TOPIC REVIEW ONE: EMPLOYMENT ACT

SECTION A: SHORT ANSWER (8 MARKS)

Briefly answer the following questions in your own words.

1. Explain TWO (2) reason why notice period is needed in an employment contract. (4

marks)

The notice period is needed in an employment contract as it can protect both employees and
employers. According to the employment contract, if an employee has been employed for less than 2
years, the notice period may not be shorter than the prescribed minimum period of 4 weeks. During this
period, the company has enough time to look for new employees to fill the position vacated by the
existing employees. Besides, employees will have time to prepare for finding another job and it is
ensured that the employee does not remain unemployed after leaving the company. In addition, a
notice period can help both parties plan their finances. This is because employees can still receive their
final paycheck when leaving the company, and employers can use this time to budget for a new hire.

2. Explain TWO (2) reasons for the need to differentiate between a person who works under a
‘Contract of Service’ and a person who works under a ‘Contract for Service’. (4 marks)

A contract of service is an agreement, oral or written, express, or implied, in which one person agrees
to hire another as an employee and the other agrees to serve his employer as an employee and
includes a contract of apprenticeship. A contract for service is an agreement enforceable between a
business and a self-employed person. It differs from an employment contract, often called a contract
of service which is between an employer and a person who later works for the company. It is
important to differentiate between a contract of service and a contract for service.

Contract of Service: -

i. The relationship is between employer and employee, they include terms of employment such as
annual leave, sick leave, and so on.

ii. They are covered by the employment act.

Contract for Service: -

i. The relationship between client and contractor. They do not have any relevant benefits.

ii. They are not covered by the employment act.

 BAWB4014 LABOUR LAWS AND INDUSTRIAL RELATIONS

SECTION B: SCENARIO BASED (12 MARKS)

You are a Bachelor in HR degree holder who has just graduated from UNITAR. Your cousin, who owns a
small company, comes to see you regarding some problems that she has with her employees. Give your
advice to her for the following scenarios based on the provisions of Employment Act 1955 and general
principles of labour laws in Malaysia.

1. Fatah works as an account clerk at the company. His salary is RM 1860. Fatah was absent from work
on Tuesday and Wednesday and only turns up for work on Thursday. When the company wishes to
take disciplinary action against Fatah, he strongly objects. Fatah said he was absent because he had
food poisoning but was too weak to go to the clinic. He claimed that Employment Act 1955 allows all
employee to be absent from work if they are sick. Fatah said that he has also informed Zura, another
clerk in his department, that he will not be coming to work. Thus, he has not committed any
wrongdoing. (6
Marks)

Based on this scenario, Fatah is an employee under the Employment Act because his salary is
RM1,820 (which is less than RM2,000). According to EA, Section 60 F, employees are entitled to paid
sick leave after being examined by a doctor or other registered GP under special circumstances.
However, if an employee takes sick leave without a medicate certificate (MC), he shall be deemed to
be absent from work without the employer's approval and without reasonable excuse for the days
of absence. In this case, the company has the right to take disciplinary action.

In this scenario, Fatah missed two days of work due to food poisoning. However, he did not provide
a medical certificate (MC). It is irrelevant that Fatah informed Zura that he would not be in the office
on the said days, as the criterion for the applicability of sick leave is explicitly stated in Section 60F of
EA, which clearly requires a medical certificate (MC).

Consequently, Fatah's employer has the right to take disciplinary action against him, which includes
an investigation into his misconduct in not showing up at the office on the two days. If Fatah cannot
prove his illness, he faces suspension or termination for misconduct.

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 BAWB4014 LABOUR LAWS AND INDUSTRIAL RELATIONS

2. Lina is the administrative assistant at the company earning a salary of RM 1740. On 24th October
2022, which is a Monday, she was absent from work. When asked, Lina said that she is merely taking
the leave for Deepavali, a public holiday in Malaysia. Your cousin says that the company does not
observe Deepavali as public holiday, but Lina insisted that employees in Malaysia should be given
leave for all gazzetted public holiday and she was within her rights for not coming to work. The
company want to know whether they can act against Lina for her absence. (6
Marks)

Based on this scenario, Lina is an employee under the Employment Act because her salary is
RM1,720 (which is less than RM2,000). According to the EA, Section 60D, an employee is entitled to
at least 11 paid public holidays, five of which are mandatory: Merdeka Day, Agong’s Birthday, The
State Sultan’s Birthday or Hari Wilayah for FT, Labour Day, and Malaysia Day. For the remaining 6
days will be at the employer’s option to choose from a list of gazetted public holidays or any other
day as a paid public holiday.

In this case, Lina was absent from work on Deepavali because she said it was a public holiday.
According to Section 60D of EA, Deepavali is not a mandatory paid public holiday. In addition, Lina’s
cousin stated that the company does not recognize Deepavali as a public holiday, which means that
the company does not consider Deepavali as one of the remaining 6 gazetted public holidays.

Consequently, the employer has the authority to require employees to report to work on Deepavali
in accordance with this section. Therefore, the company has the right to take action against Lina for
her absence.

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