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General Overview of Employment Contracts in Malaysia

Updated: Apr 27

General Overview of Employment Contracts in Malaysia

Here's a general overview of employment contracts in Malaysia:

Importance and Legality:

  • Employment contracts are crucial legal documents outlining the terms and conditions of employment in Malaysia.

  • They establish rights and responsibilities for both employers and employees.

  • The Employment Act 1955 (EA) governs employment matters, and a well-drafted contract ensures compliance with the law.

Types of Contracts:

  • Written contracts are recommended for all employment exceeding one month.

  • Verbal contracts are also valid but can be difficult to enforce in disputes.

  • Two main types of contracts are used:

  • Open-ended (permanent) contracts - Most common type.

  • Fixed-term (temporary) contracts - Less common, but used for specific projects.

Key Elements of a Contract:

  • Typically include details like:

  • Job role and responsibilities

  • Remuneration (salary, allowances) and payment schedule

  • Benefits (medical, leave entitlements)

  • Working hours and overtime pay

  • Probation period (if applicable)

  • Termination clauses (notice periods, severance pay)

Additional Points:

  • Contracts should be clear and concise, ideally in both English and Malay.

  • Employers must retain contracts for at least six years after their conclusion.

  • Employment contracts cannot restrict an employee's right to join a trade union.

Further Resources:

For more in-depth information, consider searching for these resources:

  • "Employment Act 1955 (Malaysia)"

  • "Malaysia Ministry of Human Resources - Standard Employment Contract"

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