mutual separation agreement

Newly Updated: “Guide to Malaysian Employment Law”

Marcus van Geyzel1 Comment

We have just updated our very popular Guide to Malaysian Employment Law. These updates take into account the significant changes to the Employment Act as a result of the Employment (Amendment) Act 2022 and Employment (Amendment of First Schedule) Order 2022 which came into force on 1 January 2023.

Since the Guide was launched in October 2021 (See: “Just launched: ‘Guide to Malaysian Employment Law'”) it has attracted a constant stream of readers, still averaging in the high thousands of unique views every month.

As mentioned when the Guide was launched, the topics in the Guide have been selected based on feedback from in-house counsel and HR professionals, and cover the usual high-level background legal information they would like to have on-hand, particularly as professionals from other jurisdictions considering employment issues in Malaysia. The feedback we have received on the Guide has been overwhelmingly positive, and we believe it is a unique resource.

We hope the updated Guide will continue to prove useful to all readers. (Guide to Malaysian Employment Law)

Just launched: “Guide to Malaysian Employment Law”

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I have always believed that by writing about the law and related topics, I am not only sharing knowledge with others, but also richly expanding and deepening my own understanding of the topics I write about. This is why I have been consistently publishing my legal writings from my early days of practice, going back 18 years now.

Today, we have launched a Guide to Malaysian Employment Law. This Guide will be hosted on a standalone page on The Malaysian Lawyer, and is a one-stop introductory guide to Malaysian employment law, including categorised links to employment law articles I have published on The Malaysian Lawyer.

The topics in the Guide have been selected based on feedback from in-house counsel and HR professionals, and cover the usual high-level background legal information they would like to have on-hand, particularly as professionals from other jurisdictions considering employment issues in Malaysia.

The Guide will be constantly-evolving, and its contents will be updated from time-to-time. Please share the Guide with others who may find it useful, and leave a comment if you have any feedback, or requests or suggestions for other employment law issues that should be covered.

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Changes to the Industrial Relations Act from January 2021: Highlights and practical impact on employee exits

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Some important changes to Malaysia’s Industrial Relations Act came into force on 1 January 2021, pursuant to the Industrial Relations (Amendment) Act 2020 (“the Amendment Act”). The changes heavily affect unfair dismissal claims — from the pre-trial conciliation process through to appealing an Industrial Court decision — and may significantly impact employee terminations.

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Case Update: Unfair dismissal due to poor handling of mutual separation agreement

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In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

The COVID-19 pandemic has resulted in constant pressure on employers across almost all industries. There have been widespread measures to manage the financial fallout from the global effects of the pandemic, including salary reductions, employee redesignations, retrenchments, and separation schemes.

It has become a common practice for employers to use Mutual Separation Agreements (MSAs) — which also go by various other names such as “settlement agreements”, “separation agreements”, and “termination agreements” — to bypass or shortcut the usual termination processes. Many employers, as well as employees, view MSAs as a “cleaner” way of ending the employment relationship — instead of feeling like s/he has been “sacked”, the employee can be made to feel that the exit is on his/her terms, and employers prefer the certainty of clearly documented and mutually-agreed terms.

However, it is not uncommon for MSA exits to be improperly handled, resulting in a successful unfair/constructive dismissal claim by an employee, and a high financial cost to the employer. Some of my earlier articles would also be relevant for readers interested in this topic:

  1. Retrenchments in Malaysia — some recent cases (29 May 2020).
  2. Case Update: Insufficient justification and improper handling of Voluntary Separation Scheme may give rise to unfair dismissal (20 March 2019).
  3. Case Update: Can an employee bring an unfair dismissal claim after accepting a severance payment? (16 November 2017).
  4. What you need to know about the law on retrenchment of employees (22 January 2016).
  5. Handling employee dismissals properly under Malaysian law (13 January 2016).

In this article, we will review the Industrial Court case of Thanasegaran C Munusamy v. Vale Malaysia Minerals Sdn Bhd (Award No. 1647 of 2020), where the employee, Thanasegaran (the Employee) had signed an MSA, but then lodged an unfair dismissal claim against the employer, Vale Malaysia (the Company).

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Case Update: Can an employee bring an unfair dismissal claim after accepting a severance payment?

Marcus van Geyzel1 Comment

Case Updates - yellow

In this Case Update series, I share summaries of recent Malaysian court decisions to explore the current approach taken by the courts when deciding on employment-related issues. You can find all the posts in the series by clicking here, including case updates on other legal areas by TheMalaysianLawyer co-founder Lee Shih.

Malaysian employment law is relatively pro-employee when it comes to termination of employment. Based on the fundamental principle of security of tenure, any termination by an employer must be with just cause. In practice, just cause can sometimes be difficult to establish.

To avoid having to establish just cause — and to terminate an employment relationship without being exposed to the risk of an unfair dismissal claim — many employers opt to negotiate a mutual separation with the employee.

Typically, some form of monetary compensation (and sometimes other terms as well) is negotiated between the parties, and documented in a mutual separation agreement. The agreement will usually contain a clause to the effect that the employee confirms that the separation package and terms are in full settlement of any claims the employee may have, and that the employee will not bring an unfair dismissal claim.

So what happens where a mutual separation agreement is signed, and the employer makes the agreed compensation payment, but the employee then proceeds to file an unfair dismissal claim?

The relevant legal principles were recently considered by the Industrial Court in Raul Fabrizio Casserini v. George Fischer (M) Sdn Bhd [2017] 3 ILR.

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