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Terms of Employment

Payment of Wages
Hours Of Work
Rest day
Annual Leave
Sick Leave
Maternity Protection

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Contract of service
Any agreement, whether oral
or in writing and whether
express or implied, whereby
one person agrees to employ
another as an employee and
that other agrees to serve his
employee and includes an
apprenticeship contract.
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Employer & Employee
Employer: Any person who has
entered into a contract of service
to employ any other person as an
employee and includes the agent,
manager or factor
Employee: any person or class of
(a) included in any category in the
First Schedule
In respect of whom the Minister of HR
makes an order under s2(3) or S2A

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First Schedule
Two classes of person in First
Any person, irrespective of his
occupation, who has entered
into a contract of service with
an employer and whose wages
do not exceed RM1500 a
month, excluding commission,
allowance and overtime.

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First schedule
Any person, irrespective of
the amount of his monthly wages,
has entered into a contract of service,
Manual labour
Engaged in supervising other employees
engaged in manual labour;
Is engaged in operation of any vehicle
used for the transportation,
Registered vessel
Domestic servant.

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Employment Contract

EA declares that the employment

contract cannot stipulates terms and
conditions which are less favourable to
the employee.
Section 7 EA any terms or condition
which is less favourable to the
employee than a term or condition
prescribed by this Act or any subsidiary
shall be void to that extent

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Section 7B & 10(1) EA

Any terms and conditions of

employment not prescribed by the
EA, the employment contract may
stipulate such terms and
EA requires employment contract
to be in writing.
Piece work
Exceed one month
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S 10(2)
In every written employment
contract shall be included
setting out manner in which
such contract may be
terminated by either party in
accordance with Part 11.

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Section 8 EA
Prohibits any employment contract from
restricting in any way the exercise by
an employee of his trade union rights.
To join a registered trade union
To participate in the activities of a
registered trade union.
To associate with any other persons for
the purpose of organizing a trade union
in accordance with the Trade Union Act

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Four tests
For discerning the contract of
employment/contract of
Traditional or control test
The organization or
integration test
Composite test.
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Express Terms in a Contract
of Employment
Job title
Wages and details of other monetary
Normal working hours and whether
there is requirement to work overtime
Holiday and leave entitlements
Other benefits
Probationary period

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Notice period prior to termination
Retirement age
Requirement of secrecy
Requirement to comply with
company rules and penalties for

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Changing the terms
The terms and conditions of the
contract can only be changed by
mutual consent.
Any Employer who wishes to
unilaterally change the contract
may be accused of breach of
contract by the employee.
Where an employer breaches a
major term of the employment
contract, an employee may claim
for constructive dismissal.
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Basic wages, and all other
payments due under the contract
of service excluding:
Annual bonus
Overtime payments
Subsistence allowances, and
Traveling allowances.

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Payment of wages
S18 EA.
A contract of service shall
specify a wage period not
exceeding one month.
If the contract does not
specify, the wage period
would be deemed to be one
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S19 EA
Wages after any lawful
deduction are payable not
later than the seventh day
after the day of wages.
The employer may apply for
extension of the time of
payment from the DG.
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S20 EA
On normal termination, wages are
payable on the day the contract of
service is terminated.
S21(1) Where the employer
terminates the contract of service
of an employee without notice,
wages are payable on the day when
the contract of service is terminated

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S21(2) EA.
Where the employee
terminates his service without
notice, wages are payable not
later than the third day when the
contract is terminated.

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Wage advances
Itis unlawful give advances exceeding
the amount of one months wages,
unless the purpose is for the employee
Purchase land
Purchase, build or improve a house
Purchase a motorcar,motorcycle or
Purchase livestock
Purchase shares of the employers
business offered for sale by the
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Attending Court
The employee is not entitled to
any ages for:
time spent in the prison or
police custody;
Traveling to and from prison or
any other place of custody and
Attending or returning from
court except as a witness of his
employers behalf.
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Deduction From wages

An employer may deduct the

following from his employees
wages without the employees
Overpayments made by mistake
during the immediate preceding
three months from in which
deductions are to be made.
Indemnity due to the employer
by the employee under s13(1)
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Recovery of advances of wages
provided no interest is charged on
the advances.
EPF, social security contributions,
income tax etc. as authorised by
Syarikat Bina & Kuari Sdn Bhd
and Nonmetalic Mineral
Products Manufacturing
Employees Union Award
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Deduction by employer
Payments of subscriptions, entrance
fees, installments and interest on
loans or other dues owed by the
employee to the registered trade
union or co-operative and loan society.
Payments for the shares of the
employers business offered for sale
by the employer and purchased by the

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Deductions from employees, wages only
allowed in certain restricted
The maximum monthly total deduction
must not exceed 50 % of the
employees wages unless the amount to
be deducted includes repayment of a
housing loan.
With the permission of the DG of labour,
the total deductions may be increased
to 75% of the monthly wage.

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Truck System

S25, 25A EA
Wages should be actually paid to the
employee in legal tender.
The employee, however could give
his written agreement that his wages
be paid into his account at a bank or
by cheque.
Such agreement can be revoked by
the employee by giving 4 weeks
written notice to the employer.
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Restriction on the places
S28 EA
Wages should not be paid in
taverns, amusement places,
shops or stores (except for
employees employed

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Priority of Wages
S31 EA:
Where the property of an employer
is sold by a court order upon the
application of a secured creditor,
the court shall not authorise
payment of the proceeds of the
sale to the secured creditor until
the employees wages have been
paid first.

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Priority of wages
Wages in this case include
termination and lay-off benefits,
annual leave pay, sick leave pay,
public holiday and maternity

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Failure to pay wages
Any employer who fails to pay
wages with the employment
contract has committed a breach
of contract.
Section 15(1)EA.
Lodge a complaint at Labour Dept.
File representation for
constructive dismissal at
Industrial Relations Dept.

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S69B (1) EA
Rights of employees earning RM
Lodge Complaint at Labour Dept.

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Malayan Agricultural Producers
association and All Malayan
Estates Staff Union Award
Bonus according to Oxford
Dictionary is gratuity to employees
beyond their wages. It is incentive
given to employees. .We will
therefore, order that bonus be paid
to the employees at the discretion
of the employer.
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Contractual and
discretionary bonus
Art Printing Works Sdn Bhd and
Printing Industry Employees
union Award 154/1987
IF bonus has not been made
contractual before or has not
become an implied term of
employment, the court will not
make it contractual.

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Hours of Work:S60A

Employee shall not be required under

his contract of service to work:
More than five consecutive hours
without a break of at least 30 minutes.
More than eight hours in one day.
In excess of a spread over period of 10
hours in one day or
More than 48 hours in one week.

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An employee who is engaged in
work which must be carried on
continuously and requires his
continual attendance may be
required to work for eight
consecutive hours, inclusive of a
45 minute meal break.

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S 60A:
Where there is a agreement to
work less than 8 hours on certain
day may be increased to exceed
8 hours but no employee should
work more than nine hours a day
or 48 hours in one week.
S60A(1A) If there are special
circumstances, DG may grant
permission subject to conditions
that he may impose.
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S 60C: Shift Workers
Shiftworkers may be required to
work for more than 8 hours a day
or more than 48 hours a week but:
For every 5 consecutive hours of
work, there must be a break of 30
The average number of hours over
any period of three weeks or over
any period exceeding three should
not exceed 48 hours per week.

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S 60C

Shift worker should not work for more

than 12 hours in any one day,
except in circumstances where there is
actual/ threatened accident in the
place of work;
work is essential to life of community,
defence/security of Malaysia;
urgent work to be done to machinery
or plant or an interruption of work
which is impossible to foresee.
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S60A(3)(b),(c ) EA
Overtime means the number of hours
of work carried out in excess of the
normal hours of work.
S60A (3) (a)
Employee shall be paid at a rate not
less than one and half times his
hourly rate of pay
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Restriction on overtime

Anemployee shall not work

overtime for more than
12 hours per day inclusive of
overtime or
104 hours in any one month.

Employment (Limitation of
overtime work Regulation 1980)

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S60D(1),(1A): Public
The employee is entitled to paid
holidays at his ordinary rate of pay
on 10 gazetted public holidays, four
of which should be;
The National day
The Birthday of Yg Dpertuan Agong
The Birthday of the Ruler/ Governor
of the State/ Federal Territory Day
The Worker day
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Remaining days

Employers are required to put up a

notice at the beginning of the year
informing the employees which 6
public holidays have been chosen.
S60D(1) Where a holiday falls on a
rest day, the following day will be
the holiday.

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Ifany of the 10 public holidays
falls during sick leave, annual
leave or the period of temporary
disablement under WCA or
Employees Social Security Act
Another day should be

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S60D(2) EA
Ifany employee is absent without
excuse or permission on the day
preceding or succeeding a public
He is not entitled to any wages
on the day of his absence.

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Work on Public Holiday
Normal working two days extra
wages, regardless of the actual
hours worked.
Overtime: 3 times employees hourly
rate of pay. RM900 divided by 26
(days) divided by 8(hours):RMX
hours =
Employee employed on piece rates -
twice rate per piece and if
overtime, 3 times the ordinary rate
per piece.
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LionMetal Industries Sdn Bhd
and Metal Industry Employees
Union. Award 267/1993

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S60E(1): Annual Leave
After every 12 months of continuous
service with the same employer, an
employee is entitled to annual leave, as
Less than 2 years service 8 days
for each year
More than 2 less than 5 years service
12 days
5 years service or more 16 days

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Where an employee is granted
leave of absence without pay by
his employer during any 12
months period, and the period of
absence exceeds in the aggregate
30 days, that period of leave of
absence shall be disregarded for
purpose of computing his length of
service with the employer.

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Leave occurred in one year
should be taken before the end of
the following year, or it would be
If an employee is absent for more
than 10% of the working days
without permission or excuse, he
is not entitled to any annual
leave for that year.
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S60E(2A) Where an employees
contract of service has been terminated
and the employer should pay the
employee his ordinary rate of pay in
respect of every day of such leave.

S60E(3) For leave not taken, the

employee is paid in lieu unless he
agrees in writing.

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Ifan employee is dismissed
for misconduct, he will not be
entitled to any payment for
his annual leave which he is
entitled but has not taken.

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S60F (1) Sick Leave

An employees shall, after

examination at the expenses of the
(a) doctor appointed by the employer;
(b) if no such doctor is appointed or
having regard to the nature or
circumstances of the illness,the services
of the doctor so appointed are not
obtainable within a reasonable time or
distance by any other registerd doctor,

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S60F (1)(aa)
Be entitled to paid sick leave-
(NO hospitalisation)
Less than 2 years service 14
2 years more but less than 5
years service 18 days
5 years service or more 22
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S60F (1)(bb) & S60F(2)(b)

Ifan employee is hospitalised, 60 days in in

each calendar year.

An employee is deemed to be absent if his sick

leave is not certified, or it is certified but he did
not inform or attempt to inform his employer
within 48 hours.

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Carlsbery Brewery Sdn Bhd and
National Union of Drink Manufacturing
Industry Workers
The court found that the

employees were not entitled to
paid sick leave as they had been
certified ill by a doctor who had
not been appointed by the
company whereas the workers
were not faced with any medical

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Kelang Port Management Sdn Bhd
and Karuppiah
The employees service was
terminated on the grounds of
taking excessive sick leave over a
four year period.
Employee had been warned in
writing . The co. dismissed him
Court upheld the dismissal.

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An employee would not be
entitled to any sick leave pay;-
During maternity leave;
For any period which he is
receiving any compensation for
disablement (Employees social
Security 1969 or Workmen
compensation Act 1952

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Rest DAY
At commencement of the month
the employer must prepare a
roster to inform the employee of
the days appointed to be his rest
days in that month, and the
roster should be displayed.

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Rest days
S59(1) An Employee is entitled to
whole day of rest day in each
Where an employee is allowed
more than one rest day in a
week, the last rest day shall be
the official rest day for the
purpose of the Act.

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Work on a rest day
Section 60A(2) an employee may
be required by his employer to
exceed the limit hours and to
work on a rest day in the case of:
(a) There is accident, actual or
threatened, in respect to his
place of work;

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(b) The performance of the work
is essential to life of community
(c) The work is essential for the
defence or security of Malaysia
(d) urgent work to be done to
machinery or plant

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(e) There is an unforeseen
interruption of work and
(f) Work to be performed by the
employee is essential to be
economy of Malaysia or is
essential service as defined in
the IRA 1967
Section 2 IRA any service
specified in the Schedule
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S60(3) EA: Payment
For a daily or hourly rated
One days wages at the ordinary
rate of pay for any period of work
not more than his working hours
Two days wage at the ordinary
rate of pay, for any period of
work more than half but not more
than his normal working hours.
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For a monthly rated employee he
shall be paid.
Half the ordinary rate of pay for work
done on that day for any period of
work which does not exceed half his
normal hours of work;
One days wage at the ordinary rate of
pay for any period of work which is
more than half but not more than his
normal working hour.

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Maternity Protection
S37(1) (a) EA:
every female employee is
entitled to maternity leave for a
period of not less than 60
consecutive days and maternity
S37(1)(b) maternity leave shall
not commence earlier than the
period of 30 days before the
employees confinement.
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To qualify for maternity allowance during
the eligible period, the employee must:
Have been employed by the same
employer for an aggregate of not less
than 90 days during the nine months
preceding confinement;
Have been employed by the employer
anytime during the four months
immediately preceding the confinement
Not have more than five surviving
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S37(1)(aa) EA
An employee who is not entitled
to maternity allowance can
commence work before the end
of the maternity leave period if
she is certified fit by a registered
practitioner and has her
employers consent.

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S40(1),(2) (4)
Female employee who want
expects to be confined within four
months and who is about to leave
her employment should notify her
employer of her pregnancy.
Failure to do so results in the loss
of her m/allowances

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Failure to do so will not prejudice
her, if:
The failure was due to mistake or
other reasonable cause; or
If the employer has not been let
down by such defect or
Notice should be in writing.

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The employee must within a
period of 60 days preceding her
expected confinement notify her
employer of it and the date she
intends to commence maternity
leave, or the payment of
maternity allowance will be

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S40(3), S42 EA

An employer who dismisses a female

employee from her employment during
the period in which she is entitled to
maternity leave commits an offence.
An employer who during the period of
90 days after the maternity leave
period, dismisses a female employee
who remains absent from her work
after the maternity leave period due to
illness arising from her pregnancy as
certified by a registered medical
practitioner, also commits an offence

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Other Benefits

Resignation benefits
Automotive Manufactures Sdn Bhd and
Transport Equipment & Allied Industries
Employees Union Award 60/1986
Medical benefits
Golden Sands Beach Resort Award 107/1988
Insurance Benefits
Cathay Organisation Sdn Bhd and National
Union of Cinema & Places of Amusement
workers (Award 69/1985)

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Whether a bank employee could
be required by his employer to
work on a rest day under the
employment Act 1955?


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Allys case
Allymet with an accident during the course of
employment and was certified unfit for work
the whole of 2010 for which year Ally received
temporary disablement benefits under the
Employees Social Security Act 1969. Ally did
not receive any payment in lieu of her paid
annual leave 2011that he had not taken.
Decide whether Ally was entitled to be
paid in lieu of the annual leave of 16 days
for 2011when he was receiving
temporary disablement benefits for the
whole of 2011.

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