MALAYSIAN INDUSTRIAL

RELATIONS & EMPLOYMENT LAW

Author: Maimunah Aminuddin

Chapter Two
The Employment Act
and Related Acts

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Employment Law
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
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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.

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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?
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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?

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Contracts of employment
A contract of employment can be:

 Temporary or for an indefinite period

(permanent)

 Part-time or full-time

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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.

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Common express terms & conditions
 Job title  Wages, allowances,
bonus
 Working hours  Holiday and leave
entitlements
 Other benefits  Probationary period

 Notice period  Retirement age

prior to
termination of
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Common express terms &
conditions, cont.
 Requirement of confidentiality

 Requirement to give exclusive service

 Transfer

 Requirement to comply with company rules

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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
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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.

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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.

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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

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The Employment Act, cont.

Domestic Servants are NOT entitled to

the minimum benefits provided for

under the Act.

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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.
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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
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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.

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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.

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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

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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.

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Employment Act – female employees

 Women and night work

 Women and underground work

 Maternity protection

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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

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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.

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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.
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Employment Act – termination
benefits
One-two years of 10 days wages for
service 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 20 days wages for
service every year of service

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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

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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

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Employment Law
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
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