- The EA was amended in 2012 by Act A1419, effective since April 1st, 2012.<br/><br/>- The EA which previously only applied to the Peninsular Malaysia has been extended to the Federal Territory of Labuan by the Extension and Modification of Employment Act) Order 2000 [P.U. (A) 400/2000] w.e.f. 1 November 2000.

Sec. 2(1), EA
The employment (termination and lay off benefits) apply to all employees with at least one year of service, except out-workers.

In 2012, the Employment Act was amended by the Employment (Amendment) Act 2012, Act A1419, published on 9 February 2012 and in force since April 1st, 2012.

FTC: sec. 10 (1) EA and 11(1) EA.

No statutory limitation found in the legislation reviewed.

No statutory limitation found in the legislation reviewed.

No reference to the duration of the probationary period in the legislation.
On probationary employees, see case law: KC Matthews v. Guthries (1981) 2 MLJ 320; Express Newspaper Ltd. V. Labour Court & Anor (1964) AIR SC 806.

No statutory obligation.
However sec. 10(2) EA states that every written contract of service should include a clause setting out the manner in which the contract concluded may be terminated by either party.

* Trade union activities: sec 5 (1) (d) and 59 (1) IRA.
New as of April 2012
*Maternity leave and pregnancy: Section 37 (4) has been inserted in the EA and it states that dismissing an employee during maternity leave constitutes an offence (former section 40 (3) EA). Unlike the previous Section 40 (3) EA (which now has been deleted), sec. 37 (4) of the amended EA provides that the prohibition of dismissal during maternity leave does not apply to termination on the grounds of the closure of the employer's business.
New as of April 2012
Prior to the 2012 amendments the provisions on maternity leave were applicable to female employees depending on their wages. As of April 2012, a new Section 44A has been introduced in the EA, and it states that maternity leave entitlements are now extended to all female employees, irrespective of their wage.
*Constitutes also an offence the dismissal of a female employee who remains absent from work after the expiration of the protection period as a result of illness arising out of her pregnancy or confinement (sec. 42 (1) EA).

New as of April 2012
*Maternity leave and pregnancy: Section 37 (4) has been inserted in the EA and it states that dismissing an employee during maternity leave constitutes an offence (former section 40 (3) EA). Unlike the previous Section 40 (3) EA (which now has been deleted), sec. 37 (4) of the amended EA provides that the prohibition of dismissal during maternity leave does not apply to termination on the grounds of the closure of the employer's business.
New as of April 2012
Prior to the 2012 amendments the provisions on maternity leave were applicable to female employees depending on their wages. As of April 2012, a new Section 44A has been introduced in the EA, and it states that maternity leave entitlements are now extended to all female employees, irrespective of their wage.

Constitutes also an offence the dismissal of a female employee who remains absent from work after the expiration of the protection period as a result of illness arising out of her pregnancy or confinement (sec. 42 (1) EA).

In addition, sec. 60N EA provides specific protection to local employees in case of collective dismissal as it stipulates that no employer can retrench a local employee unless it has first terminated the services of a foreign employee employed in a similar capacity.

Sec. 12 (4) EA.

Sec. 12 (2) EA lays down statutory minimum notice periods applicable to all dismissals, including those for operational reasons, but except dismissals for misconduct, as follows:
- 4 weeks for employees with less than 2 years of service;
- 6 weeks for employees with 2 to 5 years of service;
- 8 weeks for employees with more than 5 years of service.

No statutory provisions.

However, see the "Code of Conduct for Industrial Harmony [CCIH], 1975", § 20 to 24 on Redundancy and retrenchment.
The CCIH is an Agreement between the Ministry of Human Resources and the main social partners. The aim of the Code is "to lay down principles and guidelines to employers and workers on the practice of industrial relations for achieving greater industrial harmony".
Although it is not a binding instrument, it is however taken into consideration by the Industrial Court in retrenchment cases.

§ 20-21 reads as follows:
"(20) In circumstances where redundancy is likely an employer should, in consultation with his employees' representatives or their trade union, as appropriate, and in consultation with the Ministry of Labour and Manpower, take positive steps to avert or minimise reductions of workforce by the adoption of appropriate measures such as:
(a) Limitation on recruitment
(b) Restriction of overtime work
(c) Restriction of work on weekly day of rest
(d) Reduction in number of shifts or days worked a week
(e) Reduction in the number of hours of work
(f) Re-training and/or transfer to other department/work.
(21) The ultimate responsibility for deciding on the size of the workforce must rest with the employer, but before any decision on reduction is taken, there should be consultation with the workers or their trade union representatives on the reduction.".

No provision in the EA. However, pursuant to Employment (Retrenchment) Notification 2004 [PU(B) 430], the employer must inform the Labour Department via the PK Forms one month before the retrenchment.

However, see the "Code of Conduct for Industrial Harmony [CCIH], 1975", § 20-21 (not binding):
"(20) In circumstances where redundancy is likely an employer should, in consultation with his employees' representatives or their trade union, as appropriate, and in consultation with the Ministry of Labour and Manpower, take positive steps to avert or minimise reductions of workforce by the adoption of appropriate measures such as:
(a) Limitation on recruitment
(b) Restriction of overtime work
(c) Restriction of work on weekly day of rest
(d) Reduction in number of shifts or days worked a week
(e) Reduction in the number of hours of work
(f) Re-training and/or transfer to other department/work.
(21) The ultimate responsibility for deciding on the size of the workforce must rest with the employer, but before any decision on reduction is taken, there should be consultation with the
workers or their trade union representatives on the reduction."

No statutory provisions.

However, see the "Code of Conduct for Industrial Harmony [CCIH], 1975", § 20-21 (not binding):
"(20)In circumstances where redundancy is likely an employer should, in consultation with his employees' representatives or their trade union, as appropriate, and in consultation with the Ministry of Labour and Manpower, take positive steps to avert or minimise reductions of workforce by the adoption of appropriate measures such as:
(a) Limitation on recruitment
(b) Restriction of overtime work
(c) Restriction of work on weekly day of rest
(d) Reduction in number of shifts or days worked a week
(e) Reduction in the number of hours of work
(f) Re-training and/or transfer to other department/work.
(21) The ultimate responsibility for deciding on the size of the workforce must rest with the employer, but before any decision on reduction is taken, there should be consultation with the
workers or their trade union representatives on the reduction."

The courts have required employers to operate the "last on, first off" principle when retrenching employees, unless there are sound and valid reasons for departing from this principle (see i.e: East Asiatic v. Ong Wai Beng, Award 24/87).

In addition the Code of Conduct for Industrial Harmony [CCIH], 1975, provides in § 22 b) that:
"(b) The employer should select employees to be retrenched in accordance with objective criteria.
Such criteria, which should have been worked out in advance with the employees' representatives or trade union may include:
(i) The need for the efficient operation of the establishment or undertaking
(ii) Ability, experience, skill and occupational qualifications of individual workers required by the establishment or undertaking under part (i)
(iii) Consideration for length of service and status (non-citizens, casual, temporary, permanent)
(iv) Age
(v) Family situation
(vi) Such other criteria as may be formulated in the context of national policies"

See also art. 60N of the Employment Act: "Where an employer is required to reduce his workforce by reason of redundancy necessitating the retrenchment of any number of employees, the employer shall not terminate the services of a local employee unless he has first terminated the services of all foreign employees employed by him in a capacity similar to that of the local employee".

No statutory provisions.
However, see the Code of Conduct for Industrial Harmony [CCIH], 1975, § 23 (not binding):
"(23) Employees, who are retrenched, should be given priority of engagement/re-engagement, as far as is possible, by the employer when he engages workers".

No statutory provisions.

However, see the "Code of Conduct for Industrial Harmony [CCIH], 1975", § 20-21 (not binding):
"(20) In circumstances where redundancy is likely an employer should, in consultation with his employees' representatives or their trade union, as appropriate, and in consultation with the Ministry of Labour and Manpower, take positive steps to avert or minimise reductions of workforce by the adoption of appropriate measures such as:
(a) Limitation on recruitment
(b) Restriction of overtime work
(c) Restriction of work on weekly day of rest
(d) Reduction in number of shifts or days worked a week
(e) Reduction in the number of hours of work
(f) Re-training and/or transfer to other department/work.
(21) The ultimate responsibility for deciding on the size of the workforce must rest with the employer, but before any decision on reduction is taken, there should be consultation with the
workers or their trade union representatives on the reduction.
(22) (a) If retrenchment becomes necessary, despite having taken appropriate measures, the employer should take the following measures:
(i) Giving as early a warning, as practicable, to the workers concerned
(ii) Introducing schemes for voluntary retrenchment and retirement and for payment of redundancy and retirement benefits
(iii) Retiring workers who are beyond their normal retiring age
(iv) Assisting, in co-operation with the Ministry of Human Resources, the workers to find work outside the undertaking
(v) Spreading termination of employment over a longer period
(vi) Ensuring that no such announcement is made before the workers and their representatives or trade union has been informed"

The Employment (Termination and Lay-off Benefits) Regulations 1980 provides for statutory severance pay in the event of termination, on the following scale (sec. 6 (1)):
- ten days' wages for each completed year of service of less than two years;
- 15 days' wages for each year of two to five years' service;
- 20 days' wages for each year of service exceeding five years.

These Regulations apply to employees with more than one year's service (sec. 3(1)) and do not apply to dismissals for misconduct, after due inquiry (sec. 4).

Same as severance pay: see sec. 6(1) of the Employment (Termination and Lay-off Benefits) Regulations 1980.

The IRA does not expressly refer to legal limits (see provisions on the court's award: sec. 20 (2) and (3) and 30 IRA).

See sec. 20 1) and 33 b) IRA.

The employee who considers to have been dismissed without "just cause or excuse" first has to make representations to the Industrial Relations Department for reinstatement. If no settlement, including by conciliation, is possible, the Department will report the matter to the Minister, who may refer the matter to the Industrial Court (sec. 20 IRA)

The judicial body competent to hear cases of unfair dismissal is the industrial court (sec. 20 (3) and 30 IRA)
The employee who considers to have been dismissed without "just cause or excuse" first has to make representations to the Industrial Relations Department for reinstatement. If no settlement, including by conciliation, is possible, the Department will report the matter to the Minister, who may refer the matter to the Industrial Court (sec. 20 IRA)

Alternatively, an employee can bring a civil action for damages in respect of wrongful dismissal before the civil courts. However, a decision issued by the Industrial Court on unfair dismissal shall operate as a bar to any action for damages by the employee in any court in respect of wrongful dismissal.(sec. 20 (4) IRA).

Sec. 30 (3) IRA: with respect to unfair dismissal, the court shall make its award without delay and where practicable within 30 days from the day the case was referred to it.