MALAYSIAN INDUSTRIAL
RELATIONS & EMPLOYMENT LAW
Author: Maimunah Aminuddin
Chapter Two
The Employment Act
and Related Acts
Malaysian Industrial Relations &
Employment Law
1
Preview

Defining who is an employee

Types of employment contract

Terms and conditions of employment

Common express terms

Implied terms

Provisions of the Employment Act

Provisions of the Children & Young Persons
(Employment) Act
Malaysian Industrial Relations &
Employment Law
2
Employees receive protection from
employment laws

Employees are employed under a contract
of employment, aka contract of service.

Self-employed persons are not within the
scope of most employment laws.
Malaysian Industrial Relations &
Employment Law
3
Tests to determine whether a worker
is an employee or not
The Control Test is the most commonly
applied test. Questions asked by the courts
include:



How much control is imposed by the
employer on the worker?
Who provides the tools, raw materials and
equipment needed to do the work?
How is payment made?
Malaysian Industrial Relations &
Employment Law
4
Tests to determine whether a worker
is an employee or not, cont.

Are contributions made to statutory funds
such as EPF & SOCSO?

Is there a written contract, and if so, what
are its terms?

Is the worker required to comply with
organisational rules?
Malaysian Industrial Relations &
Employment Law
5
Contracts of employment
A contract of employment can be:

Temporary or for an indefinite period
(permanent)

Part-time or full-time
Malaysian Industrial Relations &
Employment Law
6
Terms and conditions of
employment
Express terms & conditions of
employment are usually written into:

a letter of appointment;

a company handbook; or

a collective agreement.
Malaysian Industrial Relations &
Employment Law
7
Common express terms & conditions

Job title


Working hours


Other benefits

Probationary period

Retirement age

Notice period
prior to
termination of
contract
Wages, allowances,
bonus
Holiday and leave
entitlements
Malaysian Industrial Relations &
Employment Law
8
Common express terms &
conditions, cont.

Requirement of confidentiality

Requirement to give exclusive service

Transfer

Requirement to comply with company rules
Malaysian Industrial Relations &
Employment Law
9
Terms and conditions of service
Implied terms = obvious terms that courts assume
exist in every employment contract, including:
Employee’s obligation to work:
 with due care
 obediently
 Faithfully
Employer’s obligation to:
 Provide safe work
 Maintain relationship of mutual respect
Malaysian Industrial Relations &
Employment Law
10
Terms and Conditions of Service,
cont.


Terms and conditions must comply with the
relevant employment laws.
Terms and conditions can only be changed
by mutual consent between employer and
employee.
Malaysian Industrial Relations &
Employment Law
11
The Employment Act
Coverage of Act
Employees earning not more than RM1,500
per month who:

work in the private sector, and

work in Peninsular Malaysia.
Malaysian Industrial Relations &
Employment Law
12
The Employment Act, cont.
Exceptions to RM1,500 Wage Ceiling
1.
Employees engaged as manual workers
2.
Supervisors of manual workers
3.
Employees who operate or maintain a
vehicle for transport of passengers or
goods
4.
Domestic servants
Malaysian Industrial Relations &
Employment Law
13
The Employment Act, cont.
Domestic Servants are NOT entitled to
the minimum benefits provided for
under the Act.
Malaysian Industrial Relations &
Employment Law
14
Sabah & Sarawak
Employees working in Sabah or
Sarawak are protected by the:

Sabah Labour Ordinance, or the

Sarawak Labour Ordinance.
The contents of the SLOs are similar to the
Employment Act.
Malaysian Industrial Relations &
Employment Law
15
The Employment Act - wages
Wages are defined as basic wages and all
other payments due under the contract of
service, but excluding:

Annual bonus

Overtime payment

Commissions

Subsistence allowance

Travelling
allowance
Malaysian Industrial Relations &
Employment Law
16
The Employment Act – wages, cont.
Advances on wages limited to one
month’s wage unless for purpose of:

Buying land or house, or renovating a house

Buying a bicycle or car

Buying livestock

Buying shares in employer’s business
Any other purpose, requires permission from
DG of Labour.
Malaysian Industrial Relations &
Employment Law
17
The Employment Act – wages, cont.

Wages must be paid at least once a month.

Wages must be paid either in cash, cheque
or direct credit to bank account.
Malaysian Industrial Relations &
Employment Law
18
The Employment Act – wages, cont.


Deduction from wages strictly
controlled.
Deductions only possible without
permission from employee for:
1. Recovery of overpaid wages
2. Payments to agencies as required by law
3. Recovery of advance where no interest
imposed
Malaysian Industrial Relations &
Employment Law
19
The Employment Act – wages, cont.
Non-payment of wages
Employees earning up to RM5,000 pm who do
not receive their wages or other payments
due, can lodge a complaint at the Department
of Labour.
Malaysian Industrial Relations &
Employment Law
20
Employment Act – female employees

Women and night work

Women and underground work

Maternity protection
Malaysian Industrial Relations &
Employment Law
21
Employment Act – working hours

Minimum of one rest day per week

Maximum hours per day = 8

Maximum hours per week = 48

Overtime payment required for work done
outside normal working hours

Maximum overtime per month = 108 hours
Malaysian Industrial Relations &
Employment Law
22
Employment Act – leave

Public holidays – minimum of 10 per year.
Four compulsory; six more chosen by
employer.

Premium rate of pay due if employee
required to work on a public holiday.

Annual leave increases with length of
service ranging from 8-16 days.
Malaysian Industrial Relations &
Employment Law
23
Employment Act – leave, cont.



Sick Leave increases with service ranging
from 14-22 days per year.
Employees only entitled to paid sick leave if
certified ill by registered medical
practitioner. (No self-certification)
If employer appoints panel doctors,
employee must use their services, failing
which only entitled to unpaid sick leave.
Malaysian Industrial Relations &
Employment Law
24
Employment Act – termination
benefits
One-two years of
service
10 days wages for
every year of service
More than 2 years, but 15 days wages for
less than 5 years of
every year of service
service
More than 5 years of
service
20 days wages for
every year of service
Malaysian Industrial Relations &
Employment Law
25
Children and Young Persons
(Employment) Act
Children and Young Persons (Employment)
Act controls employment of these employees
but does not prohibit it.

Children = persons aged under 15 yrs

Young persons = persons aged 15-18 yrs
Malaysian Industrial Relations &
Employment Law
26
Children and Young Persons
(Employment) Act, cont.

Hours of work of children and young
persons limited

Type of work that may be carried out by
children and young persons limited
Malaysian Industrial Relations &
Employment Law
27
Review

Defining who is an employee

Types of employment contract

Terms and conditions of employment

Common express terms

Implied terms

Provisions of the Employment Act

Provisions of the Children & Young Persons
(Employment) Act
Malaysian Industrial Relations &
Employment Law
28