severance payment

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)

Case Update: Justifying a retrenchment and departure from LIFO

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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.

Malaysian courts recognise an employer’s right to organise his business in the way he thinks is best, provided that this right is exercised in good faith. The law gives an employer the right to decide on the number of employees his business employs based on business needs and efficiency. When it comes to retrenchments, the courts will be slow to intervene with an employer’s decision to retrench employees, unless there is evidence that the employer acted without proper reason, or otherwise acted in bad faith.

Employees who have been retrenched commonly challenge the legality of the termination on two points: (1) There was no genuine redundancy or other reason to carry out a retrenchment exercise. (2) Where there was a genuine need for a retrenchment, the selection criteria used by the employer in deciding which employees to dismiss was unfair.

Therefore, even though employers generally have the right to decide on their workforce numbers, any decision to retrench employees must be carefully considered and implemented. The recent Industrial Court award in Wong CP & 3 Others v. Taylor’s University Sdn Bhd (Award No. 342 of 2022) is worth considering as a reminder of the issues the Industrial Court will take into consideration where employees challenge the fairness of a retrenchment.

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Just launched: “Guide to Malaysian Employment Law”

Marcus van GeyzelLeave a comment

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

Marcus van Geyzel2 Comments

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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.

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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