Employment Act 1955 plays a significant role in Malaysian employment law.
Enforcement of the amendments to Malaysia’s Employment Act 1955 begin on 1 January 2023. The primary amendments made are:
- Maximum working hours of 45 hours per week
- Paid maternity leave period has been extended from 60 days to 98 days
- 7 days paternity leave
- Separation of sick leave and hospitalisation leave
EMPLOYMENT CONTRACTS IN MALAYSIA
According to Section 10(1) of the Employment Act 1955, any employment lasting longer than 1 month requires a formal written contract between the employer and employee.
The contract should outline the key features of the employment relationship, such as the place of employment, the nature of the work to be performed, wage rates, holidays, benefits, and any provisions necessary to protect the employee’s health and safety.
The contract is important as a shield to the employer and also the employee.
WHAT DOES THE EMPLOYER NEED TO KNOW ABOUT THEIR EMPLOYEES?
- Working hours and overtime
Section 60A(3)(b) defines overtime as the hours worked beyond the normal daily working hours.
Section 60A(3)(c) specifies that “normal hours of work” are the hours mutually agreed upon by the employer and employee in their contract of service, which cannot exceed the limits set in Section 60A(1).
The regular working hours in Malaysia are 8 hours a day, and 45 hours a week, effective January 2023. If you are required to work overtime on a normal working day, the employer must pay 1.5 times the hourly wage rate.
KNOW YOUR RIGHTS!
- Leave Entitlement
- Annual leave. As per Section 60E of the Act, the minimum requirements for annual leave – for example, 1-2 years in service may entitle to have 8 days leave per year.
- Sick leave. According to Section 60F of the Act, every employee is entitled to paid sick leaves, the duration of which depends on the tenure of employment. For example, less than 2 years in service is entitled to 14 days leave per year.
- Maternity leave. In Section 44A of the Act, employers have to take note that all female employees are entitled to 84 days of paid maternity leave for their first five children.
TERMINATION OF EMPLOYMENT
Termination Notice.
According to Section 12 of the Employment Act 1955, the employer or employee must give notice within the following lengths:
- 4 weeks notice, employed for less than 2 years
- 6 weeks notice, employed between 2-5 years
- 8 weeks notice, employed for longer than 5 years
REASONS OF TERMINATION
Employers can terminate an employee’s contract under the condition that the termination is justified, done in good faith and fair.
The court may be involved if the dismissal is considered unfair, and to avoid an unfair dismissal claim, the termination must be with JUST CAUSE AND EXCUSE.
It means that the employer has a justified reason to terminate the employee. The reasons may include:
- Major misconduct -theft, sexual harassment, failure to follow safety protocols
- Negligence in performing duties
- Poor performance
- Mental disorders
- Bankruptcy
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