Employment Law in Malaysia

By Dymphna Lanjuran
DL@fcl-co.com www.dymphna.me www.twitter.com/EmploymentLaw_

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Agenda

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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

Introduction

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Employment Law in Malaysia

STATUTES

Employment Act 1956 Monthly salary RM1,500 and below Manual Labour Domestic servants Industrial Relations Act 1976 Remedy - Reinstatement Industrial Court
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Employment Law in Malaysia

STATUTES

Employees Provident Fund Act Applies to all employees of Malaysian employers Employees' Social Security Act, 1969 SOCSO Workmen's Compensation Act 1952

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Termination of Employment

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Termination of Employment
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
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Termination of Employment: Misconduct

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Termination of Employment
Ground - Misconduct

Case: Hyatt Regency Saujana v Kananathan SG Ramu [2004] 3 ILR 391 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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Termination of Employment
Ground - Misconduct

Case: Southern Bank Berhad v Azmi Ali [2003] 1 ILR 614 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.
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Termination of Employment
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.

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Termination of Employment: Poor Performance

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Termination of Employment
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 . 13

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Termination of Employment
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. 14

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Termination of Employment
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...
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Termination of Employment
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.

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Termination of Employment
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. 17

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Termination of Employment: Redundancy & Retrenchment

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Termination of Employment
Ground Redundancy & Retrenchment Case: William Jacks & Co (M) Sdn Bhd v S Balasingam [1997] 3 CLJ 235 (Court of Appeal) 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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Termination of Employment
Ground Redundancy & Retrenchment Case: Musnita Mustafa v Weatherford Solutions Sdn Bhd [2012] 3 ILR 350 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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Termination of Employment
Ground Redundancy & Retrenchment Case: Musnita Mustafa v Weatherford Solutions Sdn Bhd [2012] 3 ILR 350 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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Termination of Employment: Mutual Termination/Cessation

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Termination of Employment
Ground Mutual Termination/Cessation Case: Timber Master Trading (M) Sdn Bhd v Jane Wang Sing Fang [1994] 2 ILR 1293 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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Termination of Employment vs Constructive Dismissal

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Termination of Employment
Employer terminates employment of an employee There exist a Letter of Termination Ind Ct: Burden on employer to show just cause or excuse

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)

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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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Post Termination

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Remedy Sought: Reinstatement OR Wages ($$$)

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Post Termination
Remedy sought: Reinstatement Industrial Court Remedy sought: Wages or any other Payment in Cash Labour Court

Representation / Complaint - 60 days rule 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 Officers Report Ministers decision (subject to JR) Industrial Court

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Post Termination
PROCEDURES - Documents Industrial Court Form A & B Statement of Case Statement in Reply Bundle of documents Witness Statements Labour Court

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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

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Post Termination
PROCEDURES Industrial Court a) Trial procedures Burden of proof Procedures Submissions b) Award (subject to JR) c) Non compliance Labour Court

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a) Trial procedures Burden of proofs Procedures Submissions

b) Order (subject to appeal) c) Enforcement/NonCompliance

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Challenging the Decision (Judicial Review/Appeal)

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Challenging the Decision

REVIEW/APPEAL Industrial Court/ Ministers Reference Order 53 RHC review on procedures not on merits Labour 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

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S. 77 EA procedure in a civil appeal from Sessions Court Notice of Appeal Memorandum of Appeal Record of Appeal Written Submissions Hearing
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New Statutes

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New Statutes

Minimum Wages Order 2012 (Perintah Gaji Minimum 2012) Minimum Retirement Age Bill 2012

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Minimum Wages Order 2012 (Perintah Gaji Minimum 2012)

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New Statute Minimum 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 Statute Minimum 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 Statute Minimum Wages Order 2012

Minimum Wages Rates:
Regional areas Peninsular Malaysia Sabah, Sarawak and FT Labuan Monthly (RM) 900 800 Hourly (RM) 4.33 3.85

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New Statute Minimum Wages Order 2012

Probationers Minimum 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-theminimum-wages-order-2012/
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Minimum Retirement Age Bill 2012

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New Statute Minimum 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 grounds
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New Statute Minimum 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 Statute Minimum Retirement Age Bill 2012

No date of coming to force yet. The essence of this Bill is to make retirement age of private sectors 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-agebill-2012-gives-power-of-reinstatement-to-the-labour-officers/
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Foong Cheng Leong & Co Registered Trade Mark, Patent & Industrial Design Agent B-5-8 Plaza Mont Kiara, Mont Kiara, 50480 Kuala Lumpur, Malaysia TEL EMAIL +60379879495 mail@fcl-co.com FAX WEBSITE +60320349495 www.fcl-co.com

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Thank you
Dymphna Lanjuran
DL@fcl-co.com www.dymphna.me www.twitter.com/EmploymentLaw_