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Employment Terms and Conditions

Malaysia - Employment Terms and Conditions


Terms and conditions of employment are usually set by individual employers. Malaysia has blanket conditions in employment law set by its Parliament of which employers must adhere to. These laws in Malaysia are known as “Labour Laws”.

Working Week in Malaysia

Malaysia operates a Sunday-Thursday working week. This varies in some Northern states and some still use the Saturday-Wednesday. Reforms were made in the middle of 2000 and the weekend was changed to Friday and Saturday. Malaysia is a Muslim Country and Friday is seen as ‘Holy Day’ and therefore it is a day of rest. Most offices and shops will close on this day. The tourism industry will work as normal.

All employers have to adhere to one complete day of rest. This can be one 24- hour period so those who work shifts can still have a full day’s rest.

Working Hours

Laws are strict on this in Malaysia. No employer can ask their employee to work for more than five hours work without a 30-minute break.

An employee cannot work more than 8 hours per day.

There must not be more than 10 hours in a day worked over split shifts.

The working week should not be more than 48 hours

Overtime

Overtime is as agreed between employee and employer although the hourly terms and conditions should be applied in terms of the 30-minute break and the 10-hour day. Overtime is paid on top of what is classed as the ‘Normal Rate of Pay’

Illness/Sick Pay

An employee is entitled to sick leave of 14 days per year and this does not have to include hospitalization. This is for less than two years of service.

For employees who have worked for the company for 2-5 years this rises to 18 days.

For employees who have worked for the company for five years or more this rises to 22 days.

If a stay in hospital is required and registered by a doctor then sick leave of up to 60 days is allowed.

Sick pay is according to the terms and conditions of your contract with your employer. The sick leave entitlement is set by the government. Any medical expense must be claimed back from your insurance company.

Maternity and Paternity Leave

Mothers are entitled to one month’s maternity leave. A mother is entitled to maternity pay from her employer for this period under Malaysian employment law.

A father is entitled to one week’s paternity leave with pay under Malaysian Employment Law.

Annual Leave

Entitlement to annual leave as laid down by employment law is as follows:

8 days in any period of a 12-month continuous employment period if employed by the company for less than two years.

12 days in any period of a 12-month continuous employment period if employed by the company for less than five years.

16 days in any period of a 12-month continuous employment period if employed for more than five years.

Retirement Age and Pension Schemes

The retirement age is currently set at 60 years of age in Malaysia. Pension schemes are compulsory in Malaysia and are known as an ‘Employment Provident Fund’. This is compulsory for Malaysian citizens. Voluntary contributions can be made by residents of Malaysia who are not citizens. Employers are required by law to top these contributions up. This money is set aside in banks as money for retirement or for if a person loses their job through redundancy. It also ensures employers take care of their staff. The pension scheme is compulsory for all citizens regardless of whether they work in the public or private sector and they can invest the money themselves or allow the bank to do it. If employees choose to make their money work for them, then any losses incurred must be borne by the person, it is not covered by the EPF. Currently, the contribution is 11% of an employee’s salary. A further 12% is required as a contribution from the employer.

Unions

Malaysia operates a trade union standpoint and it is only allowed in certain areas of an industry. In other words, board members, chief executives or managing directors are not allowed to be members of unions. The trade unions must be trade. For example, a teacher must join a teacher’s union.

The Trade Union Act does protect the employee from discrimination by an employer for joining a union. This also has a flipside. There can be grounds for dismissal if an employee’s actions within a company from direct association with a union affect that company.

Probationary Periods

The Malaysian Employment Law states that all companies must be fair during a probation period. The employee will be assessed accordingly. On completion of the probationary period, either a contract is drawn up or the person is not successful. The duration of the probation period is set by the company.

Dismissal

Grounds for dismissal are set by the company and can be actioned at any time. These terms are laid down by the company and in the contract of employment which is signed by both parties.

Notice Period

Notice can be given by any party at any time in line with the terms of the employment contract.




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