WHY YOUR Employment Contract and Agreement SHOULD BE DONE BY US (PRACTICING LAWYERS)?
A standard template contract may not be so standard after all if we have to ensure that all the clauses in the contract are in accordance to the law and enforceable. You only need one small sentence / clause in the employment contract that is against the law to cause the whole employment contract to be rendered invalid and not enforceable.
A Good employment contract can give business owners a peace of mind knowing that they will not have to deal with employment issues or frequent the labour department just because of some poorly written clauses in the employment contract. Instead, they can put all their focus in building and growing their business.
A good employment contract template can be used over and over again as long as there are no amendments to our Employment Act or any relevant statutes and the companies’ policies.
Why Employment Contract is Important for Your Business
A Good employment contract can benefit a business in a lot of ways :
- creates certainties on the terms of the employment and taking away all the ambiguities
- ensures that all the minimum rights under the Employment Act is accorded to (employment contract which is not in accordance to the law can be override by the law)
- can protect the business confidential information and intellectual property
- help to prevent the business owners from facing legal threat by its employees unnecessarily
- makes the working relationship to be seen as more formal, employees will take their responsibilities more seriously when it is specifically laid down in writing
- can lay down all the dos and don'ts of your business and also laying down the procedure if there are any violation of the employees of the companies policies
Employment Contract / Agreement
- Basic downloadable simple template for DIY
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Basic downloadable template for DIY
- Package :
- Review of Existing Employment Contract / Agreement
- Free FAQs on Employment Issues
- Client uploads existing employment contracts / agreements in “Microsoft Word” format for review
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Private 1 to 1 consultation session with experienced lawyer
- General advises on employment issues by lawyer
- Custom made of Employment Contract / Agreement
- Free FAQs on Employment Issues
- Customised in accordance to Client’s requirements that are business and industry specific
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Private 1 to 1 consultation session with experienced lawyer
- General advises on employment issues by lawyer
- No limit to the amendments up until the satisfaction of the client
- Basic downloadable simple template for DIY
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Basic downloadable template for DIY
- Package :
- Review of Existing Employment Contract / Agreement
- Free FAQs on Employment Issues
- Client uploads existing employment contracts / agreements in “Microsoft Word” format for review
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Private 1 to 1 consultation session with experienced lawyer
- General advises on employment issues by lawyer
- Basic downloadable simple template for DIY
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Basic downloadable template for DIY
- Package :
- Review of Existing Employment Contract / Agreement
- Free FAQs on Employment Issues
- Client uploads existing employment contracts / agreements in “Microsoft Word” format for review
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Private 1 to 1 consultation session with experienced lawyer
- General advises on employment issues by lawyer
- Custom made of Employment Contract / Agreement
- Free FAQs on Employment Issues
- Customised in accordance to Client’s requirements that are business and industry specific
- In accordance to the Employment Act 1955
- Covers annual leaves, confidentiality clause, probation clause, statutory contributions, force majeure and more
- Can be used repeatedly at no extra cost
- Private 1 to 1 consultation session with experienced lawyer
- General advises on employment issues by lawyer
- No limit to the amendments up until the satisfaction of the client
Confidentiality assured
Valid & Well structured
Professional & Experienced
Frequently Asked Questions
-
General -
Detailed
Employment law in Malaysia is generally governed by the Employment Act 1955 (“Employment Act”). The Employment Act sets out certain minimum benefits that are afforded to applicable employees. For employees covered under the Employment Act, it is the law that any terms and conditions of the employment contract which is less favorable than the provisions under the Employment Act or any other regulations made thereunder shall be void and not enforceable.
Employment Act does not apply to all employees. The protection under the Employment Act only applies to the following categories of employees:
- Employees whose monthly salary does not exceed RM2,000;
- Employees who are engaged in manual labour, regardless of salary;
- Employees engaged in the operation or maintenance of mechanically propelled vehicle;
- Employees who supervise or oversees other employees engaged in manual labour;
- Employees engaged in any capacity on a vessel (subject to certain other conditions); or
- Domestic servants.
Certain parts of the Employment Act are not applicable to certain categories of employees. For example, multiple parts of the Employment Act do not apply to domestic servants such as termination benefits, hours of work and maternity protection.
For the employees who are not covered by the Employment Act, their employment terms will be governed by the terms of their contract of employment, subject to any other applicable statutory requirements (eg: minimum retirement age, SOCSO and EPF etc). In other words, employers are mostly free to set any benefits for these employees. Most employers still use the Employment Act benefits as a guideline or “bare minimum”.
Under the Employment Act, these are the minimum requirements for annual leave:
| Length of service | Annual leave entitlement |
|---|---|
| Less than 2 years | 8 days |
| 2 years or more, but less than 5 years | 12 days |
| More than 5 years | 16 days |
For the incomplete 12 months of service, the employee’s entitlement to paid annual leave shall be in direct proportion to the number of completed months of service.
Under the Employment Act, sick leave entitlements are:
| Length of service | Sick Leave Entitlement (per annum); where hospitalization is not necessary |
|---|---|
| Less than 2 years | 14 days |
| 2 years or more, but less than 5 years | 18 days |
| More than 5 years | 22 days |
Where hospitalization is required, employees are entitled to 60 days of hospitalization leave in total per year, as may be certified by such registered medical practitioner or medical officer provided that the number of sick leave and hospitalization leave per year shall not exceed 60 days in total.
For employees paid on a monthly basis, overtime entitlements under the Employment Act are as follows:
| Working in excess of normal working hours on a normal work day | 1.5x hourly rate of pay |
| Rest day, but working normal working hours | Where work does not exceed half his normal hours of work: ½ the ordinary rate of pay for work done on that day Where work is more than half but does not exceed normal hours of work: 1 full day’s wages at the ordinary rate of pay |
| Rest day, but working in excess of normal working hours | 2x hourly rate of pay |
| Public Holiday, but working normal workings hours | 2 days wages at ordinary rate of pay |
| Public holiday in excess of normal working hours | 3x hourly rate of pay |
The hourly rate of pay means the ordinary rate of pay divided by the normal hours of work. The ordinary rate of pay shall be calculated according to the formula of Monthly Salary / 26 days.
Overtime payments for employees not governed under the Employment Act shall be based on their respective employment contracts.
All female employees (including employees not governed under the Employment Act) are entitled to 60 consecutive days of paid maternity leave, unless she already has 5 or more surviving children at the time of her confinement. An employer is required to pay maternity allowance (i.e. payment of her salary for that 60 consecutive days) to an employee if she has been employed by that employer for:
- At least 90 days in aggregate during the 9 months before her confinement; AND
- She was employed by the employer at any time in the four months immediately before her confinement.
This means that an employer could still be required to pay maternity allowance to an employee who has left employment before giving birth. However, the law requires that a female employee who is about to leave her employment and knows she is expected to deliver within 4 months from her last date of employment must notify her employer of her pregnancy, failing which she will not be allowed to receive any maternity allowance.
A female employee cannot be terminated during maternity leave or for a period of 90 days after her maternity leave (if she is unable to resume work due to an illness arising out of her pregnancy and confinement, as certified by a registered medical practitioner).
There is so far no statutory requirements for employers in Malaysia to provide paternity leave to new fathers.
There is no distinct difference between a Contract of Service with an employment contract in law. However, there is a significant difference when it comes to the Contract for Service where it is defined as a contract to engage independent contractors to complete certain works or projects within a stipulated fixed term of contract.
If you intend to hire an individual for a fixed period of time or to complete a certain project, make sure you do not use the standard or template employment contract without making the necessary changes because you may have accidentally hired a full time, permanent employee.
Generally, an employer is required to make the following statutory contributions (irrespective of whether the employees fall under the purview of the Employment Act:-.
- Employees Provident Fund (EPF);
- Social security Organization (SOCSO);
- Employee Insurance Scheme (EIS); and
- Schedular Tax Deduction or Potongan Cukai Berjadual (PCB).
Under the Employment Act, an employer is only allowed to make deductions from an employee’s salary in the following circumstances:
- Overpayment of wages due to a mistake by the employer (only for the immediately preceding 3 months);
- Deductions for payment in lieu of notice, where the employee resigns without serving the full notice required under the contract;
- Deductions for recovery of advances of wages (provided no interest is charged on the advances);
- Deductions authorized by any other written law (eg: EPF, SOCSO, PCB).
An employer can also deduct these items from an employee’s salary ONLY if the employee requests:
- Deductions for payments to a trade union or co-operative thrift/loan society for entrance fees, subscriptions, etc;
- Deductions as payment for any shares in the employer’s business offered for sale by the employer and purchased by the employee
The Employment Act does not distinguish between probationers and confirmed employees. However, case law does provide that there is no “automatic confirmation” as a probationer who does not receive a confirmation letter is still a probationer, even though the probationary period has lapsed and the employer continued to retain the employee. Termination of probationers must also be subject to “just cause and excuse”.
Employment Act states that every employee shall be entitled to a minimum of 11 gazetted public holidays per calendar year, 5 of which must be:
- National Day;
- Birthday of Yang di-Pertuan Agong;
- Birthday of the Ruler or the Yang di-Pertua Negeri of the state where the employee works;
- Labour Day / Worker’s Day; and
- Malaysia day.
The employer is then free to choose the remaining 6 gazetted public holidays to make up the 11 days, and these chosen days must be effectively communicated with the employees either through notice or state in the employment contract. Where a public holiday that falls on a rest day (typically Sunday), the next working day shall be a holiday in substitution.
The Employment Act provides that employers must also observe any public holiday declared under the Holidays Act 1951. However, for this category of public holidays, the employer has an option to choose another day as a paid public holiday in substitution, if they choose not to observe this public holiday. There is no requirement for employers to get the consent of employees to make the substitution.
The law recognizes that employers have the right and prerogative to manage its workforce, subject to fair labour practice being adopted. Therefore, technically speaking, an employer cannot terminate an employee just by giving them notice, or payment in lieu of notice – even if this is what is stated in their employment contract. Permanent employees cannot be terminated without “just cause and excuse” and this requirement applies to all the employees whether or not they are governed by the Employment Act. However, certain exceptions may apply if the employee is on a fixed term contract. Terminating employees without good reason can amount to unfair dismissal.
Pursuant to the Employment (Termination and Lay-Off Benefits) Regulations 1980, employees are entitled to termination and lay-off benefits as stated below based on their length of service and pro-rata for an incomplete year, calculated to the nearest month:-
| Length of service | Each year of service |
|---|---|
| Less than 2 years | 10 days |
| 2 years or more, but less than 5 years | 15 days |
| More than 5 years | 20 days |
Yes. Under the Employment Act, an employer is required to inquire into all complaints of sexual harassment, and this regardless of whether the employee involved is a employee governed under the Employment Act, failing which shall be liable to fine not exceeding RM 10,000.
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