employment law in malaysia - · pdf filefcl&co 2 • introduction • termination of...

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Employment Law in MalaysiaBy Dymphna Lanjuran

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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

Agenda

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Introduction

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STATUTES

Employment Act 1956

• Monthly salary RM1,500 and below• Manual Labour• Domestic servants

Industrial Relations Act 1976

• Remedy - Reinstatement• Industrial Court

Employment Law in Malaysia

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STATUTES

Employees Provident Fund Act

• Applies to all employees of Malaysian employers

Employees' Social Security Act, 1969 – SOCSO

Workmen's Compensation Act 1952

Employment Law in Malaysia

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Termination of Employment

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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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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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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

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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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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 .


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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.


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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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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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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.


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Termination of Employment: Redundancy & Retrenchment

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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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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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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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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 vsConstructive Dismissal

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•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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• Show Cause Letter

• To suspend or not to suspend?

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• 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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• 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:

ReinstatementOR

Wages ($$$)

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• 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 Officer’s

Report

• Minister’s decision (subject to

JR)

• Industrial Court

Representation / Complaint - 60 days rule

Labour CourtIndustrial Court

Remedy sought:

Wages or any other

Payment in Cash

Remedy sought:

Reinstatement

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Post Termination

• 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

• Form A & B

• Statement of Case

• Statement in Reply

• Bundle of documents

• Witness Statements


PROCEDURES - Documents

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Post Termination

a) Trial procedures

• Burden of proofs• Procedures• Submissions

b) Order (subject to appeal)

c) Enforcement/Non-Compliance

a) Trial procedures

• Burden of proof• Procedures• Submissions

b) Award (subject to JR)

c) Non compliance


PROCEDURES

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Challenging the Decision (Judicial Review/Appeal)

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Challenging the DecisionREVIEW/APPEAL

Industrial Court/

Minister’s Reference

Labour Court

Order 53 RHC – review on

procedures not on merits

S. 77 EA – procedure in a civil appeal from Sessions 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

• Notice of Appeal

• Memorandum of Appeal

• Record of Appeal

• Written Submissions

• Hearing

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New Statutes

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Minimum Wages Order 2012(Perintah Gaji Minimum 2012)

Minimum Retirement Age Bill 2012

New Statutes

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Minimum Wages Order 2012(Perintah Gaji Minimum 2012)

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New StatuteMinimum 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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• 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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• Minimum Wages Rates:

3.85800Sabah, Sarawak and FT Labuan

4.33900Peninsular Malaysia

Hourly

(RM)

Monthly

(RM)

Regional areas

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•ProbationersMinimum 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-the-

minimum-wages-order-2012/

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Minimum Retirement Age Bill 2012

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New StatuteMinimum 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 groundsFCL&Co

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• 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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• No date of coming to force yet.• The essence of this Bill is to make retirement

age of private sector’s 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-age-

bill-2012-gives-power-of-reinstatement-to-the-labour-officers/

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Thank youDymphna Lanjuran

[email protected]

www.twitter.com/EmploymentLaw_

Foong Cheng Leong & Co

Registered Trade Mark, Patent & Industrial Design AgentB-5-8 Plaza Mont Kiara, Mont Kiara, 50480 Kuala Lumpur, Malaysia

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