employment law

EMPLOYMENT & INDUSTRIAL LAW BBUI3103

FACULTY OF BUSINESS AND MANAGEMENT

SEPTEMBER 2014

BBUI3103

“EMPLOYMENT AND INDUSTRIAL LAW ASSIGNMENT”

NO. MATRIKULASI: 810622085729-001

NO. KAD PENGNEALAN: 810622-08-5729

NO. TELEFON: 012-2500877

E-MEL: [email protected]

PUSAT PEMBELAJARAN: PETALING JAYA

1 | P a g e


1.0 INTRODUCTION

“Term” in a contract of service is the product of the decision reached between the

employment and employee. It refers to contractual obligations that the parties have agreed to

undertake. One example of employment terms in many countries is the duty to provide written

particulars of employment with the terms and conditions of employment to an employee. This

aims to allow the employee to now concretely what to expect and what is expected. It covers

important aspects including bonus, wages, work hours, overtime work, compensation, holiday

and illness rights, notice in the event of dismissal and job description. The contract is subject to

various legal provisions. An employer may not legally offer a contract that pays the workers less

than a minimum wage. An employee may not agree to a contract that allows an employer to

dismiss them or illegal reasons.

However, condition gives a different meaning. “Condition” is an instruction that is given but

the employer to employee from time to time. The employer does not have to obtain an agreement

from the employee if he wished to change the condition given. For example, the employer can

decide the employees wear uniforms on each work day. This decision can later be changed to

make it not compulsory for employees to wear the uniforms on Saturdays.

2 | P a g e


2.0 DIVISIONS OF TERMS OF EMPLOYMENT

Generally, terms can be divided into two, namely, express terms and implied terms. There are

several implied terms that have been identified as used in the contract of service. Though they

are not stated in the contract of service, the terms shall bind both employers and employees. Such

terms mostly deal with duties and responsibilities of employers and employees. Two terms that

have been identified are as follows:

Implied Terms for Employers

Implied Terms for Employees

Express terms are terms that are stated clearly in the contract of service. Express terms

become part of the contract of service. These are divided into:

Precuniary terms

Non- precuniary terms

2.1 PECUNIARY TERMS

Employment Act, 1955 (AK1955) provides the minimum rights that must be provided by

the employer to the employee. If the provision of the employment contract is less than what is

provided by AK 1955, Section 7 will apply. One of the real terms in the contract is the terms

pecuniary, the terms of the financial affairs. It includes wages and salaries, allowances, bonuses

and ex-gratia payments and benefits pecuniary. Terms in respect of wages and allowances will

usually be stated clearly in the service contract. Pecuniary benefits will consist of the termination

of benefits, retirement or removal of benefits, termination benefits of mass employment layoffs,

retirement, resignation benefits, maternity benefits, medical benefits and insurance benefits.

2.11 Payroll deductions

3 | P a g e


Section 24(1) AK 1955 states that employers are not allowed to make any deduction of

the salaries of its employees, except those provided by the Act only, The conditions of the salary

deduction made in accordance with the Act under Section 24(2) is the following;

Deductions from salary to the extent that any payment is made for errors employer within

three months earlier.

Deduction for the indemnity to be paid by the employee to the employer under Section

13(1)

Deduction for recovery of salary advances of wages made under Section 22 with no

interest charged

The deduction allowed by law to another.

Section 24(3) lists the deductions to be made only with prior written request from the employee.

Some pay cuts are:

Deduction in respect of salary payments to a registered trade union or society, and loan

association for any fee, installment and fardah or other debt, and

Deduction in respect of any payment for any shares in the employer's business offered to

employees

Section 24 (4) stipulates that the deductions that cannot be made except upon written request of the

employee, together with the written permission of the Director General. Deductions are:

4 | P a g e


any deduction for payment of pension, provident funds, employee welfare schemes,

insurance schemes and other payments for employee benefits

any deduction for the repayment of advances of wages made to employees under Section 22,

which bears interest

any deduction in respect of the payment to a third party on behalf of employees

any deduction for goods business of the employer

Any deduction in respect of rental payments and cost of accommodation services, food and

drinks provided by the employer to the employee at the request of the employee, or under the

terms of service.

The Director General will only allow a deduction under Section 24 (4) (e) if he is satisfied that

the provision of accommodation, service, food / drink is for the benefit of employees (Section 24

(5). However, Section 24 (7) has jurisdiction of the Director General to disallow any deduction

for wages, at the request of the employer, subject to certain conditions as it thinks fit. In addition

to the matters under Section 24 (9), the total deduction will be not more than fifty percent of the

wages earned by employees during the month (Section 24 (8)). In accordance with the provisions

of the Act, the Terengganu Indah Batik Company deduct all workers' wages to EPF is to ensure

the future of the workers at the rate per set. Employers also are charged EPF for employees.

Because this company did not release specific salary slips, no certain deductions made by

employers. Employees only receive a total salary after deducting EPF. All savings and debt

payments made by the employee.

2.12 Bonus

5 | P a g e


A provision relating to the bonus is not specified in the contract of employment. This is

because the bonus is the right employer. Employers have the right to include a provision on this

matter, or otherwise. However, many awards were given in relation to the bonus question.

According to the Oxford Dictionary, the bonus is defined as "a reward to employees other than

salary." In other words, not a duty upon employers to provide bonuses to its employees, but it

can be given as an incentive for services rendered by employees. Most of the questions raised in

the court were whether the bonus must be provided or otherwise.

In the case of Malaya States of Insurance Association and the National Union of

Commercial Workers (Award 157/1980), the court ruled that the bonus is not required is the

payment is uncertain. It is only paid when the employer that profitable. Type of bonus is

contractual bonus is considered mandatory. This means that this bonus has been specified in the

contract of service as a compulsory payment made by the employer, other than salary. Time and

manner of payment usually have been determined in the agreement. That amount was also

determined. It will still be paid whether the employer derives profit or otherwise. The employer

also can state that a change in form and amount of the bonus should be changed from time to

time. This depends on the economic situation that is sometimes brilliant and sometimes not very

satisfactory.

As an example, Al-Rajhi Bank also provides bonuses to its employees depending on the

profit earned by the company. If the company reaches a considerable profit, then the bonus

amount will be increased. Normally, bonuses are awarded at the end of the year. The bonus

payment, a bit of a drive and can improve the spirit of the workers to work better. The bonus is

also able to guarantee the lives of workers as well as to meet the shortage of labor income

2.2 TERMS OF NON PECUNIARY

6 | P a g e


Terms not pecuniary in an employment contract will cover the following matters:

Period of work

Overtime

Day of rest

Public holidays, annual leave and sick leave

Other Benefits

The law of the period of work, rest days, public holidays, annual leave, sick leave and maternity

leave provided for in Part XII of the Employment Act, 1955 (AK 1955). Leave about managing

the affairs of Trade Unions has been provided by the Industrial Relations Act 1967 (APP 1967)

Benefits other than those specified in the act, many determined by the Industrial Court to take

into account the current situation.

2.21 Duration of Work

Employment Act, 1955 has set a maximum period of work for an employee. Section 60 A (1)

provides that a period of work shall not be required under his contract of service work:

More than five consecutive hours without a plenty of not less than 30 minutes duration.

More than eight hours a day

More than ten hours a day

More than 48 hours per week

However, the employer may require employees to work for eight consecutive hours for work

involving continuous attention. The requirement here is that employers have to give a rest period of

not less than 45 minutes so that it has a chance to eat. To do so, too, must have the prior agreement

between the employee and employer, which allows employees required to work eight hours on one

7 | P a g e


day, but less than eight hours on other days of the week. However, no employee may be compelled to

work more than nine hours per day or forty eight hours in one week. All these provisions are

contained on Section 60A (1) (i), (ii) and (iii).

Employers are also allowed to increase the working time in excess of ordinary working hours,

but no more than the limit prescribed in Section 60A (1) (a), (b) and (c), provided the written

permission of the Director General, after stating neutral conditions that require more work time

than the normal working time. This is set out in Section 60 A (1A). The Director General may at

any time revoke this approval. Directed employees to work more than the period in question will

be considered as 'overtime'. Section 60A (3) (a) states that overtime work performed in excess of

normal working hours of employees, shall be paid not less than 1 ½ times the rate per hour.

For example, in cases of Sun Mix Concrete Sdn Bhd and Non Metallic Mineral Products

Manufacturing Employees Union (Award 115/1987), the court has recognized the management

of the employer to determine or modify the work. However, this power is subject to the law to be

according to what exists in the act and in accordance with the situation or the type of work.

2.23 Day of Rest

Provision of rest days is contained in Part XII of the Employment Act, 1955. Section 59

(1) states that each be allowed one rest day per week full day as may be prescribed from time to

time by the employer, and if an employee is allowed more than one rest day in a week, then

break the last day of the days the rest should be a rest day for the purposes of this section.

For employees who do not have regular rest days, Section 59 (2) states that employers must

provide a schedule to inform employees when their rest days, to allow employees to choose

whether to work or not. Any employer who violates this provision shall be guilty of an offense

under the Act (Section 59 (4).

This has been proved in the case V. Sundram. Veemah (1972) MLJ 83, which shows the court,

stated that Section 59 does not provide other options for employers, but set the rest of the days

specified in advance to employees, and provides a schedule of these holidays to be displayed to

the employee. This will facilitate the employees to plan and know-day holiday which they are

eligible analogue or overtime allowances. Section 60 (1) states that in accordance with the

8 | P a g e


provisions of Section 60A, shall any employee be forced to work on rest days, unless it involves

a kind of continuous or shift work. Section 60 (3) (a) also provides that in the event of an

employee required to work on rest days and paid according to a daily wage, he shall be paid for

any period of work:

Not more than half the normal working hours, he will get wages for a day’s wages at

ordinary rate of pay, or

More than half but not exceeding the normal working time, two days wages at ordinary

rate of pay.

Section 60 (3) (b) also provides for the wages of workers required to work on rest days and paid

in monthly wages. It shall be paid for any period of work:

Not more than half the normal working time, wages are equal to half the normal working

wage, or

More than half but not exceeding the normal working time, a day’s wages at ordinary rate

of pay.

Section 60 (3) (c) provides for the overtime work done on rest days. The employee shall be paid

at a rate not less than two times the rate of wages, by the hour. Section 60 (3) (d) stipulates that,

if the employee is employed and paid in proportion to follow the work, he shall be paid double

the wage rate which is usually for a job.

3.0 IMPORTANCE OF TERMS AND CONDITIONS

The central focus of most employment contracts is wages for work. However, other

essential terms might be notice periods in the event of dismissal, holiday pay rights, and the

9 | P a g e


place of work and pension schemes. Many jurisdictions require these factors to be set out in a

written contract In terms of pay which the employee may be compensated through wages, a

salary, or by commission. In addition to monetary compensation, the employment contract often

specifies a fringe benefit package, including a retirement plan, employee stock options, holiday

entitlement, required hours of work, and also the health insurance benefits. Normally, such

contracts provide for termination of employment, by either party, and include associated matters

such as notice period, compensation arrangements and, sometimes, garden leave.

Employment regulations play a key role in the development of any business. Sometimes,

building a team with complementary skills involves little more than a quick chat with someone

who has been introduced to them by a business associate. No psychometric tests, references or

formal contracts of employment here. Often, employees or team members are taken on without

sufficient protection in terms of valuable intellectual property or a means to prevent

´moonlighting’ or unfair competition when they leave .Emerging businesses and entrepreneurs

can have the basis of a fantastic business, but, once they start employing people, things can go

wrong. Employees can rip companies off by stealing their ideas or passing them on to subsequent

employers, who have not invested heavily in the underlying research and development. Even if

employees do not take ideas or indulge in unfair competition, poor performance can itself

damage the business. Not only that but any attempt to discipline or improve the errant employees

can lead to employment tribunal claims, where, for example, unlimited damages can be awarded

where discrimination is proved.

Terms and conditions are related to the hours of work, as for the example, normal hours,

and overtime, expected out of hours work. for example if the employer asked the employee to do

something that is not written in the contract, then the employee will have the right not to do the

job because it’s not written on the agreement document. Terms and conditions allow the

employer to specify an employee’s duties and responsibilities so an employee knows exactly

10 | P a g e


what is expected from them. Terms and conditions are mainly important about safety for the

employer and the employee.

They are there to make it clear to both employer and employee where each stand. To let them

each knows their responsibilities and care for each other. It is best to have such an agreement so

that if anything does go wrong, both sides has a clear understanding what rights each have. As

for our further discussions, there are 3 items that could happen towards employee and employers

which I think it is a big issue in the employment terms and conditions topic and they are:

Termination of Employees

Discrimination of Employees

Sexual Harassment

There are many employers that do not provide its employees with an employment contracts.

They always dream that "if it is not in writing, then it does not exist," nor "if there is no written

contract, then we can do what we like with our employees." These are not dreams - these are

nightmares which are sure to land the employer in court. Every employer is required by law to

provide the employee with a written contract of employment not later that the first day of

commencement of employment. Failure to do so could land the employer in jail for a term of

imprisonment or to liability for a hefty fine. The contract of employment is a vital document

which it regulates the terms and conditions of employment between the employer and the

employee. It stipulates what the employer will provide in terms of benefits, and in terms of

labour legislation, and it specifies what the employee is entitled to receive in terms of company

policy, company benefits, and labour legislation.

4.0 SUGGESTIONS

4.1 Termination of Employees

11 | P a g e


In Malaysia, termination of employment falls under the purview of the EA (Employment

Act), the Employment (Termination and Lay-Off Benefits) Regulations 1980 (1980

Regulations), and the IRA. Although the provisions of the EA only cover EA employees, these

principles of law are generally considered as guidelines for most employer-employee

relationships, particularly in the absence of a written contract of service. The IRA addresses the

issue of unions, trade disputes and dismissals. It also mandates that an employment relationship

cannot be terminated without just cause or excuse. While ‘just cause or excuse would be an issue

to be determined by the Industrial Court in general, independently of the employer’s compliance

with the EA and the terms and conditions of the employment contract relating to benefits,

terminations should be motivated by a bona fide business decision, such as the cessation and sale

of a business, continuing losses, or disciplinary or performance reasons.

In a disciplinary situation, an employer should ensure that the process of investigation and

hearing be adhered to and that the employee be given due warning and the chance to state his or

her case. In the event of unfair dismissal, employees may seek redress before the Industrial

Court. In the first step, the claimant will make representations to the Director General for

Industrial Relations for reinstatement. If there is no settlement, the matter may be referred to the

Industrial Court for adjudication. An employment relationship in Malaysia may be terminated for

redundancy. Special provisions under the 1980 Regulations govern termination by retrenchment

or the take-over or cessation of a business, and mandate that retrenched EA employees are

entitled to specific termination indemnities. In a retrenchment situation, employers should select

the employees of the same category to be retrenched based on objective criteria. The EA also

outlines how and when a contract of service may be terminated. Under the EA, a contract of

service for a specified period of time or the performance of a specified piece of work lapses

when the period expires or when the work is completed. Where the contract of service is for an

unspecified period of time, the contract may be terminated by either party by giving notice of

termination as specified in the contract. In the absence of a written provision as to the length of

notice required, Malaysian law provides that the period of notice shall not be less than:

Four weeks for employment of less than two years.

Six weeks for employment of two years or more but less than five years.

12 | P a g e


Eight weeks for employment of more than five years

4.2 Employment Discrimination

Until recently, Malaysia had no legislation governing employment discrimination, although the

Federal Constitution does state that there shall be no discrimination against citizens on the

ground of religion, race, descent or place of birth. On September 28, 2001, Article 8(2) of the

Federal Constitution was amended to prohibit gender discrimination through the Constitution

Act 2001. This, however, has yet to be encapsulated in any specific legislation. In 2001, the

Labour Department of the Malaysian Ministry of Human Resources issued the Code of Practice

for the Employment of the Disabled in the Private Sector ‘Disability Code’. As a first step to

minimize discrimination problems at the workplace, employers should set up and implement in-

house mechanisms as outlined in the Disability Code, the PDA and the HIV or AIDS Code. Such

measures should be implemented despite the codes not having the force of law, so as to promote

positive employee relations. More importantly, pursuant to the PDA, employers should now

recognize and endeavor to fulfill their new legal obligations towards employees with disabilities

to ensure equal and non-discriminatory workplace practices and attitude.

4.3 Sexual Harassment

Malaysia does not have any legislation governing workplace harassment. However, in 1999, the

“Code of Practice on the Prevention and Eradication of Sexual Harassment in the Workplace”

was promulgated (“Sexual Harassment Code”). The Sexual Harassment Code is not legally

binding, but companies are expected to adopt its recommendations.

To successfully combat sexual harassment in the workplace, employers are encouraged to set up

comprehensive in-house mechanisms. Although it is not legally binding, implementation of the

Sexual Harassment Code and the setting-up of in-house inquiry boards will provide employees

under harassment with an avenue for redress within their organization.

13 | P a g e


5.0 REFERENCES

Assoc Prof Dr Asmah Laili Yeoh, Che Thalbi Md Ismail, Khadijah Mohamed dan Asiah Bidin (2008), Employment and Industrial Law,Meteor Doc. Sdn Bhd, Selangor.

14 | P a g e


Siti Zaharah Jamaluddin (1997) Pengenalan Kepada Akta Kerja, 1955 K. Lumpur, Universiti Malaya

Maimunah Aminuddin (1999)Malaysian Industrial Relations ang Employment

Law.McGraw-Hill

Panduan pemberhentian pekerja. Undang-undang Buruh Sabah. . [On-line], Retrieved on

13/10/2011, available: http://www.mohr.my/pdf/panduan_pemberhentian.pdf

Ariff, Mohammed, Chung, M.Y.H., Kadir, A.W.A., Ean, O. G, & Lae-Imm, E. T. (1998).

Currency Turmoil and the Malaysian Economy: Genesis, Prognosis and Response,

Malaysian Institute of Economic Research, Kuala Lumpur.

Kuruvilla S. (1993). ‘Industrialization Strategy and Industrial Relations Policy in

Malaysia’, in S Frenkel and J Harrod (eds) Industrialization and Labour Relations:

Contemporary Research in Seven Countries, ILR Press, Ithaca, 216-235.

Kuruvilla, S and Hall, W (1999). Globalisation and Employment Relations in the

Philippines, Report to International Labour Organisation, Bangkok.

Ministry of Finance (1998). Economic Report 1998/99, Kuala Lumpur.

Ministry of Human Resources (1997). Malaysia: Labour and Human Resource Statistics

1992-1996, Kuala Lumpur.

National Economic Action Council (NEAC) (1998). National Economic Recovery Plan:

Agenda for Action, Economic Planning Unit, Prime Minister’s Department, Kuala

Lumpur. Malaysia, 1996.

Seventh Malaysia Plan (1996). Kuala Lumpur Malaysian Industrial Development

Authority 1995 unpublished statistics.

National Union of Bank Employees (NUBE) (1996) Report for the Period 1st April 1993

to 31st March 1996: 18th Triennial Delegates Conference, Kuala Lumpur.

15 | P a g e

http://www.mohr.my/pdf/panduan_pemberhentian.pdf

employment law

Documents