You are on page 1of 18



1.0 I!"#$%&!'# 2
2.0 D'(')'# #* T+",) #* E,-.#/,+! 5
2.1 0#"1'2 3#%") 5
2.2 E,-.#/,+! C#!"4&!) 5
2.3 M'',%, 542+ .45 6
3.0 I,-#"!4&+ #* T+",) 4$ C#$'!'#) #* E,-.#/,+!) 6
4.0 S%22+)!'#) 9
4.1 T+",'4!'# #* E,-.#/++) 9
4.2 E,-.#/,+! D')&"','4!'# 11
4.3 S+6%4. H4"4)),+! 13
7.0 C#&.%)'# 14
8.0 R+*+"+&+) 16
1.0 I!"#$%&!'#
In order endorse various investments and economic growth, the Malaysian government had
gone through a great development and encourages a pleasant relationship between employers
and employees !ommonly, Malaysia has had no mani"estation o" crippling wor#er stri#es,
loc# outs and demonstrations "or over the past ten to "i"teen years $roblems are usually
resolved in an atmosphere o" willingness and intervention between parties including trade
%he ma&or employment laws in the country that directly impact the employment relationship
are the 'mployment (ct o" 1955 )'(* and the Industrial +elations (ct 196, )I+(* %he '(
administrates the matters relating to employment in Malaysia and it applies to most
employees whose wages do not e-ceed +M1,5.. )/01 12 +M322* or who are engaged in
speci"ied wor# which are manual labour or overseeing manual labour, operation or
maintenance o" a motor vehicle with the irrespective o" salary amount )(ri"" et al, 1993*
%he employment terms and conditions o" employees above this wage level or those who are
otherwise outside the ambit o" the '(, are governed by common law and by their
employment contracts %he main areas covered by the '( are terms relating to employment
contracts, including the termination o" contracts, maternity protection, days and hours o"
wor#, annual leave, public holidays, termination and lay4o"" bene"its and methods o" dealing
with complaints and en5uiries
(ccording to 6uruvilla 0 )1993*,
7abour law is also #nown as employment law mediates the relationship between wor#ers
employees, employers, trade unions and the government !ollective labour law relates to the
tripartite relationship between employee, employer and union Individual labour law concerns
employee8s rights at wor# and through the contract "or wor# 'mployment standards are
social norms which in some cases also technical standards "or the minimum socially
acceptable conditions under which employees or contractors are allowed to wor#
7abour law arose in parallel with the Industrial +evolution as the relationship between
wor#er and employer changed "rom small scale production studios to large4scale "actories
9or#ers sought better conditions and the right to &oin or avoid &oining a labour union, while
employers sought a more predictable, "le-ible and less costly wor#"orce %he state o" labour
law at any one time is there"ore both the product o", and a component o" struggles between
various social "orces (s 'ngland was the "irst country to industrialise, it was also the "irst to
"ace the o"ten appalling conse5uences o" capitalist e-ploitation in a totally unregulated and
laisse:4"aire economic "ramewor# ;ver the course o" the late 13th and early to mid4
nineteenth century the "oundation "or modern labour law was slowly laid, as some o" the
more egregious aspects o" wor#ing conditions were steadily ameliorated through legislation
%he basic "eature o" labour law in almost every country is that the rights and obligations o"
the wor#er and the employer are mediated through a contract o" employment between the
two %his has been the case since the collapse o" "eudalism Many contract terms and
conditions are covered by legislation or common law In the /0 "or e-ample, the ma&ority o"
state laws allow "or employment to be at will, meaning the employer can terminate an
employee "rom a position "or any reason, so long as the reason is not e-plicitly prohibited
( contract o" employment is a category o" contract used in labour law to attribute right and
responsibilities between parties to a bargain ;n the one end stands an <employee8 who is
<employed8 by an employer8 It has arisen out o" the old master4servant law, used be"ore the century $ut generally, the contract o" employment denotes a relationship o" economic
dependence and social subordination
%he relation between an employer and an isolated employee or wor#er is typically a relation
between a bearer o" power and one who is not a bearer o" power In its inception it is an act o"
submission, in its operation it is a condition o" subordination, however much the submission
and the subordination may be concealed by the indispensable "igment o" the legal mind
#nown as the =contract o" employment= %he main ob&ect o" labour law has been and will
always be a countervailing "orce to counteract the ine5uality o" bargaining power which is
inherent and must be inherent in the employment relationship
( contract o" employment usually de"ined to mean the same as a <contract o" service8 (
contract o" service has historically been distinguished "rom a contract "or the supply o"
services, the e-pression altered to imply the dividing line between a person who is
<employed8 and someone who is <sel"4employed8
%he purpose o" the dividing line is to attribute rights to some #inds o" people who wor# "or
others %his could be the right to a minimum wage, holiday pay, sic# leave, "air dismissal, a
written statement o" the contract, the right to organi:e in a union, and so on %he assumption
is that genuinely sel"4employed people should be able to loo# a"ter their own a""airs, and
there"ore wor# they do "or others should not carry with it an obligation to loo# a"ter these
;ne e-ample o" employment terms in many countries is the duty to provide written
particulars o" employment with the terms and conditions o" employment to an employee %his
aims to allow the employee to #now concretely what to e-pect and what is e-pected It covers
items including compensation, holiday and illness rights, notice in the event o" dismissal and
&ob description %he contract is sub&ect to various legal provisions (n employer may not
legally o""er a contract that pays the wor#er less than a minimum wage (n employee may
not agree to a contract that allows an employer to dismiss them "or illegal reasons
In Malaysia employment law is outlined in the 'mployment (ct 1955 and the Industrial
+elations (ct 196,, which deal with relations between employers, employees and trade
unions %he 'mployment (ct gives minimum terms and conditions "or manual wor#ers and
non4manual wor#ers who earn less than a de"ined amount It covers "ull4time, part4time,
temporary and contract employment )Ministry o" >uman +esources, 199,*
$art4time wor# is classed as being employed "or less than ,. percent o" the time o" a "ull4time
employee in a similar &ob !asual wor#ers, who are hired only when needed, are not covered
by the 'mployment (ct
2.0 D'(')'# #* T+",) #* E,-.#/,+!
2.1 0#"1'2 3#%")
9or#ing hours "or employees covered by the 'mployment (ct must con"orm to the
Ma-imum o" 43 hours per wee#
@o more than eight hours o" wor# per day
Ma-imum o" ten hours o" wor# spread over a day
@o more than "ive hours straight without a minimum rest period o" 3. minutes
;ne day o"" per wee#
2.2 E,-.#/,+! &#!"4&!)
(nybody employed in Malaysia "or longer than one month must have a written employment
contract or <contract o" service8, which should include?
@ames o" the both the employee and the employer
1ate on which the employment begins
$lace o" wor# and employer=s address
Aob title or a brie" description o" the &ob
0alary, including details o" any bonuses or allowances
%erms and conditions o" employment )relating to holiday entitlement, sic# pay,
overtime, probation and wor#ing hours*
+e5uired notice period
+etirement age
( written employment contract should be received be"ore starting wor# (n oral agreement is
su""icient "or employment lasting less than a month
2.3 M'',%, 542+ .45
Minimum wage law applies to some industries and sectors in some territories Many
employees have &obs "or which there is no legal minimum wage
3.0 I,-#"!4&+ #* T+",) 4$ C#$'!'#) #* E,-.#/,+!)
%he central "ocus o" most employment contracts is wages "or wor# >owever, other essential
terms might be notice periods in the event o" dismissal, holiday pay rights, and the place o"
wor# and pension schemes Many &urisdictions re5uire these "actors to be set out in a written
contract In terms o" pay which the employee may be compensated through wages, a salary, or
by commission In addition to monetary compensation, the employment contract o"ten
speci"ies a "ringe bene"it pac#age, including a retirement plan, employee stoc# options,
holiday entitlement, re5uired hours o" wor#, and also the health insurance bene"its
@ormally, such contracts provide "or termination o" employment, by either party, and include
associated matters such as notice period, compensation arrangements and, sometimes, garden
0ome employers also use non4disclosure and non4competed clauses to protect their trade
secrets "rom being dispersed when employees leave 1epending on where you live, the laws
regarding en"orceability o" these clauses vary widely
In certain circumstances, an employer=s conduct could be such that an employee is entitled to
resign in response and to regard that as an un"air BconstructiveB dismissal Cailure by an
employer to e-tend a "i-ed term contract can also be an instance where a claim "or un"air
dismissal may be made
'mployment regulations play a #ey role in the development o" any business 0ometimes,
building a team with complementary s#ills involves little more than a 5uic# chat with
someone who has been introduced to them by a business associate @o psychometric tests,
re"erences or "ormal contracts o" employment here
;"ten, employees or team members are ta#en on without su""icient protection in terms o"
valuable intellectual property or a means to prevent Dmoonlighting8 or un"air competition
when they leave
'merging businesses and entrepreneurs can have the basis o" a "antastic business, but, once
they start employing people, things can go wrong
'mployees can rip companies o"" by stealing their ideas or passing them on to subse5uent
employers, who have not invested heavily in the underlying research and development 'ven
i" employees do not ta#e ideas or indulge in un"air competition, poor per"ormance can itsel"
damage the business @ot only that but any attempt to discipline or improve the errant
employees can lead to employment tribunal claims, where, "or e-ample, unlimited damages
can be awarded where discrimination is proved
9riting contracts should be worded clearly to avoid any misunderstanding, also the &ob
description should be easy to "ollow so the employee can show "le-ibility in their &ob role
%erms and conditions o" employments are important because it shows the employer and the
employee clearly the rights and the responsibilities "or each one o" the people who wor# in
the organisation and to ma#e sure that everything in the environment is sa"e and "air
%erms and conditions are related to the hours o" wor#, as "or the e-ample, normal hours, and
overtime, e-pected out o" hours wor# "or e-ample i" the employer as#ed the employee to do
something that is not written in the contract, then the employee will have the right not to do
the &ob because it8s not written on the agreement document
%erms and conditions allow the employer to speci"y an employee8s duties and responsibilities
so an employee #nows e-actly what is e-pected "rom them %erms and conditions are mainly
important about sa"ety "or the employer and the employee
%hey are there to ma#e it clear to both employer and employee where each stand %o let them
each #nows their responsibilities and care "or each other It is best to have such an agreement
so that i" anything does go wrong, both sides has a clear understanding what rights each have
(s "or our "urther discussions, there are 3 items that could happen towards employee and
employers which I thin# it is a big issue in the employment terms and conditions topic and
they are?
%ermination o" 'mployees
1iscrimination o" 'mployees
0e-ual >arassment
%here are many employers that do not provide its employees with an employment contracts
%hey always dream that Bi" it is not in writing, then it does not e-ist,B nor Bi" there is no
written contract, then we can do what we li#e with our employeesB %hese are not dreams 4
these are nightmares which are sure to land the employer in court
'very employer is re5uired by law to provide the employee with a written contract o"
employment not later that the "irst day o" commencement o" employment Cailure to do so
could land the employer in &ail "or a term o" imprisonment or to liability "or a he"ty "ine
%he contract o" employment is a vital document which it regulates the terms and conditions
o" employment between the employer and the employee It stipulates what the employer will
provide in terms o" bene"its, and in terms o" labour legislation, and it speci"ies what the
employee is entitled to receive in terms o" company policy, company bene"its, and labour
It also regulates the behaviour o" the employee in the wor#place because all company policies
and procedures, as well as your disciplinary code, "orm a part o" the employment contract I"
there is no contract regulating these matters, it is e-tremely di""icult to ta#e action against the
employee, i" there is no contract, or i" the employee has never been in"ormed, then he has the
right to conclude that it does not e-ist
4.0 S%22+)!'#)
4.1 T+",'4!'# #* E,-.#/++)
In Malaysia, termination o" employment "alls under the purview o" the '( )'mployment
(ct*, the 'mployment )%ermination and 7ay4;"" Eene"its* +egulations 193. )193.
+egulations*, and the I+( (lthough the provisions o" the '( only cover '( employees,
these principles o" law are generally considered as guidelines "or most employer4employee
relationships, particularly in the absence o" a written contract o" service
%he I+( addresses the issue o" unions, trade disputes and dismissals It also mandates that an
employment relationship cannot be terminated without &ust cause or e-cuse 9hile <&ust cause
or e-cuse would be an issue to be determined by the Industrial !ourt in general,
independently o" the employer8s compliance with the '( and the terms and conditions o" the
employment contract relating to bene"its, terminations should be motivated by a bona "ide
business decision, such as the cessation and sale o" a business, continuing losses, or
disciplinary or per"ormance reasons
In a disciplinary situation, an employer should ensure that the process o" investigation and
hearing be adhered to and that the employee be given due warning and the chance to state his
or her case In the event o" un"air dismissal, employees may see# redress be"ore the Industrial
!ourt In the "irst step, the claimant will ma#e representations to the 1irector Feneral "or
Industrial +elations "or reinstatement I" there is no settlement, the matter may be re"erred to
the Industrial !ourt "or ad&udication
(n employment relationship in Malaysia may be terminated "or redundancy 0pecial
provisions under the 193. +egulations govern termination by retrenchment or the ta#e4over
or cessation o" a business, and mandate that retrenched '( employees are entitled to speci"ic
termination indemnities In a retrenchment situation, employers should select the employees
o" the same category to be retrenched based on ob&ective criteria
%he Malaysian !ode o" !onduct "or Industrial >armony, which is not legally prescribed by
legislation but is ta#en note o" by the Industrial !ourt, provides guidelines "or the selection o"
a""ected employees %he guidelines speci"y the "ollowing criteria?
%he need "or the e""icient operation o" the organi:ation
%he ability, e-perience, s#ill and occupational 5uali"ications o" wor#ers
%he consideration "or length o" service and whether employees are casual, temporary
or permanent
%he age o" the employee
%he employee8s "amily situation
%he last in and "irst out principle whereby the last person employed should be the "irst
person retrenched
%he '( also outlines how and when a contract o" service may be terminated /nder the '(, a
contract o" service "or a speci"ied period o" time or the per"ormance o" a speci"ied piece o"
wor# lapses when the period e-pires or when the wor# is completed 9here the contract o"
service is "or an unspeci"ied period o" time, the contract may be terminated by either party by
giving notice o" termination as speci"ied in the contract In the absence o" a written provision
as to the length o" notice re5uired, Malaysian law provides that the period o" notice shall not
be less than?
Cour wee#s "or employment o" less than two years
0i- wee#s "or employment o" two years or more but less than "ive years
'ight wee#s "or employment o" more than "ive years
In lieu o" notice, an employer may pay wages to an employee in the amount e5uivalent to the
period o" notice >owever, regardless o" compliance with the notice period or the payment o"
bene"its, the I+( provides that there must be &ust cause or e-cuse In cases o" retrenchment,
employers are also re5uired to report to the Malaysian 1irector Feneral o" Manpower at least
one month be"ore carrying out the layo""
/nder the provisions o" the 193. +egulations, an employee who has been retrenched or
whose service has been terminated as the result o" redundancy is entitled to certain bene"its
%hese bene"its include?
1. day8s wages "or every year o" employment o" more than 12 months but less than
two years
15 day8s wages "or every year o" employment o" two years or more but less than "ive
2. day8s wages "or every year o" employment o" "ive years or more
9here an employee has only wor#ed "or a portion o" a year, payment is to be prorated and
calculated to the nearest month o" employment %hese bene"its are in addition to wages paid
in lieu o" notice
4.2 E,-.#/,+! D')&"','4!'#
/ntil recently, Malaysia had no legislation governing employment discrimination, although
the Cederal !onstitution does state that there shall be no discrimination against citi:ens on the
ground o" religion, race, descent or place o" birth ;n 0eptember 23, 2..1, (rticle 3)2* o" the
Cederal !onstitution was amended to prohibit gender discrimination through the !onstitution
(ct 2..1
%his, however, has yet to be encapsulated in any speci"ic legislation In 2..1, the 7abour
1epartment o" the Malaysian Ministry o" >uman +esources issued the !ode o" $ractice "or
the 'mployment o" the 1isabled in the $rivate 0ector <1isability !ode8 %he ob&ectives o" the
1isability !ode are to?
'stablish guidelines "or the registration and &ob placement o" the disabled with the
private sector
Increase the awareness o" private sector employers on the importance o" o""ering
employment opportunities to the disabled
'ncourage the disabled to prepare themselves in terms o" ability, 5uali"ications and
s#ill sets to participate in the development o" Malaysia as employees
%hough the 1isability !ode sets out the certain responsibilities o" both the employer and the
disabled employee, li#e other similar !odes relating to employment, there are no legal
sanctions "or non4compliance
%he Malaysian Fovernment recently passed the $ersons with 1isabilities (ct 2..3 )$1(* It
will be the "irst speci"ic anti4discrimination law in Malaysia that applies in the wor#place
/nder the $1(, employers are now legally re5uired to ensure that employees with
disabilities are accorded &ust and "avourable wor# conditions and e5ual remuneration to those
without disabilities
>owever, it is not e-pressly clear whether the $1( will cover both employees as well as &ob
applicants (t present, the protections under the $1( only e-tend to current employees More
detailed guidelines and standards will presumably be promulgated by the @ational !ouncil
"or $ersons with 1isabilities andGor the Minister o" >uman +esources in accordance with the
$1( $ending such guidelines and standards, the e-act impact on the employment landscape
remains to be seen
%he 1epartment o" ;ccupational 0a"ety and >ealth o" the Malaysian Ministry o" >uman
+esources has also issued a !ode o" $ractice on $revention and Management o" >IH or
(I10 at the 9or#place on 0eptember 2..1 to reduce the spread o" the disease and guide
employers and employees in managing >IH or (I10 issues at the wor#place %he ob&ectives
o" this >IH or (I10 !ode are to?
$rovide guidelines to employers and employees on appropriate and e""ective ways o"
preventing and managing >IH or (I10 at the wor#place
$romote education and awareness on >IH or (I10
$romote a non4&udgmental, non4discriminatory wor# environment
Fenerally, employers in Malaysia may be liable "or un"air dismissal pursuant to the
employer8s discriminatory acts or omissions where they can be construed as evidencing intent
on the part o" the employer to no longer be bound by the terms o" the employment contract
(s a "irst step to minimi:e discrimination problems at the wor#place, employers should set
up and implement in4house mechanisms as outlined in the 1isability !ode, the $1( and the
>IH or (I10 !ode 0uch measures should be implemented despite the codes not having the
"orce o" law, so as to promote positive employee relations More importantly, pursuant to the
$1(, employers should now recogni:e and endeavour to "ul"il their new legal obligations
towards employees with disabilities to ensure e5ual and non4discriminatory wor#place
practices and attitude
4.3 S+6%4. H4"4)),+!
Malaysia does not have any legislation governing wor#place harassment >owever, in 1999,
the I!ode o" $ractice on the $revention and 'radication o" 0e-ual >arassment in the
9or#placeJ was promulgated )I0e-ual >arassment !odeJ* %he 0e-ual >arassment !ode is
not legally binding, but companies are e-pected to adopt its recommendations
%he 0e-ual >arassment !ode contains guidelines "or the establishment and implementation
o" internal preventive and redress mechanisms "or dealing with se-ual harassment 0e-ual
harassment is de"ined under the 0e-ual >arassment !ode as any unwanted conduct o" a
se-ual nature having the e""ect o" verbal, nonverbal, visual, psychological, or physical
harassment that might, on reasonable grounds, be perceived by the recipient as?
$lacing a condition o" a se-ual nature on her or his employment
(n o""ence or humiliation, or a threat to her or his well4being, but that has no direct
lin# to her or his employment
%his de"inition is wide4ranging and covers almost every possible "orm o" se-ual harassment,
including verbal statements, gestures and physical conduct It also includes employment4
related se-ual harassment that occurs outside the wor#place as a result o" employment
responsibilities or employment relationships "or e-ample, at wor#4related social "unctions,
during wor#4related travel or over the telephone
%o success"ully combat se-ual harassment in the wor#place, employers are encouraged to set
up comprehensive in4house mechanisms %he minimum elements o" such a mechanism, as
outlined by the 0e-ual >arassment !ode, include?
( policy statement "rom management prohibiting se-ual harassment in the
( clear de"inition as to what constitutes se-ual harassment
0etting4up a special complaintGgrievance procedure
!lear stipulation o" the disciplinary rules and penalties that will be imposed against a
harasser as well as against those who ma#e "alse accusations
Cormulation o" a set o" protective and remedial measures "or the victim
$romotional and educational programs to e-plain the company8s policy on se-ual
harassment and to raise awareness o" se-ual harassment among all employees
(lthough it is not legally binding, implementation o" the 0e-ual >arassment !ode and the
setting4up o" in4house in5uiry boards will provide employees under harassment with an
avenue "or redress within their organi:ation
7.0 C#&.%)'#
'mployment law is in place to guarantee a "air and sa"e wor#ing environment "or employers
and employees 0tatutes and strict rules outline, "or the employer, how their employee8s
should be treated within the wor#place Many employers and employees o"ten don8t realise
how many rules and regulations are covered by employment law, leading to con"usion "or
employers and employees ali#e %here are many aspects o" covered by employment law
which means employees can ta#e legal action "or being treated un"airly
Ee"ore recruiting new employees, employers should re"er to employment law to ensure they
are up to date with all aspects It is mandatory that employees and employees have a sound,
e5ual understanding o" employment law Cor instance, i" an employee "eels they are being
bullied or mobbed it is important they realise it is not acceptable and can ta#e legal action
against an employer 'mployers need to understand employment law so they are providing an
optimal wor#ing environment "or employees
'5uality within the wor#place ensures that everyone has e5ual opportunities and can8t be
denied promotion or training "or pre&udicial reasons 'mployers cannot discriminate against
employees because o" age, gender, nationality, pregnancy and maternity leave, se-ual
orientation, disabilities, race, ethnic bac#ground, religion and belie"s 7egal action can be
carried out, should an employee believe they are being treated un"airly due to pre&udice
9or#ing time regulations state that employers can legally ma#e their employees wor# no
more than 43 hours a wee#, unless the employee agrees to Iopt outJ o" the 434hour wee#
%his is an agreement that employer and employee sign to say the wor#er can wor# more than
43 hours a wee# /npaid lunch brea#s, regular travel to and "rom wor#, voluntary unpaid
overtime and paid or unpaid holidays are not counted as wor#ing hours $aid overtime,
wor#ing lunches, wor#ing abroad "or a /6 based company and &ob4related training however,
are all included in the wor#ing wee#
%he >ealth and 0a"ety at 9or# (ct 19,4 is a large piece o" legislation which covers all
aspects o" health and sa"ety in the wor#place 'mployers have a Iduty o" careJ to ensure the
wor#ing environment is sa"e "or employees $rimarily, health and sa"ety re"ers to eliminating
ha:ards to prevent accidents and ensuring the wor#ing environment is sa"e 0hould an
employee be concerned about their health and sa"ety at wor#, they should spea# to their
employer and trade union I" spea#ing to their employer or trade union has no e""ect, they
should report the employer to the environmental health department o" their local authority
/nderstanding employment law is crucial "or employers and employees 9or#ers should
#now their rights so that they are not treated un"airly or di""erently to the rest o" the wor#ing
society 'mployers should understand employment law to avoid legal action being ta#en
against them through ignorance or lac# o" #nowledge in regards to employment law
8.0 R+*+"+&+)
(ri"", Mohammed, !hung, MK>, 6adir, (9(, 'an, ; F, L 7ae4Imm, ' % )1993*
!urrency %urmoil and the Malaysian 'conomy? Fenesis, $rognosis and +esponse, Malaysian
Institute o" 'conomic +esearch, 6uala 7umpur
6uruvilla 0 )1993* <Industriali:ation 0trategy and Industrial +elations $olicy in Malaysia8,
in 0 Cren#el and A >arrod )eds* Industriali:ation and 7abour +elations? !ontemporary
+esearch in 0even !ountries, I7+ $ress, Ithaca, 2164235
6uruvilla, 0 and >all, 9 )1999* Flobalisation and 'mployment +elations in the $hilippines,
+eport to International 7abour ;rganisation, Eang#o#
Ministry o" Cinance )1993* 'conomic +eport 1993G99, 6uala 7umpur
Ministry o" >uman +esources )199,* Malaysia? 7abour and >uman +esource 0tatistics
199241996, 6uala 7umpur
@ational 'conomic (ction !ouncil )@'(!* )1993* @ational 'conomic +ecovery $lan?
(genda "or (ction, 'conomic $lanning /nit, $rime Minister8s 1epartment, 6uala 7umpur
Malaysia, 1996
0eventh Malaysia $lan )1996* 6uala 7umpur Malaysian Industrial 1evelopment (uthority
1995 unpublished statistics
@ational /nion o" Ean# 'mployees )@/E'* )1996* +eport "or the $eriod 1st (pril 1993 to
31st March 1996? 13th %riennial 1elegates !on"erence, 6uala 7umpur