Reported by Professor Maimunah Aminuddin & Sdr. Cham Kok Soon

In conjunction with the Engineering Week 2003, G&S Section, together with the Engineering Week 2003 Committee had co-organized a talk on “Employment Law: Employees’ & Employers’ Rights”. The talk was held on 18 March 2003 at the IEM. The speaker for the talk was Professor Maimunah Aminuddin, currently a lecturer in the Faculty of Business Management, Universiti Teknologi MARA, Shah Alam. She has been lecturing for 30 years and is also the author of more than 7 books on topics relating to industrial relations, employment law and human resource management. 31 participants attended the talk. 

The talk kicked off 10 minutes late from the scheduled 5.30 p.m., due to heavy rain and traffic congestion. As the participants gradually arrived, Sdr. Kok Hee Poh had to initiate the talk by welcoming the participants. He then introduced the speaker, Professor Maimunah to the participants. 

From there, Professor Maimunah greeted the participants and wasted no time in getting into the topic. According to her, in Malaysia, there are many laws related to employment. However, the following are the major laws regulating the employment relationship: 

  1.      The Employment Act, 1955;

  2.      The Employees Provident Fund Act, 1991;

  3.      The Employees Social Security Act, 1969;

  4.      The Industrial Relations Act, 1967. 

Although the mentioned laws are significant in providing protection to both employers and employees, not all employees are within the scope of all of these acts. The Employment Act only protects employees who earn not more than RM 1,500 per month and who are working in Peninsular Malaysia in the private sector. The Employees Provident Fund Act provides a compulsory saving scheme for all employees throughout the country working in the private sector. The Employees Social Security Act establishes a scheme for compensating employees who have a work-related accident or contract a work-related illness. However, while only employees who earn not more than RM 2,000 are required to become members of the scheme, the Organization implements the “once in, always in” concept. The Industrial Relations Act applies to all employees in the private sector and provides a mechanism for protecting employees’ security of employment. 

As mentioned earlier, she reminded those preset that employees who earn more than RM1500 a month ( with a few exceptions) are not protected by the Employment Act. Therefore, the rights of these groups fall within the four walls of the employment contract. The terms should be expressly included in a letter of appointment, a company handbook or similar document specifically referred to in the letter of appointment. Employees have no right to any other benefit other than those specified in the contract. However, certain rights and obligations may be implied into the contract, as they are into all employment contracts, but it is rare in Malaysia for benefits to be implied into a contract by practice or by any other means. 

While explaining, she reminded employees accepting job offers to read the letter of appointment very carefully before signing acceptance of the terms and conditions of employment. It is crucial not only to examine what is included, but also what is not incorporated! Among the important items for any person contemplating a job offer to check are as follows:

• The duration of the contract, whether temporary or permanent;

• The wages and benefits offered;

• Whether there are any other forms of monetary remuneration such as bonus or allowances, and if so what are the conditions for receiving these;

• The hours of work;

• Whether there is a probationary period, and if so, for how long;

• Notice required before termination of employment;

• Whether there is a mobility clause;

• Whether a retirement age is incorporated into the contract; and

• Whether the employee’s right to be involved in other work, whether for remuneration or on a voluntary basis is prohibited or restricted.

On termination of service, Professor Maimunah explained that while employers in Malaysia have the right to hire as they please, they do not have the same freedom to sack employees. The Industrial Relations Act, 1967, which protects all employees in the private sector, provides a procedure whereby any employee who has had his employment contract terminated, for whatever reason, can make a claim of unfair dismissal at the nearest Department of Industrial Relations, Ministry of Human Resources. A conciliation meeting will be held to determine whether a settlement can be reached between the employer and his ex-employee.  If re-conciliation is not successful, the dispute will generally be referred to the Industrial Court for arbitration. 

Nevertheless, employers have the right to terminate an employee’s contract in certain circumstances, providing they follow a fair procedure prior to the termination. Employers can retrench employees, or dismiss them for poor performance or misconduct as elaborated below:  

 Retrenchment

An employer may downsize his workforce when there are cogent business reasons for doing so. He is expected to avoid retrenchment if at all possible. For example, a voluntary separation scheme may be introduced to reduce the numbers of workers employed, a hiring freeze could be instituted, cost saving measures initiated and so on. If retrenchment cannot be avoided, the choice of workers to be removed from the payroll must be done in an objective manner. The Industrial Court frowns upon any criteria other than “last in, first out” (LIFO). Employees should be given adequate notice before they are retrenched and, where appropriate, retrenchment benefits should be paid. Employees who are not within the scope of the Employment Act will not be entitled to retrenchment benefits unless their personal contract specifically includes such a provision – which is unlikely. 

 Poor Performance

If an employee’s work is not reaching an acceptable standard, as defined by the employer, the latter has the right to terminate the employee’s contract. Before termination, however, the employee should be given a written warning which outlines his deficiencies; he should be given adequate time to improve and he should be given assistance to improve. If, after such measures have been taken, the employee still does not meet the work standards required, he may be dismissed. 

 Misconduct

Any employee found guilty of a major misconduct may be dismissed. Any act of misbehavior which is minor should be dealt with by way of an alternative, and lesser, punishment. Before dismissing an employee for misconduct, an employer should investigate the alleged act of misconduct thoroughly and hold a formal domestic inquiry to give the employee an opportunity to defend himself.

By 6.50 p.m., Professor Maimunah almost completed the talk. She then opened the talk to the Q&A session of which she managed to answer a string of questions from curious participants. By 7.10 p.m., Sdr. Kok Hee Poh invited Ir. Chong P.E. for a short speech. Ir. Chong praised the speaker for her interesting talk. He also thanked the speaker for conducting the talk. Finally, he presented a token of appreciation to Professor Maimunah on IEM’s behalf. The talk effectively ended at 7.15 p.m.

The G&S Section and IEM also wish to thank Professor Maimunah for conducting an informative and successful talk.