Name : Fairi Azrie Bin Ismail

ID : 2013348357
Class : NBH9B
Encik Arif asks Badli to take care of his bungalow while he is away for 2 years overseas. Badli is supposed to ensure
the security of his house is maintained 24-7 and made a guardhouse to enable him to check on the security of his
house at all times. At the same time, he also installed a CCTV system around the parameter of his house. He pays
RM2,000 every month through online banking. Nothing is written in black and white.
During the first year, he called over the phone randomly at different times of the day, 2 to 3 times a week to check on
Badli's work while also checking remotely the CCTV visuals. He will make it known to Badli when he feels that
Badli is slacking off at work.
After 1 and 1/2 years, he terminated the services of Badli and appoints Ali. Feeling disappointed, Badli claims for
unlawful dismissal at the Industrial Relations (IR) Department. He also claims for unpaid EPF, SOCSO contributions
and retrenchment benefits.
Ariff is also shocked with Badli's claims.
Questions:
1. Is Badli right in doing all of the above? Please explain. (5 marks)
2. Why is Ariff shocked? What is his contention? (5marks)
3. If you are the IR Officer with the IR Dept, what will your advice given to Badli and Ariff. Please explain in detail.
(10 marks)
Answer:

1. Yes if Badli cover under Contract of Service. Contract of Service is define as "any
agreement, whether oral or in writing and whether expressed or implied, whereby one
person agrees to employ another as an employee and the other agrees to serve his
employer as an employee, and includes an apprenticeship contract" - EA ACT, 1955. If
Badli cover under Contract of Service, the employer and employee relationship is
regulated by the employment legislations. E.g.: the employer is responsible for
contributing a certain percentage of the employees wages to the EPF and SOCSO on
behalf of the employee and subjecting the wages to deduction of income tax.

2. Ariff shocked because he assume Badli is Contract of Employment. Contract of

Employment. is defined as "any agreement, whether oral or in writing and whether
expressed or implied, whereby one person agrees to employ another as a workman and
the other agrees to serve his employer as a workman" - IR ACT, 1967. There is no
statutory requirement to subject the payments of fees or retainer to independent
contractor to the deduction of income tax or contribution to the EPF or SOCSO.

Refer to Section 2 EA 1955 Contract of service is Any agreement, whether oral or

writing and whether expressed or implied whereby one person agree to employ as an
employee, and that other agrees to serves his employer as employee and includes an
apprenticeship contract.
 And Arif have to made the writing contract refer to Section 10(1) EA.

3. Control Test the Contract. This is also called the Traditional Test, it determines how
much control is being exercised over the worker by the employer. The more control that
is being exercised, it is more likely that the worker is an employee regardless of what
the contract says.Traditionally masters exercised actual control over their servants.
Essentially, the more control the employer has on the employed means the employed is
more likely to be employee. The less control the employer has on the employed means
the employed is less likely to be employee.Nevertheless, the control test does not
manifest a prima facie contract of service though the element of control is fulfilled (or
inversely, contract for service though the element of control is not fulfilled).In the case
of Bata Shoe Co (Malaysia) v EPF Board (1967), the shop managers were employees of
BATA due to the considerable control which the company had over the shop managers.
However the salesman employed by the manager were not. They were instead the
employees of the manager.

Arif randomly call Badli different time a day and he also installed a CCTV system to
check the Badli. This is show that a relationship as a employee and employer between
Badli and Ariff.
Ariff have to fullfill the claim that make from Badli.

Badli can claim the termination notice based on EA1955 Sections 13(1),13(2) or 14(1)(a)
and cliam the Termination and Lay-Off Benefits Regulations 1980.

Arif have to pay Badli SOCSO according to SOCSO ACT 1969 Section 2 (2) contribution
means the sum of money payable to the Organization by the principal employer in respect
of an insured employee and includes any amount payable by or on behalf of the employee
in accordance with this Act;

4. Other Option:
Suggestion to Improve the System and Understanding
It may seem a little too confusing considering the various legal tests adopted by the court
to classify worker whether they are employee or independent contractor. For example,
you can sign into a contract for services but you are actually an employee (e.g. MS Ally
case), or, you can agree to work as employee but after court consideration, you are
actually just an independent contractors (e.g. Bata case), or, you are actually an employee,
but have to ask the court to prove it to your employer because they do not want to
compensate you for some reason (e.g. after wrongful dismissal.
Educate the Employee / Independent Contractor

Union workers (e.g. bankers) are somehow protected because of their unions. The Union
becomes a champion on the rights of their fellow members such as they help to set
things right if the employer gets too big on their head (e.g. mistreating employees). Also,
they provide legal advice and other supports if there are breaches of employment
contracts.

Enforcement

After all the education or warning has been exhausted, then enforcement should
be administered. Perhaps a stricter punishment should be drafted (although the
author thinks it is already severe) into the current law.

However, enforcement must be done fairly, justified not selective. Political

ambitious or greedy and unethical authority enforcer may only act on certain
parties/companies/businesses and turn blind or deaf on another party.