Chapter 2 - The Employment Act and Related Acts

MALAYSIAN INDUSTRIAL
RELATIONS & EMPLOYMENT LAW,

Ninth Edition
Author: Maimunah Aminuddin
Chapter Two
The Employment Act
and Related Acts
Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 1

Employment Law Education (Asia). All rights reserved.
Preview
Defining who is an employee
Types of employment contract
Terms and conditions of employment
Common express terms
Implied terms
Provisions of the Employment Act
Provisions of the Children & Young Persons
(Employment) Act
Employees receive protection from
employment laws
Employees are employed under a contract
of employment, aka contract of service.
Self-employed persons are not within the

scope of most employment laws.

Tests to determine whether a worker
is an employee or not
The Control Test is the most commonly
applied test. Questions asked by the courts
include:
How much control is imposed by the
employer on the worker?
Who provides the tools, raw materials and
equipment needed to do the work?
How is payment made?
Tests to determine whether a worker
is an employee or not, cont.
Are contributions made to statutory funds
such as EPF & SOCSO?
Is there a written contract, and if so, what

are its terms?
Is the worker required to comply with

organisational rules?

Contracts of employment
A contract of employment can be:
Temporary or for an indefinite period

(permanent)
Part-time or full-time

Terms and conditions of
employment
Express terms & conditions of
employment are usually written into:
a letter of appointment;
a company handbook; or
a collective agreement.

Common express terms & conditions
Job title Wages, allowances,
bonus
Working hours Holiday and leave
entitlements
Other benefits Probationary period
Notice period Retirement age

prior to
termination of
contract
Common express terms &
conditions, cont.
Requirement of confidentiality
Requirement to give exclusive service
Transfer
Requirement to comply with company rules

Terms and conditions of service
Implied terms = obvious terms that courts assume
exist in every employment contract, including:
Employees obligation to work:

with due care
obediently
faithfully
Employers obligation to:

Provide safe work
Maintain a relationship of mutual respect
Terms and Conditions of Service,
cont.
Terms and conditions must comply with the
relevant employment laws.
Terms and conditions can only be changed
by mutual consent between employer and
employee.

The Employment Act
Coverage of Act
Employees earning not more than RM2,000
per month who:
work in the private sector, and
work in Peninsular Malaysia.

The Employment Act, cont.
Exceptions to RM2,000 Wage Ceiling
1. Employees engaged as manual workers
2. Supervisors of manual workers
3. Employees who operate or maintain a
vehicle for transport of passengers or
goods
4. Domestic servants

The Employment Act, cont.
Domestic Servants are NOT entitled to
the minimum benefits provided for
under the Act.

Sabah & Sarawak
Employees working in Sabah or
Sarawak are protected by the:
Sabah Labour Ordinance, or the
Sarawak Labour Ordinance.
The contents of the SLOs are similar to the

Employment Act.
The Employment Act - wages
Wages are defined as basic wages and all
other payments due under the contract of
service, but excluding:
Annual bonus Overtime payment
Commissions Subsistence allowance
Travelling
allowance
The Employment Act wages, cont.
Advances on wages limited to one
months wage unless for purpose of:
Buying land or house, or renovating a house
Buying a bicycle or car
Buying a computer
Buying shares in employers business
Payment of medical expenses
Payment of education expenses
Any other purpose, requires permission from
DG of Labour.
Wages must be paid at least once a month.
Wages must be paid by direct credit to a
bank account.

Deduction from wages strictly
controlled.
Deductions only possible without
permission from employee for:
1. Recovery of overpaid wages
2. Payments to agencies as required by law
3. Recovery of advance where no interest
imposed

Non-payment of wages
Employees earning up to RM5,000 pm who do
not receive their wages or other payments
due, can lodge a complaint at the Department
of Labour.

Maternity Leave
Maternity Leave provisions apply to ALL
female employees, including those outside
scope of Employment Act
Maternity Leave = 60 calendar days every
time a woman gives birth
Maternity Benefit (payment) only if the
employee has worked at least 90 days with
her employer and has no more than 5
surviving children

Employment Act working hours
Minimum of one rest day per week
Maximum hours per day = 8
Maximum hours per week = 48
Overtime payment required for work done
outside normal working hours
Maximum overtime per month = 104 hours

Employment Act leave
Public holidays minimum of 11 per year.
Five compulsory; six more chosen by
employer.
Premium rate of pay due if employee
required to work on a public holiday.
Annual leave increases with length of
service ranging from 8-16 days. (8: <2 years;
12: =>2 but less than 5 years; 16: =>5 years)
Employment Act leave, cont.
Sick Leave increases with service ranging
from 14, 18, 22 days per year.
Employees only entitled to paid sick leave if
certified ill by registered medical
practitioner. (No self-certification)
If employer appoints panel doctors,
employee must use their services, failing
which only entitled to unpaid sick leave.
Employment Act termination
benefits
One-two years of 10 days wages for
service every year of service
More than 2 years, but 15 days wages for

less than 5 years of every year of service
service
More than 5 years of 20 days wages for
service every year of service

Children and Young Persons
(Employment) Act
Children and Young Persons (Employment)
Act controls employment of these employees
but does not prohibit it.
Children = persons aged under 15 yrs
Young persons = persons aged 15-18 yrs

Children and Young Persons
(Employment) Act, cont.
Hours of work of children and young
persons limited
Type of work that may be carried out by

children and young persons limited

Review
Defining who is an employee
Types of employment contract
Terms and conditions of employment
Common express terms
Implied terms
Provisions of the Employment Act
Provisions of the Children & Young Persons
(Employment) Act

Chapter 2 - The Employment Act and Related Acts

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MALAYSIAN INDUSTRIAL

RELATIONS & EMPLOYMENT LAW,

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 1

Self-employed persons are not within the

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 3

Is there a written contract, and if so, what

Is the worker required to comply with

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 5

Temporary or for an indefinite period

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 6

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 7

Notice period Retirement age

Requirement to give exclusive service

Requirement to comply with company rules

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 9

Employees obligation to work:

Employers obligation to:

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 11

Employees earning not more than RM2,000

per month who:

work in the private sector, and

work in Peninsular Malaysia.

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 12

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 13

Domestic Servants are NOT entitled to

the minimum benefits provided for

under the Act.

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 14

The contents of the SLOs are similar to the

Annual bonus Overtime payment

Commissions Subsistence allowance

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 18

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 19

Employees earning up to RM5,000 pm who do

not receive their wages or other payments

due, can lodge a complaint at the Department

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 20

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 21

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 22

More than 2 years, but 15 days wages for

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 25

Act controls employment of these employees

but does not prohibit it.

Children = persons aged under 15 yrs

Young persons = persons aged 15-18 yrs

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 26

Type of work that may be carried out by

Malaysian Industrial Relations & Copyright 2016 by McGraw-Hill 27

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