Most small, medium and micro enterprises are also not aware of the requirement to report layoffs to the government.
Worse, retrenched workers also face the challenge of collecting salaries and other compensation from their previous employers.
While the employers eventually do pay, the process often takes months, even years, Asia One reported.
Fifty-year-old Goh Chee Seng, for instance, was retrenched from his job at a cable manufacturing factory in Shah Alam, alongside 100 other workers and lower management staff.
He had been with the company for 29 years, during which he observed how it had been plagued with management problems. In September last year, he and his colleagues started getting their salaries late. Things got progressively worse until they were laid off in May 2017.
Goh and his fellow workers are now seeking the help of the Electrical Industry Workers Union under the umbrella of the Malaysian Trades Union Congress (MTUC). The union facilitates dialogue sessions with the former employers to ensure that salaries and compensation would be paid as promised.
Goh is the sole breadwinner in the family and also cares for his 86-year-old mother at their home in Kapar.
"They promised us that our three-month salary would be paid to us by November this year. It was very sudden, but there was nothing we could do about it. We signed the letters and left,” Goh told Asia One.
"Suddenly, we were jobless. We had no other source of income coming in every month, no money to put food on the table or pay our bills."
Employment insurance schemes vary from country to country, but many have a system in place that provides temporary financial relief to those who have been retrenched.
For example, Goh was able to withdraw a portion of his Employees Provident Fund savings in order to make ends meet.
The money helped but Goh worries about how long his EPF savings will last.
He knows he needs to secure a job as soon as possible, but his age may pose a problem.
"Whenever I attend interviews or call a company regarding a job opening, one of the first questions they ask me is 'How old are you?'”
"They think twice about hiring a person of my age, even though I am fit, skilled an able to contribute productively,” he said.
Many of the other staff who lost their jobs are in their 50s as well.
Most employers prefer to hire foreign workers, especially for jobs in factories, as they are perceived to be more affordable and easily available.
"I am very stressed about my future and how I will continue to care for my family.
"My mother also keeps asking me when I will return to work," said Goh. He is worried the stress over his prospects might take its toll on her health
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Labour Department data say close to 40,000 Malaysian workers were retrenched last year while 17,798 employees lost their jobs in the first half of 2017, but this could be just the tip of the iceberg.