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Employment Law in MalaysiaBy Dymphna Lanjuran
www.twitter.com/EmploymentLaw_
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• Introduction• Termination of Employment • Pre-Termination (Misconduct)• Post-Termination • Challenging the Decision• New statutes – Minimum Wages Order 2012, Minimum Retirement Age Bill 2012
Agenda
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STATUTES
Employment Act 1956
• Monthly salary RM1,500 and below• Manual Labour• Domestic servants
Industrial Relations Act 1976
• Remedy - Reinstatement• Industrial Court
Employment Law in Malaysia
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STATUTES
Employees Provident Fund Act
• Applies to all employees of Malaysian employers
Employees' Social Security Act, 1969 – SOCSO
Workmen's Compensation Act 1952
Employment Law in Malaysia
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Grounds
• Misconduct• Poor Performance• Redundancy & Retrenchment• Mutual Termination/Cessation
Constructive Dismissal
• Fundamental breach that goes to the root of the contract
• Must be immediate – no cooling off period• Burden of proof – on employees
Termination of Employment
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Ground - Misconduct
Case: Hyatt Regency Saujana v Kananathan SG
Ramu [2004] 3 ILR 391
Termination of Employment
• Claimant, Security Officer - the position is one of trust and confidence where the safety and security of the entire hotel was entrusted in the hands of the Claimant.
• Illegal gambling during work.
• Dismissal justifiable.
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Ground - Misconduct
Case: Southern Bank Berhad v Azmi Ali [2003] 1 ILR 614
Termination of Employment
“The court is of the view that honesty and integrity are amongst the key characteristics
that any employee should possess, no matter
what form of employment the employee is
engaged in.”FCL&Co
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Ground – Misconduct
Case: Ng Hock Cheng v Pengarah Am Penjara &
Ors [1998] 1 CLJ 405 (Federal Court)
“An employer is the best person to judge the seriousness of the conduct of its employees.”
Termination of Employment
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Ground – Poor Performance
Probationer
�Case: Azmi & Company Sdn Bhd v Firdaus
Musa [2000] 2 ILR 510
His character, suitability and capacity as an employee is to be tested during the probationary period and his employment on probation comes to an end if during or at the end of the probation period he is found to be unsuitable .
Termination of Employment
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Ground – Poor Performance
Probationer
�Case: Dorsett Regency Hotel (M) Sdn Bhd v
Andrew Ambrose [2003] 2 ILR 740
The real test would be whether he possesses the right skill, competence, temperament,
aptitude, attitude and suitability which would entitle him to transcend from being an employee on probation to that of a confirmed permanent employee.
Termination of Employment
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Ground – Poor Performance
Probationer
• Keep the probationer informed or alerted of his shortcomings to enable the probationer to strive to meet the standards expected of him by the Company before his probationary period ends.
• Warnings, guidance, trainings, sufficient trime to improve; despite that still fail to improve...
Termination of Employment
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Ground – Poor Performance
Probationer
�Case: Robert John Reeves v Menteri Sumber
Manusia & Anor [2000] 1 CLJ 180 (High Court)
The power to either continue or discontinue the services of an employee or probationer rests with the employer.
Termination of Employment
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Ground – Poor Performance
Confirmed employee
• Rigid test• 1st: The employer must show in what respects the employee had failed to perform the work which formed the basis for his belief that the employee was a poor performer.
• 2nd: The belief under 1st above emerges from a fair process; i.e. by putting an employee on notice of his deficits & affording him a fair opportunity to improve.
Termination of Employment
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Ground – Redundancy & Retrenchment
Case: William Jacks & Co (M) Sdn Bhd v S
Balasingam [1997] 3 CLJ 235 (Court of Appeal)
Termination of Employment
• Retrenchment is defined as the discharge of surplus labour or staff.
• It is well settled that the employer is entitled to organize his business in the manner he consider best.
• Must be bona fide.
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Ground – Redundancy & Retrenchment
Case: Musnita Mustafa v Weatherford Solutions
Sdn Bhd [2012] 3 ILR 350
Termination of Employment
• Did redundancy situation arise leading to retrenchment?
• Was the consequent retrenchment made in compliance with reasonable selection process or the principle of “Last In, First Out”(LIFO).
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Ground – Redundancy & Retrenchment
Case: Musnita Mustafa v Weatherford Solutions
Sdn Bhd [2012] 3 ILR 350
Termination of Employment
• Restructuring exercise – the Flow Control Department and the Technical Department of the company were to be merged.
• 3 secretaries in the same division, with the Claimant being the most junior – surplus.
• Termination justified – with just cause.
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Ground – Mutual Termination/Cessation
Case: Timber Master Trading (M) Sdn Bhd v Jane
Wang Sing Fang [1994] 2 ILR 1293
Termination of Employment
• The duty of the Court is to determine whether there had been a termination which had been mutually and freely agreed upon between the parties.
• Must be genuinely consensual.
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•Employer terminates employment of an employee
•There exist a Letter of Termination• Ind Ct: Burden on employer to show just cause or excuse
Termination of Employment
Constructive Dismissal•Employer DOES NOT terminate employment of an employee
•Employee WALKS OUT of out employment•NO Letter of Termination• Ind Ct: Burden on employee to show dismissal
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Pre-Termination Ground: Misconduct
• Initial investigations - to identify possible allegations & possible misconduct, gather documentary evidence and oral evidence (statutory declaration)
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Pre-Termination Ground: Misconduct
• Show Cause Letter
• To suspend or not to suspend?
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Pre-Termination Ground: Misconduct
• Notice of Domestic Inquiry
• Domestic Inquiry
� 3 Panels – Independent� Charge(s) to be read� Procedures to be explained� Prosecuting Officer� Recording Secretary� Witnesses & Documents
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Pre-Termination Ground: Misconduct
• Decision of the Panel
• Decision of the Management –Demote, Suspend, Warning, Withholding of Increment/Bonus, Termination of Employment
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• Wages = less than RM5,000
• No pending inquiry or proceedings under the Industrial Relations Act (“IRA”)
• No proceedings before the Industrial Court
• Matter has not been decided by the Minister under s.20
• Conciliation
• Industrial Relations Officer’s
Report
• Minister’s decision (subject to
JR)
• Industrial Court
Representation / Complaint - 60 days rule
Labour CourtIndustrial Court
Remedy sought:
Wages or any other
Payment in Cash
Remedy sought:
Reinstatement
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Post Termination
• Statement of complaint and remedy from Complainant
• Summon to the Company:
� Notice of the complaint� Name of the
Complainant� Date, time & place to
attend and to bring witnesses.
• Warrant/Authority to Act
• Witness Statements
• Form A & B
• Statement of Case
• Statement in Reply
• Bundle of documents
• Witness Statements
Labour CourtIndustrial Court
PROCEDURES - Documents
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Post Termination
a) Trial procedures
• Burden of proofs• Procedures• Submissions
b) Order (subject to appeal)
c) Enforcement/Non-Compliance
a) Trial procedures
• Burden of proof• Procedures• Submissions
b) Award (subject to JR)
c) Non compliance
Labour CourtIndustrial Court
PROCEDURES
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Challenging the DecisionREVIEW/APPEAL
Industrial Court/
Minister’s Reference
Labour Court
Order 53 RHC – review on
procedures not on merits
S. 77 EA – procedure in a civil appeal from Sessions Court
• Leave (ex parte) - Form 111A, Order 53 Statement, Affidavit in Support
• After leave – Form 111B [Notice of Hearing] & Order
• Exchange of Affidavits• Written Submissions• Hearing
• Notice of Appeal
• Memorandum of Appeal
• Record of Appeal
• Written Submissions
• Hearing
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Minimum Wages Order 2012(Perintah Gaji Minimum 2012)
Minimum Retirement Age Bill 2012
New Statutes
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New StatuteMinimum Wages Order 2012
• Gazetted on Monday, 16 July 2012• Dates of coming into operation:
1.1.2013: • > 5 employees• Professional activity classified under MASCO (Malaysia Standard Classification of Occupations)
1.7.2013:
• 5 employees or less other than MASCO
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New StatuteMinimum Wages Order 2012
• Deferral of implementation to another date – Not less than 90 days before commencement date, make an application to the Wages Council –Discretion of the Council.
• Does not apply to Domestic Servant.
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New StatuteMinimum Wages Order 2012
• Minimum Wages Rates:
3.85800Sabah, Sarawak and FT Labuan
4.33900Peninsular Malaysia
Hourly
(RM)
Monthly
(RM)
Regional areas
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New StatuteMinimum Wages Order 2012
•ProbationersMinimum wages may be reduced NOT
MORE than 30%� Reduction may be based on
agreement between employer and employee (BUT cannot exceed 30% reduction)
� Reduction = ONLY for the 1st 6 months
Further reading: http://dymphnablog.wordpress.com/2012/07/17/brief-outlook-on-the-
minimum-wages-order-2012/
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New StatuteMinimum Retirement Age Bill 2012
• Gazetted on 16 August 2012• Minimum retirement age = 60 years old• Employer SHALL NOT prematurely retire an
employee before 60 years old [*fine: < RM10k]
• Premature employment does not include:�Optional retirement� Termination on other groundsFCL&Co
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New StatuteMinimum Retirement Age Bill 2012
• Does not apply to:• Person employed by the Federal Government, statutory body or local authorities
• Probationers• Apprentice• Non-citizen• Domestic servants• Part time employees• Fixed term of not more than 24 months
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New StatuteMinimum Retirement Age Bill 2012
• No date of coming to force yet.• The essence of this Bill is to make retirement
age of private sector’s employees in line with employees for public sector.
• More about the essence of this Bill can be downloaded here: http://www.mohr.gov.my/pdf/MRA.pdf
• Blog by MOHR on this Bill: http://www.mohr.gov.my/index.php?option=com_content&view=article&id=
2472&Itemid=634&lang=en
Further reading: http://dymphnablog.wordpress.com/2012/07/10/minimum-retirement-age-
bill-2012-gives-power-of-reinstatement-to-the-labour-officers/
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Thank youDymphna Lanjuran
www.twitter.com/EmploymentLaw_
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