Introduction of Employment Law WHAT IS EMPLOYMENT?

Employment means work or service performed by an individual to the task at hand for another person or entity in exchange for wages or other remuneration. WHAT IS EMPLOYMENT LAW? Employment Law is the law which regulates the operation of the labour market in general and the employment relationship between employers and employees in particular. Examples include hiring process, suspension from work, maternity rights, layoff and wages. The obligations and rights of an employment contract are covered by the Employment law. When an offer for employment is made by an employer to an employee, the law governing the relationship between an employee and an employer begins. WHAT ARE THE BASIC TERMS USED TO DESCRIBE THE EMPLOYMENT RELATIONSHIP ? An employer in relation to an employee or a workman, means a person by whom the employee or workman is employed. An employer obtains the services of another to perform work and has direct control of the way in which the work is to be done. An employer shall provide the means through which the services will be performed such as providing a place where the work is to be performed and tools required to get the job done. Contract of service means any agreement, whether express or implied, and if express, whether oral or in writing where the employer agrees to employ and the employee agrees to be employed and includes an apprenticeship contract. In general, an employee means a person who has entered into or works under a contract of employment. There are different interpretations for the term, employee, in different Acts governing the labour market in Malaysia. Those interpretations will determine whether you are an employee protected under the scope of an Act. Where an employee begins employment with an employer and for a period of more than one month, such employee must be given a written contract of employment with particulars of the terms and conditions of employment including the notice period required to terminate the contract of employment.

PART 1 : CONTRACTS OF SERVICE Saving of existing contracts 1. Every agreement lawfully entered into between an employer and an employee before the coming into force of this Act shall if it is still legally binding upon the parties continue in force for such period as may be specified in the agreement and the parties thereto shall be subject to, and shall be entitled to the benefits of, this Act. More favourable conditions of service under the Act to prevail 1. Subject to section 7A, any term or condition of a contract of service or of an agreement, whether such contract or agreement was entered into before or after the coming into force of this Act, which provides a term or condition of service which is less favourable to an employee than a term or condition of service prescribed by this Act or any regulations, order or other subsidiary legislation whatsoever made there under shall be void and of no effect to that extent and the more favourable provisions of this Act or any regulations, order or other subsidiary legislation whatsoever made thereunder shall be substituted therefore.

Validity of any term or condition of service which is more favourable 1. Subject to any express prohibition under this Act or any regulations, order or other subsidiary legislation whatsoever made thereunder, nothing in section 7 shall be construed as preventing an employer and an employee from agreeing to any term or condition of service under which an employee is employed, or shall render invalid any term or condition of service stipulated in any collective agreement or in any award of the Industrial Court, which is more favourable to the employee than the provisions of this Act or any regulations, order, or other subsidiary legislation whatsoever made thereunder.

Removal of doubt in respect of matters not provided for by or under this Act 1. For the removal of doubt it is hereby declared that if no provision is made in respect of any matter under this Act or any subsidiary legislation made thereunder, or if no regulations, order or other subsidiary legislation has been made on any matter in respect of which regulations, or an order or other subsidiary legislation may be made under this Act, it shall not be construed as preventing such matter from being provided for in a contract of service, or from being negotiated upon between an employer and an employee.

Contracts of service not to restrict rights of employees to join, participate in or organize trade unions 1. Nothing in any contract of service shall in any manner restrict the right of any employee who is a party to such contract a) to join a registered trade union; b) to participate in the activities of a registered trade union, whether as an officer of such union or otherwise; or 2

c) to associate with any other persons for the purpose of organizing a trade union in accordance with the Trade Unions Act 1959 [Act 262]. Contracts to be in writing and to include provision for termination 1. (a) A contract of service for a specified period of time exceeding one month or for the performance of a specified piece of work, where the time reasonably required for the completion of the work exceeds or may exceed one month, shall be in writing. (b) In every written contract of service a clause shall be included setting out the manner in which such contract may be terminated by either party in accordance with this Part. Provision as to termination of contracts 1. (a) A contract of service for a specified period of time or for the performance of a specified piece of work shall, unless otherwise terminated in accordance with this Part, terminate when the period of time for which such contract was made has expired or when the piece of work specified in such contract has been completed. (b) A contract of service for an unspecified period of time shall continue in force until terminated in accordance with this Part. Notice of termination of contract 1. (1) Either party to a contract of service may at any time give to the other party notice of his intention to terminate such contract of service. (2) The length of such notice shall be the same for both employer and employee and shall be determined by a provision made in writing for such notice in the terms of the contract of service, or, in the absence of such provision in writing, shall not be less than (a) four weeks notice if the employee has been so employed for less than two years on the date on which the notice is given; (b) six weeks notice if he has been so employed for two years or more but less than five years on such date; (c) eight weeks notice if he has been so employed for five years or more on such date: (3) Notwithstanding anything contained in subsection (2), where the termination of service of the employee is attributable wholly or mainly to the fact that (a) the employer has ceased, or intends to cease to carry on the business for the purposes of which the employee was employed;

(b) the employer has ceased or intends to cease to carry on the business in the place at which the employee was contracted to work; (c) the requirements of that business for the employee to carry out work of a particular kind have ceased or diminished or are expected to cease or diminish; (d) the requirements of that business for the employee to carry out work of a particular kind in the place at which he was contracted to work have ceased or diminished or are expected to cease or diminish; (e) the employee has refused to accept his transfer to any other place of employment, unless his contract of service requires him to accept such transfer; or (f) a change has occurred in the ownership of the business for the purpose of which an employee is employed or of a part of such business, regardless of whether the change occurs by virtue of a sale or other disposition or by operation of law. The employee shall be entitled to, and the employer shall give to the employee, notice of termination of service, and the length of such notice shall be not less than that provided under paragraph (2)(a), (b) or (c), as the case may be, regardless of anything to the contrary contained in the contract of service. (4) Such notice shall be written and may be given at any time, and the day on which the notice is given shall be included in the period of the notice. Termination of contract without notice 1. (1) Either party to a contract of service may terminate such contract of service without notice or, if notice has already been given in accordance with section 12, without waiting for the expiry of that notice, by paying to the other party an indemnity of a sum equal to the amount of wages which would have accrued to the employee during the term of such notice or during the unexpired term of such notice. (2) Either party to a contract of service may terminate such contract of service without notice in the event of any wilful breach by the other party of a condition of the contract of service. Termination of contract for special reasons 1. An employer may, on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service, after due inquiry a. Dismiss without notice the employee; b. Downgrade the employee; or c. Impose any other lesser punishment as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks.

2. For the purposes of an inquiry under subsection (1), the employer may suspend the employee from work for a period not exceeding two weeks but shall pay him not less than half his wages for such period: Provided that if the inquiry does not disclose any misconduct on the part of the employee the employer shall forthwith restore to the employee the full amount of wages so withheld. 1. An employee may terminate his contract of service with his employer without notice where he or his dependants are immediately threatened by danger to the person by violence or disease such as such employee did not by his contract of service undertake to run. When contract is deemed to be broken by employer and employee 1. An employer shall be deemed to have broken his contract of service with the employee if he fails to pay wages in accordance with Part 2. 2. An employee shall be deemed to have broken his contract of service with the employer if he has been continuously absent from work for more than two consecutive working days without prior leave from his employer, unless he has a reasonable excuse for such absence and has informed or attempted to inform his employer of such excuse prior to or at the earliest opportunity during such absence. Employees on estates to be provided with minimum number of days work in each month 1. Where an employee is employed in any agricultural undertaking on an estate on a contract of service under which he earns wages calculated by reference to the number of days work performed in each month of his service, his employer shall be bound either to provide him with work suitable to his capacity on not less than twenty-four days in each month during the whole of which he is so employed, or if the employer is unable or fails to provide work on twenty-four days in each month whereon the employee is willing and fit to work, the employer shall nevertheless be bound to pay to the employee in respect of each of such days wages at the same rate as if such employee had performed a days work: Provided that any dispute as to whether an employee was willing or fit to work shall be referred to the Director General for his decision 2. Provided further that in computing twenty-four days for the purposes of this subsection account shall not be taken of more than six days in any week.A contract of service shall be deemed to be broken by an employer if he fails to provide work or pay wages in accordance with subsection (1).

PART 2: PAYMENT OF WAGES 5

PAYMENT OF WAGES Wage period 1. A contract of service shall specify a wage period not exceeding one month. 2. If in any contract of service no wage period is specified the wage period shall for the purposes of the contract be deemed to be one month. Time of payment of wages 1. Subject to subsection (2), every employer shall pay to each of his employees not later than the seventh day after the last day of any wage period the wages, less lawful deductions earned by such employee during such wage period. 2. Wages for work done on a rest day, gazette public holiday referred to in paragraphs 60D(1)(a) and (b) and overtime referred to in section 60A shall be paid not later than the last day of the next wage period. 3. Notwithstanding subsections (1) and (2), if the Director General is satisfied that payment within such time is not reasonably practicable, he may, on the application of the employer, extend the time of payment by such number of days as he thinks fit. Payment on normal termination of contract 1. The wages, less lawful deductions, earned by but not yet paid to an employee whose contract of service terminates shall be paid to such employee not later than the day on which such contract of service so terminates. Payment on termination of contract in special circumstances and on breach of contract 1. Where an employer terminates the contract of service of an employee without notice a. the wages, less any deductions which the employer is entitled to make under section 24, earned by such employee up to and including the day immediately preceding the day on which the termination of the contract of service takes effect; and b. in addition, where the employer terminates the contract of service, the indemnity payable to the employee, shall be paid by the employer to the employee not later than the day on which such contract of service is so terminated. c. Where an employee terminates his contract of service with an employer without notice, the wages, less any deductions which the employer is entitled to make under section 24, earned by such employee up to and including the day immediately preceding the day on which the termination of the contract of service takes effect shall be paid by the employer to the employee not later than the third day after the day on which the contract of service is so terminated.

Limitation on advances to employees 6

1. No employer shall during any one month make to an employee an advance or advances of wages not already earned by such employee which exceeds in the aggregate the amount of wages which the employee earned in the preceding month from his employment with such employer, or if he has not been so long in the employment of such employer, the amount which he is likely to earn in such employment during one month, unless such advance is made to the employee a. to enable him to purchase a house or to build or improve a house; b. to enable him to purchase land; c. to enable him to purchase a motorcar, a motorcycle or a bicycle; d. to enable him to purchase shares of the employers business offered for sale by the employer; e. to enable him to purchase a computer; f. to enable him to pay for medical expenses for himself or his immediate family members; g. to enable him to pay for daily expenses pending receipt of any periodical payments for temporary disablement under the Employees Social Security Act 1969 [Act 4]; h. to enable him to pay for educational expenses for himself or his immediate family members; i. for any other purpose i. in respect of which an application in writing is made by the employer to the Director General; ii. which is, in the opinion of the Director General, beneficial to the employee; and iii. which is approved in writing by the Director General, provided that in granting such approval, the Director General may make such modifications thereto or impose such conditions thereon as he may deem proper; j. for such other purpose as the Minister may, from time to time, by notification in the Gazette, specify either generally in respect of all employees, or only in respect of any particular employee, or any class, category or description of employees. 2. For the purposes of this section, immediate family membersmean the employees parents, children, siblings or any other person under the employees guardianship. Wages not due for absence from work through imprisonment or attendance in court 1. Wages shall not become payable to or recoverable by any employee from his employer for or on account of the term of any sentence of imprisonment undergone by him or for any period spent by him in custody or for or on account of any period spent by him in going to or returning from prison or other place of custody or for or on account of any period spent by him in going to, attending before or returning from a court otherwise than as a witness on his employers behalf.