), Brightway (2021) and YTY Industry (2022). All have since been modified or revoked — CBP’s published dataset as at 23 June 2026 contains no Malaysian entry, so there is no active US order today.
The next wave is European. Regulation (EU) 2024/3015 entered into force on 13 December 2024, but Article 39 applies the market ban itself from 14 December 2027. The provisions already live are institutional — guidelines, the database, the single portal — not obligations on exporters. Malaysian palm oil, gloves, electronics and garments all appear on the US Department of Labor’s 2024 List of Goods Produced by Child Labor or Forced Labor, which is where EU authorities will start looking.
Common mistakes
Reading s.90B as an offence of coercion alone. The confinement limb is conjunctive.
Dating s.90B to 2012. The Act’s own amendment table is defective; it commenced 1 January 2023.
Citing the Employment Act on passports. It says nothing. The Passports Act 1966 does.
Assuming compliance with Act 246 fee caps satisfies a buyer. It satisfies Malaysian law and fails the ILO debt bondage indicator.
Treating the lifting of the US orders as the end of it. The EU ban applies from 14 December 2027 and works on a different mechanism.
What’s next
Audit against the eleven ILO indicators, not against Malaysian statute — the two do not align, and the buyers who can stop your shipments use the ILO list. Start with the three that produced every Malaysian withhold release order: recruitment fees, identity document retention, and accommodation conditions.
What exactly does s.90B prohibit?
It applies to an employer who threatens, deceives or forces an employee to do any activity, service or work and prevents that employee from proceeding beyond the place or area where the work is done. The means limb is disjunctive — threatening, deceiving or forcing will each do — but the confinement limb is joined by and, so restriction of movement must also be present. Penalty is a fine of up to RM100,000 or imprisonment of up to two years, or both.
Is it illegal for an employer to hold a worker's passport?
Yes, but not under employment law. The words passport and travel document do not appear anywhere in the Employment Act 1955. The prohibition is s.12(1)(f) of the Passports Act 1966, which makes it an offence to have in your possession, without lawful authority, a passport issued for the use of someone else — fine up to RM10,000 or imprisonment up to five years, or both. JTKSM confirms this reading in its own foreign worker FAQ.
Does the Employer Pays Principle apply in Malaysia?
Not as law. The Private Employment Agencies Act 1981 caps worker-paid fees rather than prohibiting them: s.14B permits a placement fee of up to 25 percent of the first month's basic wages from a job seeker, and up to one month's basic wages from a non-citizen employee. Section 14B(2) allows the employer to pay it instead, and where the employer does, nothing may be demanded from the worker — but that is permissive, not mandatory.
Are there active US import bans on Malaysian goods?
Not as at 23 June 2026, the date of CBP's current published dataset, which contains no Malaysian entry. Eight actions were issued against Malaysian glove and palm oil producers between 2019 and 2022, two of which escalated from withhold release orders to formal Findings, and all have since been modified or revoked. CBP states that companies have repaid over 85 million US dollars in withheld wages.
The following are deliberately unstated or described only qualitatively until confirmed by a subject-matter expert:
- Confirm whether the National Action Plan on Forced Labour 2026–2030 has received Cabinet approval — the 2021–2025 plan has lapsed and the successor was still in draft following the November 2025 review workshop
- Confirm how the words without lawful authority in s.12(1)(f) of the Passports Act 1966 are construed where a worker consents to employer safekeeping — no case law or AGC guidance on the point could be located
Sources
- Employment Act 1955 (Act 265), s.90B, updated text as at 1 January 2023 — Jabatan Tenaga Kerja Semenanjung Malaysia
- Adakah pasport pekerja asing boleh disimpan oleh majikan? — Jabatan Tenaga Kerja Semenanjung Malaysia
- ILO Indicators of Forced Labour — International Labour Organization
- Withhold Release Orders and Findings — US Customs and Border Protection
- List of Goods Produced by Child Labor or Forced Labor, 2024 edition — US Department of Labor, Bureau of International Labor Affairs
- Regulation (EU) 2024/3015 on prohibiting products made with forced labour on the Union market — European Union
Change history
| Version | Date | Change | By |
|---|---|---|---|
| 01.00 | 20 Jul 2026 | Approved and published. | — |