CHAPTER

1
TERMS AND CONDITIONS
OF THE EMPLOYMENT
CONTRACT
 INTRODUCTION
o A study of industrial relations and employment law encompasses an examination of the relationship between workers and
their employers within the work environment.
o This subject stresses on the importance of three major areas:

i. The relationship between employers and trade unions.

ii. The framework provided by the employment laws.

iii. Disciplinary procedures and terminations of employment contract.

oWe also will be focusing on:

i. laws and regulations which impact the parties at the work place.

ii. Terms and conditions of work

iii. Processes by which the rules and terms are made, i.e., the decision making process.
 WHO NEED TO STUDY
EMPLOYMENT LAW?
o There are at least 5 groups of people who need to understand the theory and practice of Industrial
Relations (IR) and Employment Law. These are:

i. Workers;

ii. Trade union leaders;

iii. Managers;

iv. Lawyers; and

v. Officers and executives in HR and IR departments.

 EMPLOYMENT LEGISLATION
The major pieces of employment-related legislation are:
o Laws providing for basic benefits;

i. Employment Act, 1955

ii. Wages Council Act, 1947

iii. Sabah Labour Ordinance

iv. Sarawak Labour Ordinance

v. Children and Young Persons (Employment) Act, 1966

vi. Workers Minimum Standards of Housing and Amenities Act, 1990

vii. Weekly Holidays Act, 1950

viii. Pensions Act, 1980

o Laws establishing the IR Framework;

i.Trade Union Act, 1959

ii.Industrial Relations Act, 1967
iii.Public Services Tribunal Act, 1977

o Social Security Laws;

i.Employees Provident Fund Act, 1991

ii.Employees’ Social Security Act, 1969
iii.Workmen’s Compensation Act, 1952
o Safety Laws;
i.Factories and Machinery Act, 1967
ii.Occupational Safety and Health Act, 1994

o Laws restricting employers from hiring non-citizens;

i.Immigration Act, 1959/1963
ii.Employment (Restriction) Act, 1968

o Law relating to training of employees;

i.Pembangunan Sumber Manusia Bhd Act, 2001
 INTRODUCTION TO
EMPLOYMENT CONTRACT
o Individuals employees and employers are free to form employment contracts
but these contracts must comply with relevant employment legislation.

o The most important piece of legislation as far as an Malaysian employees are

concerned is the Employment Act, 1955.

oThe purpose of this Act is to provide a number of minimum benefits for

these workers covered by the Act and to establish certain rights for both
employers and employees.
 INDIVIDUAL EMPLOYMENT
CONTRACTS
o Employment law only applies to employees and their employers.

o Employment contracts must be carefully drafted. A well written contract will fulfil certain
criteria. An employment contract must be:

i. Compliant with the law

ii. Written in language the employee can understand

iii. Complete – include all the necessary terms and conditions.

o An employee is employed under a contract of service also known as contract of employment.

o Type of employment contract:

i. Contract of service

ii. Contract for service

o Self-employed persons, and other workers who are not employees, are not protected by
employment laws.
 CONTRACT OF SERVICE
o According to EA, contract of service means 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 employer as an employee and includes an apprenticeship contract.
o A worker who is employed under a contract of service, also known as a “contract of
employment”
o Is an employee and is protected by a range of employment laws.

o For example, managers, supervisors, clerks and etc.

 CONTRACT FOR SERVICE
o A contract for service is an agreement whereby a person is engaged as an independent
contractor, such as a self-employed person, vendor or freelancer carrying out an assignment or a
project for his establishment.
o A contract for services is a formal, legally binding agreement before a business and a self-
employment individual.
o Self-employed people don’t typically gain employment rights/benefits, such as pension
schemes, because they are expected to pay for these provisions themselves.
o For example, a business owner engages services of a painter, a plumber or a grass-cutter for his
office building.
o In determining the employment status of worker, the courts have developed a number of tests to assist in the decision
making process.
o Normally, a combination of factors will be examined and several questions asked, such as:

 Does the employer control when and how the work is done and who does it?

 Does the employer provide the tools, raw materials and equipment necessary to do the work?

 How is the payment made? On a regular basis or on the completion of the work? Does the party providing the service
have to submit an invoice to get paid?

 Are contributions to statutory funds such Employees Provident Fund being made?

 Is there a written contract, and if there, what are the terms of this contract?

 Is the worker required to follow the organisational rules?

 WRITTEN AND ORAL
CONTRACTS
o A contract of employment does not have to be in writing.

o If a worker has no written letter of appointment, it does not mean that there is no contract of
employment exists between him and his employer. Such a contract can be implied by the fact that he
is working for the employer.
o However, if a dispute arises about the terms of that contract, both parties will have difficulties in
proving to the Labour Department or Court.
o Thus, it is good to human resource management practice to provide all employees with the written
terms and conditions of employment.
 TERMS AND CONDITIONS OF THE
CONTRACT OF EMPLOYMENT
o The terms are the contents of the contract or the promises made by each party to the other.

o In return, for doing his job, an employee is rewarded with certain benefits including wages, holidays,
and add in some job perks such as the use of car.
o The terms of a contract would include the number of hours per day or per week the employee is to be
available to do the employers work.
oFor many of these terms, a statutory minimum is set down in the Employment Act, which is intended to
serve as protective device to employees.
o There are two type of terms in employment contact:

i. Express terms

ii. Implied terms

 DURATION OF THE
EMPLOYMENT CONTRACT
o Employment contracts can be for a particular period of time or they can be open-ended and not
specify the duration.
o The former are known as fixed term contracts. Such contracts specify the time period for which the
worker is to be employed until the completion of a given project or task.
o A fixed term contract for any period longer than one month, or one terminating on the performance of
a specified piece of work which may be expected to take longer than one month, must be in writing.
o Such contracts terminate automatically at the end of the stated time period or when the work is
finished.
o The majority of employees are offered open-ended contracts for unspecified period of time.
 ENFORCEMENT OF THE
EMPLOYMENT ACT
o It is the responsibility of the Dept of Labour to enforce compliance with the Employment Act and the other laws
for which is responsible.

o Compliance is enforced through the state-level Labour Offices found throughout every state in the country. Each
office is manned by a number of officers who are required to;

i. Carry out routine inspections of places of employment

ii. Investigate complaints from employees

iii. Make decision on employees’ claim when they are disputed by the employer

iv. Answer queries of the Employment Act and other labour legislation from employers and employees.

v. Prosecute employers who fail to comply with Act.

THANK YOU 