Employment contracts

Your rights and responsibilities

If the employment period of an employee in a Malaysian company exceeds 1 month, he has to be given a written contract. The minimum requirements of of the contract content are set in the Malaysian Employment Act of 1955.

Employment contracts

A contract has to set terms and conditions relating to the weekly or monthly amount of working hours, the probation and termination period, overtime payment and holidays and further details as salary or the exact title of the job.

An employer can set own conditions and particulars but they must not fall below the minimum requirements of the Employment Act.

Notice of termination

The usual period when a notice of termintion has to be handed in by either the employer or the employee, depends on the duration of employment. If not stated differently in the contract, the periods according to which the notice of termination is related are:

  • employed for less than 2 years (4 weeks notice)
  • employed for 2 – 5 years (6 weeks notice)
  • employed for more than 5 years (8 weeks notice)

Probation period

During the probation period, which is set individualy by the employer, the employee can be dismissed without notice. The same applies to termination on the side of the employee. The probation period is usually between 1 and 6 months and the dismissal has to be justified. If a dismissal on the side of the employer is given after this period, and is not due to misconduct of the employee, the latter is entitled to layoff benefits. The basis on which the amount of days paid is calculated, is the same as for the probation period (employed for less than 2 years/from 2-5 years/for more than 5 years).

Overtime pay

Overtime pay must not go below 1,5 times the hourly rate on a normal working day, 2 times on a rest day and 3 times on a public holiday. The total amount of hours of overtime per month must not exceed 104.

A contract has to set terms and conditions relating to the weekly or monthly amount of working hours, the probation and termination period, overtime payment and holidays and further details as salary or the exact title of the job.

An employer can set own conditions and particulars but they must not fall below the minimum requirements of the Employment Act.

Notice of termination

The usual period when a notice of termintion has to be handed in by either the employer or the employee, depends on the duration of employment. If not stated differently in the contract, the periods according to which the notice of termination is related are:

  • employed for less than 2 years (4 weeks notice)
  • employed for 2 – 5 years (6 weeks notice)
  • employed for more than 5 years (8 weeks notice)

Probation period

During the probation period, which is set individualy by the employer, the employee can be dismissed without notice. The same applies to termination on the side of the employee. The probation period is usually between 1 and 6 months and the dismissal has to be justified. If a dismissal on the side of the employer is given after this period, and is not due to misconduct of the employee, the latter is entitled to layoff benefits. The basis on which the amount of days paid is calculated, is the same as for the probation period (employed for less than 2 years/from 2-5 years/for more than 5 years).

Overtime pay

Overtime pay must not go below 1,5 times the hourly rate on a normal working day, 2 times on a rest day and 3 times on a public holiday. The total amount of hours of overtime per month must not exceed 104.

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