Why the Gig Workers Act 2025 misses the mark

From Ong Tze Chin

While Malaysia champions its Gig Workers Act 2025 as a progressive safety net, the reality is that it hurts workers by cementing their second-class status, forcing them to fund their own social security through wage deductions while reinforcing the systematic power asymmetry of platforms that control algorithms, pricing and arbitrary account deactivations without employer accountability.

A deep comparative analysis reveals that the Act, intended as a dedicated standalone legal framework for independent contractors, is fundamentally wrong.

By institutionalising a “third worker category” instead of tackling the root problem of employment misclassification, Malaysia 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 by prioritising employee rights, forcing data transparency, and shifting 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 Gig Workers Act 2025 explicitly excludes employment contracts from its definition of a “service agreement”.

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, such as a legally mandated monthly minimum wage, paid annual leave, medical leave, and statutory employer Employees Provident Fund (EPF) contributions.

The EU Platform Work Directive 2024, on the other hand, tackles these matters head-on with a rebuttable legal presumption of employment. If a digital platform exerts de facto managerial control or direction over an individual—such as setting caps on earnings, restricting working hours, or tracking performance via apps—the worker is automatically presumed to be an employee.

By forcing a structural pivot toward reclassification, the EU ensures that approximately five million misclassified workers can 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 2025, the burden of fighting unfair platform practices falls squarely on the individual worker.

If an e-hailing driver or delivery rider faces an unfair account deactivation or a sudden reduction in payment rates, they must initiate a complex, multi-tiered bureaucratic process.

They must first submit a written complaint to the platform provider’s internal grievance mechanism, which has up to 30 days to respond. If unresolved, they must seek conciliation under the industrial relations department before finally escalating the matter to the newly established Gig Workers Tribunal.

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

In contrast, 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; rather, 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, forcing tech companies to proactively audit and restructure their workforce models to maintain compliance.

Algorithms: the ‘digital boss’

The core issues of gig workers are that the platforms’ algorithms serve as their “digital boss”, deciding who gets work, how much they 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, only allowing the gig worker to ask for a “manual review” after the damage—such as a 14-day suspension for inquiry—has already occurred.

By introducing basic transparency and requiring platforms to notify workers that an automated system is monitoring them, Malaysia stops short of challenging the deeper structures of control.

The law treats algorithmic manipulation as a static administrative feature, leaving 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 superficial transparency leaves the structural, asymmetric dominance of the platform’s digital boss entirely intact.

In contrast, the EU Platform Work Directive is strictly proactive.

It treats algorithmic management as a structural hazard to worker well-being, demanding a systematic review of psychological and ergonomic risks every two years.

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

The myth of subsidised social security

The proponents of Malaysia’s Gig Workers Act 2025 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.

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, by establishing a default mechanism for employee reclassification, the EU Platform Work Directive forces platforms to pay full social insurance, medical leave, and pension contributions directly out of corporate revenues.

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

Ultimately, the Malaysia Gig Workers Act 2025 would not provide real protection for gig workers because 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.

Ong Tze Chin, is a senior lecturer at Universiti Malaya’s law faculty.

The views expressed are those of the writer and do not necessarily reflect those of FMT.