BMG 311/05:

EMPLOYMENT LAW
& INDUSTRIAL
RELATIONS

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 WELCOME
TO
TUTORIAL 2
 UNIT 2
The Employment
Relationship

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 LEARNING OBJECTIVES
By the end of Unit 2, you should be able to:

1.Describe the contractual relationship between employer and employee.

2.Understand  the objectives and the provisions of the Employment Act
1955 and the Sarawak and Sabah Labour Ordinance.
3.Know the implied obligations and duties of employees and employers
under the contract of service.
4.Describe the contract of employment.
5.Distinguish between contract of service and contract for service and the
test.
6.Evaluate breach of contract and the remedies available.
7.Define the employment relationship.

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 Introduction
Industrial Relations is the study of the regulations of the
relations between employers, employees and their trade
unions. As this relationship is contractual, the relationship
would include the particular contract between the employer
and the employee.
 
The principal legislation governing the labour market and
employment relationship in Malaysia is the Employment Act
1955. The Act applies to Peninsular Malaysia and Labuan
and the private sector only. The state of Sarawak and Sabah
have their own Labour Ordinances namely the Sarawak
Labour Ordinance (Cap. 76) and the Sabah Labour
Ordinance (Cap. 67).

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Overview of Employment Laws
and Industrial Relations in
Malaysia
The employment relationship comprise the
employer and the employee and the employment
contract.

This contract is known as the contract of service

in the Employment Act 1955 and contract of
employment in the Industrial Relations Act 1967
that denotes the employer and employee
relationship.

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 Contract of Service &
Contract of Employment
Section 2(1) EA provides that a 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 his employee and includes an apprenticeship
contract.
 
Section 2 IRA, provides that a contract of employment is any
agreement, whether oral or in writing and whether express
or implied, whereby one person agrees to employ another as
a workman and that other agrees to serve his employer as a
workman.

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 Employment Act 1955 and the
Labour Ordinance
The Employment Act 1955 and the Sarawak and Sabah
Ordinance are principal legislation that regulates the
employment relationship between the employer and
employees.

These legislations stipulates precisely that the relationship

must be contractual in nature.

These legislations goes on further to emphasise that some

employment contract must be in writing and explains the
details that ought to be spelled out in the contract.

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 Employment Act 1955 and
the Labour Ordinance
The purpose of the Employment Act is to provide minimum
terms and conditions of employment that should be
accorded to the employees.
 
The Sarawak and Sabah Ordinance apply to Sarawak and
Sabah respectively. It was amended by the Labour
Ordinance of Sabah (Amendment) Act 2005 and Labour
Ordinance of Sarawak (Amendment) Act 2005.

Both Ordinances provide minimum terms and conditions of

employment that should be accorded to the employees.

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 Common Laws Duties of
Employees and Employers
The implied duties of an employee owed to his
employer include the duty to:

•provide the contracted skills and reasonable

competence;
•provide faithful service (or the duty of fidelity);
•maintain confidentiality;
•carry out a lawful and reasonable instruction;
•other implied conditions

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 Common Laws Duties of
Employees and Employers
For employees, there are also other aspects to
this duty namely:

•Avoid conflict of interest with the employer’s

interests
•Work diligently and honestly
•Punctual in arriving for work
•Not to leave the workplace before time
•Not to go on leave without prior approval
•Look after property entrusted to him

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 Common Laws Duties of
Employees and Employers
The common law duties of employers are as follows:

•Pay remuneration or wages to employees.

•Provide work to employees.
•Respect and trust employees.
•Indemnify employees for expenses, losses and liabilities incurred in the
course of employment.
•Ensure the safety and health of employees. This duty can be further
categorized as employment of a competent workforce; provision of a
suitable plant and equipment; provision of a safe system of work; and
adequate supervision.
•Pay the employee compensation for on-the-job injuries (and death).
•Provide testimonials and references.

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 Contract of and Contract
for Service
A contract of service of service is defined in S. 2(1) EA. It
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.

A contract for service is not defined in any Act. A contract

for services is where a person is self-employed/independent
contractor (IC). An independent contractor is not an
employee.

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 Test to Determine the
Contracts
The common law and the courts have introduced
some tests to define who may be an employee or
an IC for the purposes of the EA.

These include the Control Test, Integration Test,

Multi-factor Test, Entrepreneurial Test, the Mutual
Obligation Test and the Reasonable man’s test
(Please read the course materials page 39-42).

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 Breach of Employment
Contract
• An employment contract provides various rights and
imposed obligations to an employer and employee. They
could either be express or implied.

• If either party breaches any of the terms of the

employment contract, the other party may have remedies.
Such a breach is known as contractual breach as it is a
breach of the employment contract.

• If either party breaches any of the labour legislations, then

it is known as statutory breach.

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 Breach of Employment
Contract
Following are the examples of an employer who
has breached an employment contract:

•Unilaterally changes the terms of the contract.

•Unsafe workplace.
•No proper tools and equipment provided.
•Salary not paid.
•Salary not paid on time.

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 Breach of Employment
Contract
Following are the examples of an employee who
has breached an employment contract:

• Breaches of a confidentiality agreement.

• Absent for long periods of time without reason.
• Stealing company property.
• Misappropriation of funds.

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 Breach of Employment
Contract - Remedies
If a contract of service is breached, the recourse will be the Civil
Courts i.e. Magistrates’ Courts, Sessions Courts and the High
Courts or the Labour Courts or the Industrial Courts.

A claim can only be brought to the Industrial Court if it is a case of

wrongful dismissal. Section 20(1) IRA provides that where a
workman considers that he has been dismissed without just cause
or excuse by his employer, he may make representations in writing
to the DG to be reinstated in his former employment.

If it is a breach of contract for services, the only recourse is the

civil courts.

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 TMA 1
PROGRESS
THANK YOU &
SEE YOU AT
TUTORIAL 3