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INTRODUCTION
WHAT IS EMPLOYMENT LAW?
Employment law is basically a law which
governs employer and employee.
It regulates the operation of the labour market in
general and the employment relationship
between employers and employess in particular.
It is in fact wider than we could expect especially
when union comes in between, either
employees union or employers union.

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 That is why employment law is sometimes
referred to as industrial relation law (although IR
is more towards employer and employee in
industries).
When an offer for employment is made by an
employer to an employee, the law governing the
relationship between an employee and an
employer begins.
Individuals & employers are free to form
employment contracts but these contracts must
comply with the relevant employment
legislations.
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LAWS GOVERNING EMPLOYMENT IN
MALAYSIA
The principal legislation - the Employment Act
1955 (EA).
Other than EA, other legislations are:
Industrial Relation Act 1967 (IRA)
Trade Unions Act 1959
Employees Provident Fund Act 1991
Employees Social Security Act 1969
Weekly Holidays Act 1950
Occupational Safety & health Act 1994, etc.
THE LAWS GOVERNING EMPLOYMENT IN
MALAYSIA.
The principal legislation governing the labour
market and employment relationship in Malaysia
is the Employment Act 1955.
Essentially, Malaysian industrial relations is
governed by two main laws: The Employment
Act 1955 (EA) and the the Industrial Relation Act
1967 (IRA).

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 EA 1955:-
Regulates employer employee relations.
Establishes these relations on a contractual
footing, which in terms, the contract of service.
The court will look into this Act when determining
the nature of the employeremployee
relationship.
Legislates various terms and conditions of
employment which must be abide by both
employer and employee.

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ENFORCEMENT OF THE
EMPLOYMENT ACT (EA)
It is the responsibility of the Department of
Labour to enforce compliance with the
Employment Act (EA).
When a dispute arises between an employer
and his employee concerning the latters
entitlements under the EA, the Labour Court
are empowered to hear the dispute and make
a decision.
 Most employment contracts are negotiated
individually between employer & employee.
Problem: the bargaining power not equal when
the employees have to accept any terms &
conditions offered by the employer
 The INDUSTRIAL RELATIONS ACT (IRA)
1967:-
Regulates employer-union relations.
Emphasizes on direct negotiation between
employers and workmen or employees and their
trade unions to settle their differences
Regulate their collective/joint relationship
To settle dispute arising there through their own
effort and through mutually agreed procedures
with minimal government intervention.
Provide for speedy and just settlement of trade
disputes by conciliation or arbitration.

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Difference Between the EA &
IRA
EA governs IRA governs
employer-employee employer-union
relations relations
EA applies strictly to IRA applies
the private sector nominally to both
public and private
EA applies mainly to sectors BUT many
two classes of vital parts of the
employees: IRA do not apply to
1. basic wages do not the public sector
exceed RM 2000 IRA applies to all
2. who are employed
employees
in specified whatever their
conditions eg manual wage or occupation
labour
The Labour Court
Is an administrative tribunal
constituted by the EA 1955.
It was established to resolve
dispute between employers &
employees
Its decision are not final & may
be appealed against in the law
court specifically the High Court
 TYPE OF CLAIMS HEARD BY THE
LABOUR COURT
Termination benefits
Maternity benefits
Overtime payments
Sick pay
Annual leave pay
Public holiday pay
***Appeals from the Labour Court can be
made to the High Court (if either party is
dissatisfied with the decision) and
subsequently to the Court Of Appeal.
 INDUSTRIAL COURT
The Industrial Court is a statutory tribunal established under the
S.21 of the Industrial Relations Act 1967.
It was established principally to arbitrate disputes between
employers and unions.
BUT it is also empowered to arbitrate certain disputes between
employees and their employers over rights and obligations that
arise from the employment relationship and from the provisions
of the Industrial Relations Act 1967.
Most of the cases heard by the Industrial Court are claims by
individual employees that the employee had been unjustly
dismissed by his or her employer. The Industrial Court also
hears cases where the grievance of the individual employee is
taken up by his or her trade union against the employer and
disputes over collective agreements.
INDUSTRIAL COURT
The Industrial Court is an administrative
tribunal and a public decision-maker, you may
apply to the High Court for Judicial Review of
the award.
 INDUSTRIAL COURT
The time limit is 40 days from the date the decision
of the Industrial Court is communicated to you. It is
important to note that the Industrial Court does not
normally pronounce judgment in open court. The
decision of the Industrial Court is in writing and the
award is handed down after the parties have made
their submissions. The award is normally sent by
post and the 40 days will start to run from the day
the award is received.
Difference Between Industrial Court(IC)& Labour
Court(LC)
IC deals with individual
disputes arising from the
employer-employee
relationship (such as
dismissals) and trade
disputes between trade
unions and employers
(such as transfers) and
breaches of rights and
obligations imposed under
the Industrial Relations Act
1967.
LC deals mainly with
recovery of wages and
other monies and
employment benefits
provided to employees
under the Employment Act
1955 such as overtime pay,
maternity allowance, salary
in lieu of notice of
termination and termination
benefits
 LC not a statutory tribunal like the

Industrial Court but refers to the
IC- a statutory tribunal hearing conducted by a Labour
Officer of the Labour Department
into complaints by employees.
Employees whose monthly wages
are RM2000 and below and other
categories of employees who are
entitled to the benefits in the
Employment Act 1955 can file their
claims in the Labour Court.
Employees who fall outside the
scope of the Employment Act 1955
but whose monthly salary does not
exceed RM5, 000 may also seek
the assistance of the Labour Court
for recovery of salary or other
monies due and payable by their
employers under their individual
contracts of servic e.
Employment Act 1955-Scope
of the Act
Scope of the Act (First Schedule of the
EA). The definition of employees covered
under the scope of the EA is as follows:
Based on wages regardless of nature of
work i.e. employees earning RM2000 and
below OR
Based on the nature of work regardless of
wages i.e. employees engaged to manual
labour or employees supervising those
engaged in manual labour in and
throughout the performance of their
works
Scope
Drivers and other employees who
are involved in the operation and
maintenance of motorised
vehicles and irrespective of the
wages they earn in month.
Employer & Employee
Who is an employee?
Sche. 1 Of the EA
Earn wages not more than RM2000.00;
Manual labour, etc
Generally,the EA applies to employees
earning RM2000 per month & below. If it
exceeds RM2000 then the employee would
be covered by the EA if he is engaged in
manual labour
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Why employee?
Why should know that someone is an
employee or not?
To determine the scope of protection
under EA;
To identify rights & duties of the parties to
the employment contract;
To understand the benefits provided; etc.
 EMPLOYER EMPLOYEE RELATIONSHIP
Principally the employment relationship is
regulated by the EA and to some extent the IRA.
The relationship between employer and employee
is contractual by nature.
The EA describes the employment contract as
contract of service while IRA refers it as
contract of employment.
An employee has a contract of service but if
there is a contract for services - the person
providing the service is an independent contractor
and is not an employee.

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Contract of Service
A contract of service can be either oral or writing.
Where an employee begins employment with an
employer for a period exceeding 1 month, the
employer shall give to the employee a written
statement of particulars of employment.
Employer can provide better terms and conditions
to his employee in a contract of service but not
less favourable than the minimum requirements
provided in the EA 1955.

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 CONTENTS OF A CONTRACT OF SERVICE
A contract of service shall contain particulars of :
the names of employer and employee
the date when the employment began
the place of work or an indication of that and of
the address of the employer
the title of the job which the employee is
employed to do or a brief description of the work
for which a person is employed
the commencement salary and where applicable
other allowances and bonus

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 any terms and conditions relating to :
probation period
hours of work
entitlement to holidays, including public holidays
overtime pay and leave in lieu
incapacity for work due to sickness or injury,
including any provision for sick pay and medical
bills
EPF and SOCSO schemes

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 notice period prior to termination
retirement age, if any
Requirement of confidentiality
Mobility or transfer
Requirement to comply with companys rules
Penalties in cases of misconduct

Some of the terms are implied in every contract.

But it is good practice to write these terms into
contract.
 the length of notice which the employee is
obliged to give and entitled to receive to
terminate the contract of service or a clause on
the manner in which the contract of service may
be terminated.
In any circumstances, a wage period shall not
exceed 1 month. Where the wage period is not
specified in the contract of service, the wage
period shall be deemed to be 1 month.

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 Contract of Employment any agreement, oral or
in writing, express or implied, whereby one person
agrees to employ another as a workman and that
other agrees to serve his employer as a workman.
Employment contract must also be in writing (the
period/completion of work exceeding 1 month).
Every written contract must specify the ways in
which they may be terminated.
The EA also prohibits any employment contract
from restricting an employee to exercise his right in
trade union

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Section 10- Contracts to be
in writing and to include
provisions for termination
Contract of service for a specified
period
Contract of service for a specified
period of time or piece of work shall
terminate when the period has expired
or the work is completed.
The contract shall include manner of
terminating it, which includes notice
period of termination.
Section 12 Notice of
Termination of contract
Where the period of notice of termination is not specified
in the contract of service , the notice shall be as follows :
(*shall apply to both employer & employee)
4 weeks notice - has been employed for less than 2 years
6 weeks notice - has been employed for 2 years or more
but less than 5 years
8 weeks notice - has been employed for 5 years or more
A written contract of service with particulars of the terms
and conditions must be given to all employees on or
before the commencement of an employment.
S.13-Termination of contract
without notice
Section 13(1)- Termination (employer
or employee) by paying an "indemnity
(compensations) of a sum equal to the
amount of wages which would have
accrued (accumulated) to the
employee during the term of the
notice". (Pay/Wages in lieu of notice)
ii. Section 13(2)- Termination without
notice in the event of a wilful breach of
a condition in the contract of service.

Section 14 - Termination
Of Contract For Special
Reasons
Section 14 (1)- Dismissal on the
grounds of misconduct
Section 14(3)- Termination of
contract by the employee without
notice where he or his dependants are
immediately threatened by danger to
the person by violence or disease such
as the employee did not by his
contract of service undertake to run.
Section 15- When Contract Is
Deemed To Be Broken By Employer
And Employee
Section 15(1) - The Contract of
Service is deemed to be broken by
the employer if he fails to pay
wages within 7 days after the wage
period
Section 15(2)- An employee is deemed
to have broken his Contract of Service if
he has been absent for more than 2
consecutive working days without
reasonable excuse and has not informed
or attempted to inform his employer of
such excuse (at the earliest opportunity).
 Contract of service &
contract for services
Contract of service EA
Contract of employment IRA
any agreement, whether oral or in writing &
whether express or implied, whereby one person
agrees to employ another as an employee (or
workman) & that other agrees to serve his
employer as an employee (workman)

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 Any difference (of service & for
services)?

They are two different things:

Contract of service an employee;
Contract for services an independent
contractor.

Acts of the party depends on whether he is

bound by a contract of service or a contract
for services.
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Why must differentiate?
Because it determines the legal
consequences of the relationship between
the parties to a contract.
Example:
An independent contractor may not enjoy the
protection or take advantage of the benefits
provided by certain legislation that is meant
for the protection of employees;
Employer may be held vicariously liable for the
tortious acts of his employee but not that of an
independent contractor.

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 Any difference (of service & for
services)?

They are two different things:

Contract of service an employee;
Contract for services an independent contractor,
self employed person or small time businessman.

Acts of the party depends on whether he is

bound by a contract of service or a contract for
services.
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Contract of service v
Contract for service
Itmust be emphasized that at times
only a thin line of distinction
separates the two but the implications
are serious.
There is an entirely different set of
obligations and responsibilities for an
employer to look into if a person is
employed under a Contract of service
(employee or workman) as opposed to
a Contract for Service (self employed).
How does one differentiate
between COS v CFS?
How to differentiate?
Tests to determine:
Traditional/control test
Integration/organisation test
Multiple test
Control test/traditional test look at the
extent of control of employer over that
person concerned.
The essence of the test is that employee
works under the control of another, not
only as to what he must do but also how
and when he must do it.
.

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Control test
Control Test
1. Master /Employer
1. Whether classical has a degree of
relationship (Master- control over the
Servant) exist? servant/employee.
2. Is a person has a 2. YES, than he could
certain degree of be self employed &
independence over therefore comes under
his movements & a contract for service.
time management? *Control must cover
time, manner & place
3. of work
Superior- 3. COS- must be the
Subordinate
relationship? Superior-Subordinate
Relationship where
instructions are given
(Employer) and
obeyed (Employee).
In the case of Yewens v.
Nokes (1880) 6 QBD 530
The court held that A servant is
a person subject to the command
of his master as to the manner in
which he shall do his work.
Control or Integral/Organisation
Test
Generally speaking the control test fails in
more complicated situations where the
exercise of control over the workman is
unclear like to professionally trained
employees.
In Cassidy v Ministry of Health [1951] 2 KB
343. The Court of Appeal introduced the
concept of ultimate control. In this case, a
hospital authority was to held be vicariously
liable for an injury suffered by a patient
following negligent treatment by a full time
medical staff.
The emphasis was made on the ultimate
authority on the control that is to say,
dismissal. As a whole, the control test is
inconclusive as far as professionals are
concerned.
 Organisation test
The test was introduced to redress the
inconclusiveness of the traditional
control test.
In the case of Professionals who have a
high degree of independence, the
Integral Test is applied.
In this case it must be established
whether the person is an integral part of
the organisation and formally placed in
the organisational structure & hierachy
In the case ofEmployees Provident
Fund Board v M.S Ally & Co. Ltd. [1975]
2 All. ER 956. The case was about the
status of working assistants employed by
the defendants under EPF Ordinance.
The Federal Court decided that they were
employees since working assistants are
part and parcel of the organisation; that
they employed as part of the business
and their work is done as integral part of
and not as accessory to the business.
Organisation test
Organisation test whether the work
performed is an integral part of the
business or is merely ancillary to it.
Also problem because not appropriate
in all cases.
Multiple Test
A combination of the 2 previous tests & seeks to
examine the total nature & circumstances of the
relationship.
Multiple test court will look at a number of
criteria where other factors are also considered.
Eg. Whether the tools & equipment of work
provided by the employer; whether the individual
hired bears the risk of loss & chance of profit;
whether the statutory contributions have been
made pursuant to the provisions of EPF, SOCSO;
whether there is an obligation to only work for the
employer, etc.
The terms of contract will determine the nature of
the relationship but is still not conclusive.

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 Multiple Test
In the case of Short v Henderson
[1946]. The Court held a single control
test should give way to a series of
indicia. There are four main indicia,
inter alia the power of selection, the
payment of wages or other
remuneration, the right of suspension
or dismissal and the right of control,
that is to say the legal authority to
exercise control, which itself is often
critical and decisive, are the
determinants to decide the actual
relationship between the parties.
 Contract for service

Why contract for service?

To avoid the hassle of engaging a large
workforce especially in the area not directly
connected with production;
Payment is based on work performed;
Cost of supervision is less because an
independent contractor basically know the
what, when & how of their tasks;
Reduce overhead costs;

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 Cont

Employees get paid for the results

achieved, so less absenteeism,
malingering, etc;
Disadvantage:
Management not able to take any disciplinary
action directly even in cases of serious
misconduct up to contractor to take action.

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Courts Awards on Factors to indicate
contract of service or contract for
service
Contract of service:
(1) masters power of selecting the servant;
(2) payment of wages or other remuneration;
(3) masters right to suspension or dismissal;
(4) masters right to control the manner of
work to be done.

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Cont
Contract of service:
in consideration of a wage/remuneration,
servant agrees to provide work & skill in
performing his service for his master;
In performing the service, he will be subject
to the masters control;
The other provisions of the contract are
consistent with it being a contract of
service.

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LESS FAVOURABLE TERMS & CONDITIONS
THAN THOSE IN THE EA 1955

For employees within the scope of

the EA the minimum terms &
conditions for employment is set
out in the EA.
But, for employees who are outside
the scope of the EA the employer &
the employee are free to discuss &
agree on any terms & conditions
which are acceptable to both of
them
LESS FAVOURABLE TERMS & CONDITIONS
THAN THOSE IN THE EA 1955
Under section 7, if the terms or
conditions of a contract of service are
less favorable to an employee than
those provided in the EA, then the
terms and conditions set out in the EA
will apply in its place.
BUT, under EA s. 7 A an employer is
allowed to give more favourable terms.
According to the Minimum Wages Act
2012, wages can not be less than
RM900 per month for employees in
Peninsular Malaysia
 CHANGES TO TERMS & CONDITIONS OF
THE EMPLOYMENT CONTRACT
An employment contract contains the
terms & conditions which the employer
& the employee have agreed to carry
out at all times.
The terms of the contract can not be
altered or varied without the consent of
the other party. Any variation of the
terms without the consent of the other
party is a breach of the service contract.
Any delay by an employee in objecting
to the variation of the terms of the
service contract may be deemed as
acceptance by the employee.
 RIGHTS AND RESPONSIBILITIES
Both employer and employee have rights and
responsibilities tone another.
As an employer, his responsibilities towards the
employees among others are:
providing works and wages
providing lawful works
providing safety working systems

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 Onthe other hand, the employee responsibilities
towards the employer are:
ready to work
faithful he will not take any action that would harm
his employers business/ undertakings.
obedient & loyalty carry out any lawful order of the
employer
Due care doing his work responsibly & safely

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