Understanding Employment Law in Malaysia: Key Insights for Employers and Employees

BY EMPLOYMENT LAW MALAYSIA

Understanding Employment Law in Malaysia: Key Insights for Employers and Employees

Introduction: Navigating the Landscape of Employment Law in Malaysia

Whether you're an employer, an employee, or someone about to step into either role, understanding the nuances of employment law in Malaysia is crucial. In Malaysia, private sector employment law is primarily governed by the Employment Act 1955 ("EA"), alongside other essential legal sources. This article provides a fundamental understanding of the current labour law Malaysia landscape before the anticipated amendments to the EA are officially passed.

As the EA undergoes extensive amendments, it’s essential to get familiar with the current legal framework before these changes come into effect. You can check out the proposed amendments on the Ministry of Human Resources website. For public sector employees, however, different laws apply under the Public Service Commission, which regulates civil servants.

Sources of Employment Law in Malaysia

To ensure clarity, the sources of employment law in Malaysia include:

1. Statutory Laws: Acts passed by Parliament, such as:

   • Industrial Relations Act 1967

   • Employment Act 1955

   • Employees Provident Fund Act 1991

   • Minimum Wages Order 2016, and more.

     
     

2. Subsidiary Legislation: Ministerial orders or regulations under empowering statutes, like:

   • Employment (Part-time Employees) Regulations 2010

   • Minimum Wages Order 2016

     
     

3. Case Laws: Judicial precedents that guide future legal decisions in employment disputes.

Applicability of the Employment Act 1955

The EA applies to employees as stated in the First Schedule of the Act. Employees whose monthly wages do not exceed RM2,000 are covered under this Act. Additionally, employees earning above RM2,000 may still fall under the EA if their roles include:

• Manual labour

• Operating or maintaining mechanically propelled vehicles

• Supervising others engaged in manual labour

• Employment as a domestic servant

It’s important to understand that a contract of service—which is essentially an employment contract—is distinct from a contract for service, where an independent contractor is engaged for specific tasks. The Malaysian employment law does not recognize hybrid contracts combining both service and contract for services.

Statutory Rights of Employees Under the EA

1. Terms less favorable than the EA are void: If an employment contract offers terms less favorable than those prescribed under the EA, such provisions are void, and the statutory terms apply instead. This includes salary, benefits, and leave entitlements.

   
   

2. Employment Contracts in Writing: Section 2 of the EA defines a contract of service as a written or oral agreement. For contracts lasting over one month, the contract must be documented, including a termination clause.

   
   

3. Termination of Employment: According to the EA, either party may terminate the contract by providing notice. The notice period is determined by the employee's length of service:

   • 4 weeks: For employment under 2 years

   • 6 weeks: For employment between 2-5 years

   • 8 weeks: For employment over 5 years

   
   

   Termination of employment Malaysia must also adhere to the principles of just cause and excuse under the Industrial Relations Act 1967.

   
   

4. Employee Rights Regarding Pay and Benefits: Employees are entitled to various benefits such as paid annual leave, sick leave, and maternity leave, with varying entitlements based on tenure. Public holidays and overtime work also come with specific legal requirements.

Key Legal Concepts in Employment Law in Malaysia

• Retrenchment Law Malaysia: If an employer needs to downsize, employees may be entitled to retrenchment benefits based on their length of service. Termination of employment due to retrenchment must be handled in line with the legal requirements.

• Constructive Dismissal Malaysia: Employees who are forced to resign due to unbearable working conditions or unfair treatment may have a case for constructive dismissal Malaysia. If you believe you’ve been subjected to such conditions, consult a wrongful dismissal lawyer Malaysia for expert advice.

• Workplace Discrimination Lawyer Malaysia: If you face unfair treatment or discrimination at work based on race, gender, or other protected characteristics, it's crucial to seek guidance from a workplace discrimination lawyer Malaysia.

• Unfair Dismissal Malaysia: If you feel you've been unjustly terminated, an unfair dismissal Malaysia lawyer can help you understand your rights and seek legal remedies.

• Legal Advice for Employees Malaysia: It’s essential for employees to seek legal advice for employees Malaysia to ensure they’re not being subjected to illegal terms in their contracts or unjust treatment in the workplace.

Resolving Employment Disputes in Malaysia

Employment dispute resolution Malaysia is often the result of employment contract disputes Malaysia, where either party believes the terms of the contract have been violated. Engaging a skilled employment lawyer Malaysia can help navigate these disputes effectively, ensuring that the employee or employer’s rights are upheld.

Should a dispute escalate, it may lead to a hearing in the Labour Court Malaysia lawyer or even an employment tribunal Malaysia. These forums are where employment-related issues are legally resolved, and professional representation is crucial for a fair outcome.

HR Legal Compliance Malaysia

Employers must ensure that their operations comply with HR legal compliance Malaysia, including adherence to labor laws, workplace safety regulations, and employee rights. Failing to do so can lead to penalties, reputational damage, and legal disputes.

Conclusion

Understanding employment law Malaysia is vital for both employers and employees. Whether you're facing issues related to constructive dismissal, workplace discrimination, or termination of employment, consulting an employment lawyer Malaysia can help you navigate these challenges with expert advice.

Labour law Malaysia ensures fair treatment in the workplace, and by familiarizing yourself with the rights and obligations under the EA, you can avoid legal pitfalls. Whether you need assistance with unfair dismissal Malaysia, retrenchment law Malaysia, or a workplace discrimination lawyer Malaysia, expert legal advice is available to protect your rights.

If you’re unsure about your rights or need help with a legal issue, hire an employment lawyer Malaysia to guide you through the complexities of employment law in Malaysia. Contact us today for a free consultation via WhatsApp (+6011-1630-0091) or email (general@employmentlawmalaysia.com) for expert advice tailored to your employment needs.