Employment Law – Comprehensive Lecture 10 Notes (EA 1955 & IRA 1967)

Introduction

• Aims of employment law under the Employment Act $1955$ (EA $1955$):
  • Provide protection for employees against exploitation & victimisation.
  • Regulate contracts of service.
  • Offer specific safeguards for female employees.
  • Restrict the employment of children and young persons.
  • Reflect public-policy commitment to social justice and balanced industrial relations.

Key Statutory Definitions (s. $2$ EA $1955$)

Employer

• Any person who has entered into a contract of service to employ another person.
• Includes the employer’s agent, manager or factor—thus the Act binds both the legal person and those who act on the employer’s behalf.

Employee

• Post-amendment (effective $1$ Jan $2023$) the EA applies to all wage levels.
• Employees earning more than $RM4000$ are exempt from certain sections:
  • $60(3)$ – overtime on rest days.
  • $60A(3)$ – overtime outside normal hours.
  • $60C(2A)$ – shift-allowance.
  • $60D(3)$ & $60D(4)$ – public-holiday overtime.
  • $60J$ – termination, lay-off & retirement benefits.

Contract of Service vs. Contract for Service

Practical significance: mis-classification risks penalties, back-wages & contributions, and tort liability.

Essential Express Terms (EA & common law)

• Type / title of employment.
• Commencement date & probation period.
• Starting salary, allowances, bonuses.
• Hours: ≤ $8$ hrs/day, ≤ $48$ hrs/week.
• Meal/rest: $30$ min after every $5$ hours (s. $60A$).
• Termination notice clauses (else EA default—see later).

Statutory Presumptions of Employment (First Schedule EA)

Absent a written contract, a person is presumed employee when any factor exists:

1. Control test – manner/hours of work dictated by another.
2. Provision of tools, materials or equipment.
3. Work is integral to another’s business or solely benefits that other.
4. Regular payments constituting majority income.

These presumptions shift the burden to the “employer” to prove independent-contractor status.

Working Time Regulations

Normal Hours (s. $60A(1)$)

• ≤ $5$ consecutive hours without $\ge 30$-min break.
• ≤ $8$ hours/day.
• ≤ $45$ hours/week (reduced from former $48$ hrs).
• Excess hours ⇒ overtime entitlement (rates below).

Rest Day (s. $59$)

• Minimum $1$ full day within every $7$ days.
• Employer chooses the day & must notify employees.
• Work cannot be compelled; employee may consent at overtime rates.

Flexible Work Arrangements (FWAs) – ss. $60P$ & $60Q$

• Employee may apply in writing.
• Employer must respond within $60$ days; rejection requires written reasons.
• Covers flexi-hours, compressed weeks, remote work, etc. Encourages work-life balance and talent retention.

Shift Work & Overtime

• Shift workers may exceed daily/weekly limits provided average over any $3$-week cycle ≤ $45$ hrs (s. $60C(1)$).
• Overtime (s. $60A(3)(b)$): $\ge 1.5$ × hourly wage.
• On public holiday: $3$ × wage per hour (s. $60(3)(c),(d)$).

Public Holidays (s. $60D$)

• Total entitlement: $11$ days per calendar year.
  • Compulsory $5$: National Day, King’s Birthday, State Ruler/Governor’s Birthday, Labour Day, Malaysia Day.
  • Remaining $6$ chosen by employer & displayed before start of year.

Leave Entitlements

Annual Leave (s. $60E$)

• $<1$ yr: none.
• $\ge1$ yr < $2$ yrs: $8$ days.
• $\ge2$ yrs < $5$ yrs: $12$ days.
• $\ge5$ yrs: $16$ days.
• Unused leave forfeited unless mutually agreed to cash-out or carry forward (no statutory right).
• Case: Dunlop Malaysian Industries (Award $76/82$) – employer cannot compel employees to expend annual leave during shutdown; leave is for employee’s personal use.

Sick Leave (s. $60F$)

• ≤ $2$ yrs service: $14$ days.
• $2$–$5$ yrs: $18$ days.
• >$5$ yrs: $22$ days.
• Hospitalisation: additional $60$ days in addition to ordinary sick leave (e.g., $14 + 60 = 74$ days).

Maternity Leave & Protection (s. $37$)

• $98$ consecutive days per confinement (up from $60$).
• Employer cannot terminate pregnant employee except for: breach of contract, misconduct, closure.
• Paid maternity allowance during “eligible period”.

Paternity Leave (s. $60FA$)

• Married male employee entitled to $7$ consecutive paid days per confinement (conditions may include minimum $12$ months’ service—check subsidiary regs).

Wages & Salaries Framework

Statutory Definition (s. $2$)

• "Wages" = basic wages plus all cash payments for work.
• Excludes non-cash benefits, employer EPF/SOCSO, travel allowance, retirement gratuity, annual bonus.

Minimum Wages Order $2022$

• Effective $1$ May $2022$: $RM1500$/month (≈ $RM7.21$/hour).
• Scheduled rise to $RM1700$/month on $1$ Feb $2025$ (subject to confirmation).

Wage Period & Payment (ss. $18$–$21$)

• Wage period ≤ $1$ month (default when unspecified).
• Payment within $7$ days after end of wage period.
• Overtime: $1.5$ × on normal days; $3$ × on public holidays.
• Upon termination, all wages & indemnities payable on termination date.

Lawful Deductions

• Only those authorised by statute or with employee’s consent (e.g., EPF, SOCSO, income tax, union dues).

Termination of Employment

Contract Expiry (s. $11$)

• Fixed-term: ends when period lapses or specific project completes.

Notice of Termination (s. $12$)

Absent contractual clause:

• <$2$ yrs service ⇒ $4$ weeks.
• $2$–$5$ yrs ⇒ $6$ weeks.
• >$5$ yrs ⇒ $8$ weeks.
• Party may pay wages in lieu of notice (s. $13$).
• Employee absent > $2$ consecutive working days without leave/reason is deemed in breach (s. $15(2)$).

Case: Pan Global Textiles Bhd v. Ang Beng Teik [$2002$] $2$ MLJ $27$

• Unauthorised absence is gross misconduct; discharge justified.

Misconduct & Domestic Inquiry (DI) – s. $14$ EA $1955$

• "Misconduct" undefined; common examples: poor performance, gambling, abusive language, fighting, negligence causing harm.

Procedure

1. Suspension: up to $2$ weeks at $1/2$ pay (s. $14(2)$).
2. Charge Letter: detailed allegations, date/time/place, breached rule.
3. Employee Response: reasonable time to reply; if unsatisfactory, proceed to DI.
4. Panel Composition: independent Chairman + $2$ members + prosecutor (HR). Lawyers excluded, union officials permitted.
5. Hearing: prosecutor presents case, witnesses examined & cross-examined; employee presents defence.
6. Outcome Recommendations: immediate dismissal, demotion, suspension without pay, warning, etc.
7. Back-pay if suspension proves unwarranted.

Failure to conduct a fair DI may render dismissal unfair under Industrial Relations Act $1967$.

Unfair Dismissal (s. $20(1)$ IRA $1967$)

• Dismissal without just cause or excuse.
• Discriminatory, retaliatory, or procedurally defective terminations fall within scope.
• Employee must file representation with Director-General of Industrial Relations (DGIR) within $60$ days.
• Unresolved cases referred to Industrial Court → remedies: reinstatement, back-wages (capped at $24$ months), compensation in lieu, penalties.

Landmark Cases

1. Wong Yuen Hock v. Syarikat Hong Leong Assurance [$1995$]

   • Manager sold company motor wrecks to himself; dismissed without DI. Court: absence of inquiry = unfair dismissal despite misconduct allegations.

2. Milan Auto Sdn. Bhd. v. Wong Seh Yen [$1995$]

   • Mechanic alleged for sleeping on duty, absenteeism. Court: non-compliance with s. $14(1)$ “due inquiry” sufficed to declare dismissal unjust—substantive merits not examined.

Constructive Dismissal

• Employee resigns due to employer’s repudiatory breach (goes to root of contract).
• Typical conduct: public humiliation, unilateral salary cut, demotion, discriminatory workload.
• Tests established in case law:
  1. Syarikat Permodalan Kebangsaan v. Mohamed Johari [$2001$] – Mere unfairness not enough; prevents abuse.
  2. Anwar Abdul Rahim v. Bayer (M) Sdn. Bhd. [$1998$] – Core question: has employer evinced intention no longer to be bound by contract?
• Employee may seek same s. $20$ IRA remedies.

Ethical & Practical Implications

• Balances managerial prerogative with humane working conditions.
• Encourages transparent HR policies—clear contracts, documented performance management.
• Promotes gender equality (maternity/paternity rights) & modern workforce flexibility (FWAs).
• Non-compliance exposes businesses to monetary penalties, reputational harm, and potential criminal liability (for example, unlawful termination of pregnant employee).

Numerical & Formulaic References (compiled)

\begin{aligned}
\text{Normal hours} &\le 8 \text{ hrs/day},\
\text{Weekly hours} &\le 45 \text{ hrs/week},\
\text{Overtime rate (normal)} &= 1.5\times \text{hourly wage},\
\text{Overtime rate (public holiday)} &= 3\times \text{hourly wage},\
\text{Annual Leave Scale} &= \begin{cases}
8 & (1 < \text{svc} < 2 \text{ yrs})\
12 & (2 \le \text{svc} < 5 \text{ yrs})\
16 & (\text{svc} \ge 5 \text{ yrs})
\end{cases}
\end{aligned}

Quick Revision Checklist

• Understand definitions & coverage scope (post-$2023$ amendments).
• Distinguish contract of vs. contract for service tests.
• Memorise working time & leave thresholds.
• Recall minimum wage and overtime multipliers.
• Master termination notice default periods & DI steps.
• Cite key cases for unfair & constructive dismissal.

"Employment law is not merely a set of technical rules—it is an evolving social contract between labour and capital, balancing economic efficiency with human dignity."