Malaysian Employment Termination
Termination of Employment in Malaysia: A Guide
Termination of employment in Malaysia is governed by several laws, including the Employment Act 1955 (EA 1955) and the Industrial Relations Act 1967 (IRA 1967). The EA 1955 primarily applies to employees earning less than RM2,000 per month, while the IRA 1967 provides broader protection for all employees, regardless of their salary.
Key Points:
Notice Period: Employers must give employees a certain amount of notice before terminating their employment. The notice period varies depending on the length of service:
Less than 2 years: 4 weeks' notice
2-5 years: 6 weeks' notice
5 years or more: 8 weeks' notice
Severance Pay: Employees who have been employed for at least 2 years and are earning less than RM4,000 per month are entitled to severance pay. The amount of severance pay is calculated based on the employee's length of service and salary.
Just Cause and Excuse: Employers must have a valid reason for terminating an employee's employment, such as misconduct, poor performance, or redundancy. This is known as "just cause and excuse."
Unfair Dismissal: Employees who believe they have been unfairly dismissed can file a complaint with the Director-General of Industrial Relations within 60 days of termination.
Important Considerations:
Disciplinary Procedures: Employers must follow fair disciplinary procedures when terminating an employee for misconduct. This includes giving the employee an opportunity to explain their actions and conducting a fair investigation.
Retrenchment and Redundancy: In cases of retrenchment or redundancy, employers must follow specific procedures and may be required to provide severance pay and retrenchment benefits.
Maternity Leave: Employers cannot terminate an employee who is on maternity leave, except in cases of gross misconduct.
Additional Resources:
How to Terminate Employees in Malaysia: How to terminate employees in Malaysia https://www.bestar-asia.com/post/malaysia-guides-terminating-employees
Termination of Employment under Employment Act 1955 and Industrial Relations Act 1967: https://www.bestar-my.com/post/termination-of-employment-under-employment-act-1955-and-industrial-relations-act-1967
How Bestar can Help
Termination of Employment
Bestar can provide invaluable assistance during the termination of employment in Malaysia. Here's how we can help:
For Employers:
Compliance with Labor Laws: Bestar can ensure that employers adhere to all relevant employment laws, including the Employment Act 1955 and Industrial Relations Act 1967. This includes understanding and complying with regulations regarding notice periods, severance pay, retrenchment benefits, and disciplinary procedures.
Drafting Termination Letters: Bestar can help draft clear and legally sound termination letters that outline the reasons for termination, the notice period, and any severance pay or benefits due to the employee.
Managing Dismissal Procedures: We can guide employers through the proper dismissal procedures, ensuring fairness and minimizing the risk of unfair dismissal claims.
Risk Mitigation: Bestar can help identify and mitigate potential legal risks associated with termination, such as wrongful dismissal claims or disputes with labor unions.
Negotiating Separation Agreements: In some cases, Bestar can assist in negotiating separation agreements with employees, outlining terms and conditions of separation, including severance pay, confidentiality agreements, and non-compete clauses.
For Employees:
Understanding Rights and Entitlements: Bestar can explain the employee's rights and entitlements under employment laws, including notice periods, severance pay, and other benefits.
Negotiating Severance Packages: We can help employees negotiate favorable severance packages, including additional compensation, benefits, or other terms.
Challenging Unfair Dismissal: If an employee believes they have been unfairly dismissed, Bestar can help file a complaint with the Industrial Relations Department.
Seeking Legal Remedies: Bestar can advise on potential legal remedies, such as filing claims for wrongful dismissal, unpaid wages, or other damages.
Protecting Interests: We can protect the employee's interests throughout the termination process, ensuring fair treatment and compliance with labor laws.
Key Benefits of Hiring Bestar:
Expertise and Knowledge: Bestar has a deep understanding of employment laws and can provide expert advice on complex legal issues.
Risk Mitigation: We can help minimize legal risks and potential liabilities for both employers and employees.
Effective Representation: Bestar can effectively represent clients in negotiations.
Peace of Mind: Knowing that you have professional representation can provide peace of mind during a stressful time.
By seeking the assistance of Bestar, both employers and employees can navigate the termination process with confidence and protect their legal rights.
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