CHAPTER 2
TERMS AND CONDITIONS OF
EMPLOYMENT
EMPLOYMENT ACT 1955 (Revised 1981) (Act 265)
WORKING HOUR
Overtime
Shift Work
Flexi time
Compressed work week
Part time
Salary/Wages
Wage periods
Wage setting
Advances on Wages
Deductions from wages
Priority of wages
Leaves
Rest days
Public holidays
Annual leaves
Sick leaves
Working Hours
According to Sect. 60A
of the Employment Act,
an employee in his
contract of service
SHALL NOT BE required
to work:
> 5
consecutive
hours
without a
period of
leisure of not
< 30 min
duration
> 8
hours
in one
day
However, under Sect. 60(2) of the
Employment Act, an employee
may be required to exceed the
above limitation by the employer
when:
Accident,
threatened
in or at
workplace
Work
that
involves
the
defence
of
Malaysia
Overtime
Overtime means the number of hours of work carried out in excess of the normal
hours of work per day.
Therefore, the employee shall be paid at the rate NOT LESS than one & half (1.5)
times the hourly of pay.
Any work carried out by an employee employed on a daily, hourly or other rate of
pay who WORKS ON REST DAY shall be paid
• 1 day’s wages if he works less than half his normal hours of work
• 2 day’s wages if he works between half the normal hours and the full hours
• If employee employed on piece rate who work on a rest day, he shall be paid twice his ordinary rate
per piece
Shift Work
The shift worker may be required to work for more than 8
hours a day or more than 48 hours a week BUT must have
a break of 30 min for every 5 consecutive hours of work
However, the average number of hours worked over any period of
3 weeks shall NOT exceed 48hours/week
Employers will normally provide several types incentives to their
employees for e.g. free transportation from house to workplace,
free food & shift allowances
There are two shift patterns;
We have double-day shift : two shifts in one day and triple
shift work – three shifts in one day
In the double shift pattern, we can have a normal eight-hour
shift or twelve-hour shift
In the triple shift pattern, we can have a three eight-hour
shift
Morning shift 7 a.m. – 3 p.m.
Afternoon shift 3 p.m. – 11 p.m.
Night shift 11 p.m. – 7 a.m.
Flexitime
Flexitime or flexible working hours is a system of working
hours where the starting and stopping times are decided by
the individual worker within a number of limitations set by
the employer
Flexitime refers to variations in
starting and quitting times but
assumes that a constant number of
hours (8 hours) are worked each
day
In other words, the employees can
work any time they choose, but per
day they have to put in 8 hours of
efforts or 48 hours per week.
Compressed Work Week
Any arrangement of
work hours that permits
employees to fulfil their
work obligation in fewer
days than the typical 5
day or 6 day workweek
An example will be 4
days workweek and the
length of the work day
will be increase to 10 or
more hours
Advantages of Compressed Work
Employees can schedule their leisure
time for family life, personal
business & recreation
Lower absenteeism & lateness rates
at companies
Tend to be more productive during
scheduled work days
Time for personal care
Motivation to work
Work life balance
Disadvantages of Compressed Work
Longer work day is physically and mentally
challenging
Employee morale could suffer due to the long
hours.
Difficult to arrange dependent care or
transportation around the longer workday
Managers may be required to work the same
schedule as the employee for support and to
provide supervision
May result in overtime expenses, creating
salary equity issues among those not
participating in the program
Partime
An employee can be working during the normal
working hours but he/she is employed on an
hourly basis
They can earn extra income through part-time
work without being tied to the organization.
Organization use part-time jobs to increase in
the number of employees to complete a certain
demand or projects.
WAGES/SALARY
Wages means basic salary & other payments in cash to an employee due under the
contract of service excluding
• Annual bonus
• Overtime payments
• Commissions
• Subsistence allowances (Elaun Sara Hidup) • Travelling allowances
• Any gratuity payable on discharge or retirement
• Any contribution paid by the employer account’s to any pension fund, provident fund, superannuation
scheme, retrenchment, termination, lay off or retirement scheme established for the benefits of
employee
• The value of house accommodation or supply of food, fuel, light,water, or medical attendance.
• Any retrenchment or termination benefits.
Wage Periods
Must be paid at
least once every
month.
The employer must
make payment of
wages not later
than 7 days after
the end of that
wage period
Wage Payment
Wages paid to
employees must be in
legal tender
However, the Employment
Act Section 25(10) do
allow payment to be made
in the following form:
Payment on the name of
the employee through
any bank accounts in
Malaysia
Payment through
cheque issued directly to
the worker
ADVANCES ON WAGES
The Employment Act allows employers an advance
on wages
this is not encouraged to be practice
because lending money to employees may lead to
all kinds of industrial relations problems
offer an advance on wages to
their employees, particularly before the various
religious festivals
DEDUCTIONS FROM WAGES
Deductions from employees’ wages are only allowed in
certain restricted circumstances
The maximum monthly total deduction must not exceed
50 per cent of the employee’s wages unless the amount
to be deducted includes repayment of a housing loan
permission of the Director-General of
Labour, the total deductions may be increased to 75
percent of the monthly wage
Leaves
Also known as the period of time during which you are
absent from work or duty with the permission from your
employers
Several types of leaves that include:
Rest days
Public holiday
Annual leaves
Sick leaves
Rest Days
All employees are entitled to at least ONE (1) rest day per week
It can be on a Sunday, Friday, or any other day.
For employees who do not work the normal work hours (e.g. shift work), the
employer will prepare a roster for the employees’ rest days & this roster will be
informed to the employees in advance
When a daily rated employee agrees to work on his rest day at the request of his
employer he is entitled to a higher than normal rate of pay: • If he works less than half his normal hours of work, he is paid one (1) full days’ wages. • If he works between half the normal hours & the full hours he is entitled to two (2) day’s wages.
The term "layoff" originally meant a temporary suspension or
permanent termination of employment of an employee for business
reasons,
- E.gs: personnel management or downsizing an organization
Layoffs are not caused by any fault of
the employees but by reasons such as
lack of work, cash, or materia
Public Holidays
The Employment Act entitles workers
to 11 public holidays per year whereas
Malaysia has 16 or 17 (depending on
the state) such holidays
Five of 11 gazette public holidays are:
Workers Day
Malaysia Day
Independence Day
Birthday of the Yang di-Pertuan Agong
Birthday of the State Ruler
Examples of the remaining six gazette public holidays
are:
Hari Raya Puasa Christmas Chinese New Year
Deepavali New Year’s Day Wesak Day
Thaipusam Awal Muharram Hari Raya Korban
Annual Leaves
Employees are only entitled to annual leave once they
complete a year of service
The duration of annual leave granted to workers depends
on their length of service with their employer
Length of Service No. of Days of Annual Leave
1 to 2 years 8 days
2 to 5 years 12 days
5 and above 16 days
Sick Leaves
Before employees can avail themselves of this privilege,
they must undergo an examination by a registered
medical practitioner appointed by the employer (known
as a panel doctor) and be certified unfit for work by the
doctor
The employer is required to pay for
this medical examination and he
also pays for any treatment
recommended by the doctor
Length of Service No. of Days of Sick Leave
Less than 2 years 14 days
2 to 5 years 18 days
5 and above 22 days
Benefits
Something that aids or promotes well-being, an advantage to the
employee that includes:
Termination
benefits
Layoff benefits
Retrenchment
benefits
Resignation
benefits
Medical
benefits
Maternity
benefits
Termination
benefits
Voluntary : An employee may quit because
of resignation due to other job outside or
retirement (employees ARE NOT entitled
to termination benefit)
Involuntary : Referred to dismissal or
being retrenched due to company
economy problems
Length of Service Amount of Benefit
1 to 2 years 10 days’ wages for every year of service
2 to 5 years 15 days’ wages for every year of service
5 and above 20 days’ wages for every year of service
Notice of Termination
•The Employees Rights Under The Employment Act 1955
The notice of termination in accordance with the contract of
service but shall not be less than those specified in the
Employment Act 1955
Layoff
benefits
The term "layoff" originally meant a temporary suspension or
permanent termination of employment of an employee for business
reasons,
- E.gs: personnel management or downsizing an organization.
Layoffs are not caused by any fault of
the employees but by reasons such as
lack of work, cash, or material.
Usually a layoff occurs as a costcutting measure
Length of Service Amount of Benefit
1 to 2 years 10 days’ wages for every year of service
2 to 5 years 15 days’ wages for every year of service
5 and above 20 days’ wages for every year of service
Medical
benefits
Employee medical benefits are the additional benefits provided to the
employees by the company
Almost all the companies provide their employees with medical benefits
so that they can give their best during their working hours without any
fear
Examples of medical benefit are:
Employee Medical Plan.
• There is a regular medical check up for the employees to provide the healthy
working condition to the employees.
• Employees are provided with healthy and hygienic food by the company.