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MATRICULATEION NO.: 750203025180001














2.1 Organizational Analysis

2.2 Task Analysis
2.3 Individual Analysis


3.1 Need analysis in Smart Modular
3.2 The information needed to conduct an organizational analysis can be obtained from a
variety of sources including:
3.4 Task analysis provides data about a job or a group of jobs and the knowledge, skills,
attitudes and abilities needed to achieve optimum performance.
3.5 Results of the Needs Assessment


4.1 Questionnaires
4.4) Examining Documents






Terms and conditions of employment are the elements of a contract which help to
define the relation between an employer and an employee. Information on
conditions of employment, contracts of employment including fixed term, short term
and temporary contracts, contractual change, probationary periods, notice periods
and restrictive covenants can be found.
Definition of Term in a contract of service is the product of the decision reached
between the employer and employee. It refers to contractual obligations that the
parties have agreed to undertake. Definition of Condition is an instruction that is
given by the employer to the employee from time to time
The conditions that an employer and employee agree upon for a job. Terms of
employment include an employee's job responsibilities, work days, hours, breaks,
dress code, vacation and sick days and pay. They also include benefits such as
health insurance, life insurance and retirement plans. Employees whose skills are in
higher demand will have an advantage when negotiating terms of employment.

Employment Act 1955 (the EA 1955) also contains provisions regarding terms and
conditions pertaining to employment. Among the provisions are:
(a) Duration of work (including overtime);
(b) Wages;
(c) Rest days;
(d) Public holidays;
(e) Annual leave, medical leave and maternity leave; and
(f) Resignation and maternity benefits.
What differentiates between a contract of service from an ordinary contract is that
the terms and conditions are not only limited to what have been stated in the
document of contract entered between the parties. Alternatively, the terms and
conditions can be found impliedly or expressly in contracts between employers
and the employees unions or in EA1955 itself.


Terms and conditions of employment are usually set by individual employers.

Malaysia has blanket conditions in employment law set by its Parliament of which
employers must adhere to. These laws in Malaysia are known as Labour Laws.

Working Week in Malaysia

Malaysia operates a Sunday-Thursday working week. This varies in some Northern states and
some still use the Saturday-Wednesday. Reforms were made in the middle of 2000 and the
weekend was changed to Friday and Saturday. Malaysia is a Muslim Country and Friday is seen
as Holy Day and therefore it is a day of rest. Most offices and shops will close on this day. The
tourism industry will work as normal.
All employers have to adhere to one complete day of rest. This can be one 24- hour period so
those who work shifts can still have a full days rest.
Working Hours
Laws are strict on this in Malaysia. No employer can ask their employee to work for more than
five hours work without a 30-minute break.
An employee cannot work more than 8 hours per day.
There must not be more than 10 hours in a day worked over split shifts.
The working week should not be more than 48 hours
Overtime is as agreed between employee and employer although the hourly terms and conditions
should be applied in terms of the 30-minute break and the 10-hour day. Overtime is paid on top
of what is classed as the Normal Rate of Pay
Illness/Sick Pay
An employee is entitled to sick leave of 14 days per year and this does not have to include
hospitalization. This is for less than two years of service.
For employees who have worked for the company for 2-5 years this rises to 18 days.
For employees who have worked for the company for five years or more this rises to 22 days.
If a stay in hospital is required and registered by a doctor then sick leave of up to 60 days is
Sick pay is according to the terms and conditions of your contract with your employer. The sick
leave entitlement is set by the government. Any medical expense must be claimed back from
your insurance company.

Maternity and Paternity Leave

Mothers are entitled to one months maternity leave. A mother is entitled to maternity pay from
her employer for this period under Malaysian employment law.
A father is entitled to one weeks paternity leave with pay under Malaysian Employment Law.
Annual Leave
Entitlement to annual leave as laid down by employment law is as follows:
8 days in any period of a 12-month continuous employment period if employed by the company
for less than two years.
12 days in any period of a 12-month continuous employment period if employed by the company
for less than five years.
16 days in any period of a 12-month continuous employment period if employed for more than
five years.
Retirement Age and Pension Schemes
The retirement age is currently set at 60 years of age in Malaysia. Pension schemes are
compulsory in Malaysia and are known as an Employment Provident Fund. This is compulsory
for Malaysian citizens. Voluntary contributions can be made by residents of Malaysia who are
not citizens. Employers are required by law to top these contributions up. This money is set aside
in banks as money for retirement or for if a person loses their job through redundancy. It also
ensures employers take care of their staff. The pension scheme is compulsory for all citizens
regardless of whether they work in the public or private sector and they can invest the money
themselves or allow the bank to do it. If employees choose to make their money work for them,
then any losses incurred must be borne by the person, it is not covered by the EPF. Currently, the
contribution is 11% of an employees salary. A further 12% is required as a contribution from the
Malaysia operates a trade union standpoint and it is only allowed in certain areas of an industry.
In other words, board members, chief executives or managing directors are not allowed to be
members of unions. The trade unions must be trade. For example, a teacher must join a teachers

The Trade Union Act does protect the employee from discrimination by an employer for joining
a union. This also has a flipside. There can be grounds for dismissal if an employees actions
within a company from direct association with a union affect that company.
Probationary Periods
The Malaysian Employment Law states that all companies must be fair during a probation
period. The employee will be assessed accordingly. On completion of the probationary period,
either a contract is drawn up or the person is not successful. The duration of the probation period
is set by the company.
Grounds for dismissal are set by the company and can be actioned at any time. These terms are
laid down by the company and in the contract of employment which is signed by both parties.
Notice Period
Notice can be given by any party at any time in line with the terms of the employment contract.
Discussion on the division of terms of employment


Section 17(1) of the Industrial Relations Act 1967 (IRA 1967) is a mandatory
provision. This section provides for the following matters:
A collective agreement which has been taken cognisance of by the court shall be
deemed to be an award and shall be binding on:
(a) The parties to the agreement including in any case where a party is a trade
union of employees, all members of the trade union to whom the
agreement relates and their successors, assignees or transferees; and
(b) All workmen who are employed or subsequently employed in the
undertaking or part of the undertaking to which the agreement relates.




For the

For the



An implied term is deemed to exist in law, even though it is not expressed
in any agreement or contract of service.
There are several implied terms that have been identified as used in the contract
of service. Though they are not stated in the contract of service, the terms shall
bind both employers and employees. Such terms mostly deal with duties and
responsibilities of employers and employees. Two terms that have been identified
are as follows:
(a) I Implied Terms for Employers
(i) The employer shall not direct his employees to do an act that contravenes the
Even though it is necessary for an employee to follow the instructions
of an employer, he is only bound to follow instructions that are legal.
The employer shall not instruct the employee to do something that is illegal. For
example, a clerk shall not be instructed to withhold from making deductions for
the Employees Provident Fund.
(ii)It is the duty of the employer to give work to the employee
In the contract of service, the employee has to do work as instructed by the
employer. As consideration, the employer shall pay wages to the employee
In the case of T Turner v Sawdon (1901), the court decided that the employer
does not have the duty to provide work for the employee. The duty only arises
if the employer employs workers who are paid by way of commission or by
way of work done.
In the case of B Breach v Epsylon Industries Ltd (1976) on the other hand, the
courts took a different approach that is, providing work to the employee is
important in order to decide upon the status of the employee and to ascertain
his incentive.
(iii) I It is the duty of the employer to provide a safe and proper system of

In the contract of service, it is required that the employer shall provide

a system of work that is safe at the workplace. It is included to avoid
exposing employees to unnecessary risk of injury.
The court ruled that the employer at all times knew or ought to have
known that the workplace was not safe and his failure in giving a
warning on this matter makes him liable for the death of the worker
In the case of L Lian Ann Lorry Transport & Forwarding Sdn Bhd v
Govindasamy (1982), an employee sustained serious injuries caused by a
carpet while unloading it from a lorry.
The court ruled that the employer had failed to ensure occupational
safety for the purpose of transferring carpets from the lorry.
Thus, based on the decided cases as above, it can be summarised that
the employers are responsible for ensuring that occupational safety is
maintained. If employees sustain injuries due to their own negligence
and if the employer had provided all the relevant precautionary
measures at the workplace, the employer cannot be held liable.

(b) I Implied Terms for Employees

Like employers, employees also have implied terms that must be fulfilled
such as:
(i) T The employee shall always be sincere and faithful towards the
The employee has to perform all instructions given by employers. The
relationship between the employer and employee has to be cordial
and requires the sincerity and trustworthiness of the employees to do
as required by the employer. This means that the employee at all times
has to do what is reasonable in the interests of the employer.
(ii) T The employee shall not divulge or make known the confidential
information of the employer
It is an implied term that an employee should protect the employer by
refraining from divulging confidential information of the employer.
Even after one has stopped work, a part of this duty still remains.
According to the case of F Faccienda Chicken Ltd v Fowler (1986), the court
explained that restraint of trade can be imposed by the employer towards past
employees from divulging, using or relaying to others confidential
information about the former employers business. This is especially so if an
employees former position is of high rank. In such a case, there is a
presumption that he shall have several pieces of confidential information and
also the inclination to divulge them to others.
(iii) T The employee is also required to divulge confidential information
regarding the employer at all times
This does not mean that the employee is being dishonest with the

employer. Such divulging of confidential information is necessary if it

involves public interest, for example when such information concerns
an act of crime or fraud. However, it is not practical to divulge such
information because this could mean dismissal by the employer.
(iv) T The employee has to do the work assigned with full care and caution
The employee also has the implied duty to perform work with full
care and caution and to use his skills efficiently. For example, a driver
has the responsibility of ensuring that care and caution is exercised in
driving the employers vehicle.
In the case of L Lister v Ramford Ice Ltd (1957), a driver caused an accident
involving a fellow worker and the victim brought an action against their
employer. After paying damages to the victim, the employer initiated an action
for negligence against the other employee i.e. the driver. He was accused of not
performing his duty with full care and caution.
Therefore, the driver was ordered by the court to pay back the damages to
the company.
Therefore, an employee has to be careful and at all times look after the
interest of the employer in any work that involves the business and affairs
of the employer. This is in line with the implied term regarding care and
caution with the employer throughout the tenure of the contract of service.
In the case of Majlis Perbandaran Pulau Pinang v Lin Soo ENG (1991), the same
principle was applied. In this case, the Federal Court decided that the employer
did not have vicarious liability for injuries or losses of third parties incurred as
a consequence of employees who had been negligent while performing their

3.5.2 Express Terms

The Employment Act 1955 (EA 1955) provides the minimum rights that should be
provided for by employers towards employees. If the provisions are lesser than that
spelt out in EA 1955, section 7 shall be invoked. EA 1955 as stated in the previous topic
stipulates express terms in regulating an employment relationship.
The express terms are further divided into two categories i.e. pecuniary and nonpecuniary terms. Pecuniary terms refer to the terms in a contract of service which are
related to financial, such as, wages, allowances, bonuses, ex-gratia payments and
pecuniary benefits. Meanwhile, non-pecuniary
terms are terms in a contract of employment that are non-monetary, which means they
do not directly relate to money. The examples are duration of work, overtime work, rest
days, public holidays, annual leave and sick leave.

Express terms become part of the contract of service. These are divided into:
(a) Pecuniary terms (terms that are financial in nature); and
(b) Non-pecuniary terms (terms that are non-financial in nature).
Express terms are terms that are stated clearly in the contract of service.

Wages or Salaries

Section 2(1) (a) _ (f) of EA 1955 defines wages or salaries as

Wages means basic wages and all other payments in cash payable to an employee
for work done in respect of his contract of service but does not include:

The value of any house, accommodation or the supply of any food, fuel, light
or water or medical attendance or of any approved amenity or approved
Any contribution paid by the employer on his own account to any pension
fund, provident fund, superannuation scheme, retrenchment, termination,
lay-off or retirement scheme, thrift scheme or any other fund or scheme
established for the benefit or welfare of the employee.
Any travelling allowance or the value of any travelling concession.
Any sum payable to the employee to defray special expenses entalled on him
by the nature of his employment.
Any gratuity payable on discharge or retirement.
Any annual bonus or any part of any annual bonus.

Determining whether certain types of payment such as allowances or fixed

remuneration are wages as defined by the S. 2 of EA 1955 is very important for
the purpose of computation of overtime allowance, pay for rest days and public
holidays as well as termination and lay-off benefits.
In the case of Chin Swee Hin v Md.Arif (1977), the court decided the food
allowance paid to the respondent by the appellant was part and parcel of the
contract of service and therefore was within the definition of wages as stated
in S. 2 of EA 1955.
The court decided that since the principal aim of EA 1955 is to protect the
workers from exploitation, therefore certain types of payment paid in cash to
workers could be excluded for purposes of computing overtime pay.

4.1.2 Period of Wages or Salaries

S. 18 (1) EA 1955 provides that a wage period shall not be more than one month.
However, it can be less than one month.
Wage period means the period in respect of which wages earned by an
employee are payable (S. 2 of EA 1955).

4.1.3 Payment of Salaries

Generally, the employer must pay the salaries according to the period that has
been fixed.


S. 19 EA 1955, every employer must pay to each of his employees not later than
the seventh day after the day of any wage period the wages, less lawful
deductions earned by such employee during such a wage period.
However, if there is an application from the employer, the time of payment of
wages can be extended if the Director-General is satisfied with the reasons
provided by the employer.
S. 25(1) specifies that the entire amount of wages shall be paid to the employee
through a bank account of the employee.
However, according to S S. 25A (1), an employer may pay an employees wages in
cash or by cheque upon written request of the employee.
Section 26 states that an employer cannot impose conditions upon the employees
as to how the wages should be spent.
Section 28 underlines the method of payment of wages i.e. employers are
forbidden from paying wages to employees at liquor shops, entertainment
outlets or grocery outlets and so on.
Under S. 69 of EA 1955, the Director-General has the power to enquire and
decide any dispute between an employee and employer in respect of wages or
any other payment in cash due to the employee. Employees who are not within
the coverage of EA 1955 may also resort to this section to recover any wages due
to them by employers.

4.1.4 Advance of Salaries

S. 22 (1) of EA 1955 states that an employer shall not advance a sum of money
that exceeds the aggregate total salary of one month, except in situations
explained in Figure 4.2 as stated in S. 22 (a) _ (de).
According to the general practice in this country, there are schemes that are
allowed that enable loans and advances to be made (refer to Figure 4.2).
Advances and loans to employee:
a) To purchase, build and repair houses
b) To purchase land
c) To purchase motorcycles, motorcars and bicycles
d) To purchase shares offered by the employer
e) For other purposes:
- Application by way of writing by employer to Director-General
- That is beneficial to the employee in the opinion of the Director-General.
- That is approved by the Director-General but on condition that upon
approval, the Director-General can make specifically or use terms that are
da) for the purposes gazette by the Minister from time to time
db) To purchase a computer
dc) To pay for medical expenses for himself or his immediate family members.
dd) To pay daily expenses in relation to temporary disablements
de) to pay educational expenses for himself or his immediate family.

4.1.5 Deduction of Salaries

S. 24 (1) EA 1955 states that an employer is not allowed to make deductions of
employees wages that are provided in the Act only. Situations where such


deductions are allowed as per the Act under S S. 24(2) are shown in Figure 4.3.

(a) Any overpayment made by the employer in the 3 months before deduction
(b) Deductions to indemnify that has been paid by employer to employee under
(c) Deductions to recover advances paid under s.22 without interest.
(d) Deductions allowed under any written laws.

S. 24(3) lists deductions allowed with the written consent of employees
Such deductions include:
(a) Deductions towards registered trade unions, cooperative thrift and loan
societies of any sum of money for entrance fees, subscriptions instalments
and interest on loans or other dues; and
(b) Deductions in respect of any shares of employers business offered for sale
by the employer and purchased by the employee.
S. 24 (4) touches on deductions that shall not be made except with the request
in writing by the employee and with the prior permission of the DirectorGeneral in writing.

Such deductions are for:

(a) Payment of any superannuation scheme pension fund, employers welfare
scheme or insurance scheme established for the benefit of employees;
(b) Repayments made to employees under S. 22 where interest is levied;
(c) Payments to third party on behalf of the employee;
(d) Payment of purchase of any business commodity by the employer;
(e) Rental of accommodation and cost of services, food and meals provided by
the employer under the request of employees or under the terms of contract
of service.
Under S S. 24(5) the Director-General shall not permit any deductions for
payments under paragraph 4(e) unless he is satisfied that the provision of the
accommodation services, food or meals is for the benefit of the employee.
However, S S. 24(7) empowers the Director-General to allow deductions upon
request by the employers but subject to such terms that he may deem fit to
Apart from S S. 24(9), the total deductions cannot exceed 50% of the wages of the
employees in that month S S. 24(8).

4.1.6 Minimum Wages

Besides EA 1955, the recent statute that deals with employees wages is the
National Wages Consultative Council Act 2011 (the 2011 Act), which established
the National Wages Consultative Council (the Council). The main responsibility
of the Council is to conduct studies on all matters concerning minimum wages
and to make recommendations to the government to make minimum wages
order according to sectors, types of employment and regional areas, and to other


matters relating to minimum wages and wages. Consequently, on 1 May 2012,

Malaysian Prime Minister Datuk Seri Najib Tun Razak announced the first
national minimum wage policy which is laid down in the M Minimum Wages
Order 2012 (the Order). The Order would apply to employees who enter a
contract of service in all economic sectors, except for domestic services, involving
maids and gardeners (Paragraph 3 of the Order). Thus, all employees within the
scope of EA 1955 will benefit from this new policy.
Paragraph 4 of the Order specifies a minimum wage of RM900, or RM4.33 an
hour, for Peninsular Malaysia and RM800, or RM3.85 an hour, for Sabah, Labuan
and Sarawak. This new scale of wages took effect on 1 January 2013 for
employers who employ more than five employees and those employers
regardless of numbers of employees who are involved in professional business
activities i.e. medical and dental clinic, law, architectural and consulting firm.
Meanwhile, the effective date for small-time employers or micro enterprises with
at least five employees is extended to 1 July 2013 to ensure that they have ample
time to make the necessary adjustments. The affected employers are, however,
allowed to apply to the Council to postpone the implementation of the new
wages scale to another date (Paragraph 2 (2) of the Order). The Order also covers
the requirement of minimum wages for employees under probationary period
i.e. the minimum amount of wages for this category of workers is allowed to be
reduced not exceeding 30% from the minimum amount of wages as stated before
(Paragraph 5). The 2011 Act (S. 43) provides that an employer who fails to
comply with this new policy commits an offence and shall upon conviction be
liable to a fine not exceeding RM10,000 for each employee.

Matters regarding allowances have long been deliberated by the courts even
though EA 1955 hardly deals with these employees rights except maternity
allowance. The following is the list of allowances recognised by the courts:
. Acting allowance;
. Attendance allowance;
. Call allowance;
. Living allowance;
. Food allowance;
. Hardship allowance;
. Housing allowance;
. Outstation allowance;
. Overtime allowance;
. Shift allowance;
. Training allowance;
. Transfer allowance; and
. Travelling allowance.
The settlement regarding these allowances is based on the provisions of the
contract of service. Therefore, it may be different from one organisation to another.
However, for overtime allowance on rest and public holidays, the provision under
Employment (Limitation of Overtime Work) Regulations 1980 applies.
Maternity Allowance


Eligibility for maternity allowance is stipulated in S. 37 (1) (a) of EA 1955.

However, since the relevant provisions also set out other maternity-related
benefits, the discussion will extend to all such benefits.
Every female employee regardless of whether she falls within the ambit of EA
1955 is now assured to enjoy her maternity-related rights as provided under Part
IX of EA 1955 (S. 37-44A). The entitlements are a period of maternity leave of not
less than 60 consecutive days and a maternity allowance during this period (S. 37
(1) (a). Female employees may start their maternity leave from the 22nd week of
pregnancy (see definition of the term confinement in S. 2 of EA 1955).
EA 1955 (S. 37 (4)) further prohibits the termination of a female employee during
the period she is eligible to maternity leave. An employer who terminates the
service of a female employee during the period commits an offence unless the
termination is proven to be the result of the closure of the employers business.
The following conditions are however imposed by EA 1955 for a female
employee to enjoy maternity-related benefits i.e. maternity leave and allowance:
(a) The leave should not commence earlier than a period of 30 days
immediately preceding the confinement of a female employee or later than
the day immediately following her confinement unless certified by a
medical officer appointed by the employer. In such cases, the leave may
commence any time before the 14 days prior to delivery;
(b) If the worker takes leave prior to the situations above, she is not entitled to
the benefit for the days she has not turned up for work; and
(c) This allowance is only if she has not more than five children including
those that had passed away in previous pregnancies.
Section 40 (2) states that a female employee who is pregnant must inform the
employer of her position within 60 days before delivery. Otherwise, the payment
of allowance can be withheld. This is important to enable the employer to make
necessary arrangements.


Bonus and ex-gratia payments are payments made by employers apart from the
wages and are not discussed in EA 1955.
S. 60I (3) provides that the Director-General can upon the application of the
employer approve in writing any scheme of incentive payment as an approved
incentive payment.
However, this matter has been discussed by the court and the scope is very wide.
This is because there are far too many types of payments that can be made by the
employer, apart from wages to attract the employees. Only a few types of
bonuses and compensations will be discussed here, whereas the differences
regarding wages, bonus and ex-gratia payments are to be discussed later.

4.3.1 Bonus

EA 1955 is silent on the right of employees to be paid bonus. The contract of

service also does not mention bonuses. This is because it is the prerogative of the
employer. Employers may insert this provision at their discretion. However, the
courts sometimes recognise another types of bonus which is contractual bonus.
The awards of the courts below will illustrate the differences between
discretionary bonus and contractual bonus.
As defined by the Oxford Dictionary, bonus is payment to employees apart
from wages. In other words, it is not the duty of the employers to provide bonus
to employees but they may provide it as an incentive towards the services
provided by the employees.
Many questions have been raised in the courts as to whether compulsory


bonuses must be provided or otherwise.

In the case law of States of Malaya Insurance Association and National Union of
Commercial Workers (Award 157/80), it was decided that the non-contractual
bonus is an uncertain payment. It can only be given if the employer makes
Contractual bonus is bonus that is considered compulsory. This means the
bonus is provided for in the contract of service as compulsory payment by the
employer apart from the wages. Time and mode of payment is decided in the
agreement. The quantum is also fixed. It shall be paid whether the employer
makes a profit or not.

4.3.2 Ex-gratia Payment

The ex-gratia payment does not have a strict definition.

In the case of N NSTP Bhd and National Union of Journalist (250/88), apart from
receiving bonus of two months wages on 20 December each year, the employees
were also given compensation that varied as per the employers discretion. In
this case, the Workers Union was unhappy with the way the employers used
their discretion to ascertain the payment. The union sought a guideline and for
the employer to adhere to it. Upon deciding, the court exhorted that the word
ex-gratia is clear as its meaning which means compensation. Therefore, only
one compensation is to be made as an incentive by the employer. Thus, the
application of the union was disallowed.


Pecuniary benefits include:

. Dismissal, retrenchment or discontinuance allowances;
. Retrenchment benefit;
. Retirement benefit;
. Medical benefit; and
. Insurance benefit.
Most of the above said benefits are not provided for in E EA 1955. Likewise, there
are also other benefits that are not provided for in the statute but have been
provided by the courts like death benefits, car loans and housing loans.

4.4.1 Lay-off and Termination Benefits

The benefits regarding lay-off and termination can be found in the Employment
(Termination and Lay-off Benefits) Regulations 1980. The following are the
significant provisions in E Employment (Termination and Lay-off Benefits)
Regulations 1980.
(a) R Rule 3 _ An employee is entitled to termination or lay-off benefits if his
contract of service is terminated or laid-off provided that the employment
is not less than 12 months of continuous service.
(b) R Rule 4 (1) _ The entitlement in Rule 3, however, does not cover a situation
when an employee is terminated from his service due to retirement, by an
employer on the basis of misconduct or voluntary termination by the
(c) R Rule 4 (2) and (3) _ A worker is not entitled to lay-off and termination


benefits if:
(i) There is continuation of work by the employee through a new
contract of service that has new terms which are not lesser than the
previous contract of service and the renewal of the contract of service
is enforced from the date of termination;
(ii) The employer has made a new offer with no lesser terms not fewer
than seven days from the date of lay-off and termination; and
(iii) The renewal begins on or before the date of lay-off and termination
but the employee has turned it down unreasonably.
(d) R Rule 8 _ If there is a change in the employers (equity or ownership) then
the employee is not entitled to lay-off and termination benefits if:
(i) The employee has rejected the offer by the new employer that has
been offered with seven days of change of the employer and with no
lesser terms contained therein
(ii) The employee is not offered such a job then the previous and new
employers are jointly liable to pay compensation.
(e) R Rule 5 _ Provides that an employee is deemed to be laid-off if:
(i) The employer did not provide work for at least 12 days in any one
(ii) No wages were paid for such days when he was not provided with
(iii) If these days fall on rest days, public holidays, sick days, maternity
leave or other holidays then these days are not included as the days
when work was not provided.
(f) R Rule 6 _ Specifies the quantum of compensation payable in the cases of layoff/
(i) If the employee had been working less than 2 years _ not less than 10
days wages for each year.
(ii) If employee has been working more than 2 years but less than 5 years
_ not less than 15 days wages for each year.
(iii) If employee had been working 5 years or more _ not less than 20 days
wages for each year.
(iv) On a pro-rata basis if lesser years based on the nearest number of
In the case of H Hotel Continental and National Union of Hotel, Bar & Restaurant
Workers (Award 571/1984), the court allowed the part or whole closure of
business by the employer. However, the workers must be paid benefits as
contained in Regulations 1980.

4.4.2 Retirement Benefits

The EPF shall only be paid upon retirement and not when there is a long lay-off/
termination or resignation. In the case of A Association of Bank Officers and
Malaysian Commercial Bank Association (Award 54/1981), it was stated thus:
_The contribution or payment of employees to the EPF is actually a

retirement benefit.

4.4.3 Resignation Benefits

The courts do not endorse such benefits but if they are provided for the collective
agreement, then the courts shall not deny it.
In the case of F Federal Iron Works Sdn Bhd and Metal Industry Employees
Union (Award 123/1991)
- In principle we do not condone resignation benefits. However, if the

company and the unions have such provisions in their collective agreement,
then we do not propose to hinder it.

4.4.4 Medical Benefits

The Industrial Court in Golden Sands Beach Resort and National Union of
Hotel Bar and Restaurant Workers (Award 107/1988) confirmed that the
employer had to provide medical benefits. This was not extended to family
members. Furthermore, the expenses incurred should not over-burden the

4.4.5 Insurance Benefits

The Industrial Court also does not reject the giving of insurance benefits to the
employer for a total that is more than that provided in E Employees Social
Security Act 1969 (ESSA 1969) on condition that the employer is able to provide it
and the workers receive the benefit. This is because the protection that is
provided by the Social Security Organisation (SOCSO) is limited. For example,
the protection from SOCSO is only for any incident out of and in the course of
employment. Any protection other than this is not provided by SOCSO.
The courts allow the employers to grant protection that is above the scope of that
provided for in SOCSO (namely, the protection out of and in the course of
employment). The extent of the protection is dependent upon the employer and
is dependent upon the capacity of the employers. However, the general safety of
the worker has to be considered at all times.


The terms that are non-pecuniary in nature provided by EA 1955 (Part XII) are,
among others, duration of work, overtime work, rest days, public holidays,
annual leave and sick leave. Meanwhile, leave regarding union matters have
been provided for in Industrial Relations Act 1967 (IRA 1967). Apart from these,
the awards of the Industrial Courts have also provided several benefits by
considering the current situations.

4.5.1 Duration of Work

EA 1955 (S. 60A (1)) has specified some rules relating to work hours of an
employee. It does not allow an employee to work:
_ More than 5 continuous hours without a rest period for at least 30 minutes;
_ More than 8 hours in one day;
_ More than 10 hours in the case of spread-over period a day; and
_ More than 48 hours a week.
Regarding to spread-over hours of work usually in restaurants and catering


business, the following illustration will be useful:

If an employee in a restaurant works from 10am to 2pm and from 6pm to 10pm,
his spread-over period of work is 12 hours which entitles him to be paid with
overtime of 2 hours.
Exceptions to the above rules are as follows:
(i) Generally, the maximum work hours of an employee is 8 hours. In the case
where an employee is required to work 8 hours continuously, he is entitled
to have at least 45 minutes as a rest period (S. 60A (d)(ii)).
(ii) In the event an agreement is concluded between both parties i.e. to work for
8 hours per day but less than 8 hours on any other in the week, the total hours
of work shall not be more than 9 hours per day or 48 hours per week. All these
provisions can be found in Section 60A (d) (iii).
(iii) The employer can also increase the work hours more than that provided for
in Section 60A(1) but on condition prior written permission is obtained
from the Director-General and after stating the reasons for the increase in
hours of work.

(iv) Section 60C (1) states that the employer can require the worker to work
longer than that in Sections 60A(1) for those involved in s shift work. He can
be asked to work more than 8 hours on any day or more than 48 hours in a
week but the average hours in any 3 weeks must not exceed 48 hours in a
(v) Section 60A (2) allows an employer to ask the worker to work longer than
that in 60A (1) in certain situations as follows:
. Accidents, real or threatening, in or related to the workplace;
. Work which is essential for the lives of the society;
. Work regarding defence and security of Malaysia;
. Work that has to be done on machinery or plant;
. An unexpected disturbance to work; or
. Work that should be performed by the workers in any industrial
activity that is necessary for the economy of Malaysia, or any necessary
service that is defined in the Industrial Relations Act 1967.
Section 60 A (7) states that no employer can direct his workers to work more than
12 hours in a day, except if he can show one of the situations as in 60A(2) to exist.
However, this provision is not used if the worker is not involved in active work
or the job requires waiting for longer periods.
If a worker is directed to work longer than what has been stated, his work is
considered as o overtime work.
Regarding the time of work, the court gives discretion to the employer to modify
it in accordance with the needs of the company.
In the case of Sun Mix Concrete Sdn Bhd and Non metallic Mineral Products
Manufacturing Employees Union (Award 115/1987), the court confirmed the
employers power in deciding and modifying the time of work. However, this
power is subject to the laws, so that it is in accordance with provision of the Act
and situation or type of work.

4.5.2 Overtime Work

Section 60A (3) (b) defines overtime work as:
Work hours carried out in excess of the normal work hours


Any work exceeding 10 hours that is from the beginning of work until the
worker ends for the day is considered overtime. In the case of Eng Giap Public
Motor Bus Co.Ltd v Gan Eng Keng and 36 others [1975], the court explained
overtime as follows:
Overtime exists when a worker is required to work more than the normal work
hours in a day.
Section 60A (3)(a) states that for any work done beyond the normal work hours,
the worker should be paid one and a half times the normal rate of wages.
Normal work hours refer to the total work hours as agreed upon by the employer
and the worker in the contract of service as the work hours in a day. Any work
that is done on rest days, any gazetted holiday or any paid holiday substituted
thereof is to be taken as overtime work.
The payment is based on what the worker receives monthly, weekly, daily or
hourly or is a piece rate.
Section 60I (1A) and (1B) state respectively that when a worker is paid a monthly
rate of pay and weekly rate of pay respectively, the ordinary rate of pay (means
wages as defined in S. 2 of the EA) shall be calculated according to the formula:
_ Monthly rate of pay/26; and
_ Weekly rate of pay/6.

The formulas for payment on daily rate, payment for sick leave for workers who
work at the normal rate of wages and so on are contained in Section 60I (1C) to

4.5.3 Rest Days

Section 59(1) of EA 1955 secures the right of an employee to enjoy his rest days as
Rest days do not include maternity leave, sick leave during the period of
temporary disablement under the Workmens Compensation Act 1952 or under
the Employees Social Security Act 1969. In the case of an employee engaged in
shift work, any continuous period of not less than 30 hours shall constitute a rest
Section 59 (1A) Subsection (1B) empowers the Director-General to grant the rest
day for each week on any day of the month in which the rest day falls.
For employees who do not have fixed rest days, S.59(2) states that a roster be
prepared to inform the workers when their rest days fall to enable them to make
choices as to whether to work on these days. An employer who contravenes this
section commits an offence under section 59(4).
Every employee shall be allowed in each week a rest day of one whole day as
may be determined from time to time by the employee and where an employee
is allowed more than one rest day in a week the last of such rest days shall be
the rest day for the purpose of this Part.
This was proved in the case of Sundram v Veemah (1972) MLJ 83 that showed
that the court stated that Section 59 does not give choices to the employers except
to inform the workers in advance of the rest days and preparing the roster that
has to be displayed. This facilitates the worker in preparing for his leave in
advance and also to know when he is qualified to do overtime work if required.


As per 60(1), no worker can be forced to do overtime on rest days unless he is

involved in work that has to be carried out continuously or continually by shifts.
Summary for rates of payment that should be received when an employee works
on rest days which depend on the types of pay received (see Table 4.1).
Table 4.1: Summary for Rates of Payment
Works On Rest Days Types of Pay Received
Daily or hourly pay _ S. 60 (3) (a)
. For work done that does not exceed _
normal hours of work
. For work done more than half but does
not exceed normal hours of work
. For work done exceeding normal hours
of work - S. 60 (3) (c)
1 days wages
2 days wages
2 x hourly rate of pay x hours worked
Monthly pay _ S. 60 (3) (b)
. For work done does not exceed _
normal hours of work
. For work done more than half but does
not exceed normal hours of work
. For work done exceeding normal hours
of work
_ days wages
1 days wages
2 x hourly rate of pay x hours worked
Piece-rated pay _ S. 60 (3) (d) 2 x ordinary rate per piece

4.5.4 Annual Leave

S. 60E (1) (a) _ (c) stipulates annual leave as follows:
_ 8 days if employed for less than two years;
_ 12 days if employed for a period of two years or more but less than five years;
_ 16 days if employed for five years or more.
If an employee has not completed 12 months of continuous service and his
service is terminated in that year, he is entitled to paid annual leave in direct
proportion to the number of completed months of service with the condition that
where the fraction of a day of annual leave that is calculated that is less than half
of a day or more, must be considered as one day. However, his right to enjoy
such leave is denied if he is absent without the permission of the employer, and
without reasonable basis for more than 10% of the working days during the
twelve months of continuous service.
If an employee while on annual leave is entitled to sick leave or maternity leave,
then the worker is to be given sick leave or maternity leave and the annual leave
is taken as not used (S. 60E (1B)).
For employees terminating their services, they are allowed to take their paid
annual leave in that year where termination occurred. In addition, all the accrued
leave for the months of service in that year can be taken (S. 60E (2A)).
If the contract of service has been terminated by either party before the employee
takes his paid annual leave, the employer must pay the worker the normal wage
rate for each day of the leave, except in the case of the employee being dismissed


after due inquiry for gross misconduct (S. 60E(3A)).

4.5.5 Sick Leave

Section 60 F (1) states such leave can be taken only after examination paid by the
employer by:
_ Registered medical officer appointed by the employer; or
_ Any other medical officer if the above is unavailable.
Section 60F (1) (aa) states the following leave entitlement if the worker does not
require hospitalisation:
_ 14 days if the worker has worked less than 2 years;
_ 18 days if he has worked more than 2 years but less than 5 years; and
_ 21 days if the worker has worked more than 5 years.
Section 60F (1) (bb) states if hospitalised, the worker gets 60 days of leave for
each year. A doctors confirmation is required for hospitalisation. If the employee
is not hospitalised, he is still entitled for 60 days of leave.

Section 60F (2) states that if a worker absents himself because of sick leave:
. That is not confirmed by a registered medical doctor under Subsection (1) or
by a dentist as provided in (1A); or
. Confirmed by doctor and dentist but he fails to inform the employer within
48 hours after such leave; and
. Is said to have absented himself without the employers permission and
without good reason.
The employer has to pay the normal rate of wages for every day of the sick leave
and if the monthly wages has no deduction of the sick leave then it is to be said
that the sick leave has been paid for _ Section 60F (3). Employees who are under
maternity leave, incapacity leave under SOCSO Act 1969 and Compensation Act
1952 are not entitled to paid sick leave.

4.5.6 Public Holidays

According to Section 60D (1), every worker is entitled to paid holidays in a

calendar year as follows:
(a) For 11 days as gazetted, 5 of which shall be:
(i) National Day;
(ii) Birthday of Yang Di-Pertuan Agong;
(iii) Birthday of Ruler or Yang Di-Pertua Negeri;
(iv) Federal Day; and
(v) Malaysia Day.
(b) On any day declared under Section 8 of the Holidays Act 1951. According
to Section 60 D (1), if any of the public holidays referred to in paragraph (a)
and (b) falls on a rest day, the following work day would then become the
holiday as a replacement.
Among the gazetted holidays are:
(i) Hari Raya Puasa;
(ii) Hari Raya Haji;
(iii) Chinese New Year;
(iv) Labour Day;
(v) Wesak Day;
(vi) Maulidur Rasul;
(vii) Deepavali; and


(viii) Christmas Day.

Among the state public holidays are birthday of the Sultan, Yang Di-Pertua
Negeri, Awal Ramadhan, Thaipusam, Nuzul Quran and New Year. Thus if the
public holiday falls on a rest day, the worker has the right to a holiday the
following day. This is provided under Section 60D (1)(b).
Section 60D (1A) _ The employer and worker can also have an agreement that
of the identified paid holidays can be replaced by another day.
Section 60D (1B) fixes that if the public holiday falls on sick leave, annual leave or
during a period of incapacity then as per Employees Social Security Act 1969 or
Workmens Compensation Act 1952, the holiday must be replaced with another
as paid holiday.
Section 60D (2) states that if a worker does not attend the day before or the day
after the public holiday without consent of the employer he is not entitled to get
payments for the public holiday unless he has good reasons.
Section 60D (3) states the wages to be paid while working on holidays. As an
addition for the payment for the holiday the employee also gets:
Two days wages at the normal rate if taken to work monthly, weekly,
hourly or any other rate; or
Twice the normal rate for the work done if he has taken to work at the rate
according to work.
right of the employee to this payment is fixed although the duration of work
that day is less than the normal working hours.
However, if the employee is required to work overtime beyond the normal
working hours, Section 60D (3) (aa) states that the worker can get three times the
normal rate. Subject to the condition of the agreement, travelling allowance must
be provided by the employer for the journey to and from work.
Section 60D (4) however provides that if any public holiday falls on a half
workday, the normal wage rate that is applicable must be the wage rate for a full

4.5.7 Maternity Leave

This right of a female employee has been discussed earlier (refer to maternity
allowance 4.2.1).