Understanding The Regulations and Amendments to the Malaysian Employment Act 1955 in a Simple and Practical Way

1. UNDERSTANDING THE
EMPLOYMENT ACT 1955
REGULATIONS AND AMENDMENTS IN A SIMPLE AND
PRACTICAL WAY

2. course modules
1. WHAT IS THE EMPLOYMENT ACT 1955
2. CONTRACTS OF SERVICE VS CONTRACTS FOR SERVICE
3. WORKING DAYS AND HOURS
4. EMPLOYMENT BENEFITS AND PAYMENT
5. HOSPITALISATION AND NON HOSPITALISATION BENEFITS

3. COURSE MODULES
6. PAID AND UNPAID MATERNITY LEAVE
7. WAGE AND SALARY
8. DISCIPLINARY PROCEDURE AND ACTION
9. SEXUAL HARASSMENT
10. RETRENCHMENT BENEFITS

4. WHAT IS THE EMPLOYMENT
ACT 1955
MODULE 1

5. coverage
• EA 1955 APPLIES ONLY TO PENINSULAR MALAYSIA (INCLUDES FEDERAL
TERRITORY)
• SABAH - SABAH LABOUR ORDINANCE
• SARAWAK - SARAWAK LABOUR ORDINANCE
• THE LATEST REVISION TO EA 1955 WAS DONE IN 2012
• EA 1955 IS ALSO KNOWN AS ACT 265

6. THE PURPOSE OF EA 1955
THE ACT ENSHRINES THE RIGHTS OF BOTH THE EMPLOYEES AND
EMPLOYERS, AND THE OBLIGATIONS OR RESPONSIBILITIES THEY
ARE OBLIGED TO FULFIL TO HAVE THE LEGAL PROTECTION.
THE SCOPE OF EMPLOYMENT ACT 1955 ONLY COVERS WORKERS
WHO ARE DEFINED AS “EMPLOYEES” UNDER THE ACT

7. EMPLOYEES COVERED UNDER
EA 1955
• 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

8. EMPLOYEES COVERED UNDER
EA 1955
• EMPLOYEES WHO SUPERVISE OR OVERSEES OTHER EMPLOYEES
ENGAGED IN MANUAL LABOUR
• EMPLOYEES ENGAGED IN ANY CAPACITY ON A VESSEL (SUBJECT
TO CERTAIN OTHER CONDITIONS)
• DOMESTIC SERVANTS

9. EMPLOYEES COVERED UNDER
EA 1955
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.

10. EMPLOYEES COVERED UNDER
EA 1955
ANY PERSON WHO, IRRESPECTIVE OF THE AMOUNT OF WAGES HE
EARNS IN A MONTH, HAS ENTERED INTO A CONTRACT OF SERVICE
WITH AN EMPLOYER ENGAGED IN MANUAL LABOUR

11. EMPLOYEES NOT COVERED
UNDER EA 1955
“NON-EA EMPLOYEES” WILL BE GOVERNED BY THE TERMS OF THEIR
CONTRACT OF EMPLOYMENT, SUBJECT TO ANY OTHER APPLICABLE
STATUTORY REQUIREMENTS

12. EMPLOYEES NOT COVERED
UNDER EA 1955
EMPLOYERS ARE MOSTLY FREE TO SET ANY BENEFITS FOR NON-EA
EMPLOYEES, ON THE ASSUMPTION THAT THOSE EMPLOYEES AGREE
TO THOSE BENEFITS BY ACCEPTING AND SIGNING THE EMPLOYMENT
AGREEMENT.

13. EMPLOYEES NOT COVERED
UNDER EA 1955
MOST EMPLOYERS STILL USE THE EMPLOYMENT ACT BENEFITS AS A
GUIDELINE OR “BARE MINIMUM”, EVEN FOR NON-EA EMPLOYEES.

14. EA1955 VS COMPANY POLICIES
THE LAW SPECIFICALLY STATES THAT ANY TERM OF EMPLOYMENT
WHICH IS LESS FAVOURABLE TO THE EMPLOYEE THAT THOSE
PROVIDED BY THE LAW "SHALL BE VOID AND OF NO EFFECT" AND THE
PROVISIONS OF THE ACT OR THE PROVISIONS MADE UNDER
SUBSIDIARY LEGISLATION "SHALL BE SUBSTITUTED THEREFOR".

15. EA1955 VS COMPANY POLICIES
OF THE LAW ALSO SPECIFICALLY PROVIDE THAT IT DOES NOT
PREVENT THE EMPLOYER AND THE EMPLOYEE FROM AGREEING TO
TERMS WHICH ARE MORE FAVOURABLE TO THE EMPLOYEE THAN
WHAT IT HAS BEEN PROVIDED FOR.

16. PENALTIES FOR NON
COMPLIANCE OF EA 1955
ANY PERSON WHO COMMITS ANY OFFENCE UNDER, OR
CONTRAVENES ANY PROVISION OF, THIS ACT, OR ANY REGULATIONS,
ORDER, OR OTHER SUBSIDIARY LEGISLATION WHATSOEVER MADE
THEREUNDER, IN RESPECT OF WHICH NO PENALTY IS PROVIDED,
SHALL BE LIABLE, ON CONVICTION, TO A FINE NOT EXCEEDING TEN
THOUSAND RINGGIT.

17. CONTRACTS OF SERVICE VS
CONTRACTS FOR SERVICE
MODULE 2

18. contract OF service
CONTRACT OF SERVICE‖ MEANS ANY AGREEMENT, WHETHER ORAL
OR IN WRITING AND WHETHER EXPRESS OR IMPLIED, WHEREBY ONE
PERSON AGREES TO EMPLOY ANOTHER AS AN EMPLOYEE AND THAT
OTHER AGREES TO SERVE HIS EMPLOYER AS AN EMPLOYEE AND
INCLUDES AN APPRENTICESHIP CONTRACT

19. contract OF service
A CONTRACT OF SERVICE IS AN AGREEMENT IN WHICH:
• ONE PERSON AGREES TO EMPLOY ANOTHER AS AN EMPLOYEE
• THE OTHER PERSON AGREES TO SERVE THE EMPLOYER AS AN
EMPLOYEE

20. contract OF service
THE AGREEMENT CAN BE IN WRITING, VERBAL, EXPRESSED OR
IMPLIED. IT CAN BE IN THE FORM OF A LETTER OF APPOINTMENT OR
EMPLOYMENT, OR AN APPRENTICESHIP AGREEMENT. HOWEVER, TO
MINIMISE DISPUTES ON THE AGREED TERMS AND CONDITIONS, THE
CONTRACT SHOULD BE IN WRITING

21. KEY EMPLOYMENT TERMS (KET)
FROM 1 APRIL 2016, ALL EMPLOYERS MUST ISSUE KEY EMPLOYMENT
TERMS (KETS) IN WRITING TO EMPLOYEES COVERED BY THE
EMPLOYMENT ACT.

22. KEY EMPLOYMENT TERMS (KET)
1. FULL NAME OF EMPLOYER
2. FULL NAME OF EMPLOYEE
3. JOB TITLE, MAIN DUTIES AND RESPONSIBILITIES

23. KEY EMPLOYMENT TERMS (KET)
4. START DATE OF EMPLOYMENT
5. DURATION OF EMPLOYMENT (IF EMPLOYEE ON A FIXED TERM
CONTRACT)

24. KEY EMPLOYMENT TERMS (KET)
6.WORKING ARRANGEMENTS, SUCH AS:
• DAILY WORKING HOURS (E.G. 8.30AM – 6PM).
• NUMBER OF WORKING DAYS PER WEEK (E.G. SIX).
• REST DAY (E.G. SATURDAY).

25. KEY EMPLOYMENT TERMS (KET)
7. SALARY PERIOD
8. BASIC SALARY
9. FIXED ALLOWANCE

26. KEY EMPLOYMENT TERMS (KET)
10. FIXED DEDUCTIONS
11. OVERTIME PAYMENT PERIOD ( IF DIFFERENT FROM ITEM 7 SALARY
PERIOD)
12. OVERTIME RATE OF PAY

27. KEY EMPLOYMENT TERMS (KET)
13.OTHER SALARY-RELATED COMPONENTS, SUCH AS:
• BONUSES
• INCENTIVES

28. KEY EMPLOYMENT TERMS (KET)
14.TYPE OF LEAVE SUCH AS:
• ANNUAL LEAVE
• OUTPATIENT SICK LEAVE

29. KEY EMPLOYMENT TERMS (KET)
14.TYPE OF LEAVE SUCH AS:
• HOSPITALISATION LEAVE
• MATERNITY LEAVE
• CHILD CARE LEAVE

30. KEY EMPLOYMENT TERMS (KET)
15.OTHER MEDICAL BENEFITS, SUCH AS:
• INSURANCE
• MEDICAL BENEFITS
• DENTAL BENEFITS

31. KEY EMPLOYMENT TERMS (KET)
16. PROBATION PERIOD
17. NOTICE PERIOD
18. RETIREMENT AGE

32. KEY EMPLOYMENT TERMS (KET)
19. TRANSFER
20. PLACE OF WORK (OPTIONAL) IF THE WORK LOCATION IS
DIFFERENT FROM THE EMPLOYER'S ADDRESS.
ALTHOUGH OPTIONAL, YOU ARE STRONGLY ENCOURAGED TO
INCLUDE THIS INFO.

33. LEGAL POSITION OF
PROBATIONERS
THE EMPLOYMENT ACT DOESN’T 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

34. KEY EMPLOYMENT TERMS (KET)
KETS MUST INCLUDE THE ITEMS BELOW, UNLESS THE ITEM IS NOT
APPLICABLE. FOR EXAMPLE, IF THE EMPLOYEE IS A PROFESSIONAL,
MANAGER OR EXECUTIVE AND OVERTIME PAY DOES NOT APPLY, THE
KETS ISSUED DO NOT NEED TO INCLUDE ITEMS 11 TO 12.

35. CONTRACT FOR SERVICE
A CONTRACT OF SERVICE IS AN AGREEMENT BETWEEN AN EMPLOYER
AND AN EMPLOYEE.
IN A CONTRACT FOR SERVICE, AN INDEPENDENT CONTRACTOR, SUCH
AS A SELF-EMPLOYED PERSON OR VENDOR, IS ENGAGED FOR A FEE
TO CARRY OUT AN ASSIGNMENT OR PROJECT.

36. CONTRACT OF SERVICE VS
CONTRACT FOR SERVICE
CONTRACT OF SERVICE CONTRACT FOR SERVICE
HAS AN EMPLOYER-EMPLOYEE
RELATIONSHIP
HAS A CLIENT - CONTRACTOR
RELATIONSHIP
EMPLOYEE DOES BUSINESS FOR
EMPLOYER
CONTRACTOR CARRIES OUT
BUSINESS ON THEIR OWN ACCOUNT
MAY BE COVERED UNDER EA 1955 NOT COVERED BY EA 1955
INCLUDES TERMS OF EMPLOYMENT
(KET)
STATUTORY BENEFITS DO NOT
APPLY

37. factors to be considered in identifying a
contract FOR SERVICE
CONTROL
• WHO DECIDES ON THE RECRUITMENT AND DISMISSAL OF EMPLOYEES?
• WHO PAYS FOR EMPLOYEES' WAGES AND IN WHAT WAYS?
• WHO DETERMINES THE PRODUCTION PROCESS, TIMING AND METHOD
OF PRODUCTION?
• WHO IS RESPONSIBLE FOR THE PROVISION OF WORK?

38. factors to be considered in identifying a
contract FOR SERVICE
OWNERSHIP OF FACTORS OF PRODUCTION
• WHO PROVIDES THE TOOLS AND EQUIPMENT?
• WHO PROVIDES THE WORKING PLACE AND MATERIALS?

39. factors to be considered in identifying a
contract FOR SERVICE
ECONOMIC CONSIDERATIONS
• IS THE BUSINESS CARRIED OUT ON THE PERSON'S OWN ACCOUNT
OR IS IT FOR THE EMPLOYER?
• CAN THE PERSON SHARE IN PROFIT OR BE LIABLE TO ANY RISK OF
LOSS?
• HOW ARE EARNINGS CALCULATED AND PROFITS DERIVED?

40. WORKING DAYS AND HOURS
MODULE 3

41. hours of work
AN EMPLOYEE SHALL NOT BE REQUIRED UNDER HIS CONTRACT OF
SERVICE TO WORK --
• MORE THAN FIVE CONSECUTIVE HOURS WITHOUT A PERIOD OF
LEISURE OF NOT LESS THAN THIRTY MINUTES DURATION;
• MORE THAN EIGHT HOURS IN ONE DAY;

42. hours of work
AN EMPLOYEE SHALL NOT BE REQUIRED UNDER HIS CONTRACT OF
SERVICE TO WORK --
• IN EXCESS OF A SPREAD OVER PERIOD OF TEN HOURS IN ONE
DAY;
• MORE THAN FORTY-EIGHT HOURS IN ONE WEEK:

43. HOURS OF WORK
AN EMPLOYEE WHO IS ENGAGED IN WORK WHICH MUST BE CARRIED
ON CONTINUOUSLY AND WHICH REQUIRES HIS CONTINUAL
ATTENDANCE MAY BE REQUIRED TO WORK FOR EIGHT CONSECUTIVE
HOURS INCLUSIVE OF A PERIOD OR PERIODS OF NOT LESS THAN
FORTY-FIVE MINUTES IN THE AGGREGATE DURING WHICH HE SHALL
HAVE THE OPPORTUNITY TO HAVE A MEAL

44. HOURS OF WORK
WHERE, BY AGREEMENT UNDER THE CONTRACT OF SERVICE
BETWEEN THE EMPLOYEE AND THE EMPLOYER, THE NUMBER OF
HOURS OF WORK ON ONE OR MORE DAYS OF THE WEEK IS LESS
THAN EIGHT, THE LIMIT OF EIGHT HOURS MAY BE EXCEEDED ON THE
REMAINING DAYS OF THE WEEK, BUT SO THAT NO EMPLOYEE SHALL
BE REQUIRED TO WORK FOR MORE THAN NINE HOURS IN ONE DAY OR
FORTY-EIGHT HOURS IN ONE WEEK.

45. subsection 60A (2)
AN EMPLOYEE MAY BE REQUIRED BY HIS EMPLOYER TO EXCEED THE LIMIT OF HOURS
PRESCRIBED IN SUBSECTION (1) AND TO WORK ON A REST DAY, IN THE CASE OF
• ACCIDENT, ACTUAL OR THREATENED, IN OR WITH RESPECT TO HIS PLACE OF WORK
• URGENT WORK TO BE DONE TO MACHINERY OR PLANT
• AN INTERRUPTION OF WORK WHICH IT WAS IMPOSSIBLE TO FORESEE

46. SHIFT WORK
AN EMPLOYEE WHO IS ENGAGED UNDER HIS CONTRACT OF SERVICE
IN SHIFT WORK MAY BE REQUIRED BY HIS EMPLOYER TO WORK MORE
THAN EIGHT HOURS IN ANY ONE DAY OR MORE THAN FORTY-EIGHT
HOURS IN ANY ONE WEEK BUT THE AVERAGE NUMBER OF HOURS
WORKED OVER ANY PERIOD OF THREE WEEKS, OR OVER ANY PERIOD
EXCEEDING THREE WEEKS AS MAY BE APPROVED BY THE DIRECTOR
GENERAL, SHALL NOT EXCEED FORTY-EIGHT PER WEEK.

47. SHIFT WORK
NO EMPLOYER SHALL REQUIRE ANY EMPLOYEE WHO IS ENGAGED
UNDER HIS CONTRACT OF SERVICE IN SHIFT WORK TO WORK FOR
MORE THAN TWELVE HOURS IN ANY ONE DAY.

48. SPLIT SHIFT
• A PERSON’S WORK DAY IS SPLIT INTO 2 OR MORE PARTS. FOR
EXAMPLE A PERSON MAY WORK FROM 5.00 AM TILL 9.00 AM AND
TAKE A BREAK UNTIL 2.00 PM AND RETURN TO WORK UNTIL 7.00 PM

49. DOUBLE DAY SHIFT
• THE ORGANIZATION IS WORKING 16 HOURS PER DAY
• SHIFT 1 - 7.00 AM TILL 3.00PM
• SHIFT 2 - 3.00 PM TILL 11.00 PM

50. THREE SHIFT WORK
• THE ORGANIZATION IS WORKING 24 HOURS PER DAY
• SHIFT 1 ( MORNING) - 7.00 AM TILL 3.00 PM
• SHIFT 2 (AFTERNOON) - 3.00 PM TILL 11.00 PM
• SHIFT 3 ( NIGHT) - 11.00 PM TILL 7.00 AM

51. HOURS OF WORK
FOR ANY OVERTIME WORK CARRIED OUT IN EXCESS OF THE NORMAL
HOURS OF WORK, THE EMPLOYEE SHALL BE PAID AT A RATE NOT
LESS THAN ONE AND HALF TIMES HIS HOURLY RATE OF PAY
IRRESPECTIVE OF THE BASIS ON WHICH HIS RATE OF PAY IS FIXED.

52. OVERTIME WORK
THE EA 1955 DEFINES THAT ‘OVERTIME WORK’ MEANS THE NUMBER OF HOURS
OF WORK CARRIED OUT IN EXCESS OF THE NORMAL HOURS OF WORK PER DAY
THE LIMIT OF OVERTIME WORK SHALL BE A TOTAL OF 104 HOURS IN ANY 1
MONTH. THIS MEANS AN AVERAGE OF ABOUT 4 HOURS IN 1 DAY
THE PAY RATE SHALL BE 1½ TIMES THE HOURLY RATE OF PAY OF EMPLOYEES
EMPLOYERS MUST BE MINDFUL THAT THEY MUST NOT REQUIRE ANY EMPLOYEE
UNDER ANY CIRCUMSTANCES TO WORK MORE THAN 12 HOURS IN ANY ONE DAY

53. OVERTIME RATES
APPLY TO EMPLOYEES COVERED UNDER THE EMPLOYMENT ACT (E.G.
WAGES NOT EXCEEDING RM2,000, MANUAL LABOURERS), BUT CAN
ALSO BE USED AS GUIDELINES FOR OTHER STAFF.

54. OVERTIME RATES
WORKING IN EXCESS OF NORMAL WORKING HOURS ON A NORMAL
WORK DAY
1.5X HOURLY RATE OF PAY

55. OVERTIME RATES
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

56. OVERTIME RATES
REST DAY, BUT WORKING IN EXCESS OF NORMAL WORKING HOURS
2X HOURLY RATE OF PAY

57. OVERTIME RATES
PUBLIC HOLIDAY, BUT WORKING NORMAL WORKINGS HOURS
2 DAYS WAGES AT ORDINARY RATE OF PAY

58. OVERTIME RATES
PUBLIC HOLIDAY – EXCESS OF NORMAL WORKING HOURS
3X HOURLY RATE OF PAY

59. “ORDINARY RATE OF PAY” IN THIS CONTEXT IS BASICALLY THE EMPLOYEE’S “DAILY”
WAGE, AND IS CALCULATED BY DIVIDING THE EMPLOYEE’S MONTHLY SALARY BY 26.
“HOURLY RATE OF PAY” MEANS THE ORDINARY RATE OF PAY DIVIDED BY THE NORMAL
HOURS OF WORK.
FOR EXAMPLE, AN EMPLOYEE WHO WORKS 8 HOURS A DAY FOR A MONTHLY SALARY
OF RM1,300.00 WOULD HAVE AN ORDINARY RATE OF PAY OF RM50 (RM1,300 / 26 =
RM50). THAT EMPLOYEE’S HOURLY RATE OF PAY WOULD BE RM6.25 (RM50 / 8 HOURS =
RM6.25)
IF THAT EMPLOYEE WAS ASKED TO WORK ON A PUBLIC HOLIDAY DURING HIS NORMAL
WORKING HOURS, HIS OVERTIME PAYMENT FOR THAT DAY WOULD BE RM100 (RM50 X
2).
NON-EA EMPLOYEES ARE NOT ENTITLED TO OVERTIME PAYMENTS

60. calculation for unpaid leave
YOU MAY CHOOSE EITHER ONE OF THREE OPTIONS:
• FIXED NUMBER OF DAYS: YOU MAY SELECT YOUR COMPANY’S WORKING
DAYS FOR THE PARTICULAR PAYROLL MONTH.
• WORKING DAYS IN CURRENT CALENDAR MONTH: INCLUDES ALL TICKED
WORKING DAYS INCLUDING PUBLIC HOLIDAYS.
• ALL DAYS IN CURRENT CALENDAR MONTH: INCLUDES ALL DAYS IN THE
CURRENT CALENDAR MONTH.

61. calculation for unpaid leave
EXAMPLE FOR WORKING DAYS IN CURRENT CALENDAR MONTH:
JIM EARNS RM 4,000 A MONTH, AND TAKES 3 DAYS UNPAID LEAVE IN THE MONTH OF MARCH
2019. HOW MUCH SHOULD BE DEDUCTED?
FOLLOWING THE STEPS LISTED ABOVE, WE FIND:
• THERE ARE 21 WORKING DAYS IN THE MONTH OF MARCH
• JIM EARNS RM 190.48 PER DAY (4000/21).
• AS JIM HAS TAKEN 3 DAYS OFF, THE TOTAL DEDUCTION SHOULD BE RM 571.43
(4000*3/21).

62. EMPLOYEE BENEFITS AND
PAYMENTS
MODULE 4

63. EA 1955 - MINIMUM REQUIREMENTS
FOR ANNUAL LEAVE
LENGTH OF SERVICE ANNUAL LEAVE ENTITLEMENT
LESS THAN 2 YEARS 8 DAYS
MORE THAN 2 YEARS BUT LESS THAN
5 YEARS
12 DAYS
MORE THAN 5 YEARS 16 DAYS

64. ANNUAL LEAVE - TERMS &
CONDITIONS
IF THE EMPLOYEE HAS NOT COMPLETED TWELVE MONTHS OF
CONTINUOUS SERVICE WITH THE SAME EMPLOYER DURING THE YEAR
IN WHICH HIS CONTRACT OF SERVICE TERMINATES, HIS ENTITLEMENT
TO PAID ANNUAL LEAVE SHALL BE IN DIRECT PROPORTION TO THE
NUMBER OF COMPLETED MONTHS OF SERVICE:

65. ANNUAL LEAVE - TERMS &
CONDITIONS
THE PAID ANNUAL LEAVE TO WHICH AN EMPLOYEE IS ENTITLED
UNDER SUBSECTION (1) SHALL BE IN ADDITION TO REST DAYS AND
PAID HOLIDAYS.

66. ANNUAL LEAVE - TERMS &
CONDITIONS
WHERE AN EMPLOYEE WHO IS ON PAID ANNUAL LEAVE BECOMES
ENTITLED TO SICK LEAVE OR MATERNITY LEAVE WHILE ON SUCH
ANNUAL LEAVE, THE EMPLOYEE SHALL BE GRANTED THE SICK LEAVE
OR THE MATERNITY LEAVE, AS THE CASE MAY BE, AND THE ANNUAL
LEAVE SHALL BE DEEMED TO HAVE NOT BEEN TAKEN IN RESPECT OF
THE DAYS FOR WHICH SICK LEAVE OR MATERNITY LEAVE IS SO
GRANTED.

67. ANNUAL LEAVE - TERMS &
CONDITIONS
THE EMPLOYER SHALL GRANT AND THE EMPLOYEE SHALL TAKE SUCH
LEAVE NOT LATER THAN TWELVE MONTHS AFTER THE END OF EVERY
TWELVE MONTHS CONTINUOUS SERVICE AND ANY EMPLOYEE WHO
FAILS TO TAKE SUCH LEAVE AT THE END OF SUCH PERIOD SHALL
THEREUPON CEASE TO BE ENTITLED THERETO;

68. ANNUAL LEAVE - TERMS &
CONDITIONS
PROVIDED THAT AN EMPLOYEE SHALL BE ENTITLED TO PAYMENT IN
LIEU OF SUCH ANNUAL LEAVE IF, AT THE REQUEST OF HIS EMPLOYER,
HE AGREES IN WRITING NOT TO AVAIL HIMSELF OF ANY OR ALL OF HIS
ANNUAL LEAVE ENTITLEMENT.

69. ANNUAL LEAVE - TERMS &
CONDITIONS
IF THE CONTRACT OF SERVICE HAS BEEN TERMINATED BY EITHER
PARTY BEFORE AN EMPLOYEE HAS TAKEN THE PAID ANNUAL LEAVE
TO WHICH HE IS ENTITLED UNDER THIS SECTION, THE EMPLOYER
SHALL PAY THE EMPLOYEE HIS ORDINARY RATE OF PAY IN RESPECT
OF EVERY DAY OF SUCH LEAVE

70. REST DAY
EVERY EMPLOYEE SHALL BE ALLOWED IN EACH WEEK A REST DAY OF
ONE WHOLE DAY AS MAY BE DETERMINED FROM TIME TO TIME BY
THE EMPLOYER, AND WHERE AN EMPLOYEE IS ALLOWED MORE THAN
ONE REST DAY IN A WEEK THE LAST OF SUCH REST DAYS SHALL BE
THE REST DAY

71. REST DAY
FOR ANY WORK CARRIED OUT IN EXCESS OF THE NORMAL HOURS OF
WORK ON A REST DAY BY AN EMPLOYEE SHALL BE PAID AT A RATE
WHICH IS NOT LESS THAN TWO TIMES HIS HOURLY RATE OF PAY.

72. REST DAY
THE EMPLOYER SHALL PREPARE A ROSTER BEFORE THE
COMMENCEMENT OF THE MONTH IN WHICH THE REST DAYS FALL
INFORMING THE EMPLOYEE OF THE DAYS APPOINTED TO BE HIS REST
DAYS

73. REST DAY
EVERY SUCH ROSTER AND EVERY PARTICULAR RECORDED THEREIN
SHALL BE PRESERVED AND SHALL BE MADE AVAILABLE FOR
INSPECTION FOR A PERIOD NOT EXCEEDING SIX YEARS FROM THE
LAST DAY OF THE MONTH IN RESPECT OF WHICH THE ROSTER WAS
PREPARED OR CAUSE TO BE PREPARED.

74. HOLIDAYS
EVERY EMPLOYEE SHALL BE ENTITLED TO A PAID HOLIDAY AT HIS
ORDINARY RATE OF PAY ON TEN GAZETTED PUBLIC HOLIDAYS IN ANY
ONE CALENDAR YEAR, FOUR OF WHICH SHALL BE--
• THE NATIONAL DAY;
• THE BIRTHDAY OF THE YANG DI-PERTUAN AGONG;

75. HOLIDAYS
EVERY EMPLOYEE SHALL BE ENTITLED TO A PAID HOLIDAY AT HIS ORDINARY
RATE OF PAY ON TEN GAZETTED PUBLIC HOLIDAYS IN ANY ONE CALENDAR YEAR,
FOUR OF WHICH SHALL BE--
• THE BIRTHDAY OF THE RULER OR THE YANG DI-PERTUA NEGERI, AS THE CASE
MAY BE, OF THE STATE IN WHICH THE EMPLOYEE WHOLLY OR MAINLY WORKS
UNDER HIS CONTRACT OF SERVICE, OR THE FEDERAL TERRITORY DAY, IF THE
EMPLOYEE WHOLLY OR MAINLY WORKS IN THE FEDERAL TERRITORY; AND
• THE WORKERS' DAY:

76. HOLIDAYS
PROVIDED THAT IF ANY OF THE SAID TEN GAZETTED PUBLIC
HOLIDAYS FALLS ON A REST DAY THE WORKING DAY FOLLOWING
IMMEDIATELY THEREAFTER SHALL BE A PAID HOLIDAY IN
SUBSTITUTION THEREFOR.

77. HOLIDAYS
THE EMPLOYER SHALL EXHIBIT CONSPICUOUSLY AT THE PLACE OF
EMPLOYMENT BEFORE THE COMMENCEMENT OF EACH CALENDAR
YEAR A NOTICE SPECIFYING THE REMAINING SIX GAZETTED PUBLIC
HOLIDAYS IN RESPECT OF WHICH HIS EMPLOYEES SHALL BE
ENTITLED TO PAID HOLIDAYS:

78. HOLIDAYS
PROVIDED THAT BY AGREEMENT BETWEEN THE EMPLOYER AND AN
EMPLOYEE ANY OTHER DAY OR DAYS MAY BE SUBSTITUTED FOR ONE
OR MORE OF THE SAID REMAINING SIX GAZETTED PUBLIC HOLIDAYS.

79. HOLIDAYS
WHERE ANY OF THE SAID TEN GAZETTED PUBLIC HOLIDAYS OR ANY OTHER
DAY SUBSTITUTED THEREFOR AS PROVIDED FALLS WITHIN THE PERIOD
DURING WHICH AN EMPLOYEE IS ON SICK LEAVE OR ANNUAL LEAVE TO
WHICH THE EMPLOYEE IS ENTITLED UNDER THIS ACT, OR FALLS DURING
THE PERIOD OF TEMPORARY DISABLEMENT UNDER THE WORKMEN'S
COMPENSATION ACT 1952, OR UNDER THE EMPLOYEES SOCIAL SECURITY
ACT 1969, THE EMPLOYER SHALL GRANT ANOTHER DAY AS A PAID HOLIDAY
IN SUBSTITUTION FOR SUCH PUBLIC HOLIDAY OR THE DAY SUBSTITUTED
THEREFOR.

80. HOLIDAYS
ANY EMPLOYEE WHO ABSENTS HIMSELF FROM WORK ON THE
WORKING DAY IMMEDIATELY PRECEDING OR IMMEDIATELY
SUCCEEDING A PUBLIC HOLIDAY OR TWO OR MORE CONSECUTIVE
PUBLIC HOLIDAYS OR ANY DAY OR DAYS SUBSTITUTED THEREFOR
UNDER THIS SECTION WITHOUT THE PRIOR CONSENT OF HIS
EMPLOYER SHALL NOT BE ENTITLED TO ANY HOLIDAY PAY FOR SUCH
HOLIDAY OR CONSECUTIVE HOLIDAYS UNLESS HE HAS A
REASONABLE EXCUSE FOR SUCH ABSENCE.

81. “SUDDEN” PUBLIC HOLIDAYS
THERE HAVE BEEN INSTANCES WHERE THE GOVERNMENT HAS
DECLARED A PUBLIC HOLIDAY WITHOUT MUCH NOTICE TO THE
PUBLIC. ONE EXAMPLE WAS IN 2010 WHEN THE GOVERNMENT
DECLARED A PUBLIC HOLIDAY UNDER THE HOLIDAYS ACT 1951
BECAUSE OF MALAYSIA’S VICTORY AT THE AFF SUZUKI CUP.

82. “SUDDEN” PUBLIC HOLIDAYS
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 DO NOT WANT TO
OBSERVE THIS PUBLIC HOLIDAY. THERE IS NO REQUIREMENT FOR
EMPLOYERS TO GET THE CONSENT OF EMPLOYEES TO MAKE THE
SUBSTITUTION.

83. HOSPITALISATION AND NON
HOSPITALISATION BENEFITS
MODULE 5

84. SICK LEAVE ENTITLEMENT
AN EMPLOYEE SHALL, AFTER EXAMINATION AT THE EXPENSE OF THE EMPLOYER --
• BY A REGISTERED MEDICAL PRACTITIONER DULY APPOINTED BY THE EMPLOYER; OR
• IF NO SUCH MEDICAL PRACTITIONER IS APPOINTED OR, IF HAVING REGARD TO THE
NATURE OR CIRCUMSTANCES OF THE ILLNESS, THE SERVICES OF THE MEDICAL
PRACTITIONER SO APPOINTED ARE NOT OBTAINABLE WITHIN A REASONABLE TIME OR
DISTANCE, BY ANY OTHER REGISTERED MEDICAL PRACTITIONER OR BY A MEDICAL
OFFICER,
BE ENTITLED TO PAID SICK LEAVE

85. SICK LEAVE @ ENTITLEMENT
IF THERE IS NO HOSPITALISATION, THE NUMBER OF DAYS OF SICK LEAVE SHALL BE
14 DAYS IN EACH CALENDAR YEAR IF THE EMPLOYEE HAS BEEN EMPLOYED FOR LESS
THAN 2 YEARS;
18 DAYS IN EACH CALENDAR YEAR IF THE EMPLOYEE HAS BEEN EMPLOYED FOR 2
YEARS OR MORE BUT LESS THAN 5 YEARS;
(22 DAYS IN EACH CALENDAR YEAR IF THE EMPLOYEE HAS BEEN EMPLOYED FOR 5
YEARS OR MORE

86. SICK LEAVE @ ENTITLEMENT
IF THERE IS HOSPITALISATION
60 DAYS IN EACH CALENDAR YEAR IF HOSPITALISATION IS
NECESSARY, AS MAY BE CERTIFIED BY SUCH REGISTERED MEDICAL
PRACTITIONER OR MEDICAL OFFICER

87. SICK LEAVE @ PENALTIES
AN EMPLOYEE WHO ABSENTS HIMSELF ON SICK LEAVE
WHICH IS NOT CERTIFIED BY A REGISTERED MEDICAL PRACTITIONER OR A MEDICAL OFFICER
OR A DENTAL SURGEON; OR
WHICH IS CERTIFIED BY SUCH REGISTERED MEDICAL PRACTITIONER OR MEDICAL OFFICER OR
DENTAL SURGEON, BUT WITHOUT INFORMING OR ATTEMPTING TO INFORM HIS EMPLOYER OF
SUCH SICK LEAVE WITHIN FORTY-EIGHT HOURS OF THE COMMENCEMENT THEREOF:
SHALL BE DEEMED TO ABSENT HIMSELF FROM WORK WITHOUT THE PERMISSION OF HIS
EMPLOYER AND WITHOUT REASONABLE EXCUSE FOR THE DAYS ON WHICH HE IS SO ABSENT
FROM WORK.

88. SICK LEAVE @ PAYMENT
THE EMPLOYER SHALL PAY THE EMPLOYEE HIS ORDINARY RATE OF
PAY FOR EVERY DAY OF SUCH SICK LEAVE, AND AN EMPLOYEE ON A
MONTHLY RATE OF PAY SHALL BE DEEMED TO HAVE RECEIVED HIS
SICK LEAVE PAY IF HE RECEIVES FROM HIS EMPLOYER HIS MONTHLY
WAGES FOR THE DAY OR DAYS ON WHICH HE IS ON SICK LEAVE.

89. SICK LEAVE @ UNPAID
NO EMPLOYEE SHALL BE ENTITLED TO PAID SICK LEAVE FOR THE
PERIOD DURING WHICH THE EMPLOYEE IS ENTITLED TO MATERNITY
ALLOWANCE UNDER PART IX, OR FOR ANY PERIOD DURING WHICH HE
IS RECEIVING ANY COMPENSATION FOR DISABLEMENT UNDER THE
WORKMEN'S COMPENSATION ACT 1952, OR ANY PERIODICAL
PAYMENTS FOR TEMPORARY DISABLEMENT UNDER THE EMPLOYEES
SOCIAL SECURITY ACT 1969.

90. PAID AND UNPAID MATERNITY
LEAVE
MODULE 6

91. MATERNITY LEAVE @ PAID
IF YOU HAVE WORKED FOR YOUR EMPLOYER FOR AT LEAST 90 DAYS
IN THE FOUR MONTHS BEFORE STARTING MATERNITY LEAVE. UNDER
THE 1955 EMPLOYMENT ACT, YOU ARE THEN ENTITLED TO AT LEAST
60 CONSECUTIVE DAYS OF MATERNITY LEAVE AT FULL PAY.

92. MATERNITY LEAVE @ UNPAID
A FEMALE EMPLOYEE SHALL NOT BE ENTITLED TO ANY MATERNITY
ALLOWANCE IF AT THE TIME OF HER CONFINEMENT SHE HAS FIVE OR
MORE SURVIVING CHILDREN.

93. MATERNITY LEAVE @ PUBLIC
HOLIDAY
IF YOU'RE TAKING YOUR MATERNITY LEAVE IN A CONTINUOUS
PERIOD, YOU AREN'T ENTITLED TO ADDITIONAL PAY FOR PUBLIC
HOLIDAYS. HOWEVER, IF YOU ARE ON UNPAID MATERNITY LEAVE,
YOU ARE ENTITLED TO PAID PUBLIC HOLIDAY DURING THIS PERIOD.

94. MATERNITY LEAVE @ CONTRACT
STAFF
UNDER THE LAW, EMPLOYEES ARE ENTITLED TO STATUTORY
BENEFITS, INCLUDING PAID MATERNITY LEAVE, WITHIN THEIR PERIOD
OF EMPLOYMENT.
IN ADDITION, THE EMPLOYMENT ACT PROHIBITS UNFAIR DISMISSAL AT
ANY STAGE OF PREGNANCY.

95. MATERNITY LEAVE @
COMMENCEMENT
FEMALE EMPLOYEES MAY COMMENCE THEIR MATERNITY LEAVE AT
ANY TIME AS LONG AS IT IS NOT EARLIER THAN 30 DAYS BEFORE
CONFINEMENT OR LATER THAN THE DAY IMMEDIATELY FOLLOWING
CONFINEMENT.
ABSENCE FROM WORK OUTSIDE OF THESE PERIODS WOULD NOT BE
TREATED AS MATERNITY LEAVE AND WOULD NOT ENTITLE THE
EMPLOYEE TO MATERNITY ALLOWANCE.

96. MATERNITY LEAVE @
COMMENCEMENT
HOWEVER, FEMALE EMPLOYEES MAY BE REQUIRED TO COMMENCE
THEIR MATERNITY LEAVE EARLIER (UP TO 14 DAYS BEFORE
CONFINEMENT) THAN THEIR PREFERRED DATE IF A MEDICAL OFFICER
DETERMINES THAT THEY ARE UNABLE PERFORM THEIR DUTIES
SATISFACTORILY AS A RESULT OF THEIR ADVANCED STATE OF
PREGNANCY.

97. MATERNITY LEAVE @
PROTECTION FROM DISMISSAL
IF A FEMALE EMPLOYEE REMAINS ABSENT FROM WORK AFTER SHE
HAS EXHAUSTED HER MATERNITY LEAVE DUE TO A PREGNANCY
RELATED ILLNESS (AS CERTIFIED BY A REGISTERED MEDICAL
PRACTITIONER), SHE SHALL BE PROTECTED FROM DISMISSAL FOR A
PERIOD OF UP TO 90 DAYS AFTER THE EXPIRATION OF HER
MATERNITY LEAVE.

98. WAGES AND SALARY
MODULE 7

99. wages - definition (section 2)
• BASIC WAGES AND ALL OTHER PAYMENTS IN CASH PAYABLE TO AN EMPLOYEE
FOR WORK DONE IN RESPECT OF HIS CONTRACT OF SERVICE BUT DOES NOT
INCLUDE
• BENEFITS - PETROL, HOUSING
• ALLOWANCE - TRAVELLING
• STATUTORY CONTRIBUTIONS - EPF, SOCSO
• BONUS

100. NON PAYMENT OF WAGES
• THE EA 1955 ALLOWS THE EMPLOYEE WHOSE INCOME IS RM
5,000.00 AND BELOW TO MAKE A CLAIM AT THE LABOUR
DEPARTMENT IF HE IS NOT PAID WAGES

101. MINIMUM WAGES
UNDER THE MINIMUM WAGES ORDER 2016, EFFECTIVE 1 JULY 2016,
THE MINIMUM WAGE IS RM1,000 A MONTH (PENINSULAR MALAYSIA)
AND RM920 A MONTH (EAST MALAYSIA AND LABUAN)

102. WAGE PERIOD
A CONTRACT OF SERVICE SHALL SPECIFY A WAGE PERIOD NOT
EXCEEDING ONE MONTH.
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.

103. WAGES @ PAYMENT PERIOD
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:

104. WAGES @ TERMINATION OF
SERVICE
WHERE AN EMPLOYER TERMINATE THE CONTRACT OF SERVICE OF AN
EMPLOYEE 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; AND

105. WAGES @ TERMINATION OF
SERVICE
• IN ADDITION, WHERE THE EMPLOYER TERMINATES THE
CONTRACT OF SERVICES UNDER SECTION 13 (1), THE INDEMNITY
PAYABLE TO THE EMPLOYEE UNDER THAT SUBSECTION, SHALL BE
PAID BY THE EMPLOYER TO THE EMPLOYEE NOT LATER THAN THE
DAY ON WHICH SUCH CONTRACT OF SERVICE IS SO TERMINATED

106. WAGES @ TERMINATION OF
SERVICE
WHERE AN EMPLOYEE TERMINATES HIS CONTRACT OF SERVICE WITH AN
EMPLOYER WITHOUT NOTICE IN ACCORDANCE WITH SECTION 13 (1) OR (2)
OR SECTION 14 (3), 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.

107. LIMITED ADVANCE TO
EMPLOYEES (SECTION 22)
NO EMPLOYER SHALL DURING ANY ONE MONTH MAKE TO AN EMPLOYEE AN ADVANCE OR
ADVANCES OF WAGES NOT ALREADY EARNED BY SUCH EMPLOYEE, UNLESS
TO PURCHASE A HOUSE OR TO BUILD OR IMPROVE A HOUSE
TO PURCHASE LAND
TO PURCHASE LIVESTOCK
TO PURCHASE A MOTORCAR, A MOTORCYCLE OR A BICYCLE
TO PURCHASE SHARES OF THE EMPLOYER'S BUSINESS OFFERED FOR SALE BY THE
EMPLOYER;

108. UNPAID WAGES @ JAIL /
COURT
ACCORDING TO SECTION 23 OF THE EMPLOYMENT ACT 1955
THIS BASICALLY MEANS, AN EMPLOYER WILL NOT HAVE TO PAY THE
WAGES OF AN EMPLOYEE WHO IS ABSENT FROM WORK DUE TO
BEING IMPRISONED OR BECAUSE HE/SHE IS REQUIRED TO ATTEND IN
COURT UNLESS IF IT IS ON BEHALF OF THE EMPLOYER.

109. WAGES @ LAWFUL
DEDUCTIONS
IT SHALL BE LAWFUL FOR AN EMPLOYER TO MAKE THE FOLLOWING DEDUCTIONS:
• DEDUCTIONS TO THE EXTENT OF ANY OVERPAYMENT OF WAGES MADE
DURING THE IMMEDIATELY PRECEDING THREE MONTHS FROM THE MONTH IN
WHICH DEDUCTIONS ARE TO BE MADE, BY THE EMPLOYER TO THE EMPLOYEE
BY THE EMPLOYER'S MISTAKE;
• DEDUCTIONS FOR THE INDEMNITY DUE TO THE EMPLOYER BY THE EMPLOYEE
UNDER SECTION 13 (1); (TERMINATION OF CONTRACT WITHOUT NOTICE)

110. WAGES @ LAWFUL
DEDUCTIONS
IT SHALL BE LAWFUL FOR AN EMPLOYER TO MAKE THE FOLLOWING
DEDUCTIONS:
• (DEDUCTIONS FOR THE RECOVERY OF ADVANCES OF WAGES
MADE UNDER SECTION 22 PROVIDED NO INTEREST IS CHARGED
ON THE ADVANCES; AND
• DEDUCTIONS AUTHORISED BY ANY OTHER WRITTEN LAW.

111. WAGES @ LAWFUL
DEDUCTIONS
THE FOLLOWING DEDUCTIONS SHALL ONLY BE MADE AT THE REQUEST IN WRITING OF
THE EMPLOYEE:
• DEDUCTIONS IN RESPECT OF THE PAYMENTS TO A REGISTERED TRADE UNION OR CO-
OPERATIVE THRIFT AND LOAN SOCIETY OF ANY SUM OF MONEY DUE TO THE TRADE
UNION OR SOCIETY BY THE EMPLOYEE ON ACCOUNT OF ENTRANCE FEES,
SUBSCRIPTIONS, INSTALMENTS AND INTEREST ON LOANS, OR OTHER DUES; AND
• DEDUCTIONS IN RESPECT OF PAYMENTS FOR ANY SHARES OF THE EMPLOYER'S
BUSINESS OFFERED FOR SALE BY THE EMPLOYER AND PURCHASED BY THE
EMPLOYEE.

112. WAGES @ LAWFUL
DEDUCTIONS
GENERALLY, AN EMPLOYER IS REQUIRED TO MAKE THE FOLLOWING
DEDUCTIONS FROM AN EMPLOYEE’S SALARY (IRRESPECTIVE OF WHETHER
THEY ARE AN EA EMPLOYEE OR A NON-EA EMPLOYEE):
• EMPLOYEE’S CONTRIBUTION TO EMPLOYEES PROVIDENT FUND (EPF)
• EMPLOYEE’S CONTRIBUTION TO SOCIAL SECURITY ORGANIZATION
(SOCSO)
• MONTHLY INCOME TAX DEDUCTION

113. WAGES @ LAWFUL
DEDUCTIONS
THE FOLLOWING DEDUCTIONS SHALL NOT BE MADE EXCEPT AT THE
REQUEST IN WRITING OF THE EMPLOYEE AND WITH THE PRIOR
PERMISSION IN WRITING OF THE DIRECTOR GENERAL:
• DEDUCTIONS IN RESPECT OF THE PAYMENTS INTO ANY
SUPERANNUATION SCHEME, PROVIDENT FUND, EMPLOYER'S
WELFARE SCHEME OR INSURANCE SCHEME ESTABLISHED FOR
THE BENEFIT OF THE EMPLOYEE

114. WAGES @ LAWFUL
DEDUCTIONS
THE FOLLOWING DEDUCTIONS SHALL NOT BE MADE EXCEPT AT THE
REQUEST IN WRITING OF THE EMPLOYEE AND WITH THE PRIOR
PERMISSION IN WRITING OF THE DIRECTOR GENERAL:
• DEDUCTIONS IN RESPECT OF REPAYMENTS OF ADVANCES OF
WAGES MADE TO AN EMPLOYEE UNDER SECTION 22 WHERE
INTEREST IS LEVIED ON THE ADVANCES AND DEDUCTIONS IN
RESPECT OF THE PAYMENTS OF THE INTEREST SO LEVIED;

115. WAGES @ LAWFUL
DEDUCTIONS
THE FOLLOWING DEDUCTIONS SHALL NOT BE MADE EXCEPT AT THE REQUEST
IN WRITING OF THE EMPLOYEE AND WITH THE PRIOR PERMISSION IN WRITING
OF THE DIRECTOR GENERAL:
• DEDUCTIONS IN RESPECT OF PAYMENTS TO A THIRD PARTY ON BEHALF OF
THE EMPLOYEE;
• DEDUCTIONS IN RESPECT OF PAYMENTS FOR THE PURCHASE BY THE
EMPLOYEE OF ANY GOODS OF THE EMPLOYER'S BUSINESS OFFERED FOR
SALE BY THE EMPLOYER; AND

116. WAGES @ LAWFUL
DEDUCTIONS
THE FOLLOWING DEDUCTIONS SHALL NOT BE MADE EXCEPT AT THE
REQUEST IN WRITING OF THE EMPLOYEE AND WITH THE PRIOR
PERMISSION IN WRITING OF THE DIRECTOR GENERAL:
• DEDUCTIONS IN RESPECT OF THE RENTAL FOR ACCOMMODATION
AND THE COST OF SERVICES, FOOD AND MEALS PROVIDED BY THE
EMPLOYER TO THE EMPLOYEE 'AT THE EMPLOYEE'S REQUEST OR
UNDER THE TERMS OF THE EMPLOYEE'S CONTRACT OF SERVICE.

117. WAGES @ LAWFUL
DEDUCTIONS
THE TOTAL OF ANY AMOUNTS DEDUCTED UNDER THIS SECTION FROM
THE WAGES OF AN EMPLOYEE IN RESPECT OF ANY ONE MONTH
SHALL NOT EXCEED FIFTY PER CENTUM OF THE WAGES EARNED BY
THAT EMPLOYEE IN THAT MONTH.

118. PRIORITY OF WAGES
• IF THE EMPLOYER IS FORCED BY COURT TO SELL OF PROPERTIES
AND ASSETS TO PAY DEBTS, EMPLOYEES WHO HAVE NOT BEEN
PAID THEIR WAGES RECEIVE PRIORITIES OVER ALL DEBTORS BUT
THEY CAN ONLY CLAIM A MAXIMUM OF 4 MONTHS WAGES

119. DISCIPLINARY PROCEDURE
AND ACTION
MODULE 8

120. THE MEANING OF EMPLOYEE
MISCONDUCT
ANY CONDUCT ON THE PART OF EMPLOYEE WHICH IS INCONSISTENT
WITH THE FAITHFUL DISCHARGE OF HIS DUTIES, OR ANY BREACH OF
THE EXPRESS OR IMPLIED DUTIES OF AN EMPLOYEE TOWARDS HIS
EMPLOYER.
IT IS ALSO KNOWN AS A FORM OF IMPROPER BEHAVIOUR OR AN
INTENTIONAL WRONGDOING OR A DELIBERATE VIOLATION OF A RULE
OR STANDARD OF BEHAVIOUR.

121. EA 1955 (SECTION 14)
S14 OF THE EMPLOYMENT ACT 1955 PROVIDES THAT AN EMPLOYER
MAY PUNISH AN EMPLOYEE ON GROUNDS OF MISCONDUCT AFTER
DUE INQUIRY. DUE INQUIRY HERE MEANS THE COMPANY MUST
INVESTIGATE THE CASE AND PROVIDE THE EMPLOYEE AN
OPPORTUNITY TO DEFEND HIMSELF BEFORE AN INDEPENDENT PANEL
BEFORE JUDGMENT IS PUT ON HIM.

122. EA 1955 (SECTION 14)
S14 GOES ON TO PROVIDE THAT WHILE INVESTIGATING A MATTER,
THE COMPANY HAS THE RIGHT TO SUSPEND AN EMPLOYEE FROM
WORK IF HIS PRESENCE AT THE WORKPLACE WOULD AFFECT
INVESTIGATIONS, I.E. BY TEMPERING WITH EVIDENCE OR BY
THREATENING WITNESSES, ETC.

123. DEALING WITH MISCONDUCT
AN EMPLOYER WHO CONTINUES TO KEEP AN EMPLOYEE IN
EMPLOYMENT WITH FULL KNOWLEDGE THAT THE EMPLOYEE HAS
COMMITTED A BREACH OF DUTY/MISCONDUCT CONDONES THE
BREACH, AND SUCH WAIVER OF RETROACTIVE PERMISSION
PREVENTS THE EMPLOYER FROM LATER PUNISHING THE EMPLOYEE
FOR IT
EMPLOYERS ARE ENCOURAGED TO BE TACTFUL AND ALWAYS HAVE
DOCUMENT TRAILS IN EVERY SINGLE MATTER

124. MAJOR & MINOR MISCONDUCT
THERE IS NO HARD AND FAST RULE ON WHAT CONSTITUTES MAJOR
MISCONDUCT OR MINOR MISCONDUCT. THE EMPLOYMENT ACT 1955
DOES NOT MAKE REFERENCE TO THE WORDS MAJOR AND MINOR.
COMPANIES GENERALLY LIKE TO DIFFERENTIATE MAJOR AND MINOR
MISCONDUCT BY IDENTIFYING DIFFERENT TYPES OF PUNISHMENTS
FOR BOTH CATEGORIES OF MISCONDUCT.

125. MAJOR & MINOR MISCONDUCT
N FACT, THE LIST OF MINOR AND MAJOR MISCONDUCT IS SUBJECTIVE
AND MIGHT VARY DEPENDING ON THE NATURE OF EACH BUSINESS.
FOR EXAMPLE, THE ACT OF SMOKING MIGHT NOT BE A MAJOR
MISCONDUCT IN A LEGAL FIRM BUT IT MIGHT BE DEEMED AS MAJOR
MISCONDUCT IN AN OIL AND GAS PLANT.

126. MAJOR & MINOR MISCONDUCT
MISCONDUCT THAT IS SERIOUS ENOUGH TO WARRANT TERMINATION
AS MAJOR MISCONDUCT AND THE OTHERS AS MINOR MISCONDUCT.
HOWEVER, AN EMPLOYEE WHO HABITUALLY COMMITS ACTS OF
MINOR MISCONDUCT WILL BE DEEMED TO HAVE COMMITTED A MAJOR
ACT OF MISCONDUCT. I.E. LATE-COMING IS MINOR MISCONDUCT BUT
HABITUAL LATE-COMING WOULD THEN BE MAJOR MISCONDUCT.

127. TERMINATION FOR MISCONDUCT
EXAMPLES OF GROUNDS FOR TERMINATION WOULD INCLUDE
MISCONDUCT, POOR PERFORMANCE, REDUNDANCY, ETC.
S20 OF THE INDUSTRIAL RELATIONS ACT 1967 PROVIDES THAT ANY
EMPLOYEE WHO FEELS THAT HE HAS BEEN DISMISSED WITHOUT JUST
CAUSE AND EXCUSE MAY FILE AN ACTION FOR REINSTATEMENT AT
THE IR DEPT.

128. TERMINATION FOR MISCONDUCT
IN MATTERS CONCERNING EMPLOYEE MISCONDUCT, IT IS WELL
SETTLED THAT DUE PROCESS MUST BE FOLLOWED, I.E. THE
ADHERENCE TO THE PRINCIPLES OF NATURAL JUSTICE. IN SIMPLE
TERMS, THE EMPLOYEE MUST BE GIVEN AN OPPORTUNITY TO
DEFEND HIS CASE BEFORE AN INDEPENDENT PANEL.

129. SHOW CAUSE LETTERS
THE FIRST STEP TO THIS IS THE ISSUANCE OF A SHOW CAUSE
LETTER. IF ADMISSION IS OBTAINED, THERE IS NO NEED TO PROCEED
FURTHER BUT IF THE EMPLOYEE DENIES THE CHARGES METED OUT
AGAINST HIM, THEN THE EMPLOYER WILL HAVE TO INVESTIGATE
FURTHER THROUGH A DOMESTIC INQUIRY.

130. ACTION ON GUILTY EMPLOYEE
ONCE THAT IS DONE AND IF THE EMPLOYEE IS SUBSEQUENTLY
FOUND GUILTY, PUNISHMENTS MAY THEN BE IMPOSED AND THE
NATURE OF PUNISHMENTS VARIES ACCORDING TO THE SEVERITY OF
MISCONDUCT COMMITTED.

131. SHOW CAUSE LETTER
IT IS ALRIGHT IF THE EMPLOYEE REFUSES TO SIGN THE SHOW CAUSE
LETTER. HAVE SOMEONE TO ACCOMPANY YOU DURING THE DELIVERY
PROCESS SO THIS PERSON CAN SIGN OFF AS A WITNESS THAT THIS
LETTER WAS SERVED ON THE EMPLOYEE. TO TAKE IT ONE STEP
FURTHER, THE LETTER CAN THEREAFTER BE COURIERED TO THE
EMPLOYEE’S RESIDENCE, IN WHICH CASE THE SLIP CAN BE USED AS
PROOF OF RECEIPT.

132. SHOW CAUSE LETTER
ALSO, MAKE SURE THAT YOUR SHOW CAUSE LETTER WOULD COVER
FOR A SITUATION WHERE THE EMPLOYEE FAILS TO REPLY THE
LETTER WITHIN THE STIPULATED TIME. FAILURE TO REPLY SHOULD
ALLOW YOU TO PROCEED WITH PUNISHMENTS ON THE ASSUMPTION
THAT NO EXPLANATION COULD BE OFFERED.

133. SUSPENSION FOR MISCONDUCT
N EMPLOYEE MAY BE SUSPENDED FOR A MAXIMUM OF 14 DAYS ON
HALF PAY. ANY SUBSEQUENT EXTENSION OF THE SUSPENSION
PERIOD SHALL BE ON FULL PAY.
HOWEVER, IF THE EMPLOYEE IS FOUND NOT GUILTY, THE 14 DAYS
HELD DURING THE FIRST PERIOD OF SUSPENSION WILL HAVE TO BE
REINSTATED IN FULL.

134. PUNISHMENT CONSIDERATIONS
BEFORE DECIDING ON PUNISHMENTS, EMPLOYERS SHOULD TAKE
INTO ACCOUNT PAST RECORDS, PERFORMANCE INDICATORS, YEARS
OF SERVICE, GENERAL BEHAVIOUR OF AN EMPLOYEE, LEVEL OF
SENIORITY, ETC.
THESE ARE MITIGATING FACTORS THAT SHOULD BE TAKEN INTO
ACCOUNT BEFORE PUNISHING AN EMPLOYEE.

135. NOTICE OF TERMINATION FOR
MISCONDUCT
ONCE AN EMPLOYEE IS FOUND GUILTY OF MISCONDUCT AND THE
COMPANY DECIDES TO PUNISH AN EMPLOYEE, HE IS NOT ENTITLED
TO NOTICE AND CAN BE TERMINATED IMMEDIATELY.
ANY ANNUAL LEAVE NOT UTILISED WILL ALSO BE FORFEITED.

136. PAYMENT FOR UNFAIR
DISMISSAL
THE PROBATIONER SHALL BE ENTITLED TO ANY BACK WAGES, WHICH
SHALL NOT EXCEED TWELVE MONTHS’ BACK WAGES FROM THE DATE
OF DISMISSAL AS PER THE SALARY GIVEN.
WHEN A CONFIRMED EMPLOYEE IS UNFAIRLY DISMISSED, THE
ENTITLEMENT TO ANY BACK WAGES WOULD BE BASED ON THE
NUMBER OF YEARS THEY HAVE SERVED THE COMPANY.

137. SEXUAL HARASSMENT
MODULE 9

138. EA 1955 - SECTION 15A
SEXUAL HARASSMENT. MEANS ANY COMPLAINT RELATING TO SEXUAL
HARASSMENT MADE—
BY AN EMPLOYEE AGAINST ANOTHER EMPLOYEE;
BY AN EMPLOYEE AGAINST ANY EMPLOYER; OR
BY AN EMPLOYER AGAINST AN EMPLOYEE.

139. SEXUAL HARASSMENT INQUIRIES
UPON RECEIPT OF A COMPLAINT OF SEXUAL HARASSMENT, AN
EMPLOYER OR ANY CLASS OF EMPLOYERS SHALL INQUIRE INTO THE
COMPLAINT IN A MANNER PRESCRIBED BY THE MINISTER.

140. SEXUAL HARASSMENT INQUIRIES
WHERE AN EMPLOYER REFUSES TO INQUIRE INTO THE COMPLAINT OF
SEXUAL HARASSMENT AS REQUIRED UNDER EA 1955, HE SHALL, AS
SOON AS PRACTICABLE BUT IN ANY CASE NOT LATER THAN THIRTY
DAYS AFTER THE DATE OF THE RECEIPT OF THE COMPLAINT, INFORM
THE COMPLAINANT OF THE REFUSAL AND THE REASONS FOR THE
REFUSAL IN WRITING.

141. SEXUAL HARASSMENT INQUIRIES
AN EMPLOYER MAY REFUSE TO INQUIRE INTO ANY COMPLAINT OF
SEXUAL HARASSMENT AS REQUIRED IF—
THE COMPLAINT OF SEXUAL HARASSMENT HAS PREVIOUSLY BEEN
INQUIRED INTO AND NO SEXUAL HARASSMENT HAS BEEN PROVEN; OR

142. SEXUAL HARASSMENT INQUIRIES
THE EMPLOYER IS OF THE OPINION THAT THE COMPLAINT OF SEXUAL
HARASSMENT IS FRIVOLOUS, VEXATIOUS OR IS NOT MADE IN GOOD
FAITH.
ANY COMPLAINANT WHO IS DISSATISFIED WITH THE REFUSAL OF THE
EMPLOYER TO INQUIRE INTO HIS COMPLAINT OF SEXUAL
HARASSMENT, MAY REFER THE MATTER TO THE DIRECTOR GENERAL.

143. SEXUAL HARASSMENT INQUIRIES
THE DIRECTOR GENERAL AFTER REVIEWING THE MATTER REFERRED
TO HIM:
IF HE THINKS THE MATTER SHOULD BE INQUIRED INTO, DIRECT THE
EMPLOYER TO CONDUCT AN INQUIRY; OR
IF HE AGREES WITH THE DECISION OF THE EMPLOYER NOT TO
CONDUCT THE INQUIRY, INFORM THE PERSON WHO REFERRED THE
MATTER TO HIM THAT NO FURTHER ACTION WILL BE TAKEN.

144. SEXUAL HARASSMENT
FINDINGS BY THE EMPLOYER
WHERE THE EMPLOYER CONDUCTS AN INQUIRY INTO A COMPLAINT
OF SEXUAL HARASSMENT RECEIVED UNDER SUBSECTION 81B(1) AND
THE EMPLOYER IS SATISFIED THAT SEXUAL HARASSMENT IS PROVEN,
THE EMPLOYER SHALL—
IN THE CASE WHERE THE PERSON AGAINST WHOM THE COMPLAINT
OF SEXUAL HARASSMENT IS MADE IS AN EMPLOYEE, TAKE
DISCIPLINARY ACTION WHICH MAY INCLUDE THE FOLLOWING:

145. SEXUAL HARASSMENT
FINDINGS BY THE EMPLOYER
DISMISSING THE EMPLOYEE WITHOUT NOTICE;
DOWNGRADING THE EMPLOYEE; OR
IMPOSING ANY OTHER LESSER PUNISHMENT AS HE DEEMS JUST AND
FIT, AND WHERE THE PUNISHMENT OF SUSPENSION WITHOUT WAGES
IS IMPOSED, IT SHALL NOT EXCEED A PERIOD OF TWO WEEKS; AND

146. SEXUAL HARASSMENT
FINDINGS BY THE EMPLOYER
IN THE CASE WHERE THE PERSON AGAINST WHOM THE COMPLAINT
OF SEXUAL HARASSMENT IS MADE IS A PERSON OTHER THAN AN
EMPLOYEE, RECOMMEND THAT THE PERSON BE BROUGHT BEFORE
AN APPROPRIATE DISCIPLINARY AUTHORITY TO WHICH THE PERSON
IS SUBJECT TO.

147. SEXUAL HARASSMENT
PENALTIES
IF ANY EMPLOYER WHO FAILS—
TO INQUIRE INTO COMPLAINTS OF SEXUAL HARASSMENT
TO INFORM THE COMPLAINANT OF THE REFUSAL AND THE REASONS
FOR THE REFUSAL AS REQUIRED

148. SEXUAL HARASSMENT
PENALTIES
TO INQUIRE INTO COMPLAINTS OF SEXUAL HARASSMENT WHEN
DIRECTED TO DO SO BY THE DIRECTOR GENERAL OR TO SUBMIT A
REPORT OF INQUIRY INTO SEXUAL HARASSMENT TO THE DIRECTOR
GENERAL UNDER SUBSECTION
COMMITS AN OFFENCE AND SHALL, ON CONVICTION, BE LIABLE TO A
FINE NOT EXCEEDING TEN THOUSAND RINGGIT.

149. RETRENCHMENT BENEFITS
MODULE 10

150. RETRENCHMENT AND
REDUNDANCY
RETRENCHMENT IS A FORM OF DISMISSAL THAT IS JUSTIFIED ON THE BASIS
THAT THE ROLES OF THE EMPLOYEES CONCERNED HAVE BECOME
REDUNDANT.
PROOF OF REDUNDANCY, THAT IS, SURPLUS OF LABOUR, IS REQUIRED FOR A
RETRENCHMENT EXERCISE TO BE VALID. REDUNDANCY CAN ARISE IN MANY
SITUATIONS
EXAMPLES INCLUDE CESSATION OF JOB FUNCTIONS, MERGER OF WORK UNITS
AND DISCONTINUATION OF PRODUCTION LINE.

151. RETRENCHMENT AND
REDUNDANCY
PUT IN ANOTHER WAY, REDUNDANCY IS A SITUATION WHERE THE
EMPLOYEE OR POSITION IS NO LONGER REQUIRED. RETRENCHMENT
IS THE ACTION TAKEN TO TERMINATE THE EMPLOYMENT
RELATIONSHIP IN THE EVENT OF REDUNDANCY.

152. SITUATION FOR RETRENCHMENT
COMPANIES THAT ARE SUFFERING LOSSES MAY DECIDE ON A
BUSINESS STRATEGY TO MINIMISE THE IMPACT OF POOR ECONOMIC
CONDITIONS, FOR EXAMPLE TERMINATING SOME EMPLOYEES AND
OUTSOURCING THOSE JOB FUNCTIONS TO THIRD PARTIES IN ORDER
TO REDUCE COSTS.

153. RETRENCHMENT @
JUSTIFICATION
THE BURDEN OF PROVING THAT THE RETRENCHMENT WAS BONA
FIDE LIES ON THE EMPLOYER, AND IT IS NOT ON THE EMPLOYEE TO
SHOW THAT THE RETRENCHMENT WAS UNFAIR.

154. CODE OF CONDUCT FOR
INDUSTRIAL HARMONY
THE CODE CONTAINS SUGGESTED CRITERIA FOR EMPLOYERS TO
CONSIDER WHEN SELECTING EMPLOYEES TO RETRENCH. THIS INCLUDES:
• ABILITY
• EXPERIENCE
• SKILL AND OCCUPATION QUALIFICATIONS
• AGE

155. CODE OF CONDUCT FOR
INDUSTRIAL HARMONY
THE CODE CONTAINS SUGGESTED CRITERIA FOR EMPLOYERS TO
CONSIDER WHEN SELECTING EMPLOYEES TO RETRENCH. THIS
INCLUDES:
• FAMILY SITUATION
• LENGTH OF SERVICE
• STATUS (NON-CITIZENS, CASUAL, TEMPORARY, PERMANENT).

156. CODE OF CONDUCT FOR
INDUSTRIAL HARMONY
A COMMON INDUSTRIAL PRACTICE IS ALSO TO RETRENCH
EMPLOYEES BASED ON THE LIFO PRINCIPLE, IE “LAST IN, FIRST OUT”,
WHEREBY THE MOST JUNIOR EMPLOYEE (MEASURED IN TERMS OF
LENGTH OF SERVICE) IN A PARTICULAR CATEGORY IS SELECTED FOR
RETRENCHMENT.

157. CODE OF CONDUCT FOR
INDUSTRIAL HARMONY
IT IS NOT MANDATORY FOR EMPLOYERS TO USE THE LIFO PRINCIPLE,
ALTHOUGH IT IS RECOGNISED AS ONE OF THE MORE OBJECTIVE
MEANS OF SELECTION
IN CASES WHERE THERE ARE FOREIGN WORKERS OCCUPYING POSTS
SIMILAR TO THAT OF LOCAL EMPLOYEES, THE EMPLOYMENT ACT 1955
REQUIRES THAT THE SERVICES OF FOREIGN WORKERS BE
TERMINATED FIRST.

158. NOTIFICATION TO THE
AUTHORITIES
EMPLOYERS ARE REQUIRED TO SUBMIT AN EMPLOYMENT
NOTIFICATION RETRENCHMENT FORM (PK FORM) TO ANY LABOUR
OFFICE, FAILURE OF WHICH CARRIES A PUNISHMENT OF A FINE OF
RM10,000.00.
*PK FORM (RETRENCHMENT/VSS/TEMPORARY LAY OFF & SALARY
DEDUCTION FORM)

159. NOTIFICATION TO THE
AUTHORITIES
EMPLOYERS ARE REQUIRED TO DISCLOSE INFORMATION SUCH AS
THE REASONS FOR THE RETRENCHMENT, NUMBER OF WORKFORCE,
NUMBER OF WORKERS INVOLVED IN VOLUNTARY SEPARATION
SCHEME, ETC.

160. NOTIFICATION TO THE
AUTHORITIES
THE PK FORM IS A NOTIFICATION REQUIREMENT, AND IS NOT A
REQUEST FOR APPROVAL. AS SUCH, EMPLOYERS DO NOT NEED
APPROVAL FROM THE LABOUR OFFICE BEFORE THEY CAN CONDUCT
RETRENCHMENT EXERCISES.

161. RETRENCHMENT BENEFITS
THESE PROVISIONS ARE ONLY APPLICABLE TO EMPLOYEES COMING
WITHIN THE PURVIEW OF THE EMPLOYMENT ACT 1955, EG:
EMPLOYEES WHOSE SALARY DO NOT EXCEED RM2,000 A MONTH OR
WHO ARE ENGAGED IN MANUAL LABOUR
FOR EMPLOYEES NOT COVERED UNDER THE EMPLOYMENT ACT 1955,
THEIR TERMINATION BENEFITS WOULD DEPEND ON THE TERMS OF
THEIR CONTRACT.

162. RETRENCHMENT BENEFITS
LENGTH OF SERVICE TERMINATION BENEFITS
LESS THAN 2 YEARS
10 DAYS WAGES FOR EVERY YEAR OF
SERVICE
MORE THAN 2 YEARS, LESS THAN 5
YEARS
15 DAYS WAGES FOR EVERY YEAR OF
SERVICE
5 YEARS OR MORE
20 DAYS WAGES FOR EVERY YEAR OF
SERVICE

163. RETRENCHMENT BENEFITS NOT
APPLICABLE IN SITUATIONS
DURING ACQUISITIONS, EMPLOYEES MAY BE “TRANSFERRED” TO THE
ACQUIRING COMPANY FOR REORGANISATION REASONS. FROM A
LEGAL PERSPECTIVE, THIS INVOLVES TERMINATING THE EXISTING
EMPLOYMENT CONTRACT WITH THE TARGET COMPANY AND HAVING
A NEW JOB OFFER EXTENDED FROM THE ACQUIRER. IN SUCH
SITUATIONS, EMPLOYEES ARE NOT ENTITLED TO TERMINATION
BENEFITS IF:

164. RETRENCHMENT BENEFITS NOT
APPLICABLE IN SITUATIONS
• THE ACQUIRER OFFERS TO CONTINUE TO EMPLOY THE
EMPLOYEE UNDER TERMS AND CONDITIONS OF EMPLOYMENT
NOT LESS FAVOURABLE THAN THEIR EXISTING CONTRACT WITH
THE TARGET COMPANY; AND
• THE EMPLOYEE UNREASONABLY REFUSES THE OFFER

165. CHALLENGING THE
RETRENCHMENT EXERCISE
IN THE ABSENCE OF A VALID JUSTIFICATION FOR THE
RETRENCHMENT EXERCISE, THE TERMINATION MAY AMOUNT TO
DISMISSAL WITHOUT JUST CAUSE AND EXCUSE ENTITLING
EMPLOYEES TO REMEDIES SUCH AS BACK WAGES, REINSTATEMENT
AND/OR COMPENSATION IN LIEU OF REINSTATEMENT.

166. CHALLENGING THE
RETRENCHMENT EXERCISE
AN EMPLOYEE WHO BELIEVES THEY HAVE BEEN UNFAIRLY
RETRENCHED MUST LODGE A COMPLAINT WITH THE DIRECTOR
GENERAL OF INDUSTRIAL RELATIONS WITHIN 60 DAYS FROM THE
DATE OF THE DISMISSAL.

167. CHALLENGING THE
RETRENCHMENT EXERCISE
IF PARTIES ARE UNABLE TO SETTLE THEIR DISPUTE DURING THE
CONCILIATION MEETING ORDERED BY THE DEPARTMENT OF
INDUSTRIAL RELATIONS, THE MINISTER OF HUMAN RESOURCES MAY
REFER THE MATTER TO THE INDUSTRIAL COURT FOR ADJUDICATION.

168. BEST PRACTICES FOR RETRENCHMENT
BASED ON CODE ON CONDUCT FOR INDUSTRIAL HARMONY
FIRSTLY, CONSIDER WHETHER THERE ARE OTHER ALTERNATIVES
FOR COST-CUTTING, AS OPPOSED TO RETRENCHMENT, EG:
• LIMITATION OF RECRUITMENT (HEAD COUNT FREEZE)
• RESTRICTION OF OVERTIME WORK
• REDUCTION IN SHIFTS WORKED

169. BEST PRACTICES FOR RETRENCHMENT
BASED ON CODE ON CONDUCT FOR INDUSTRIAL HARMONY
FIRSTLY, CONSIDER WHETHER THERE ARE OTHER ALTERNATIVES
FOR COST-CUTTING, AS OPPOSED TO RETRENCHMENT, EG:
• REDUCTION IN NUMBER OF HOURS WORKED
• RETRAINING AND/OR TRANSFERRING TO OTHER DEPARTMENTS
OR SUBSIDIARIES WITHIN THE ORGANISATION

170. BEST PRACTICES FOR RETRENCHMENT
BASED ON CODE ON CONDUCT FOR INDUSTRIAL HARMONY
• GIVING AS EARLY WARNING, AS PRACTICABLE, TO THE WORKERS
CONCERNED
• INTRODUCING SCHEMES FOR VOLUNTARY RETRENCHMENT AND
RETIREMENT (EG: VSS)
• RETIRING WORKERS WHO ARE BEYOND THE RETIREMENT AGE
FIRST

171. BEST PRACTICES FOR RETRENCHMENT
BASED ON CODE ON CONDUCT FOR INDUSTRIAL HARMONY
• PROVIDE PAYMENT OF REDUNDANCY AND/OR RETIREMENT BENEFITS
• HAVING A (WELL DOCUMENTED) OBJECTIVE SELECTION CRITERIA
• SPREADING TERMINATION OF EMPLOYEES OVER A LONGER PERIOD
• CONSIDER OTHER ALTERNATIVES TO RETRENCHMENT SUCH RE-
TRAINING AND/OR TRANSFERRING THE EMPLOYEE TO OTHER
DEPARTMENTS / SUBSIDIARIES WITHIN THE ORGANISATION, TEMPORARY
REDUCTION OF WORKING HOURS; ETC

172. BEST PRACTICES FOR RETRENCHMENT
BASED ON CODE ON CONDUCT FOR INDUSTRIAL HARMONY
ADOPTING BEST PRACTICES IS NOT JUST TO PRE-EMPT THE
LIKELIHOOD OF THE EXERCISE BEING SUCCESSFULLY CHALLENGED
IN COURT BUT TO ALSO ENSURE THAT EMPLOYERS ADOPT POLICIES
THAT ARE IN ACCORDANCE WITH FAIR AND EQUITABLE LABOUR
PRACTICE.

173. applied knowledge is power