How To Write A Compliance Employment Contract In Malaysia

In Malaysia , employer must keep employment contracts for at least 6 years if employee resigned or dismissed based on employment act 1955. So, make sure all the relevant documents are kept accordingly when you dismiss a employee

To write a compliance employment contract, here are the important notes you should know. 

  1. Employment contract in Malaysia can be either permanent or term . However, the courts may consider the dismissed  employee as a permanent employee if the contract was renewed many times. 

  2. The key terms of the employment relationship should include location of work, scope of work, wage rates, wage period, holiday and benefits. 

  3.  Minimum retirement age in Malaysia is 60 . To avoid paying severance, you must include retirement age in employment contract and you may prescribe an earlier retiring age if necessary. 

  4. The probation period should be prescribed in employment contract. In addition, employer has the right to extend probation period if those standards are not met by the employee.

  5.  A notification period should be prescribed in employment contract when either party want to terminate the contract. If not, either party must provide a notice period according to their service period with company.  

    • Service period  less than two years, either party must  provide four (4) weeks of notice period
    • Service period between two to five years, either party must provide six (6) weeks of notice period
    • Service period more than five years, either party must provide eight (8) weeks of notice period

Click here to download the sample of employment contract by JTKSM. 

How do courts determine verbal contractual obligations when there is no signed written employment contract? Judge will listen & read the testimony by the employer and the aggrieved employee. Definitely, both parties statement will be vastly different. Then, the judge will determine which one is true and give a decision. 

If you are aware the importance of written employment contract, act now and review your current contract or make a contract.  Click here if you need our assistance. 

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