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HaemesWorks Online Networks * HaemesNetworks Online Networks!* Shah Alam, Kuala Lumpur, Butterworth, Kangar, Arau, Johor Bahru.

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INTRODUCTION An organisation is a mechanism which works with structured coordination in establishing a corporate relationship. For illustration, a legal firm works with proper systems and functions in administering its layouts. Zaid Ibrahim & Co to be named; is a leading legal firm which handles corporate cases and civil litigations. Inspired by Dato Zaid Ibrahim himself, this firm caters legal practitioners under a roof of partnership. It has more than 300 members comprising of directors, managers, partners and workers; to date at all 6 local branches in Malaysia beneath the contract of service as well as contract for service between the firm and the clients who have utmost faith in the organization of the firm. CONTRACT OF SERVICE AND CONTRACT FOR SERVICES Basically, there are two types of employment which are contract of service and contract for service. Dealing with the first variation, contract of service is generally an agreement which can be done verbally or in writing as well as expressly or impliedly signified. However, it must strictly be in writing if the contract of service is for a fixed period of time more than a month. Besides, the terms and conditions of the contract have to be in accordance with the Employment Act 1955 and must also be communicated to the employee before the commencement of the employment. The contract of service occurs when a person decides to appoint an individual as his employee and subsequently, that particular individual agrees to be part of the employment. In this situation, if the employees have the contract of employment with the firm Zaid Ibrahim & Co., they are deemed to be in the contract of service. Contract for service on the other hand is an agreement between the firm and client. it is when the firm agrees to give and provide services to the clients in undertaking a certain job for them. Regarding contract for service, the agreement will stand as an evidence that an individual has employed an organization to carry out task an assignment or a project. In this matter, a bystander, who is also a client to the firm Zaid Ibrahim & Co. would appoint it to deal with any claims or suits made against a party. However, it is to be noted that the contract for services does not cover any employer and employee relationship but it is instead an engagement of work between an organisation and an entity which is not part of the firm. In addition to that, the employee is not protected under the Employment Act 1955 as compared to the contract of service.

There are certain circumstances leading to the formation of the types of the employment contract. These factors can be determined by 6 points. They are: i) ii) iii) iv) v) vi) Control Workplace and timeline Representation Statutory rights Liability Obligation

Firstly, control is essential in verifying the types of employment contract. The worker is deemed to be controlled by the employer and thus the employees are obliged to follow and execute the instructions given by the employer. This presence shall make the employment agreement as a contract of service whereas with regards to the contract for services, the requirement to supply services for the client depends absolutely to the agreement made earlier and it has to be in accordance with the specification underlined in the contract. For example, Zaid Ibrahim & Co. exercises both types of employment contract. Contract of service can be found between the employer of the firm with the employees and the relation formed between the firm with the client seeking for their legal assistance can be considered as an instance of contract for services. Secondly, workplace and timeline are also a key factor to determine a specific kind of employment contract. A contract of service requires the employee to work at a specific place during specific hours on specific time or days. For example, an employee will begin their work at 9.00am and ends at 5.45pm. In fact, flexi-time and over-time also have core hours. Pursuant to the contract for services, the organization has no fixed workplace or working time since it is required to complete the project at a specified time even the distance extends to milestones. This is also need to be finished in line with the schedule set in the very first place between both parties. This is crucial in order to ensure that the standard of the work is adhered by the firm in complimenting the needs of the client as agreed in the contract. At Zaid Ibrahim & Co., the employees work depending on the agreed terms and conditions stipulated. They punch in at

9.00am and punch out at 5.45pm while the lawyers assigned with tasks and cases by the client work in a flexible way without a rigid schedule in order to achieve the standard and quality of work expected by the client. Thirdly, with regards to representation of an entity, whether it can be made on behalf of a person. Under the contract of service, the employee must present themselves for work and they cannot be represented by any other person or substitutes for the reason that its occurrence could violate the contractual terms made between them and the employer. Meanwhile, in the contract for services; the firm has the right to provide substitutes to complete the work specified in the contract based on the agreed terms on timeline and schedule. This is different as compared to the contract of service which disallows any alternate to be made and this is on the basis of valuing the crux of justice and contractual obligation. At Zaid Ibrahim & Co., the employee will execute the works assigned to them based on their specifications and skills and they are not to be substituted or replaced by any other person whereas the firm can assign anyone to complete the case and claims originated by the client in ensuring the timeline of the claim to be observed. Next is the statutory rights embodied to employees. Technically, under the contract of service; the employees have the statutory rights to certain advantages such as holiday pay, sick pay, maternity and paternity rights and redundancy payments. What is more, it is also provided as part of their statutory rights regarding how they can be asked to leave their jobs. However, the contract for services provides no absolute statutory rights to the employees. It just matters that the firm is to be paid once the job is done in accordance to the agreed contract. For example, employees at Zaid Ibrahim & Co. should acknowledge on their statutory rights reserved to them while the contractor and client relationship is not accorded with statutory advantages since it is important to complete the work within specified time. Fifthly, another factor to determine the characteristic of an employment contract is liability. In the contract of service, the employees are not personally liable for any errors they make when completing work for their employer and they are also not expected to make good in their own time. With regards to contract for services, the contractor is required to abide by any health and safety and security arrangements when working at the clients site and on top of that, liability for any errors or defects in work that will be completed for client. It is also a possible circumstance

that the liability will expand to be personal one such as in the event that the contractor is the director of the organisation. An instance to that would be corporate manslaughter. This clearly distinguishes the liability that will be taken in different employment contracts. Zaid Ibrahim & Co., the employees will not be made personally liable but the director of the firm can be held such if he is found to be involved in the crisis of corporate manslaughter or malicious intents. The last factor that can be scoped in determining the type of employment contract is obligation. Under the contract of service, employee and employer have a relationship called mutuality of obligation in which the employer is obliged to provide work for the employee while the employee is under a responsibility to complete the work. This is fundamental since the failure on the part of the employee to fulfill this obligation might result to dismissal. Similarly, the employee can take legal action against the employer at the Industrial Tribunal if the employer failed to perform his duties. On the other hand, in the contract for services; the client is under an obligation to provide safe working environment for the contractor as well as the contractor too in regards to their duties and obligations. If either party breaches an obligation, a legal action can be taken against each other as one remedial act to the possible frustration of contract. Particularly at Zaid Ibrahim & Co., the principle of uberrimae fidei is observed by both employees and employer in making their works go properly with accuracy and precision without any delay to complete it. Regarding the contract for services, the same principle is observed in implementing the obligation at best without any prejudicial acts. Furthermore, these factors are also affirmed in the cases of Market Investigations v Minister of Social Security (1969) 2 QB 173 and Ready Mixed Concrete Ltd v Minister of Pensions and National Insurance (1968) All E.R. 433 which respectively underline the multi-factoral test and control test in the factors and characteristics determining the types of employment contract. METHODS OF TERMINATON FOR CONTRACT OF SERVICE Section 2 of the Employment Act 1955 mentions contract for service as any agreement made orally or in written form, in which the employer agrees to employ an employee who agrees to it and that shall also include an apprenticeship contract. Termination is generally related to the end of an employment relationship but it can also be simplified as the termination of an employment contract as a whole. Either parties to the contract, whether employer or employee has the rights

to terminate the employment contract due to any failure to perform a specific obligation under the contract. For example the contract may be terminated by the employer when he retrenches and also by the employee when he resigns as well by an occurrence of an event of death. In light of the case of Raman a/l Perumal Thever v National Land Finance Cooperative Society Ltd. And Industrial Court Malaysia, in order to terminate a contract; a notice must be given and it is not necessary be accorded with reasoning in accordance with Section 12 of the Employment Act 1955. In reference to the Employment Act 1955, there are 4 methods of termination for contract of service and they include: i) ii) iii) iv) Termination by effluxion of time Termination by notice Termination without notice Termination for special reason

Firstly, Section 11 of the Employment Act 1955 provides that a contract of service for a specified period of time or for performance of specified piece of work shall be terminated when the supposed agreement has expired. Regarding a contract of unspecified period of time, it can be terminated in accordance to Part II of the previously mentioned Act. It literally signifies the flexibility of an employment contract that can be repudiated and terminated upon any breaches or failure such as when the agreement has lapsed. Secondly, Section 12 of the Employment Act 1955 mentions that termination can also be effective through the issuance of notice. It is to be executed by a party to another through communication of the notice and it is to be noted that a reasoning or justification is not needed or required for a termination to occur. This interpretation gives the rights to the employer to dismiss an employee without giving any reason. The provision also enlightens the sufficiency of the notice which depends on the duration of employees services. Thus, it potrays the credibility and reliability of an employment contract which needs a notice to be given before the intended repudiation takes place.

Thirdly, Section 13 of the Employment Act 1955 also stipulates the rights of any party to terminate the employment contract without the issuance of notice. However it is to be accorded with the payment of indemnity as equal as to the amount wages for the notice period or proportionate to the unexpired terms of the notice. This technically gives just chance to any party to leave the employment contract and serves as a vivid compensatory form. By virtue of the case of Sellamuthu v Karai Nagar Estate, the notice if to be given must be adequate and if not, must be indemnified equally. Lastly, Section 14 of the Employment Act 1955 points out that an employer may dismiss an employee without notice and this is to consider certain circumstances that affect the organisation such as misconduct and it can only be executed upon a proper domestic enquiry. On the contrary, the employee may also terminate his employment contract if it is discovered that the employer is incapable due to bodily danger through violence or disease. This is therefore an indication that if it can be proven the existence of specific special reason of terminating the employment contract, it shall take place without any prejudicial implication. COMPLIANCE OF TERMINATION TERMS TO EMPLOYMENT ACT 1955 An employment contract is terminated due to perceived misconduct of a party and the reason given to it shall be deemed as dismissal. Termination of employment contract is exercisable by both parties by notice while dismissal is the prerogative of the employer to end the employees employment through the reason of misconduct and misbehavior. It is a polemic on the differences between termination and dismissal as well as whether termination does actually comply to the provisions laid down under the Employment Act 1955. The Industrial Court in the case of I Rajespaire and Iskandar Polo Club decided that there are differences the two terms and hence, the concept of termination complies to the provisions of the Act provided notice is issued prior to the termination and indemnification must be exacted if it is to be done without notice. Moreover, the Employment Act 1955 also highlights the benefits of termination. The Act nonetheless set out provisions particularly for employees in receiving compensation and benefits if they are about to be terminated. Furthermore, this benefit is also outlined in the Employment

(Termination and Lay-off Benefits) Regulations 1980 for the entitlement of the process of termination. This indicates compliance of the term termination pursuant to the Employment Act 1955 which is also supported by the rights to do such in the said Regulations. However, employees are not entitled to the benefits of termination if they retire pursuant to the contract of service, they are dismissed upon the reason of misconduct after enquiry, they voluntarily retire and if they unreasonably refuse the offer of renewal and re-engagement. This compliance satisfies the principle in the case of Malakoff Bhd v Kuppusamy & Ors in which the Court ruled that the termination benefits entitle a person to receive it if the termination was done in compliance to the Employment Act 1955 and the Employment Regulations 1980. In conclusion, the compliance of the term termination is pivotal in determining the validity of the said act and the entitlement of the benefits that are to be received upon such termination from the employment contract.

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