Termination

 of  Contract
(J’09  Q2)

Under  EA’55,  a  contract  of  service  

may  be  terminated  as  follows:

Automatically With  Notice Without  Notice

1. A  contract  of  service  for  a   2. A  contract  of  service  may  also   3. Either  party  to  a  contract  of  service  may  
specified  period  of  time  or  for   be  terminated  by  one  party   terminate  it  without  notice  (or  if  notice  has  
the  performance  of  a   giving  to  the  other  notice  of   already  been  given  in  accordance  with  s.12,  
specified  piece  of  work  will   his  intention  to  terminate  it without  waiting  for  the  expiry  of  the  notice)  
terminate  automatically  when   Section  12(1)  EA’55 by  paying  and  indemnity  to  the  other.
the  specified  period  of  time   Section  13  EA’55.  
has  elapsed  or  the  specified   Section  12(4)  EA’55  requires  
piece  of  work  has  been   the  notice  to  be  in  writing.   The  indemnity  must  be  a  sum  equal  to  the  
completed. The  notice  may  be  given  at   amount  of  wages  that  would  have  accrued  to  
Section  11(1)  EA’55 any  time  but  must  comply   the  employee  during  the  period  of  notice  
with  the  period  of  notice   required  under  s.12  or  during  the  unexpired  
stated  in  Section  12(2)  EA’55. term  of  such  notice.
 
4. Either  party  to  a  contract  of  service  may  
Length  of  Notice terminate  it  without  notice  in  the  event  of  a  
Section  12(2)  EA’55  the  length  of  notice  required  to  be  given  by   willful  breach,  by  the  other  party,  of  a  
either  party  to  the  other  in  the  case  of  termination  by  notice  is  the   condition  of  the  contract  of  service.
length  of  notice  stipulated  in  the  contract  of  service.  In  the   Section  13  EA’55
absence  of  such  provision  in  the  contract  of  service,  the  following    
will  apply. 5. Section  14  EA’55
An  employer  may  terminate  the  contract  of  
service,  without  notice,  on  the  grounds  of  
Year(s)  of  completed  service   Period  of  Notice
misconduct  of  the  employee  after  due  
with  the  same  employer (no.  of  weeks)
(no.  of  years) inquiry.  

x  <  2 4 An  employee  may  also  terminate  his  contract  

of  service  without  notice,  where  he  or  his  
2  ≤  x  <  5 6 dependents  are  immediately  threatened  by  
danger  of  violence  or  disease  which  was  not  
x  >  5 8 undertaken  by  the  employee  in  this  contract  
of  service.

Due  Inquiry
Section  14  EA’55  the  employer  may  dismiss  the  employee  without  notice  on  the  ground  of  misconduct  by  an  employee.  
However,  the  employer  may  only  do  so  after  ‘due  inquiry’

The  EA  does  not  sate  what  constitute  ‘due  inquiry’.  However,  reference  may  be  made  to  the  following  guidelines  laid  
down  by  the  Industrial  Court  in  the  case  of  KJJ  Cleetus  and  Unipamol  (M)  Sdn  Bhd.
1. the  inquiry  is  to  be  instituted  as  early  as  possible  after  the  suspension  of  the  complainant;
2. the  complainant  is  to  be  given  particulars  of  the  misconduct,  preferably  in  writing;  and  a  reasonable  time  is  to  be  given  
to  him  before  the  inquiry  to  enable  him  to  prepare  his  case;
3. Where  applicable,  the  complainant  is  to  be  accompanied  by  his  Union  or  Committee  Representative,  if  any,  at  the  
inquiry;
4. the  inquiry  is  to  be  conducted,  as  far  as  possible,  by  such  officer(s)  as  not  directly  connected  with  the  investigation  of  
the  misconduct,  so  as  to  give  the  hearing  impartiality;
5. examination  of  relevant  witnesses  to  be  allowed  at  the  reasonable  discretion  of  the  officer-­‐in-­‐charge  of  the  inquiry;
6. notes  in  the  form  of  questions  and  answers  and  the  final  decision  are  to  be  recorded  to  show  that  the  inquiry  was  
proper,  and  that  the  decision  arrived  at  was  fair.

10  -­‐  1                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved

 Constructive  Dismissal•Redundancy•Lay-­‐Off
(D’08  Q2a;  D’07  Q2)

The  supreme  Court  in  the  case  of  

Constructive  Dismissal Wong  Chee  Hong  v  Cathay  
-­‐ May  said  to  have  occurred  where  the  employee  has   Organization  (M)  Sdn  Bhd
resigned  because  the  employer  has  made  it  intolerable  for  
the  employee  to  continue  working  for  the  employer.

-­‐ This  may  occur,  where,  in  doing  so,  the  employer  has   to  determine  if  there  has  been  a  constructive  dismissal.
2
two  Factors

breached  the  contract  of  employment  thereby  entitling  

the  employee  to  resign. 1. Whether  the  employer’s  conduct  amounted  to  a  
breach  of  the  contract  of  employment  going  to  the  
-­‐ For  example,  if  the  employer  had  demoted  the  employee   root  of  the  contract.
or  subjected  him  to  unfair  or  oppressive  working  
conditions  in  order  to  humiliate  him  tot  he  extent  that  he   2.Whether  the  employee  made  up  his  mind  to  leave  the  
can  no  longer  tolerate  it  and  feels  compelled  to  resign,  he   employment  and  acted  within  a  reasonable  time  after  
may  be  considered  to  have  been  constructively  dismissed. the  employer’s  conduct.
Bumpus  v  Standard  Life  Assurance  Co  Ltd

Redundancy
A  redundancy  may  be  said  to  occur  in  the  circumstances  mentioned  in  Section  12(3)(a)  -­‐  (d)  EA’55  i.e.  where:

1. The  employer  has  ceased,  or  intends  to  cease  to  carry  on  the  business  for  the  purposes  of  which  the  employee  was  
employed;
2.The  employer  has  ceased  or  intends  to  cease  to  carry  on  the  business  in  the  place  at  which  the  employee  was  
contracted  to  work;
3.The  requirements  of  that  business  for  the  employee  to  carry  out  work  of  a  particular  kind  have  ceased  or  diminished  
or  are  expected  to  cease  or  diminish;
4.The  requirements  of  that  business  for  the  employee  to  carry  out  work  of  a  particular  kind  in  the  place  at  which  he  
was  contracted  to  work  have  ceased  or  diminished  or  are  expected  to  cease  or  diminished.

Food  Specialities  Sdn  Bhd  v  Esa  bin  Mohamd

Gold  Coins  Feedmills  Sdn  Bhd  v  Ibrahim  Shah
Automovitve  Sdn  Bhd  v  Subramaniam  Andi  &  Others

10  -­‐  2                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved

 Constructive  Dismissal•Redundancy•Lay-­‐Off
(D’08  Q2a;  D’07  Q2)

Lay-­‐Off
A  ‘lay-­‐off’  may  be  said  to  occur  in  the  circumstances  stated  in  Regulation  5(1)  of  the  Employment  (Termination  and  Lay-­‐off  
Benefits)  Regulation  1980  (Revised  1983)  i.e.  where:

1. The  employer  does  not  provide  work  for  the  employee  on  at  least  a  total  of  12  normal  working  days  within  any  period  of  
4  consecutive  weeks;  and
2.The  employee  is  not  entitled  to  any  remuneration  under  the  contract  for  the  period  or  periods  (within  such  period  of  4  
consecutive  weeks)  in  which  he  is  not  provided  with  work.

However,  in  determining  whether  an  employee  has  been  laid-­‐off,  any  period  during  which  an  employee  is  not  provided  
with  work  as  a  result  of  a  rest  day,  a  public  holiday,  sick  leave,  maternity  leave,  annual  leave,  any  other  leave  authorized  
under  any  written  law,  or  any  leave  applied  for  by  the  employee  and  granted  by  the  employer,  shall  not  be  taken  into  
account.

Lay-­‐Off  Benefits
Lay-­‐off  benefits  which  an  employee  is  entitled  to  receive  should  not  be  less  than:

Year(s)  of  completed  service   Days  of  Wages

with  the  same  employer (no.  of  days)
(no.  of  years)

x  <  2 10

2  ≤  x  <  5 15

x  >  5 20

and  pro  rata  basis  in  respect  to  an  incomplete  year,  calculated  to  the  nearest  
month.  The  regulations  require  that  such  lay-­‐off  benefits  must  be  paid  by  the  
employer  to  the  employee  not  later  than  7  days  after  the  relevant  date.

10  -­‐  3                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved

 Remedies
(D’08  Q2b)

the  remedies  available  to  an  employee  who  

has  been  unjustifiably  dismissed  are  as  follows:

Reinstatement  and  Backpay Compensation  in  lieu  of   Re-­‐engagement  

Reinstatement  and  Backpay
-­‐ This  is  a  remedy  whereby  the   -­‐ Sometimes  the  employee  is  not  
employee  is  put  back  into  the   -­‐ The  court  may  order  compensation  in   reinstated  but  is  merely  re-­‐engaged  
position  he  would  have  been  in  had  it   lieu  of  reinstatement  and  backpay   or  re-­‐employed.  
not  been  for  the  unjustifiable   where  it  is  not  possible  or  advisable   -­‐ This  means  that  the  employee  is  
dismissal. to  order  reinstatement. given  an  opportunity  to  work  for  the  
-­‐ Reinstatement  requires  that  the   -­‐ Reinstatement  may  be  refused   employer.
employee  should  be  restored  to  his   where  the  employer  has  lost   -­‐ All  past  services  will  be  lost.
previous  position  so  far  as  his   confidence  in  the  employee  or  where   -­‐ The  employee  will  start  afresh  and  he  
capacity,  status  and  emoluments  are   such  reinstatement  may  lead  to  an   is  not  entitled  to  any  backpay.
concerned.   apprehension  of  breach  of  industrial  
-­‐ He  is  then  entitled  to  backpay,  i.e.   peace.   Restu  Motor  Sdn  Bhd  and  Nazaruddin  
arrears  of  salary  from  the  time  of  his   -­‐ Reinstatement  will  of  course  be   bin  Abdul  Samad
dismissal  to  the  time  of  his   impossible,  for  example,  where  the  
reinstatement. employee  has  died  after  the  
commencement  of  legal  
Western  India  Automobile  Association  v   proceedings.
Industrial  Tribunal
-­‐ The  compensation  payable  is  usually  
at  the  rate  of  one  month’s  pay  for  
each  year  of  service  subject  to  a  
maximum  of  24  months.

10  -­‐  4                                                                                                                        ⓒ  Teh  Joo  Ling  All  rights  reserved