PUBLIC HOLIDAY ON 24 APRIL 2017

akhbar

 

Ah, 24 April 2017.  The joke is that if there is any moment in time that employees are extremely efficient, it is when they are attuned to any announcement(s) / declaration(s) of public holidays.  It is the employees who inform the HR departments about the holidays before the HR Department knows about it themselves!

24 April 2017 was announced to be a public holiday, to mark the occasion of the installation of Sultan Muhammad V as the Yang diPertuan Agong.  The announcement was made on 3 April 2017.  This was followed up by a very misleading online article which stated that employers stand to be fined RM10,000.00 if employers do not give the employees a day off on 24 April 2017.

Let us look at the provision in the Employment Act.

Section 60D states that every employee is entitled to 11 gazetted public holidays.

(a) Out of the 11, 5 MUST BE-

1) National Day

2) Birthday of Yang di-Pertuan Agong

3) Birthday of the Ruler or the Yang di-Pertua Negeri, as the case may be, or FT Day- (employee has to be working in the state)

4) Labour Day

5) Malaysia Day.

These 5 are compulsory holidays and CANNOT BE SUBSTITUTED.

(b) In addition to the 5 above, those other holidays declared to be a public holiday under s. 8 of the Holidays Act 1951.  THIS CAN BE SUBSTITUTED.  The public holiday of 24 April 2017 was declared pursuant to this law.

Q: In the context of 24 April 2017, what does this mean?

A: employees can be required to work on 24 April 2017.  Either the employee is paid his holiday rate of pay as per the EA, or given another holiday in substitution.

Q: What about the RM10,000 fine?

A: It is only when the employer is found to have contravened the EA provisions relating to holidays and payments in relation thereto / substitution of the holiday that there is a possibility of being fined.  There would be no contravention if: the employee is paid his holiday rate of pay as per the EA, or given another holiday in substitution.

NOTE:- this applies to those who fall under the EA.  For non-EA employees, it depends on whether the company observes the holidays and on what is stated in the employment contract.

Probationers / Confirmation on probation

A typical clause in an employment contract is as follows-

“The appointment will be effective from [date], subject to six (6) month probation and at the end of the probation period, the employee’s performance will be evaluated, provided that the employer may extend the probation at its discretion.  During the probation period, either party may terminate the contract terminate contract of service by giving X weeks/months notice or by paying to the other party X weeks/months wages in lieu of notice”

Q: If the employer does not confirm the employee after the period of probation has passed, what is the status of an employee? Is there automatic confirmation?

A: The status of the employee is that he is neither confirmed nor discharged from employment, and is allowed to remain in employment.  There is no “automatic” confirmation.  However, if by the conduct of the employer, the probationer is treated as if he was a confirmed employee, the courts may recognize that the probationer was confirmed as a result of the employer’s conduct.

Example:

Case: Paari a/l Perumal v Abdul Majid Nazarudin (2000)

FACTS: the employee was employed as a clerk and in the contract of employment it was stated that his probation is for 3 months.  The employer did not write an official letter of confirmation to the employee.  In his contract of employment, it was stated that the employee would be entitled to annual leave IF he was confirmed.  Despite not being given an official confirmation letter, the employee was allowed to go on annual leave.

HELD:  It was held that due to the employer’s conduct in granting annual leave to the employee (which was only for confirmed employees), the employee is regarded as being confirmed.

Q: Can an employer use this clause to justify non-confirmation?

A: The short answer is NO.  We go back to section 20 IRA once again.  Section 20 of IRA states that where a workman considers that he was dismissed without just cause or excuse, he may bring a legal action against his former employer to be reinstated in his former employment.

This extends to probationers as well.

Therefore if an employer does not wish to confirm an employee who is on probation, the employer must have just cause or excuse for doing so.

Unlike other civil cases (where a person who sues must prove his case) or criminal cases (where the prosecution must prove that the accused is guilty of the offence), in industrial law, the employer has the burden of proving that the employee was dismissed with just cause or excuse.   The employee only needs to show that he was in employment with the employer together with the circumstances leading up to the dismissal.

If the employer only wishes to rely on the clause, there is a very high probability that the court will rule dismissal to be without just cause or excuse.  Mere reliance on the clause is NOT sufficient.

IN SUMMARY-

1)         Malaysian laws are very pro-employee.  Section 20 applies also to probationers.

2)         Employers should be very careful in employing.  It would be ideal if a proper thorough background check is conducted on an employee in order to determine his/her suitability to the job.

2)         Employer must have just cause or excuse for non-confirmation. Employers MUST have exercised the discretion in not confirming an employee on probation in a bona fide (good faith) manner.  If the reason is for poor performance, then there must be evidence to show, eg letters written to the employee, monthly assessments, warning of poor performance etc.

Q: Can an employer choose to confirm an employee at an earlier stage?

A: It would depend on how the clause in the employment contract is worded.  But the general answer is yes.

Length of Notice Period

Typically, there is a clause in an employment contract that states along these lines:-

“Either party … may terminate contract of service by giving X months’ notice or by paying to the other party X months wages in lieu of notice.”

What is the position of the EA on this? Can an employee use this clause? Can an employer use this clause?

Section 12 EA

  • Length of notice should be the same for both parties.
  • Length of notice should be stated in writing in the contract of service.  If there is no provision, then it should be as follows:-
LESS THAN 2 YEARS SERVICE

4 weeks

MORE THAN 2 YEARS BUT LESS THAN 5 YEARS

6 weeks

MORE THAN 5 YEARS

8 weeks

Comments

  • It is easy for the employee use the clause.  This is usually done when he tenders his resignation.  However, it is not easy for the employer to use the clause.  WHY? It is because of the existence of another provision in a statute, i.e. section 20 of the Industrial Relations Act 1967 (“IRA“).
  • Section 20 of IRA states that where a workman considers that he was dismissed without just cause or excuse, he may bring a legal action against his former employer to be reinstated in his former employment.
  • Therefore, if an employer uses the clause and says that it was merely following what was stated as per the clause, the employee can bring a legal action against the employer for unfair dismissal.  Unlike other civil cases (where a person who sues must prove his case) or criminal cases (where the prosecution must prove that the accused is guilty of the offence), in industrial law, the employer has the burden of proving that the employee was dismissed with just cause or excuse.   The employee only needs to show that he was in employment with the employer together with the circumstances leading up to the dismissal.
  • If the employer only wishes to rely on the clause, there is a very high probability that the court will rule dismissal to be without just cause or excuse.  Mere reliance on the clause is NOT sufficient.
  • ANY dismissal of workman / employee in Malaysia (whether due to misconduct, poor performance, retrenchment, business closure, VSS, etc) MUST BE WITH JUST CAUSE OR EXCUSE.   THE EMPLOYER HAS THE BURDEN TO PROVE JUST CAUSE OR EXCUSE.  If the employer is attempting to justify the just cause or excuse by adducing evidence, the court will scrutinise the evidence.  If the employer only has verbal evidence, the employer’s case will be significantly weakened.

Employment Act 1955

What is the purpose of the EA?

To provide minimum terms and conditions in a contract of service for persons who are within the definition of “employees”.

The EA provides for the minimum terms relating to overtime, annual leave, sick leave, notice period, etc.

Therefore the EA provides the minimum terms and conditions for employees.   This means that employers must be offering at the bare minimum, the terms and conditions as provided in the EA. 

Q: Can an employer provide more than what is provided in the EA?

The answer is found in sections 7, 7A and 7B of the EA.

s. 7 – Any term in a contract of employment which is less favourable to any employee than what is provided by the law is void and it is automatically replaced by the more favourable provisions of the law.

s. 7AExcept when there is an express prohibition, an employer is not prevented from providing any term or condition of service which is more favourable to the employee than the law.

s. 7B– Even if the EA does not provide for any minimum terms and conditions in respect of certain matters, the parties are not prevented from providing for it in the contract of service. Eg in the EA, there is no provision relating to entitlement to bonus. That does not mean that it cannot be provided for in the contract of service.

In summary-

–              An employer cannot provide terms and conditions in a contract of service that is LESS than the minimum provided in the EA.   If the employer does so, section 7 states that such terms and conditions are VOID (Meaning-not valid or legally binding), and the relevant clause will be automatically replaced by the minimum terms and conditions in the EA.

–              An employer CAN provide terms and conditions in a contract of services that is MORE than the minimum provided in the EA, but ensure that the EA /  law does not EXPRESSLY PROHIBIT it.

One example- in the EA, women are entitled to receive maternity allowance if they satisfy the eligibility requirements.  One of the requirements is that she is not entitled to maternity allowance if she has 5 more or surviving children.  The mistaken belief is that companies think that they can extend the entitlement to maternity allowance for women with 5 or more surviving children because the EA is only setting out the minimum terms and conditions, correct?

That is incorrect.  The reason is because the EA contains as EXPRESS PROHIBITION in section 37(1)(c) which states “…a female employee shall not be entitled to any maternity allowance if at the time…she has five or more surviving children”.

Malaysian employment laws

The 2 statutes usually dealt with in Peninsula Malaysia are the Employment Act 1955 (“EA“) and the Industrial Relations Act 1967 (“IRA“).

I will focus mainly on the EA and IRA, but I will deal with other relevant statute(s) on a piecemeal basis.

Let us first deal with the EA.

EA Basics
1) The EA applies to those who fall within the definition of the term “employee” in section 2.

2) An “employee” is a person who
a) has signed a contract of service with the employer
b) earns wages of not more than RM2000.00 per month.

3) Notwithstanding 2)(b) above, there are those who earn more than RM2000.00 per month but are still classified as “employee” under the EA. They are
a) manual labourers
b) operators of mechanically propelled vehicles
c) supervisor of manual labourers employed by the same employer in and throughout the performance of work
d) ship officers
e) domestic servants.

What is “contract of service”?
1) It is a contract where one person agrees to employ another as an employee and that other agrees to serve his employer as his employee. Usual examples- Employment Contract, Letter of Offer, Letter of Appointment.

2) It is essentially a master-servant relationship.

3) There is a greater level of control that the master (the employer) exerts over the servant (employee). Typical clauses in the contract of service would be-
– Job title/position
– Remuneration
– Commencement date
– Probation period
– Duration
– Hours of Work
– Annual Leave
– Medical benefits
– Statutory deductions
– Conflict of Interest
– Confidentiality / non-competition
– Termination

4) Contrast this with a contract FOR service. This is a different arrangement. Another description is that the person is an Independent Contractor. One typical example is that a company engages an external party to carry our renovation work for their office. The contract between the company and external party is a contract for service. That external party cannot be said to be an employee of the company.

5) Here are some differences between employees and independent contractors. Of course these are the common ones and subject to exceptions:-

Employee Independent Contractors (“IC”)
Hours of work It is usually standard hours, eg 9am to 6pm. Flexible / not set.  However, this may be set by the person hiring the IC.  Eg a person who is hired to renovate in a condo unit may be restricted to the by-laws of that unit to work only between 830am to 5pm.
Remuneration Monthly/weekly/hourly salary is stated in the contract. Usually it is set and based upon completion of task / project.  Or paid based on completion of certain stages of the project.
Statutory deductions EPF, SOCSO None
Annual Leave It is stated in the employment contract None
Termination It is usually – either party to give xxx months’ notice of pay salary in lieu Upon completion of the project.  There may be penalty clauses for early termination. There may be penalty clauses if the contractor fails to complete certain stages within specified time.
Probation A probation period is set to determine the suitability for employment with the company. None
Work place Usually at the employer’s office. Contractor is working out of principal’s place

I will post more in the future.

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