EMPLOYMENT LAW

INTRODUCTION
- Previously there is no rule of law
governing the relationship between
employer and employee. The contractual
relationship entered by them definitely create rights and
obligations .Therefore labour laws play an important role
in solving conflict between employers and employees. The
employment law covers the relationship between an
employer and employee.
 Definition of Contract of Service ,
Employer and Employee
• S.2 of the Employment Act 1955 defines contract of
service as any agreement whether oral or in writing,
implied or expressly, whereby one person agrees to
employ another as his employee and the other party
agrees to serve him as an employee
( include an apprenticeship contract).
 - The same section and Act also defines
employer and employee.
• An employer is defined as any person who has entered
into a contract of service to employ another person as
an employee includes the agent, manager or factor.
• An employee is a person who enters into contract of
service with employer and whose wages do not exceed
one thousand five hundred ringgit a month. However
there are exceptions where certain persons are include
within the definition of employee even though his wages
above the limit as mentioned earlier.

For e.g manual labour, persons engaged in the operation

capacity or maintenance of any mechanical propelled
vehicle (operated for the transport of passengers or goods
or for reward or for commercial purposes) or engaged in
any capacity in any vessel registered in Malaysia and is
not an officer or is engaged as a domestic servant.
Differences Between Contract of Service
and Contract for Service
• The word contract of service and employee or
workman have significant legal implications. As the
definition stated in the Act, an employee or a workman
must be under contract of service. It is different from a
contract for service where the employer gets the work
done by an independent or self employed contractor.
• For e.g an electrician who came to a private house
to repair a faulty circuit is an independent
contractor whereas an electrician hired and
working stationed in a factory to look after its
electrical components is an employee of the
factory.
 Test For Determining Contract of
Service and Contract For service
• In determining whether an employee is working under a
contract of service or contract for service as independent
contractor, the court applied several tests. Such tests are
control test,organizational test or integration test,
multiple,mixed or economic reality test and other elements
such as intention and objective of the contractual
relationship.
 1. Control Test

• This test is traditional or basic test. In Yewens v. Nokes, the

control test was applied. It was stated that a servant is
subject to the command of his master as the manner in
which he shall do his work. The essence of the control test
that an employee works under the control of another not
only as to what he must do but also how and when he must
do it.
 2. Organizational Test
• The test was introduced to replace the inclusiveness of the
traditional control test. In Stevenson, Jordan & Harrison Ltd v. Mac
Donald & Evans,Lord Denning developed a test known as
organizational or integration test. He pointed out that under contract
of service, a man is employed as part of business and his work is
done as integral part of business, whereas under contract for
services, his work although done for the business is not integrated
into it but only accessory to it.
 3. Mixed or Multiple Test

• The courts attempted to introduce a comprehensive test .

In Short v. Henderson, Lord Thankerton lay down an
important approach, which may be used in most cases.
There are four main criterion: 1) the power of selection,2)
the payment of wages or other remuneration 3) the right of
suspension or dismissal and 4) the right of control
 4. Intention of Parties

• Although the intention is an important element in

determining contractual relationship, the courts
will not solely rely on this aspect to decide
whether a contract of service existed. The whole
circumstances will have to be taken into account.
 In Massey v Crown Life Insurance

• The court pointed out that the intention of parties is

important where there is ambiguity as to whether
the contract of service or for services despite having
considered the facts and circumstances of the case.
The intention of parties is considered only as a last
resort to determine the status of the workman.
 Duties of Employer
• 1. Employees have a duty of care to their employees which
means
• it is the duty of the employer to take reasonable care in order to
avoid the employee from any risk of injury.
• It is his duty to provide a safe proper system of work. The
employer has to protect health, safety and welfare of their
employees and other people who might be affected by their
business, employers must do whatever is reasonably
practicable to achieve this.
• The workers and others are protected from
anything that may cause harm , effectively
controlling any risks to injury or health and
negligence claims that could arise in the
workplace.
 Manlio Vasta v Inter Ocean Salvage &
Towage Ltd
While performing diving operation for the defendant
company, the plaintiff was injured. He claimed for
damages. The Singapore High Court held the
defendant company had failed to provide safe and
proper system of work as they did not provide a
second diver at the scene and also was negligent.
 - Vicarious Liability for not providing a safe
system of work
• Ang Toh Wah v Goh Loh & Anor
The P was employed as a labouror by the first D on a lighter.
The first D had entered into contract with second D to transport
the second D crushed granite. The granite had to be unloaded
by using a grab crane operated by a servant of second D. Due to
the negligence of crane driver, the P was injured because the
grab fell on the P.
Singapore High Court held that the accident was
caused by the negligence of the crane driver. Since
at the time of accident, the P was not doing the work
of first D but was doing the work for second D
Company , therefore the second D Company was
vicariously liable for negligence for his employee.
 - Duty to take reasonable care
Johnstone v Bloomsbury
The P was employed by the Ds as a senior officer in a hospital.
Under contract of service, The P was required to work for 88
hours a week. The P brought an action against Ds seeking a
declaration that he should not work in excess of 72 hours a week
and damages for personal because he had an inadequate sleep,
stress and depression. Held the clause of
of the contract of service gave the Ds power to
require the P to work up to 88 hours per week on
average. But that power had to be exercised in
other contractual terms that is duty to take care for
his safety.
 Duties of Employee

1). To
obey lawful, reasonable order with the terms
of employment
2) To serve faithfully
3) To cooperate with the employer on matters of
health and safety
4)Perform duties with proper care and diligence
5) Account for all money or property received
6) Indemnify the employer in appropriate case
7) Not to misuse the confidential information
required while in service
8) Following training provided for using equipment or
devices at work
9) Taking reasoble care of their own and other’s health
and safety. They are entitled by law to refuse to
undertake work that isn’t safe without fear of
disciplinary action
10) Reporting hazards or inadequate precautions in
the workplace
 Dismissal

-Dismissal is an act of employer to terminate the contract of

service. The employee no longer to be in the services of the
employer
- The power of dismissal was considered to be prerogative of
the employer as he had right to fire or hire a workman without
giving any reason. But now he can do so if there is any cause
-Labour laws have laid down certain safeguards to an employee
against unfair dismissal:
1) Reinstatement can be claimed
- Under s. 20(1) of the Industrial Relations Act 1967, a dismissed
workman can make representation in writing to the Director
General for reinstatement, if he considers that he has been
dismissed without just cause or excuse
by his employer.
- The representation must be made within sixty days from the
date of such dismissal. Where a workman is dismissed with
notice, he can file a representation at any time during the period
of that notice but not later than sixty days from the expiry.
- If the workman fails to claim reinstatement within
the prescribed time, he cannot claim reinstatement .
Fung Keong Rubber Manufacturing (M) Sdn. Bhd. v Lee Eng
Kiat & Ors.
The respondents were dismissed from their services , as they were
alleged to have committed a theft in the factory premises. The
prosecution failed to establish the case against them and were
acquitted by the court. Subsequently they
made a representation under s.20(1) of the Industrial
Relations Act 1967. However the claim was resisted
by the appellant on the ground that the reinstatement
was not made within the prescribed time. The Federal
Court held a workman must claim reinstatement for
wrongful dismissal within prescribed time.
 2) Notice of termination –mandatory requirement

• Lawful termination takes place when there is sufficient

notice
• Under s.12 of the Employment Act 1955 , it is mandatory
to give notice to other party. The length of notice shall be
four weeks if an employee has been employed for less than
two years, on the date on which the notice is given
• If employed more for two years or more but less
than five years, the length of notice shall be six
weeks.
• If employed more than five years the length of
notice shall be eight weeks.
• An employee maybe dismissed on the ground of misconduct(for
e.g absenteeism , gambling, disclose confidential information etc)
without any notice,after due inquiry(siasatan dalaman) or down
graded or imposed lesser punishment under s.14(1) , and during
the period of inquiry, the employer may suspend the employee
from work from work for a period not exceeding two weeks but
shall pay him not less than half of his wages for such period.