The

Contract of Employment
Employee - Who is an employee? Section 2(1) EA55

- Any person irrespective of his occupation who has entered into a contract of service with an employer under which such persons wages does not exceed RM1,500/mth; or - Any person whose wages exceeds RM1,500/mth AND: 1. he is engaged in manual labour and the time spent on manual labour in any one wage period exceeds one- half of his total working time; or 2.Any person engaged in operation or maintenance of mechanically propelled vehicle for the transport of passengers or goods for commercial purposes; or 3.Any person supervising or overseeing other employees engaged in manual labour, employed by the same employer or any person engaged as a domestic servant; or 4.Any person engaged in any capacity in any vessel registered in Malaysia and is not an ocer certicated under the Merchant Shipping Acts of the UK, or the Merchant Shipping Ordinance 1952; or has not entered into an agreement under the MSO52; 5.He is engaged as a domestic servant.

Contract OF Service v Contract FOR Service

(D09 Q2a)

OF
- a contract between an employer and an employee under which the employee agrees to work for the employer. Denition: - Employment Act 1955 any agreement whether oral or in writing and whether express or implied, whereby one person agrees to employ another as his employee and that other agrees to serve his employer as employee and includes an apprenticeship contract - Industrial Relations Act 1967 Refers the contract as contract of employment. any agreement whether oral or in writing and whether express or implied whereby one person agrees to employ another as a workman and that other agrees to serve his employer as a workman It has generally been accepted that there is no distinction between the two phrases. American International Assurance Co Ltd and Dato Lam Peng Chong & Others

FOR
- Is essentially dierent from that of the contract of service or employment. - It does not create and employer-employee relationship and does not therefore come within the purview of the EA55 and the IRA67. - It merely creates a contractual relationship between an employer and an independent contractor.

(J08 Q3bi)

Section 10(1) EA55 A contract of service for a specic period of time exceeding one month or for the performance of a specied piece of work, where the time reasonably required for the completion of the work exceeds or may exceed one month, shall be in writing.

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Determine OF or FOR
(D09 Q2b)

3 Tests
Control Test
- Relates to the extent of control which the employer had over the employee in relation to the manner in which the employee was to do his work. - The greater the control, the greater the possibility that there is contract of service. Yewens v Noakes - Has been seen as inadequate especially in occupations of a skilled or professional nature because the employer may be unable to exercise such control.

Integration Test
- Relies on the extent to which a person can be considered as part and parcel of an organization. - The greater the integration with the organization the greater the possibility of a contract of service. Whittaker v M.P.N.I

Multiple Test
(Economic Reality Test) - Is more relied upon nowadays. - Takes into account multiple considerations in order to determine whether a contract of service exists. - The courts will take into consideration a. the extent of control b. the power of selection and appointment c. the power to suspend and dismiss the employee d. the intention of the parties e. the nature and contents of the agreement between them.

***
Advantages of the Employer/Employee Relationship (Contract of Service) The distinction between employees and independent contractors is important mainly because of the obligations arising from the employment relationship. i. Taxation Employers make income tax deductions for the employees whilst the independent contracts are directly responsible for their own tax due. ii.Employment protection legislation The protection provided to employees include minimum periods of notice, remedies for unfair dismissal, redundancy payments whilst no such protection is provided to the self-employed. iii.Tortious acts Employers are generally vicariously liable for tortious acts of employees committed in the course of employment whilst the liability of a person hiring an independent contractor for the contractors acts are severely limited. iv.Implied rights and duties There are rights and duties implied by statute for employers and employees whilst these either do not extend or would not apply to the same degree to a contract for service. v.Bankruptcy/Liquidation In liquidation, an employee has preferential rights as a creditor for payment of outstanding salary and redundancy payments up to a certain limit whilst there is no such provision for an independent contractor who is ranked as an ordinary unsecured creditor. vi.Health and Safety There is signicant legislation and regulation governing employers duties to employees with regard to health and safety (e.g Health and Safety Act 1974; The Occupational Safety & Health Act 1994)

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Payment of Wages
(J98 Q8ab; D03 Q6)

Denition of Wages
The term, wages is dened in Section 2(1) EA55 to mean basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service but does not include the following. 1. value of accommodation, or the supply of food, fuel, light, water, medical attendance, amenity, or service. 2. employers contribution to pension fund, provident fund, superannuation scheme, retrenchment, termination, lay-o or retirement scheme, thrift scheme, or any other fund/scheme for the employees welfare. 3. sum payable to the employee to defray special expenses incurred by nature of his employment. 4.traveling allowances or value of traveling concessions. 5. gratuity upon discharge or retirement. 6.annual bonus.

Latest Date for Payment

- Section 19 EA55 Every employer is required to pay his employees the wages due to them for a wage period, not later than the seventh day after the last day of that wage period. - However, if the DG is satised that payment within such time is not reasonably practicable, he may on the application of the employer extend the time of payment by such number of days as he thinks t. What if....

Termination by employee w/o notice Within 3 days from the day of such termination

Termination by either party with notice At the end of the notice period

Dismissal Employee is dismissed by employer - on the last day of his employment

Wage Period
- Section 2(1) EA55 Wage period is the period in respect of which wages earned by an employee are payable. - Section 18(2) EA55 If no wage period is specied in any contract of service, the wage period shall be deemed to be 1 month.
(A contact of service may specify a wage period which must not exceed 1 month)

Mode of Payment
- Section 25 EA55 The wags of an employee must be paid to him in legal tender, and wages paid in any other form is illegal, null and void. - However, Section 25A EA55 Payment may be made in the following ways provided the employee has consented in writing to payment in such manner; (i) Payment into an account at a bank in any part of Malaysia being an account in the name of the employee, or an account in the name of the employee jointly with one or more other persons. (ii)Payment by cheque made payable to or to the order of the employee.
Maximum amount deductible - Must not exceed 50% of the wages earned during the wage period. (Limitation does not apply in relation to deduction of indemnity for breaking contract of service in lieu of notice and may also be increased by another 25% if with regards to a housing loan)

Circumstances - employer may deduct employees wages - Overpayment by employer during the immediate 3 months due to employers mistake - Deductions for indemnity due e.g. breaking a contract of service. - Repayment of advances of wages. - Deductions authorized by any written law e.g. EPF, Socso Contribution, income tax etc. - Deductions made at the request of the employee in writing. e.g. subscriptions. - Deductions made with prior permission in writing of the DG of Labour.

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Payment of Wages
(D03 Q6b)

What is the maximum total amount of advance that can be granted to an employee?

Advances on Wages
Section 22 EA55 An employer may not during any one month make advance of wages not already earned by such employee with exceeds in the aggregate the amount of wages which the employee earned in the preceding month from his employment with such employer, or if he has not been so long in the employment of such employer, the amount which he is likely to earn in such employment during one month, unless such advance is made to the employee: 1. to enable him to purchase a house or to build or improve a house; 2. to enable him to purchase livestock; 3. to enable him to purchase a motorcar, a motorcycle or a bicycle; 4.for any other purpose: (i) in respect of which an application in writing is made by the employer to the DG; (ii)which is in the opinion of the DG, benecial to the employee; and (iii)which is approved in writing by the DG, provided that in granting such approval, the DG may make such modications thereto or impose such conditions thereon as he may deem proper. 5. for such other purpose as the Minister may, from time to time, by notication in the Gazette, specify either generally in respect of all employees, or only in respect of any particular employee, or any class, category or description of employees.

Trade Union
(J08 Q3bii)

An employer cannot restrict an employee from being involved in a trade union or trade union-related activities.

Section 8 EA55 Nothing in any contract of service shall in any manner restrict the right of an employee who is a party to such contract: (i) to join a registered trade union; (ii)to participate in the activities of a registered trade union, whether as an ocer of such union or otherwise; (iii)to associate with any other persons for the purpose of organizing a trade union in accordance with the Trade Unions Acts 1959.

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Hours of Work
Section 60A EA55
(D98 Q8)

General Rule
Section 60A(1) EA55 - the time for which an employee is required to work cannot exceed: (i) 5 consecutive hours without a period of leisure of 30 minutes duration (ii)8 hours in one day (iii)a spread over period of 10 hours in one day (iv)48 hours in one week. The proviso to the sub-section states that employees whose work requires continual attendance because he is engaged in work which must be carried on continually may be required to work for eight consecutive hours with a break of at least 45 minutes in between to enable him to have his meal. Further where under his contract of service with the employer the employee is required to work < 8 hours in one or more days a week, the limit of 8 hours may be exceed on the other days of the week subject to a further limit of 9 hours in one day or 48 hours a week.

Exceptions
(where the prescribed limits may be exceeded)

- Section 60A(1A) EA55 the DG, on the application of an employer may grant him permission to enter into a contract of service with his employees requiring them to work in excess of the hours prescribed in (i) - (iii) of s.60A(1) if he is satised that there are special circumstances relating to the business of the employer which justify the granting of such permission. Such permission may be granted subject to any other conditions the DG may deem proper to impose. - Section 60A(2) EA55 the employer may require the employee to exceed the prescribed limits of hours of work in the case of: (a) accident, actual or threatened in or with respect to his place of work; (b) work, the performance of which is essential to the life of the community; (c) work essential for the defense or security of Malaysia. (d) urgent work to be done to machinery or plant. (e) an interruption of work which it was impossible to foresee. (f) work to be performed by employees in an industrial undertaking essential to the economy of Malaysia or any essential services as dened in the IRA67 - Section 60C(1) EA55 employees who are engaged in shift work may be required to work > 8 hours in one day or > 48 hours a week but the average number of hours worked over a period of those weeks must not exceed 48 hours per week. - Section 60C(2) Ea55 Such employees generally cannot be required to work more than 12 hours in one day. Payment of Overtime Work - Section 60A(3) EA55 the overtime rate cannot be less than one and a half times the hourly rate of pay of the employee, irrespective of the basis on which his rate of pay is xed.

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Public Holiday and Rest Days

Public Holiday
Section 60D EA55 - Every employee is entitled to a minimum of 10 out of any gazetted public holidays in a year. - 4 out of the 10 are compulsory 1. Kings Birthday 2. Sultans Birthday/Head of State/Federal Territory day 3. Labour Day 4.National Day Section 60D(3) EA55 - Payment In the case of an employee who is required to work on any paid gazetted public holiday and who is on a (i) monthly, weekly, daily, hourly or such similar rate of pay, then he shall be paid as follows: - 2 days wages at his ordinary rate of pay, in addition to his holiday pay he is entitled to for that day. - at least 3 times his hourly rate of pay of work if he works for more than his normal number of hours of work. (ii)piece rate basis, then he shall be paid as follows: - 2 times his ordinary rate per piece, in addition to the rate of pay he is entitled to for that day. - 3 times his ordinary rate per piece if he works in excess of his normal working hours.

Rest Days
(J01 Q7)

Section 59 EA55 - Every employee is entitled to a rest day of one whole day in each week as may be determined by the employer. - Where the employee is allowed more than one rest day in a week the second of such rest days will be considered as the rest day for the purposes of the Act. Section 60(1) EA55 - An employee cannot be compelled to work on a rest day unless he is engaged in work which by reason of its nature requires to be carried on continuously or continually by 2 shifts. Section 60(3) EA55 - Payment In the case of a (i) daily or hourly rated employee, he must be paid: - 1 days wages at the ordinary rate of pay if the period of work does not exceed half his normal hours of work; or - 2 days wages at the ordinary rate of pay if the period of work exceeds half his normal hours of work (but does not exceed his normal hours of work). (ii)monthly rated employee, he must be paid: - half the ordinary rate of pay for work done on that day if the period of work does not exceed half his normal hours of work; or - 1 days wages at the ordinary rate of pay for work done on that day if the period of work exceeds half his normal hours of work (but does not exceed his normal hours of work). Where work is carried out in excess of the normal hours of work, both the above categories of employees are entitled to a rate of not less than twice their hourly rate of pay. In the case of an employee employed on piece rates who works on a rest day, he must be paid twice his ordinary rate per piece.

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Section 60E EA55

Annual Leave

No of days of entitlement per year

Year(s) of completed service with the same employer (no. of years) Annual Leave entitlement in aggregate in each calendar year (no. of days)

1 x < 2 2 x < 5 x > 5

8 12 16

*if worked < 1 year, then will only be entitled to annual leave in proportion to the no. of completed months.

Forfeiture of AL Possible if: 1. He absents himself from work w/o permission; or 2.W/o reasonable excuse for > 10% of total number of working days during the 12 months for which his entitlement is accrued. Can AL be substituted for payment? Yes, at the request of the employer and with the employees written consent. Sick leave while on AL? Employee will receive additional leave (likewise if employee goes on maternity leave)

Section 60F EA55

(J96 Q5d)

Sick Leave

Employee will be entitled to sick leave if a certicate from a registered medical practitioner is obtained AND has informed his employer within 48 hours of the commencement of his sickness

Max Number of Days 1. Where no hospitalization is necessary:

Year(s) of completed service with the same employer (no. of years) Sick Leave entitlement in aggregate in each calendar year (no. of days)

x < 2 2 x < 5 x > 5

14 18 22

2.Where hospitalization is necessary: 60 days in aggregate in each calendar year.

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Employment of Women

Conditions of employment for female employees 1. Not allowed to work in any industrial or agricultural venture between 10pm - 5am 2.Must have had a period of 11 consecutive hours free from work.

Maternity Leave
1. No. of days entitled? 60 consecutive days of paid maternity leave. 2. What if the female employee dies? Her nominee or legal personal representative will receive the maternity leave allowance up to the the dat of her death. 3. When should the leave be taken? Entitled to up to 30 days paid maternity leave before connement and 30 days after connement. 4.What is the rate payable? Calculated at the ordinary rate of pay or at the rate of RM6 per day whichever is greater. 5. What is the minimum rate of maternity allowance per day? Minimum rate is RM6/day 6.What if she absents herself after the 60 days maternity leave? She cannot be terminated until such absence exceeds 90 days if she is still medically unt for work. THe employer may grant her unpaid leave for the period exceeding 60 days r request her to treat the excess period as annual leave. 7. When can the maternity pay be suspended? If the female employee does not inform her employer of the date of her commencement of the maternity leave within a period of 60 days preceding her expected connement.

Exceptions - For females engaged in shift work, condition no.1 may be waived with the approval of the Minister of HR; - Females employed and licensed as a conductor of a public service vehicle may work between 10pm - 1am

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