Employee Relations - Communications


What is Employee Relations?

Employee Relations involves the body of work concerned with maintaining employer-employee relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, Employee Relations is concerned with preventing and resolving problems involving individuals who arise out of or affect work situations.

Information about the employer-employee relationship provided to employees to promote a better understanding of management's goals and policies. Information is also provided to employees to assist them in correcting poor performance, on or off duty misconduct, and/or to address personal issues that affect them in the workplace. Employees are advised about applicable regulations, legislation, and bargaining agreements. Employees are also advised about their grievance and appeal rights and discrimination and whistleblower protections.


How to calculate the payment in lieu of annual leave?

Calculation of payment in lieu of annual leave is based on wages at ordinary rate of pay (ORP) i.e.

Monthly Rate of Pay / 26 Days = 1ORP


How many days of annual leave should an employee entitled to?

An employee should be entitled to annual leave of not less than the followings

Less Than 2 years' service 8 days for each year of service
More Than 2 years' but less than 5 years 12 days for each year of service
5 Years or more 16 days for each year of service



How many days of paid sick leave should an employee be entitled to in one year?

An employee should be entitled to a paid sick leave of not less than the followings :

Less Than 2 years' service 14 days in each calendar year
More Than 2 years' but less than 5 years 18 days in each calendar year
5 Years or more 22 days for each year of service



Under what circumstances an employee should not be entitled to his annual leave?

An employee is not entitled to annual leave due to the followings:-

If he or she absents himself or herself from work without the permission of the employer and without reasonable excuse for more than ten per centum of the working days during the twelve (12) months of the continuous service in respect of which his or her entitlement to such leave accrues, if he or she is dismissed after due inquiry.


What are the circumstances under which an employee is not entitled to sick leave pay?

An employee is not entitled to be paid sick leave during maternity leave for any period during which she is receiving periodical payments under Workmens' Compensation or SOCSO.


How should an employee be paid for working on a public holiday recognised by the employer?

An employee shall be paid in addition to the holiday pay he is entitled to for that day, 2 day's wages at ordinary rate of pay [section 60D(3)(a)].

For any overtime work during a public holiday, an employee shall be paid at a rate of not less than 3 times his hourly rate of pay [section 60D(3)(aa)] .


What is the minimum retirement ageprescribedbythe Minimum Retirement AgeAct2012?

Section 4 of theMinimum Retirement Age Act2012 (Act 753) provides that the minimum retirement age of an employeeo f the private sector is when an employee reaches the age of60 years.


How to deal with an employee who is absent without leave for more than two consecutive working days?

  • For an employee under the scope of the Employment Act 1955, invoke section 15(2) of Employment Act for breach of contract due to absence for more than two consecutive working days without prior leave from the employer without reasonable excuse. The employee may be terminated under section 13(2) of the Act if the reply to the show-cause letter to him is not acceptable.
  • For an employee outside the scope of the Employment Act 1955, absence without leave for one day or more is breach of contract of service and disciplinary action may be taken which may lead to dismissal. (Refer to Industrial Court Award No. 270/1996 between Advanced Point Sdn. Bhd. AllsonKelana Resort, Seremban v SarinaTeh Rahman Khan)

I am a Manager and my month salary is over RM5,000, am I protected under the Employment Act? If not where can I seek compensation?
 You are not covered by the Employment Act. But in the event of a dismissal which you consider as wrongful, you may seek compensation at the Industrial Relations Department. You may make claim under Section 20 of the Industrial Relations Act.


My salary is more than RM2,000 per month, am I covered under the Employment Act?
If your salary is more than RM2,000 and perform manual duties, you are covered under the Employment Act.


What is a Fixed-Term Contract?
A Fixed-Term Contract is for a stated period of time. Once the time-period is over, the contract automatically comes to an end. While the employee can be offered a fresh contract on the expiry of the previous one, this practice cannot be carried on continuously. If the contract is frequently renewed, it will be considered a permanent contract of employment.


Can an employee on a fixed-term contract be dismissed?
The employee on a fixed-term contract can be dismissed for poor performance or misconduct. The same requirements and procedures must be followed as for employees on permanent contracts.


If an employee is required to work on a Rest day and Public Holiday, do the Company need to pay accordingly the appropriate rates for working on these days to the employee?
The Company is legally obliged to pay the employee appropriate rates for working on Rest Day and Public Holiday. If a company fails to pay the Rest Day or Public Holiday prescribed in the Employment Act 1955 for work on rest day and public holiday, the employee may lodge a complaint at the nearest Labour Office.


Can my employer change the terms in the employment contract at will after it is signed? Or would both parties' consent be required for any amendment?
Both the employer and employee are bound by the contract of service that was signed at the beginning of employment. This contract should not be amended or changed without the consent of both parties concerned. If the employer would like to amend the terms and conditions of employment as stated in the employment     contract, it would need to negotiate with the affected employees or their union. However, the employer can change the terms and conditions of employment of an existing employee if the change is to his advantage. Employees who do not agree     to the changes should raise their objections directly to the employer for negotiation. Ultimately, if there is no agreement reached on the changes to the employment contract, either party could choose to terminate the contract of service by giving the appropriate notice or payment in-lieu of notice. Otherwise, you could be deemed to have accepted the revised terms of employment.


My Company often rejects my applications for annual leave. The company also does not allow us to carry forward or en-cash our unutilised leave, so I often have to forgo my leave. Is this illegal?
The approval of an employee's annual leave application is at the discretion of the employer. That means that an employer can choose not to approve a leave application due to insufficient manpower or the application being made during peak periods. Nevertheless, employers should exercise flexibility when granting leave, taking into consideration the employee's preference, and granting the applications whenever the situation permits.


My employer requests that I work on a public holiday. How should I be compensated?
Employees are entitled to 11 paid public holidays per year. If an employee works on a public holiday, he should be paid one extra day's basic rate of pay in addition to the day's gross rate of pay. If the public holiday also falls on a rest day, the next working day will be a replacement paid holiday. The employee must not absent himself without consent or reasonable excuse one day before or after the public  holiday.

18. Is an unmarried mother entitled to maternity allowance?
Yes, it does not matter whether a female employee is married or otherwise as long as she eligible.


What are the Management Prerogatives under Industrial Relations Act 1967?


Management Prerogatives/Rights are mentioned in Section 13(3) Industrial Relation Act 1967 that related to:

1.     Promotion

Employee upward mobility within an organization through higher grade or occupational status and often entails an increase in pay and benefits.

2.   Transfer of a workman within the organization of an employer's profession, business, trade of work, provided that such transfer does not entail a change to detriment of a workman in regards to his terms of employment.

3.     Employment of any person

Employer have right to employ anybody that is deemed suitable to hold any position in the company.

4.    Termination of the Services by Reason

Termination of the services because of redundancy, re-organisation of an employer's profession, business, trade or work.

5.    Dismissal and Reinstatement

Death to employees, Resignation, Termination under Section 13(2), 12(1) Employment Act 1955, Breach of Contract under Section 15, Employment Act, Misconduct, Poor Performance, Termination at the end of probation period, expiry of fixed term contract, Frustration of Contract, Change of Business Ownership, Closure of Business, Insolvency, Redundancy & Retrenchment, VSS, Retirement.

6.   Assignment or Allocation of Duties or specific tasks to a workman that is consistent or compatible with the terms of his employment.

7.    Employee Training & Development

There is no specific provision in the Employment Act 1955 and Industrial Relations Act 1967 on employee training and development at workplace. However, there is a compulsory training under the OSHA Act 1994. Employee training is also outlined in the Code of Conduct of Industrial Harmony 1975 in clause 14 to 17 of the Code.

8.    Probation

When hiring employees, employer has the right to put new employees on probation. Probation is considered a testing of conduct or character of person, a probationer has no substantive right to hold the post; he has no right of tenure to his job beyond the agreed probationary period.  

20. What are the laws for the employment of foreigner?
  Foreign workers who are legally employed in Malaysia (those within the scope of First Schedule, EA 1955) are protected by the Employment Act and are entitled to the same benefits as locals.If employer is conducting a retrenchment exercise, foreigners employed in the jobs concerned must be retrenched before local.
21. What is the meaning of Security of Tenure?
  Security of Tenure refers to feeling secure in the job. When a person takes up employment, the expectation is that he is stable on the job and can work up to retirement and not be put into the streets without proper cause.
22. What is the meaning of Termination Simpliciter?
  Termination Simpliciter refers to termination of the contract solely based on the provision of the contract and for no other reason.
23. What is the meaning of Estoppel?
  Estoppel refers to employee is not stopped from making claim against employer even after having received consideration (payment) as full and final settlement and signed a declaration/waiver/release letter to that effect.
24. What are the Facts to determine Contract of Service?
  1. Ensure that employer has the right to direct what should be done and when and how for the job given.
  2. Ensure job allotted is not part of the regular business of your company.
  3. Ensure job is an independent business performance.
  4. Ensure his employment of assistants allowed.
  5. Ensure he provide his tools and materials.
  6. Ensure the demand is for work of final results.
  7. Ensure time of performance is not regulated by the employer.
  8. Make payment by request of submission of invoice.
  9. Ensure payment is not made at a fixed price.
  10. Ensure jobs are not contracted out, after compulsory retrenchment.


When does an employer not need to pay wages?


An employer does not have to pay wages to employees who do not come to work because:

  1. They are in prison or police custody;
  2. They are attending a court case which has nothing to do with the employer;
  3. They have no adequate reason for their absence and they have not given prior leave.


What benefits are required by law?


  1. Medical benefits and leave
  2. Employees Provident Fund contributions
  3. Annual Leave


What are the difference between Contract OF Service and Contract FOR Service?




Contract OF Service

Contract FOR Service

Primary Law Involved

Employment Act 1955 & Industrial Relations Act 1967.


Industrial Relations Act 1967.


The status of the employee.

The status as an independent contractor, consultants etc.


Statutory Requirements for Income Tax, EPF & SOCSO

The employer and employee relationship is regulated by the employment legislations. e.g. The employer is responsible for contribution a certain percentage of the employee's wages to the EPF & SOCSO on behalf of the employee and subjecting the wages to the deduction of income tax.


The payment of fees or retainer and the need for the contractor to submit payment invoices for each piece of work completed.

Vicarious Liability

[Present] The employer is liable in tort for the wrong done by the employee while at work.

[Absent] Independent contractor under contract for services are personally responsible for their own torts.


Provision of Tools & Facilities

The tools and facilities to complete the work are provided by the employer.

The tools and facilities are provided in the contractual terms, but usually these are provided by the contractor himself.


Termination of Contract

The employee can make representation through Industrial Court if he had been wrongly dismissed.


The independent contractor can sue in the civil courts for breach of contract.

Rights & Responsibilities

There exist the rights and responsibilities of employers, employees vice versa.


There exist the rights and responsibilities among the parties concerned under general contractual terms.



A female employee had an abortion, is she entitled to maternity allowance?


If it is a still birth, the pregnancy must be least 22 weeks old. Yes if all other conditions have been fulfilled.


What are the eligibilities of maternity allowance?


The eligibilities of maternity allowance are:

  1. 22 weeks pregnancy
  2. 60 consecutive days
  3. Rest Day and Public Holiday ignored
  4. Cannot start earlier than 30 days before confinement or later than the day immediately following
  5. Not entitle for maternity allowance if more than five (5) surviving children but entitled to maternity leave
  6. For monthly rated employee is paid monthly wages, she is deemed to be paid maternity allowance
  7. Minimum allowance is RM6.00 per day
  8. Must maintain maternity register/record
  9. Married and unmarried female employees are equally entitled to maternity protection.


Can a female employee claim maternity allowance after she resigns?


She can claim maternity allowance after resigns if she has been employed in the 4 months immediately before her confinement and been employed not less than 90 days during the 9 months immediately before her confinement.


How long is a probation period?


A probationary period can be from 1 – 6 months or from 1 – 4 years depending on the status of an individual employee or the nature of employment


What is the status of a probationer at the end of his probationary period?


On the expiry of the probation period, if no action is taken by the employer by way of confirmation or by way of termination, the employee continues to be in service as a probationer.


Can probation period be extended?


The period of probation can be extended by the employer at his discretion. Such extension, however, cannot be requested by the employee


What are the difference between Apprenticeships and Traineeships?


Apprentices are generally training to be tradespeople, while trainees are generally learning the skills of a non-trade occupation.

However both Apprenticeships and Traineeships involve:

  • A registered training agreement;
  • Practical work;
  • Learning skills on and off the job; and
  • Rates of pay covered by an award or agreement


Is a Collective Agreement a Contract Of Service?


A collective agreement is a contract on the terms and conditions of employment signed between the employer and the trade union.  The terms are applicable to members of the union working in the company. It is not a Contract of Service per se between employer and an employee, but rather serves as the terms of employment relating to that employee's contract of service.


What item should be written in an employment contract?


Your employment contract should meet all minimum conditions of employment, and contain key terms and conditions of the job. Regulation (b) of Employment Act 1955 recommends the following:

  • Name of employee and NRIC No.
  • Occupation or appointment;
  • wage rates (excluding other allowances);
  • Other allowances payable and rates;
  • Rates for overtime work;
  • Other benefits;
  • Agreed normal hour of work per day;
  • Agreed period of notice for termination of employment or wages in lieu;
  • No. of days of holidays;
  • Annual leave;
  • Sick leave;
  • Maternity benefits;
  • EPF/SOCSO contributions;
  • Transfer;
  • Retirement age;
  • Period of probation;
  • Company rules and regulations (to be given separately)


What happens when certain terms are left silent in the Contract Of Service?


It  does happen and when it does, there are certain recourse such as:-

  • To revert to the appropriate provisions of the Employment Act.
  • To  look for customary practices and implied conditions
  • To try proving or disproving claims of oral promises.


Can the employer reduce the salary of an employee?


No.  Not unless, the employee agrees to it, as in the case of business downturn where the employer is badly affected.  It is for the employer to convince the employee of his circumstances and hope that the employee understands that helping to contribute towards cost reduction, jobs can be preserved; or it is in the form of disciplinary action where the employee has been found guilty of misconduct after a domestic enquiry.  It is a rarely exercised punishment as it can lead to other counter actions by the employee, unless such a punishment has been made known to the employee explicitly in his terms and conditions of employment.  As a punishment, it is an option best avoided unless the employer exercises it clearly to avoid otherwise having to dismiss the employee.


Can an employee refuse an order to work on a public holiday?


The Law says "any employee may be required by his employer to work on any public holiday to which he is entitled". So it looks like the employee cannot refuse to work on a public holiday if the employer insists that he return to work. When it comes to public holidays, the employer can require the employee to work.


I am working in a company in Malaysia. However, all Human Resource, Finance and Managing Director and all decisions comes from Singapore (Regional Office). Does Malaysian or Singapore law bind me?


Malaysian law binds you, even though all the decisions come from Singapore (Regional Office).


Is it lawful for an employer to make deductions from his employee's wages?


An employer may deduct the following items from employee's wages without the employee's permission:

  • Overpayments made by mistake during the immediate preceding three months from the month in which deductions are to be made;
  • Indemnity due to the employer by the employee under Section 13(1) Recovery of advances of wages provided no interest is charged on the advances;
  • and EPF, social security contributions, income tax and etc. as authorised by law.


When should wages be paid to employees?


  • Wages (less any lawful deductions) are payable not later than the seventh day after the end of wage period.
  • The employer may apply for extension of payment of wages time from the Director General of Labour Department.


When should wages be paid in a situation where a contract of service is terminated by an employer without giving notice in accordance with either Section 13(1) or (2) or Section (14)(1)(a) of the Act?


Wages should be paid not later than the day when the contract of service is terminated.


When should wages be paid in a situation where a contract of service is terminated by an employee without giving notice in accordance with either Section 13(1) or (2) or Section (14)(3) of the Act?


When employee terminates his service without notice in such situation, wages (less any lawful deductions) are payable not later than the third day after the day when the contract is terminated.


What does it mean by ‘overtime'?


Overtime means the hours of work carried out in excess of the normal hours of work per day.


What is the meaning of ‘normal hours of work'?


‘Normal hours of work' means the hours of work as agreed between an employer and an employee in the contract of service to be the usual hours of work per day. The normal hours of work should not exceed:

  • 8 hours a day excluding a period of rest
  • 5 consecutive hours of work without a period of rest of not less than thirty minutes; and
  • 48 hours in a week.
Upon mutual agreement, hours of work can exceed 9 hours a day but it cannot exceed 48 hours in a week.



What is the maximum number of hours for which an employee can be required to work per day?


12 hours a day. [section 60A(7)].


What is the normal hours of work per week of an employee?


Not exceeding 48 hours per week. [section 60A(1)(d)].


What is the normal hours of work per day of an employee?


For non-shift employees not exceeding 8 hours per day - if the hours of work is less than 8 hours on one or more days of the week, an employee can be required to work up to 9 hours a day but not more than 48 hours in one week.


What is the maximum number of hours of overtime which an employee can be required to work per month?


104 hours a month. [section 60A(4)(a) & Regulation 2, Employment (Limitation of Overtime Work) Regulations 1980]


What is ORP?


Ordinary rate of pay (ORP) means wages as defined in section 2, whether calculated by the month, the week, the day, the hour, or by piece rate, or otherwise, which an employee is entitled to receive under the terms of his contract of service for the normal hours of work for one day, but does not include any payment made under an approved incentive payment scheme or any payment for work done on a rest day or on any gazetted public holiday granted by the employer under the contract of service or any day substituted for the gazetted public holiday.


What is the calculation of Ordinary rate of pay (ORP)?


The formulae for calculating the ORP for employees hired on a monthly, weekly, daily or piece-rated basis is provided below:-

Monthly rated employee
ORP = Monthly rate of pay / 26

Weekly rated employee
ORP = Weekly rate of pay / 6

Daily or piece-rated employee
ORP = Total wages earned during the preceding wage period
             Actual number of days worked during that period

This mode of calculation is also provided in the Sabah Labour Ordinance (Sec 2(3)) and Sarawak Labour Ordinance (Sec 2(3)).



What is the rate of minimum wage and which sectors involved?


Minimum Wage Policy has raised the basic wages of all employees to a minimum of RM1000 in Peninsular Malaysia and RM920 in Sabah, Sarawak and Labuan respectively. The minimum wage applies to all sectors of employment in Malaysia except domestic labour such as maids and gardeners.


What are the common benefits given by employers?


  • Handphone expenses
  • Company vehicles
  • Marriage leave
  • Family day
  • Nursery facilities
  • Laptop
  • Club membership
  • Professional subscriptions
  • Bereavement aid
  • Medical
  • Retirement medical benefit
  • Medical board out
  • Transfer expenses
  • Repatriation
  • Training
  • Bonuses
  • Employee Provident Fund (EPF)
  • Mileage Claim
  • Meals allowance
  • Others


What type of payments which are not considered as `wages' but in cash payable to an employee for work done in respect of the contract of service?



  • The value of any house accommodation or the supply of any food, fuel, light or water or medical attendance, or of any approved amenity or approved service;
  • Any contribution paid by the employer on his own account to any pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-off or retirement scheme, thrift scheme or any other fund or scheme established for the benefit or welfare of the employee;
  • Any travelling allowance or the value of any travelling concession;
  • Any sum payable to the employee to defray special expenses entailed on him by the nature of his employment;
  • Any gratuity payable on discharge or retirement; or
  • Any annual bonus or any part of any annual bonus.



How many gazetted public holidays should be declared by the employer?


For public holidays which are fixed by the employer only 5 days are compulsory and shall not be substituted. The remaining 7 public holidays can be selected by the employer.


Recently, Nuzul Al-Quran is announced as a public holiday by government for Kuala Lumpur, Selangor and Wilayah Persekutuan Labuan. If an employee is required to work on that day, shall he/she entitle for public holiday pay?


Yes, the employee is entitled for public holiday pay.


If a public holiday falls on a rest day, is it necessary to have a replacement public holiday?


The following working day after the rest day is the replacement public holiday.


What is the best action when an employee who claims themselves is unfairly dismissal?


Under Section 20, Malaysian Industrial Relations Act 1967 ("IRA 1967") provides that an employee who claims he has been unfairly dismissed may make a representation to the Director General for Industrial Relations ("Representation") within 60 days from the date of his dismissal.


How long employers are required to report to the nearest Labour Department before any action on ‘retrenchment' can be taken?


Employers are required to report 30 days before retrenchment.


3. If an employee's sick leave entitlement is 14 days, what would be his hospitalisation leave entitlement?


Sick Leave + Hospitalisation Leave = 60 days

Hospitalisation Leave = 60 days - 14 days = 46 days

However, any unused sick leave can be added to hospitalisation leave, but unused hospitalisation leave cannot be added to the sick leave entitlement.


Does an employee may take unpaid sick leave since he already fully utilised sick leave entitlement and annual leave? 


Yes. An employee may take unpaid sick leave if he has fully utilised his sick leave entitlement and annual leave.


What is the rate of calculation for Maternity Allowance?


  1. The rate of calculation of Maternity Allowance is based on ORP :
    Monthly Wages / 26 X 60 Days; OR
  2. Use fixed monthly wages as payment in lieu of allowance for full employees


What will happen to an employee who is on paid annual leave but suddenly fall sick and received sick leave?


An employee who is on paid annual leave becomes entitled to sick leave while on such annual leave, the employee shall be granted the sick leave as the case may be, and the annual leave shall be deemed to have not been taken in respect of the days for which sick leave is granted.


Employee submit resignation letter and directly quit from job because he will start working with other company without providing one month notice, does the company have the right to deduct the wages because in the offer letter stated one month notice or pay in lieu?


Yes. It shall be lawful for an employer to make the deductions for the indemnity due to the employer by the employee under Subsection 13 (1) which is "Either party to a contract of service may terminate such contract of service without notice or, if notice has already been given in accordance with Section 12, without waiting for the expiry of that notice, by paying to the other party an indemnity of a sum equal to the amount of wages which would have accrued to the employee during the term of such notice or during the unexpired term of such notice.


Does a part time employee govern by the Employment Act 1955 Employment (Part Time Employees) Regulations 2010?


Yes, a part time employee is governed by the Employment Act 1955 Employment (Part Time Employees) Regulations 2010. These regulations may be cited as the EMPLOYMENT (PART-TIME EMPLOYEES) REGULATIONS 2010 and come into operation on 1 October 2010.


What are in these regulations that do not apply to part time employees?


These Regulations do not apply to part time employee:

(a) Who is employed on a regular basis or occasionally, only when required, and whose working within a week does not exceed thirty per cent of the normal working hours of a full-time employee of the week (also known as part-time workers); and

(b) Who performs work for an employer in the employee's residence, irrespective of his occupation (also known as a worker who works at home).


What is the normal hour of work of part time employee where normal hours of work of full time employee cannot be ascertained?


In these regulations, "normal hours of work" means the work time agreed in the contract of service or as determined under Regulation 4, as the case may be

(1) Where the normal hours of work of a full time employee cannot be ascertained or there is no full time employee employed in a similar capacity in the same enterprise, the normal hours of work of a full time employee shall be deemed to be eight hours in one day or forty eight hours in one week.

(2) In the circumstances mentioned in sub regulation (1), the normal hours of work of a part-time employee shall be seventy per centum of the normal hours of work of such full time employee.


How much is the payment of hourly rate beyond normal hours of work for part time employees?


If a part time employee is required by the employer to work beyond his normal hours of work, the employer shall pay the part time employee for such extra work at the following rates:

(a) Not less than his hourly rate of pay for each hour or part thereof which exceeds the normal hours of work of the part time employee but does not exceed the normal hours of work of a full time employee employed in a similar capacity in the same enterprise; and

(b) Not less than one and a half times the hourly rate of pay of the part time employee for each hour or part thereof which exceeds the normal hours of work of a full time employee employed in a similar capacity in the same enterprise.


Does part time employee eligible for paid holidays?


Yes, all part time employees are entitled to a paid holiday of not less than seven gazetted public holidays (where four of them are National Day, Birthday of the Yang di-Pertuan Agong, Birthday of the Ruler/Yang di-Pertua Negeri and Worker's Day)


Are part time employees eligible for Annual Leave, Sick Leave and Rest Day?


Yes, a part time employee is eligible for Annual Leave, Sick Leave and Rest Day subject to Regulations (7), (8) and (9).