Gardening leave

Your employer may ask you not to come into work, or to work at home or another location during your notice period. This is called ‘gardening leave’.

You’ll get the same pay and contractual benefits.

Garden leave or gardening leave is the practice where an employee leaving a job (having resigned or otherwise had their employment terminated) is instructed to stay away from work during the notice period, while still remaining on the payroll.

An issue that arises in practice is the position of an employee during the period between his giving notice and the expiry of the notice period. It is common for an employer to ask the employee to stay at home during the period. An employer may take this course of action, rather than waive the notice, as he wishes to ensure that the employee does not go to work for a competitor during that period and/or to give that employee’s replacement time to take over his contacts and business. Contracts usually provide an employer with this right.

There are no local cases that deal with the legal position of “garden leave” or “gardening leave”.  Judges in the Malaysian cases have talked about “garden leave” in the context of “…the employee was placed on garden leave” but did not expand any further on the legal position, or applicability in Malaysia.  As such, the English and Australian positions are considered.


A brief article on the English position is found in the website of an English law firm known as Slater & Gordon:-

The relevant portion of the article states:-

“The employee is also entitled to their normal pay and contractual benefits over their gardening leave period.”


A brief article on the Australian position is found in the website of an Australian law firm known as Holding Redlich:-

The relevant portion of the article states:-

“…Lessons for employers

  • While an employee is on gardening leave, he or she is entitled to all the remuneration and employment benefits as if the employee was working for you ordinarily.  Do not remove access to motor vehicles, mobile phones or other work tools unless you are sure they constitute ‘tools of trade’ as opposed to agreed components of the employee’s remuneration package….”


The reason behind “Garden Leave” is to place an employer on leave by remaining away from the office, while serving out their notice period.  I would be inclined to adopt the position of England and Australia.  The employee who is placed on garden leave should be entitled to his salary and contractual benefits as well, unless it can be shown that the allowances are of the nature that can be removed.


Medical Board Out

Medical Board Out” refers to a situation where the affected employee is sufficiently incapacitated due to a medical illness or disability, rendering them unable to fully and/or satisfactorily perform their job, leaving the employer with little or no option but to terminate the employee on the basis of medical grounds.

An employer may terminate the employee’s services if it can be proven that the illness/disability has severely curtailed the ability of the employee to perform his job and recovery is unlikely.

The considerations should be taken into account by an employer are the following (note this is not exhaustive):-
1) Has the illness/disability severely curtailed the ability to perform his job?
2) Is recovery likely? If so, when, and to what extent?
3) Can the employer wait any longer and for how much longer?
4) What is the illness?
5) What is the job function?
6) What is the period of absence?
7) Has the absence impacted the company/other employees?
8) Has there been meeting(s) with the affected employee, apprising him of the difficult circumstances?
9) Is there an attempt to accommodate the employee by offering an alternative role?

The employer must show that they have thoroughly taken the various factors into consideration and that based on the information they have compiled, the decision was made to terminate the employee. The Court may hold a termination to be unfair if an employer is shown to not make the sufficient and necessary enquires on the illness of the employee and merely terminates, based on the assumption that the illness was permanent in nature.

For employees covered under the Employment Act 1955, there are provisions relating to statutory sick leave and hospitalization leave. There are however no provisions for the minimum requirements of a medical board out procedure. As such, a medical board out procedure is a matter of contract between the employer and employee, and/or based on the company’s policies and procedures, if any.

A proper medical board out procedure/meeting, to be adopted by the employer for all affected employees is ideal as it would help establish that due consideration, with all regard to the surrounding circumstances, were taken into account before a decision was made to terminate. This helps in demonstrating that termination was not made on a whim.

Do note that the employee may be eligible for termination benefits (if protected by EA or if your internal T&Cs provide such benefits), any utilised annual leave, any other benefits or allowances payable under his contract and notice period.

Difference between Retrenchment, VSS, & MSS

Although the end result is the same for retrenchments, VSS and MSS (i.e. the employee is no longer employed), there are differences.

This is dismissal of employees who are regarded as surplus to requirements. The company / department itself is not being closed, but rather a select group of employees are retrenched. Not all employees are retrenched.

Companies in carrying out retrenchment are required to abide the legal provisions of the Employment Act 1955 (where relevant) and the general rule of LIFO (Last In First Out).

Voluntary Separation Scheme. This arises when a company that is not officially retrenching but nonetheless wishes to get rid of employees.

In this scenario, the company will make an announcement that is addressed to the employees along the lines of 1) “Profit hasn’t been good” 2) “We have been making losses” 3) “The company is not dismissing anyone, but will welcome application from employees to be considered for VSS”.

It is like a job advertisement that invites applicants. The difference here is that it is not a job advertisement, but rather, an invitation by the company for application by the employees, to be considered for VSS.

Usually the company will also talk about the terms and conditions of the VSS (compensation terms, qualifications, requirements etc).

Because of the nature of VSS, it is usually more difficult for employees who have left the company on VSS to challenge this in the Malaysian courts.

Mutual Separation Scheme. This arises when both parties agree to terminate the employment relationship. The keyword is “mutual”, i.e. both parties agree to a settlement that is a win-win scenario for them.

Section 20 IRA 1967
As is the case with all dismissals of employees, the employer has the burden of proving just cause or excuse in dismissing the employee(s).

If it is a retrenchment and the purported reason is eg, losses for the preceding xx number of years, then the employer must be able to show the losses by way of the profit and loss account, etc.

A VSS is more difficult for the employee to argue unless it can be shown that the employee was coerced into it, or there existed the usual elements that may render the VSS void or voidable.

Absenteeism & Lateness

The relevant section in the Employment Act 1955 that deals with absenteeism is section 15(2).

“An employee shall be deemed to have broken his contract of service with the employer if he has been continuously absent from work for more than two consecutive working days without prior leave from his employer, unless he has a reasonable excuse for such absence and has informed or attempted to inform his employer of such excuse prior to or at the earliest opportunity during such absence.”

Key words-
– more than two consecutive working days
– without prior leave from his employer
– attempted to inform his employer
– at the earliest opportunity during such absence

The ideal steps to be taken by an employer (at bare minimum)
1) (Usual scenario where the employee returns to work)
– ensure that all requirements as stated in the key words are satisfied.
– issue a show cause letter
– wait for reply from employee
– read the reply from the employee and determine if the excuse is acceptable.
– punish. Under section 14(1) Employment Act 1955 :

“On the grounds of misconduct, the employer may, AFTER due inquiry, impose any of the following punishments:
a) Dismiss without notice the employee;
b) Downgrade the employee (This means a demotion to a lower position and it may entail a salary reduction appropriate to the new grade); or
c) Impose any lesser punishment as he deems fit and just and fit. Any lesser punishment may include:  salary reduction/ deferment of increment/ suspension without pay/ written warning. Take note that if suspension without pay is imposed, the maximum period that is permitted is 2 weeks.

2) (scenario where it is habitual / repeated)
– as above, but issue a final warning.

3) (scenario where the employee does not return to work)
– repeat as above
– if no reply is forthcoming, then terminate.

– Proceed against the employee for abandonment of contract.

Why does the employer need to repeat the disciplinary process?  Can’t the employer refer to the previous warning and just take action on the absenteeism?

Section 20 IRA 1967 places the burden on the employer to show that the employee was fairly dismissed. The purpose is to prove to the court that there was just cause or excuse in dismissing and that the rules of natural justice were followed by providing the employee with the opportunity to explain his absence. Many (although not all) companies have in place a disciplinary procedure which is usually requires more steps to be taken compared to what is decided in case law. If the company is able to show that the due process of the disciplinary procedure was adhered to and followed, then there is a better chance that the court will agree with the company’s decision.

How many times can the employer warn before there can be a dismissal of the employee?

There is NO set / fixed rule on the number of warnings to be given. It is not the case of 3 strikes, and you are out. All the cases have mentioned is that if its habitual and repeated, then it warrants dismissal. A one-off incident would not warrant dismissal. Each case must depend on its own particular facts and circumstances.

There is NO set / fixed rule on the number of warnings to be given. All the cases have mentioned is that if its habitual and repeated. A one-off incident would not warrant dismissal. Each case must depend on its own particular facts and circumstances.

Employers are encouraged to go through the appropriate disciplinary process, i.e. issue show cause letter, await reply, consider reply and then punish.

Employers are discouraged from giving immediate warnings to employees. This is akin to punishing first without giving the employee the opportunity to explain his actions. The courts view warnings negatively. If for example, on a fine day, you are walking on the street and a policeman immediately whips out his pistol and shoots you, that would not be nice.  Ditto for warnings.

Employment Insurance Scheme

Check out the link above.  The Government has introduced an Employment Insurance Scheme (“EIS”).  Some of the objectives of this EIS includes providing income protection who lose their jobs, increasing employability to those who lose their jobs, providing support for job search, job matching, job placement and workers mobility.

The important points for this scheme/system are:

  1. The rate of contribution will be announced by the government after the Bill has been approved. Few speculations that you guys might heard before is that the 0.25% from the employee, 0.25% from the employer. However, this rate is subject to final confirmation.
  2. The eligibility to receive payments would apply to loss of employment due to certain reasons only.  Where loss of employment is because of (dismissal due to) misconduct, voluntary resignation, retirement and expiry of fixed term contract, there is NO entitlement;
  3. The ex-employee will obtain money every month till s/he manages to find a job. However, it applies up to 6 months only, and the allowance will stop if on the 7th month and the employee is still unable to find work.
  4. Throughout the unemployment period, there will be provision of training allowance where these training will be provided by verified trainers.
  5. The EIS is going to be implemented on 1st January 2018.

Maternity Leave

Check out the link above.  In summary- Standard Chartered introduced a 20-week fully paid maternity leave for female employees, whereas male employees will be entitled to a 2 week paid maternity leave.

Laws on Maternity Leave

The Employment Act provides that ALL female employees are entitled to maternity leave of 60 consecutive days.  Therefore, maternity leave is guaranteed by statute / law.  The only question that arise is whether the female employee can still receive her salary if she takes that 60 days off.  

Those female employees who satisfy the eligibility requirements will ALSO be entitled to maternity allowance during the maternity leave.  If the female employee DOES NOT meet the eligibility requirements, then SHE IS STILL ENTITLED TO MATERNITY LEAVE, but she will not get her maternity allowance. 

What is maternity allowance?  It is NOT something that is in addition to the salary.  A female employee who gets her monthly salary during her maternity leave is deemed to have received her maternity allowance.  Therefore in that context, maternity allowance = monthly salary.

In order to be eligible to maternity allowance, the 3 requirements are:-

  • The female employee must have worked with the employer for at least 90 days during the pregnancy period; AND
  • The female employee was in employment with the employer ‘at any time’ during the 4 months preceding confinement; AND
  • The female employee does not have 5 or more surviving children.


While the rights of a female employee in relation to maternity leave are  set out in law, Paternity Leave remains somewhat of a “new” concept in Malaysia.  There is a proposal to amend the laws to provide a minimum 3 days for fathers.  Unless and until the legislature / Parliament actually puts something concrete into place, the granting of Paternity Leave will remain at the sole discretion of the employers.

Section 20 Industrial Relations Act 1967

Let us deal with the laws relating to dismissal of employees.

The main sources of this area of law are-

1) Statutes.  These are Acts which are passed by Parliament.  One very recent example was the Sexual Offences against Children Act 2017 which was widely reported in the media.   We are however, in this case, referring to the Industrial Relations Act 1967 (“IRA”).

2) Case law.  This refers to court cases.  In court, the judge makes a decision on the case.  The judge applies the statute and decides what is applicable and what is not applicable.

The main provision is section 20 of IRA.

“Where a workman, irrespective of whether he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director General to be reinstated in his former employment; the representations may be filed at the office of the Director General nearest to the place of employment from which the workman was dismissed.”

 The Director General shall not entertain any representations … unless such representations are filed within sixty days of the dismissal:

Provided that where a workman is dismissed with notice he may file a representation at any time during the period of such notice but not later than sixty days from the expiry thereof.

Let us consider the following terms within section 20 IRA.


The IRA applies to all, including those within the EA, and outside of the EA.  So long as the person is engaged under a contract of service as opposed to contract for service, they are covered.


This connotes a subjective element.  All a workman needs to do is to “consider” himself dismissed unfairly.


This covers ALL types of dismissals, i.e. due to misconduct, poor performance, VSS, MSS, retrenchment, retirement etc.

Without just cause or excuse

The ex-employee needs to show the facts/circumstances leading up to dismissal.  *However, the employer (AND NOT THE EMPLOYEE) has the burden to show that the dismissal was with just cause or excuse.  (Please see my comment on this below)


The remedy under section 20 is to be reinstated to the employee’s former job.

Sixty days

The employee has 60 days to file his claim.


*Comment- the employer must show the court that there was just cause or excuse when it carried out the dismissal of the employee.  The requirements differ for misconduct, poor performance, retrenchment, VSS, MSS, retirement, etc.