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OPEN UNIVERSITI MALAYSIA

FACULTY OF BUSINESS AND MANAGEMENT

-BBUI3103EMPLOYMENT AND INDUSTRIAL LAW

NAME

TUTOR NAME:
LEARNING CENTRE
Greenhill Learning Centre, Ipoh, Perak.

SEMESTER MAY 2015

WHO IS AN EMPLOYER?
The term employer is defined under section 2 of the IRA as: any person or body of persons,
whether corporate or un incorporate, who employs a workman under a contract of employment
and includes the Government and any statutory authority, unless otherwise expressly stated in the
Act.
WHAT IS EMPLOYMENT ?
Employment means work or service performed by an individual to the task at hand for another
person or entity in exchange for wages or other remuneration.
WHAT IS EMPLOYMENT LAW ?
Employment Law is the law which regulates the operation of the labour market in general and
the employment relationship between employers and employees in particular. Examples include
hiring process, suspension from work, maternity rights, layoff and wages.
The obligations and rights of an employment contract are covered by the Employment law.
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.
WHAT ARE THE BASIC TERMS USED TO DESCRIBE THE EMPLOYMENT
RELATIONSHIP ?
An employer in relation to an employee or a workman, means a person by whom the employee
or workman is employed. An employer obtains the services of another to perform work and has
direct control of the way in which the work is to be done.
An employer shall provide the means through which the services will be performed such as
providing a place where the work is to be performed and tools required to get the job done.
Contract of service means any agreement, whether express or implied, and if express, whether
oral or in writing where the employer agrees to employ and the employee agrees to be employed
and includes an apprenticeship contract.
In general, an employee means a person who has entered into or works under a contract of
employment. There are different interpretations for the term, employee, in different Acts
governing the labour market in Malaysia. Those interpretations will determine whether you are
an employee protected under the scope of an Act.
Where an employee begins employment with an employer and for a period of more than one
month, such employee must be given a written contract of employment with particulars of the
terms and conditions of employment including the notice period required to terminate the
contract of employment
WHAT ARE THE LAWS GOVERNING EMPLOYMENT IN MALAYSIA ?

The principal legislation governing the labour market and employment relationship in Malaysia
is the Employment Act 1955. However, the application of these rules to Sarawak and Sabah
references made under the Act shall be substituted by references to the Sarawak Labour
Ordinance (Cap. 76) and Sabah Labour Ordinance (Cap. 67) or other written laws in force in
Sarawak or Sabah, as the case may be.
Some other legal regulations include :
Pensions Act 1980
For the administration of pensions, gratuities and other benefits for officers in the public
service and their dependants.
Employees Social Security Act 1969 (ESSA)
For social security protection to all employees and their dependants as well as the
employers. This Acts is administered by the Social Security Organization (SOCSO) or
Pertubuhan Keselamatan Social (PERKESO), Malaysia.
Employees Provident Fund Act 1951
For the provision of financial security to its members particularly after retirement,
through a compulsory savings scheme. This Act is administered by the Employees
Provident Fund (EPF) or Kumpulan Wang Simpanan Pekerja (KWSP), Malaysia.
Occupational Safety and Health Act 1994 (OSHA)
For the safety, welfare and health of persons of workplaces or in the operation of high
risk machinery against risks to safety or health. This Act is administered by the
Department of Occupational Safety and Health or Jabatan Keselamatan dan Kesihatan
Pekerjaan, Malaysia.
Private Employment Agencies Act 1981
This Act is administered by the Manpower Department, Ministry of Human Resources or
Jabatan Tenaga Rakyat, Kementerian Sumber Manusia, Malaysia.
Human Resources Development Act 1992
This Act is administered by the Human Resources Development Council or Majlis
Pembangunan Sumber Manusia, Malaysia.
Factories and Machinery Act 1967
This Act is administered by the Department of Occupational Safety and Health or Jabatan
Keselamatan Dan Kesihatan Pekerjaan, Malaysia.
Petroleum (Safety Measure) Act 1984
This Act is administered by the Department of Occupational Safety and Health or Jabatan
Keselamatan Dan Kesihatan Pekerjaan, Malaysia.
Trade Unions Act 1959
This Act is administered by the Trade Union Affairs Department or Jabatan Hal Ehwal
Kesatuan Sekerja, Malaysia.
Workmen's Compensation Act 1952
For compensation to foreign workers injured in the course of their employment and to
worker's dependents in the event of fatal accident. This Act is administered by the
Department of Labour or Jabatan Buruh - Peninsular Malaysia, Sabah and Sarawak.
Industrial Relations Act 1967
An Act which governs the relationship between employers and workmen or employees
and their trade unions and generally deal with trade disputes. This Act is administered by
the Industrial Relations Department or Jabatan Perhubungan Perusahaan, Malaysia.

Wages Council Act 1947

This Act is administered by the Department of Labour or Jabatan Buruh - Peninsular
Malaysia, Sabah and Sarawak.
Employment Information Act 1953
This Act provides the Department of Labour with power to obtain and collect information
and data on employment, terms and conditions relating to an employment, from any
industries in the private sector. This Act is administered by the Department of Labour or
Jabatan Buruh - Peninsular Malaysia, Sabah and Sarawak.
Employment (Restriction) Act 1968
This Act is administered by the Department of Labour or Jabatan Buruh Peninsular
Malaysia.
Worker's Minimum Standards of Housing and Amenities Act 1990
This Act is administered by the Department of Labour or Jabatan Buruh Peninsular
Malaysia.
Weekly Holidays Act 1950
This Act is administered by the Department of Labour or Jabatan Buruh Peninsular
Malaysia.
Children and Young Persons (Employment) Act 1966
This Act is administered by the Department of Labour or Jabatan Buruh Peninsular
Malaysia
TERMS OF EMPLOYMENT
DEFINITION of 'Terms Of Employment'
The conditions that an employer and employee agree upon for a job. Terms of employment
include an employee's job responsibilities, work days, hours, breaks, dress code, vacation and
sick days and pay. They also include benefits such as health insurance, life insurance and
retirement plans. Employees whose skills are in higher demand will have an advantage when
negotiating terms of employment.
'Terms Of Employment'
Most employment contracts are at-will, meaning that either the employer or employee can
legally terminate employment at any time for any reason, though employees cannot be fired for a
few legally protected reasons such religion and gender. At-will employment means that an
employee can be fired even if he or she does not violate any terms of employment. However,
some employees work under contracts that provide job security for the length of the contract as
long as they do not violate their contract conditions.

PECUNIARY TERMS

:
Definition of wages or salaries as per stated in S 2(1) (a) (f) of EA 1955
Determining whether certain types of payment such as allowances or fixed remuneration are
wages as defined by the S. 2 of EA 1955 is very important for the purpose of computation of
overtime allowance, pay for rest days and public holidays as well as termination and lay-off
benefits.
In the case of Chin Swee Hin v Md.Arif (1977), the court decided the food allowance paid to
the respondent by the appellant was part and parcel of the contract of service and therefore was
within the definition of wages as stated in S. 2 of EA 1955.

The court decided that since the principal aim of EA 1955 is to protect the workers from
exploitation, therefore certain types of payment paid in cash to workers could be excluded for
purposes of computing overtime pay.

In the case of Asia Motors (KL) Sdn Bhd v Ram Raj (1985), the question was whether Special
Relief Allowance and Additional Relief Allowance form part of wages since the argument of the
respondents that they were paid less than provided by the statutory minimum payment stated by
the paragraph 4 (i) of the Wages Regulations (Shop Assistants) Order 1970. The employer argued
that the basic wages as defined by the Order does not solely mean basic wages but include other
types of payment i.e. specific relief allowance and additional specific relief allowance.
Therefore, they were paid more than provided by the Order.
The court decided that both the payments were not part of wages. The court was of the view that
clauses S. 2 (1) a f were not closed clauses. On the other hand, the employer can make other
payments that are not listed but not considered as wages. The important thing is that both parties
especially the employer must show an intention that is clear regarding it.
With regard to wages, EA 1955 continues to explain the period of wages, its methods of
payment, advance payment of wages and wage deductions.
Period of Wages or Salaries
S. 18 (1) EA 1955 provides that a wage period shall not be more than one month. However, it
can be less than one month.
Wage period means the period in respect of which wages earned by an employee are payable
(S. 2 of EA 1955).
4.1.3 Payment of Salaries
Generally, the employer must pay the salaries according to the period that has been fixed.
Provision
S. 19 EA 1955, every employer must pay to each of his employees not later than the seventh day
after the day of any wage period the wages, less lawful deductions earned by such employee
during such a wage period.
However, if there is an application from the employer, the time of payment of wages can be
extended if the Director-General is satisfied with the reasons provided by the employer.

Provision
S. 25(1) specifies that the entire amount of wages shall be paid to the employee through a bank
account of the employee.
However, according to S. 25A (1), an employer may pay an employees wages in cash or by
cheque upon written request of the employee.
Section 26 states that an employer cannot impose conditions upon the employees as to how the
wages should be spent.
Section 28 underlines the method of payment of wages i.e. employers are forbidden from paying
wages to employees at liquor shops, entertainment outlets or grocery outlets and so on.
Under S. 69 of EA 1955, the Director-General has the power to enquire and decide any dispute
between an employee and employer in respect of wages or any other payment in cash due to the
employee. Employees who are not within the coverage of EA 1955 may also resort to this section
to recover any wages due to them by employers.

NON-PECUNIARY TERMS
The terms that are non-pecuniary in nature provided by EA 1955 (Part XII) are, among others,
duration of work, overtime work, rest days, public holidays, annual leave and sick leave.
Meanwhile, leave regarding union matters have been provided for in Industrial Relations Act
1967 (IRA 1967). Apart from these, the awards of the Industrial Courts have also provided
several benefits by considering the current situations.
Duration of Work
EA 1955 (S. 60A (1)) has specified some rules relating to work hours of an employee. It does not
allow an employee to work:
More than 5 continuous hours without a rest period for at least 30 minutes;
More than 8 hours in one day;

More than 10 hours in the case of spread-over period a day; and

More than 48 hours a week.
Regarding to spread-over hours of work usually in restaurants and catering business, the
following illustration will be useful:
If an employee in a restaurant works from 10am to 2pm and from 6pm to 10pm, his spread-over
period of work is 12 hours which entitles him to be paid with overtime of 2 hours.
Exceptions to the above rules are as follows:
1

Generally, the maximum work hours of an employee is 8 hours. In the case where an
employee is required to work 8 hours continuously, he is entitled to have at least 45
minutes as a rest period (S. 60A (d)(ii)).

In the event an agreement is concluded between both parties i.e. to work for 8 hours per
day but less than 8 hours on any other in the week, the total hours of work shall not be
more than 9 hours per day or 48 hours per week. All these provisions can be found in
Section 60A (d).

The employer can also increase the work hours more than that provided for in Section
60A(1) but on condition prior written permission is obtained from the Director-General
and after stating the reasons for the increase in hours of work.

Section 60C (1) states that the employer can require the worker to work longer than that
in Sections 60A(1) for those involved in shift work. He can be asked to work more than
8 hours on any day or more than 48 hours in a week but the average hours in any 3 weeks
must not exceed 48 hours in a week.

Section 60A (2) allows an employer to ask the worker to work longer than that in 60A (1)
in certain situations as follows:

Accidents, real or threatening, in or related to the workplace;

Work which is essential for the lives of the society;

Work regarding defence and security of Malaysia;

Work that has to be done on machinery or plant;

An unexpected disturbance to work; or

Work that should be performed by the workers in any industrial activity that is necessary
for the economy of Malaysia, or any necessary service that is defined in the Industrial
Relations Act 1967.

AMENDMENT
First I would like to talk about maternity leave. For government servant the leave period are
90days. For private section the period are 60days. Why there is a 1month gap differences
between this two sections? Supposed both sectors should give more than 4month Maternity
leave. 3month or 2month leave is not enough. A new rules should been amendment.
Secondly I would like to talk about, Advance & Loan S22 (b) to purchase land. This section
should been removed from the industrial and employment law. This is because the land price
now are so expensive , if a general worker takes a loan to buy a land which cost Rm100,000
how many years needed to settle his loan? It is different for a manager or Ceo who earns more
than 5k per month.

Third, its about Minimum wages which are categories as Pecuniary terms. On 1 january 2013,
government announced minimum wages of Rm900, which are stated in Paragraph 4. After two
years , now currently the minimum wages is not enough for the general workers. After GST have
been announced, its a hard time for everyone. I suggested to maximised the minimum wages as
Rm 1200. Others may feel its too much but for the needed ones its fare much.
Fourth, I am not satisfied with total of public holiday in Malaysia. Consider with other country
we are celebrating and earning many public holidays. So, public holidays should been deducted
to become lesser. Too much of public holidays only makes people become lazy and get bored.

REFERENCE
International Labour Organization
NATLEX database
BBIU 3103 EMPLOYMENT AND INDUSTRIAL LAW