MALAYSIA has presented the Gig Workers Act 2025 as a landmark step towards protecting platform workers. Yet a closer examination suggests the law may do more to legitimise the gig economy’s existing power imbalance than to correct it.
Rather than addressing the underlying issue of worker misclassification, the Act creates a standalone framework for gig workers as independent contractors.
In doing so, it establishes a permanent third category of worker that sits outside traditional employment protections. A comparison with the EU Platform Work Directive (Directive (EU) 2024/2831) highlights the shortcomings of this approach.
The Act explicitly defines a service agreement as distinct from an employment contract.
As a result, gig workers remain excluded from many protections available to employees, including minimum wage guarantees, paid annual leave, medical leave and employer-funded Employees Provident Fund (EPF) contributions.
By contrast, the EU Platform Work Directive introduces a rebuttable presumption of employment.
Where a platform exercises significant control over a worker through performance monitoring, earnings restrictions or work allocation, the individual is presumed to be an employee unless the platform can prove otherwise.
This shifts the focus from preserving contractor status to ensuring workers receive appropriate labour protections.
Malaysia’s approach effectively institutionalises a second tier of labour. Rather than requiring platforms to justify their employment arrangements, the law accepts the contractor model as the default position.
Workers bear the burden
The Act also places the burden of challenging unfair treatment largely on workers themselves.
A driver or rider facing an account suspension, deactivation or sudden pay reduction must first pursue the platform’s internal grievance process, which may take up to 30 days.
If the dispute remains unresolved, the worker must then seek conciliation through the Industrial Relations Department before bringing the matter to the newly established Gig Workers Tribunal.
For workers earning modest and often unpredictable incomes, navigating this process can be financially and practically difficult.
The EU framework takes a different approach. Instead of requiring workers to prove they are employees, the burden falls on the platform to demonstrate genuine self-employment. If it cannot do so, employee status applies.
This shift in responsibility acts as a deterrent against misclassification and encourages platforms to review their labour practices proactively.
Algorithmic management remains largely unchecked
One of the defining features of platform work is algorithmic management. Digital platforms determine work allocation, performance rankings, earnings opportunities and, in some cases, account deactivations through automated systems.
Malaysia’s law acknowledges this reality but adopts a largely reactive approach. Workers may request a manual review after an adverse decision has been made, but the Act does little to limit the underlying power of algorithms or require meaningful human oversight.
While platforms must disclose the existence of automated monitoring systems, transparency alone does not address concerns over shifting performance targets, behavioural manipulation or opaque decision-making.
The EU Directive goes further. It treats algorithmic management as a potential occupational risk and requires regular assessments of its effects on workers’ health and well-being.
It also restricts platforms from using automated systems to monitor private communications or personal beliefs, recognising the broader risks posed by unchecked digital surveillance.
The social protection gap
Supporters of the Act often point to its mandatory social protection provisions. Under the law, 1.25% of a worker’s earnings is automatically deducted and channelled to SOCSO/PERKESO.
However, the scheme does not require mandatory employer-style matching contributions from platform companies. Platforms effectively act as collection agents for contributions funded primarily by workers themselves.
In contrast, the EU’s employment-based model requires platforms to contribute directly towards social insurance, pensions and other statutory benefits when workers are deemed employees.
As a result, Malaysia’s system risks placing additional financial pressure on riders and drivers already facing stagnant base fares and rising living costs.
Reform without rebalancing power
The Gig Workers Act 2025 represents an attempt to regulate a rapidly expanding sector, but it does so largely on the platforms’ terms.
By formally recognising gig workers as a separate class of labour, it shields digital platforms from many of the obligations borne by conventional employers.
The Act introduces greater transparency and establishes dispute-resolution mechanisms, but it leaves the fundamental imbalance of power largely intact.
Without addressing employment status, platform accountability and employer contributions, the law risks offering the appearance of protection while preserving the conditions that make gig workers vulnerable in the first place. ‒ July 7, 2026
The author is a Senior Lecturer at the Faculty of Law, Universiti Malaya.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Main image: Pexels/Optical Chemist
