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Principles of the Law of Contract in Malaysia

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Principles of the Law of Contract in Malaysia Powered By Docstoc

                          MALAYSIAN LABOUR LAW

1.   INTERPRETATION OF “WORKMAN” WITHIN THE                               SCOPE     OF


 First Schedule Section 2(1) EA 1955-

     1] any person, irrespective of his occupation, who has entered into a contract of
     service with an employer under which such person’s wages do not exceed RM
     1500 per month

     2] any person who irrespective of the amount of wages he earns in a month, has
     entered into a contract of service with an employer in pursuant of which : -

     (a) he is engaged in manual labour including such labour as an artisan or
     apprentice: provided that where a person is employed by one employer partly
     in manual labour and partly in some other capacity, such person shall not be
     deemed to be performing manual labour unless the time during which he is
     required to perform manual labour in anyone wage period exceeds one-half of
     the total time during which he is required to work in such wage period .

     (b) he is engaged in the operation or maintenance of any mechanically
     propelled vehicle operated for the transport of passengers or goods or for
     reward or for commercial purposes.

     (c) he supervises or oversees other employees engaged in manual labour
     employed by the same employer in and throughout the performance of their

     (d) he is engaged in any capacity in any vessel registered in Malaysia and who: -
     I] is not an officer certificated under the Merchant Shipping Act of the United
     Kingdom as amended from time to time;
     Ii] is not the holder of a local certificate as defined in Part VII of the Merchant
     Shipping Ordinance 1952; or
     Iii] has not entered into an agreement under Part III of the Merchant Shipping
     Ordinance, 1952; or

     (e) he is engaged as a domestic servant

 A new section ( section 69B ) provides protection for employees whose monthly
  wages exceed RM 1500.00 but do not exceed RM15,000 the Director - General
  of Labour is now empowered to hear complaints under section 69( 1 ) (a ) from
  this category of employees. However, section 69B ( 3 ) stipulates that the rest of
  the provision of the Act do not apply to them.

   The Employment Act protects not only full-time regular employees but also
    part-timers, temporary / fixed term contract workers.
    [ part-time employees are defined as employees who work 70% or less than the
    normal working hours of a full-time employee in the same company carrying
    out the same work.


   Section 2 IRA states that “workman” means any person, including an
    apprentice, employed by an employer under a contract of employment to
    work for hire or reward, and for the purposes of any proceeding in relation to a
    trade dispute, includes any such person who has been dismissed, discharged or
    retrenched in connection with or as a consequence of that dispute, or whose
    dismissal, discharge or retrenchment has led to that dispute.
   [ * thus the term “workman” includes a wider range of employees than those
    covered by the Employment Act 1955. under the Industrial Relation Act, any
    person who has a contract of employment ( written or oral ) is considered as a
    workman. ]


   The probationary period is for the employer to test the suitability of the
    employee for the job assigned to him. The employer may test the aptitude,
    attitude, ability or adaptability of the employee for the job. He may also take
    into consideration other factors like behaviour, conduct, co-operation, and
    responsibility of the employee. If the employee is found to be lacking in a few of
    the above attributes, it is advisable for the employer in a cordial manner, with
    a view to improving him.
   An employer may extend the initial probationary period to a further period of
    1-3 months. In such an event, the employee should be informed, in writing,
    before the end of the probationary period, that his probationary period is being
    extended. He should also be informed of the specific areas where improvement
    is expected.
   The employer could terminate the services of an employee on probation, if the
    employee does not measure up to the employer’s satisfaction. But the
    satisfaction must be reasonable. If an employee on probation has reasons to
    believe that terminations of his service was mala fide, he may seek
    reinstatement under Section 20 of the Industrial Relations Act.
   An employee may also quit the job if he dissatisfies with the job, even without
    waiting for the end of the probationary period.


   Normal Hours of Work
  1] not more than five consecutive hours with a period of rest not less than 30

2] not more than 8 hours in one day
3] not more than 10 hours in a “spread-over” period
4] if the work is of a continuous nature, it can be 8 consecutive hours with a period
of rest (paid) of not less than 45 minutes.
5] not more than 48 hours in a week.

 Emergency work allowed only

1] in case of accident, actual or threatened.
2] urgent work to be done to machinery or plant
3] an interruption of work impossible to foresee

 Overtime

It means work done in excess of the “normal hours of work”. However, it does not
include work done on Rest Days and Public Holidays. Overtime on normal working
days- 1 ½ time the normal hourly rate of pay

1] 104 hours per month, unless exempted by the Minister under Section 2B
2] Not more than 12 hours of work (including normal hours in a day)

 Work on Rest Days

1] for daily-rated employees:-
     2 times the daily wages for daily-rated employees, if work exceeds half the
normal working hours of works; 1 day’s daily wages if the work is half or less than
the normal hours of work.

2] for monthly-rated employees:-
half the day’s wages for a period not exceeding half their normal hours of work.
One day’s wages for work not exceeding their normal hours of work.

 Overtime on Rest Days

Shall be 2 times the hourly rate of pay

 Work on Public Holidays

1] for monthly-rated employees
2 days wages regardless that the work done on that day is less than the or normal
hours of work

2] for daily-rated employees

2 day’s wages regardless that the work done on that day is less than their normal
hours of work plus their public holiday pay.

 Overtime on Public Holidays

3 times the hourly rate of pay for work done in excess of normal hours of work


 Annual leave

-   An employee is entitled to annual leave only after 12 months of continuous
    service as follows:
    1] Less than 2 years of service – 8 days for each year
    2] 2 years or more but less than 5 years – 12 days for each year
    3] More than 5 years – 16 days for each year

-   The paid annual leave does not include public holidays.

-   An employee must take his annual leave not later 12 months after the end of
    every 12 months of continuous service. If he fails to do so, his annual leave will be

-   The whole or part of the untaken annual leave may be substituted for
    payment at the request of the employer and with the written consent of the

-   An employee’s annual leave can be forfeited if he absents himself from work
    without permission, or without any reasonable excuse for more than 10% of the
    total number of working days during the twelve months of continuous service
    for which his entitlement is accrued.

-    If an employee’s service is terminated (for reasons other than misconduct) or if
    he resigns by giving due notice, he is entitled to the ordinary rate of pay in lieu
    for the completed months of service.

-    If an employee who is on annual leave falls sick, or is on maternity leave, the
    employee is entitled to sick leave or maternity leave as the case may be and
    the annual leave already taken by him/her becomes cancelled.

 Sick leave

-   An employee is entitled to paid sick leave only under the following
    1. he has obtained a certificate from a registered medical practitioner duly
        appointed by his employer; or
    2. he has obtained a certificate from a dental surgeon; or

      3. if no such medical practitioner is appointed, or the services of such a
         practitioner are not obtainable within a reasonable time or distance, then
         other registered medical practitioners or government medical officers will be
         accepted; and
      4. he has informed or has attempted to inform the employer of his sick leave
         within 48 hours of the commencement of the sickness.

  -   The number of days of paid sick leave which an employee is entitled to in each
      calendar year is as follows:
      1] Less than 2 years – 14 days
      2] 2 years but less than 5 years – 18 days
      3] 5 years or more – 22 days

  -   If hospitalization is necessary, the amount of paid sick leave can be extended by
      up to 60 days per calendar year.

  -   If there is a company appointed doctor or panel of doctors, the employee
      should seek medical treatment from such doctors.

  -   However, in case of emergency (when the company appointed doctor is not
      readily available or the clinic is too far away) the employee can seek treatment
      from any registered medical practitioner. All such cases are to be decided
      depending upon the circumstances and nature of the illness or injury.


  -   Every employee is entitled to 10 out of any of the following gazetted public
      holidays and any day declared as a public holiday by the Federal or State
      Government under section 8 of the Holidays Act 1951 in any one calendar year:-
  -   Federal Public Holiday
            Hari Raya Puasa
            Chinese New Year
            Workers’ Day
            Wesak Day
            Birthday of YDPA
            Hari Raya Haji
            Awal Muharram
            National Day
            Birthday of Prophet Muhammad
            Depavali
            Christmas Day

      State Public Holidays

            New Year’s Day
            Federal Territory Day
            Thaipusam
            Israk & Mikraj

          Nuzul Quran
          Good Friday
          Pesta Keamatan
          Hari Dayak
          Birthday of State’s Sultans / Rulers

   Compulsory gazetted Public Holiday

          National Day
          The King’s Birthday
          Birthday of Sultans/ Head of State or Federal Territory Day
          Workers’ Day

- If any of the ten chosen gazetted public holidays falls within the period during
     which the employee is absent due to sick leave, annual leave, temporary
     disablement under the Workmen’s Compensation Act 1952 or under the
     Employees’ Social Securities Act 1969 or maternity leave, the employee is
     entitled to another day as a paid holiday in substitution for such public holiday.


  -   Either party to a contract of service may at anytime give to the other, notice of
      his intention to terminate such contract of service. The period of notice required
      by either party is usually in accordance with the provision in the contract of

  -   In the absence of a provision for period of notice made in the contract, the
      period of notice of termination shall be based on the provision of the
      Employment Act as follows:-
      1] less than 2 years- at least 4 weeks
      2] 2 years or more- at least 6 weeks
      3] 5 years or more- at least 8 weeks

  -   An employer may terminate an employee’s services for any of the following
      reasons: -
            Retirement
            Section 14(1) IRA- misconduct
            Wilful Breach of Contract
            Retrenchment
            Criminal Offence
            Frustration of Contract
            Repudiation of Contract
            Effluxion of time [contract of service for specific period]
            Termination for poor performance

  -   For the employee govern by the IRA 1967, the Act recognizes the management’s
      prerogative to employ, terminate for reasons of redundancy or reorganization
      or dismiss an employee w ith proper cause or excuse. However, the Industrial
      Court also has “the right to interfere into any management prerogatives and
      strike down any unfair labour practice or victimization”. But the Court will not
      interfere with the bona fide exercise of power which is given to the
      management by the common law and by the contract of service which is
      inherent in the management.
  -   On the other hand, section 20(1) of the IRA 1967, provides: where a workman
      who is not a member of a trade union of workmen considers that he has been
      dismiss without just cause or excuse by his employer, he may within 60 days of
      the dismissal make representation in writing to the Director-General to be
      reinstated in his former employment, the representation may be filed at the
      office of the Director-General nearest to the place of employment from which
      the workmen was dismissed.
  -   If the workman is a member of a union, his union can file an appeal on his
      behalf for reinstatement [section 26 of IRA]


An employer may on the ground of misconduct dismiss an employee. However, it
should be noted that the dismissal is valid only after due inquiry has been done


The word “harass” includes quite a broad spectrum of action; distress, badger, trouble,
vex, plunge, torment, irritate, heckle, beset, worry, afflict, depress, sadden, annoy and
disturb. In a workplace, sexual harassment becomes a form of sexual discrimination,
which is contrary to the principles of equal rights for men and women. On late, there
has been much emphasis on the problem of sexual harassment at the workplace, so
mush so, the Minister of Human Resource has introduced the Code of Practice to
Prevent and Eradicate Sexual Harassment at the “workplace”, which includes a
guideline to be followed in combating the problem of sexual harassment. The Code
provides practical guide to employees, workers, trade unions and other interested
parties on how to contain, and if possible, totally eradicate this social problem.

What constitutes Sexual Harassment ?

Sexual harassment may take many forms, some of which may be subtle while others
may be more explicit, but all of which are bound to cause much embarrassment to the
victim. The following may be considered as typical examples;

    Unsolicited compliments regarding a person’s figure, dressing, make-up, style of
     movement, way of talking, etc
    Sexually tainted jokes, rumours, comments, news items, etc. made in the
     presence of a person of the opposite sex
    Physically molesting female staff by touching parts of their bodies
    Persistently trying to strike up a conversation, even after the other person has
     indicated that he/she is not keen to do so.
    Verbal advances and suggestions of a lewd and sexual nature.
    Unwarranted telephone calls, especially if such calls are made to the person’s
     office or home at unearthly hours
    Repeatedly or persistently inviting a person for lunch/ dinner, dates, or for a
     drink or ride
    Sending love letters or posting love notes on the Internet
    Sending or showing pornographic materials to another person in order to
     embarrass him/her
    Instructing a subordinate employee to stay back alone, after normal working
     hours, on the pretext of having urgent work to be done.

Remedial Measures

An individual victim has every right to protect herself from any form of harassment.
However, in dealing with cases of sexual harassment at the workplace, there are many
factors the victim has to consider;- one’s reputation, the family, opinion among
colleagues, social relationship, and also the job itself. Any adverse publicity is bound to
bring irreparable psychological damage to the victim. Therefore, great care and
caution should be taken in finding solution to the problem.
     If the harasser is a colleague, the following steps may be taken by the victim:-
           1. tell him at the very first instance that you are not amused with his
                behaviour and warn him not to repeat it; but keep your cool
           2. avoid losing control of your emotions or temper and do not throw
           3. should he repeat his action, give him a second and final warning in a
                plain and straightforward manner
           4. do not show him that you are afraid of or intimidated by him in any
           5. if you know others who are also victims of this particular harasser, get
                them together and give him a tongue-lashing, outside office hours.
           6. if his actions persist, take up the matter with your boss or report him to
                his boss

          7.   if the problem still persists, make a written complaint to the Personnel
               Manager and at the same time refer the matter to the union, if you are
               a union member.
          8.   if as a last resort, the matter is reported to the police, they can take
               action against the harasser- PENAL CODE- SECTION 509

    If the harasser is your own boss or a senior member of the management staff,
     the situation may be a bit more complicated and the whole matter has to be
     dealt with delicately and diplomatically. However, the preventive actions to be
     taken are more or less the same as stated above.

Prepared by:-
1] Suria Fadhillah Bt. Md. Pauzi
   [ LL.B (Hons.) UIAM, LL.M UKM ]

2] Nadia Bt. Omar
   [ LL.B (Hons.) UIAM, LL.M UKM ]

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