Employment Law in Malaysia

Updated on Thursday 05th April 2018

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Regarding Employment Law in Malaysia, there are two basic types of labor contracts: contract of service and contract for service.  
 

The definition and conditions for a contract of service 



Every contractor must know his or her rights and responsibilities (because they differ, according to each contract in place) but, in case there are unanswered questions, our law firm in Malaysia is able to help in any situation.

Here is a list of the key responsibilities and rights under a contract of service:

- the worker has to work at a specified place, during specific hours and days,
- the employee has to be present for work and is not allowed to send someone else in his/her place,
- the worker is controlled by his or her employer (e.g. the employee must perform tasks according to the job description),
- all employees have rights to receive holiday pay, maternity and paternity, redundancy payments and sick pay,
- every employee can enjoy different additional benefits, depending on the employer (e.g. private health insurance, company car, staff canteens, gyms, health clubs),
- when working for an employer, the worker is not personally liable for all of the errors that might occur during the program (it depends on the error).

If an employee has been absent from work, for two or more days without permission, the contract can be broken.

We invite you to watch the following video describing the main points in the Malaysian Employment Law:

 

Types of contracts within Malaysia



There are full-time contracts, part-time, casual (freelance), fixed term, traineeships, with a probationary period and piecework (commission only payment). During full-time contracts, employees work on a weekly basis (full week), but a worker with a part-time contract is expected to work on a regular ongoing basis and not a full week.

Casual employees, also known as freelancers, work on an irregular basis, depending when they are needed. They can agree with the employer to work a certain number of hours and are free to refuse the offer of work. When an employee has a fixed term contract, he/she is usually hired for a specific project or just for replacing another worker, for a certain period of time.

Trainees are the people hired for a certain job where they have to do practical work (for learning new skills), without payment from the company they work for. Their rates of pay are usually covered by an agreement or an award.

Contracts under a probationary period are constructed so that a business owner can be certain of the fact that the new employee is fit for the job at hand.
 

Wages in Malaysia



First of all, payments through banks or by cheque are allowed, but if the employer is charging interest on the advances, that is forbidden. However, it is legal for the employer to provide the worker with accommodation, water, food, medical attendance and so on, in addition to a salary. 

Regarding overtime payment, for any work that has been carried out after normal work hours, the employer must pay the worker at a rate of no less than one and a half times of the normal hourly rate.

For more details about employment in this country, you may contact our law firm in Malaysia