Employment Contract in Malaysia

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Employment contracts serve as crucial legal documents defining employment terms and conditions. They establish employers’ and employees’ rights and responsibilities, providing clarity and legal protection. 

 

In Malaysia, the Employment Act 1955 governs employment-related matters, and having a well-drafted employment contract is a legal requirement. It ensures that your employment practices align with the law, offering security and peace of mind. 

 

Specifically, any employment that exceeds one month’s duration must be formalized through a written contract, as per Section 10(1) of the Employment Act. This contract is mandated to specify essential terms of the employment relationship, including but not limited to

 

  • Types of employment (permanent, part-time, fixed term, internship, or freelance)
  • Nature of duties
  • Workplace location
  • Remuneration rate
  • Payment intervals
  • Employee benefits
  • Public holiday entitlements, annual leave, and sick leave
  • Termination clauses

 

Employers must retain all employment contracts for six years following the conclusion of these contracts.

Choosing the Right Law Firm and Employment Contract Lawyers

Crafting a robust employment contract requires careful consideration of various elements. Consult our legal experts at the Lee & Poh Partnership law firm on an employment contract. We recognise that every employment arrangement is unique. Our team tailors each contract to suit your industry, company size, and the nature of employment.

 

Rest assured that our employment contracts are meticulously crafted to meet the legal requirements outlined in the Employment Act 1955, ensuring full compliance with the labour law in Malaysia.



Contact our skilled legal team to assist you in crafting a precise and compliant agreement under the provisions of the Employment Act 1955.

FAQs

What are the key elements included in an employment contract?

An employment contract in Malaysia typically encompasses various critical aspects, such as job roles, responsibilities, salary structure, provisions for leave entitlements, and the procedural framework for employment termination. 

Moreover, employers should ensure registration with the Employees Provident Fund (EPF) and Social Security Organisation (SOCSO), reinforcing the importance of comprehensive and compliant employment contracts.

Check out our templates for employment contracts in Malaysia here, or engage our corporate law firm to prepare them for you.

 

What is the minimum salary stipulated in the Malaysia 2023 Labour Law?

 

The recent adjustment in the minimum wage, from RM1,200 to RM1,500 per month starting on July 1, 2023, has resulted in uniform minimum wage standards across Malaysia. All employers with fewer than five employees, excluding those engaged in professional activities, are classified under the Malaysia Standard Classification of Occupations (MASCO)  by the Ministry of Human Resources.

What is the new work policy in Malaysia?

Starting on January 1 January 2023, there is a reduction in the maximum weekly working hours to 45 for all employees covered by the Employment Act 1955, regardless of whether they work on non-shift or shift schedules. 

The minimum working hours in Malaysia are eight hours a day. In the event that an employee is mandated to work beyond regular hours on a typical working day, they are entitled to receive compensation at a rate of 1.5 times their hourly wage.

Can an employment contract be modified or updated?

Yes, employment contracts can be modified or updated to reflect changes in employment terms, provided both parties agree and follow legal procedures.

Does the Employment Contract have to be in writing?

An oral agreement between an employer and an employee holds legal recognition and enforceability between the involved parties. 

Nevertheless, it is recommended that an employment arrangement be documented in writing and duly signed by both parties. This indicates acknowledging and accepting the employment relationship’s terms and conditions.

What happens if there is a dispute related to the employment contract?

In case of disputes, our legal team can provide guidance and support in resolution, ensuring that your rights are protected.

How long does it take to draft a customised employment contract?

The timeframe for drafting an employment contract can vary depending on the complexity and specific requirements of the contract. We aim for efficiency while ensuring legal accuracy.

What is the difference between an employment contract and an employment agreement?

The difference between an employment contract and an employment agreement lies in their legal enforceability. 

An agreement refers to a mutual understanding between parties, while a contract is a legally binding agreement enforceable under the law. Specifically, a contract involves an offer, acceptance, consideration, legality, and capacity. The key distinction is that a contract is legally binding, with clear penalties for violation, whereas an agreement may not be binding.

The terms “employment contract” and “employment agreement” are commonly used and understood in the employment context. However, if you want to emphasis the legally binding nature of the arrangement, “employment contract” may be more precise.

Using “employment agreement” might convey a slightly broader sense, including non-legally binding understandings. In legal and formal contexts, the term “employment contract” is often preferred for clarity and specificity.

Responsibilities of Executor:

  • Apply for and extract the grant of probate.
  • Make arrangements for the funeral of the deceased.
  • Collect and make an accurate inventory of the deceased’s assets.
  • Settling the debts and obligations of the deceased.
  • Distributing the assets.

Note for Digital Executor:
If you wish to leave your digital assets to certain people in your Will, there are important steps that need to be taken to ensure that your wishes can be carried out:

  • Keep a note of specific instructions on how to access your username and password of your digital asset.
  • You are advised to store these private and confidential information in a USB stick, password management tool or write them down.
  • Please inform your executor or a trusted person of the whereabouts of the tools so that they will have access to your digital asset.