5 Most Important Things To Know About Malaysian Employment Laws

As jobseekers or employees, we need to be sufficiently informed about our rights and benefits. Companies expect us to work hard, follow rules and regulations, and remain loyal throughout our employment. So, we should expect companies to respect our rights and benefits. This is the mutually beneficial two-way agreement we enter into in order to foster a healthy working environment. To maintain a functional dynamic within any organisation, employees must know the most major details of our employment laws. Before you can demand something, know what you are entitled to. Here’s a quick guide on the important things you must know about Malaysian Employment Laws. 

(Read more: Fresh Graduates Should Know These 4 Malaysia Labour Law Facts)

Not all employees are covered by the Malaysian Employment Act

The Malaysia Employment Act (EA) 1955 is the piece of legislation that governs all private-sector labour policies. What you may not know is that it does not cover all workers. The EA is only applicable to employees whose monthly salary does not exceed RM 2,000. It also covers domestic servants and workers engaged in manual labour or operation, supervision, or maintenance of mechanically-propelled vehicles, regardless of their salary grade.

This means that most white-collar jobs, especially those in management, are not covered by the EA. However, it has been standard practice by most employers to confer the same standard rights and benefits to all employees, whether or not they are covered by the EA. This includes sick leaves, maternity leaves, and vacation days, among others. If you do not fall under the category of employees specified in the EA, make sure to read your employment contract carefully. What is not covered under Malaysian labour law is still covered by contract law.

You have a right to privacy

Malaysia’s Personal Data Protection Act imposes certain limits on how employers should handle your personal data. The law requires companies to get employees’ consent when collecting, processing, and disclosing their personal data. This means that your employers do not have the right to share sensitive data about yourself, such as your personal background or medical history, without your approval. Employees also have the right to access and correct his or her own data when needed.

Trade unions are legal

Employees are allowed to form unions as long as they register their union under the Trade Unions Act 1959 and it is recognized by the employer under the Industrial Relations Act (IRA) 1967. This is a right that cannot be restricted via any contract. However, the IRA does allow employers to prohibit employees who deal in confidential information or security from joining unions.

Joining a union can be highly beneficial. You can have greater bargaining power since the union, through elected representatives, can collectively bargain on behalf of its members. The union can also represent its members in disciplinary meetings. When joining any company, get to know its workers’ union, its history, and its specific benefits within the company. You also need to check whether or not your job status allows you to join a union.

Non-compete clauses cannot be enforced

Some employment contracts prohibit workers from taking jobs in competing companies upon termination. What some people may not know is that these contracts cannot be enforced. Under the Contracts Act 1950, any agreement that restricts a person from exercising a “lawful profession, trade, or business of any kind”, is essentially void. Since this covers all contracts, this should be applicable to all employees, even those not covered under the EA.

So if you are dismissed by your employer with whom you signed a contract with a non-compete clause, do not worry. You can freely apply to any job openings within the same industry.

Laid-off employees are entitled to severance pay

Due to the pandemic, many companies have been forced to lay off some of their employees. If you happen to be a casualty of retrenchment, you may be entitled to severance pay.

If you have been with the company for less than two years, then you have a right to severance compensation of 10 days’ worth of salary multiplied by the number of years you were employed. For two to five-year employees, they are entitled to 15 days’ worth of salary multiplied by the number of years employed. For those who have served five years or more, 20 days’ worth of salary will be multiplied to their years of service in the company.

As employees or jobseekers, it is not enough to merely know what our jobs entail. We should also have sufficient knowledge of Malaysian employment laws. Knowledge of our employee rights and benefits will help guide us in our career journey. 

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