Malaysian Employment Act and Malaysian Labour Law

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Contract of Service

What is Contract of Service?
Section 2 (1) of Employment Act 1955
"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.

Comment:
(i) The contract of service may be implied or in writing. However, certain contract must be in writing, if it is for a specified period of time exceeding one month, or for the performance of a specified piece of work exceed one month (Section 10 (1)). It shall include provision for termination (Section 10 (2)).

(ii) Employment Regulalation 1957 5(b) require the following terms be given in writing:-
(a) Name of employee and National Registration Identification Card No.;
(b) Occupation or appointment;
(c) Wage rates (excluding other allowances)
(d) Other allowances payable and rates;
(e) Rates for overtime work;
(f) Other benefits (including approved amenities and services);
(g) Agreed normal hours of work per day;
(h) Agreed period of notice of termination of employment or wages in lieu;
(i) Number of days of entitlement to holidays and annual leave with pay; and
(j) Duration of wage period.

The above serve as the minimum terms that is requires to be in writing, however additional terms may be included, depend on the individual organizations, professional firms or institutions, as follows:
(a) Location of work, transfer and relocation clause;
(b) Penalties for misconduct;
(c) Confidentiality clause;
(d) Return of property upon termination of contract, include tangible and intangible;
(e) Working for another part time job; and
(f) Requirement to go for compulsory medical check up.

(iii) Any terms which is less favourable than that prescribed by this Act or Regulations is null and void (Section 7)

(iv) Any terms which is more favourable than that prescribed by this Act or Regulations shall be valid (Section 7A)

(v) Contracts of service can not restrict rights of employees to join, participate in or organize trade unions (Section 8)

Malaysian Employment Act and Malaysian Labour Law

An Overview
By Tan Thai Soon

Introduction
Malaysian Employment Act and Malaysian Labour Law provide a minimum standards guides to Malaysian employers and foreign investors in Malaysia. The Employment Act is applicable to lower income group, however its provisions and regulations could be regarded as the minimum standard applicable to everyone under employment. Both employer and employee can however exercute an employment contract with terms and conditions higher than that provided in the Act.

Disclaimer
All content on this website, including articles, journal and weblinks is for information purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of professional advise.

Section 1 - Short Title and Application
(1) This Act may be cited as the Employment Act 1955
(2) This Act shall apply to West Malaysia only

Objectives of The Employment Act
1. To provide minimum standards in respect of hours of work and overtime, rest days, public holidays, annual and sick leave, maternity benefits, termination and lay-off benefits etc.

2. To protect employees in respect of payment of wages in legal tender, deductions, priority of wages, protection of female employees.

3. To provide an avenue to employees or employers to claim or settle the amount due under the contract or the Act.

4. To provide for the administration or enforcement of the Act and punishment of offenders.


Applications of the Act
There are three general circumstances underwhich this Act may be applicable.

a) Where an organization commence business and hire the first employee. The provisions relate to contract of service, payment of wages, and the minimum benefit due to the employee.

b) Where an organization under restructuring, merger and acquisition, and relocation. The provisions relate to termination, lay-off and retirement benefits.

c) Where an organization is put under receivership by the financial institution or has been wound up by the court. The laws relate to the retrenchment benefit and priority of payment.