CHAPTER 2
TERMS AND CONDITIONS OF
EMPLOYMENT

EMPLOYMENT ACT 1955 (Revised 1981) (Act 265)

WORKING HOUR

 Overtime
 Shift Work
 Flexi time
 Compressed work week
 Part time

Salary/Wages

 Wage periods
 Wage setting
 Advances on Wages
 Deductions from wages
 Priority of wages

Leaves

 Rest days
 Public holidays
 Annual leaves

 Sick leaves

Working Hours

According to Sect. 60A
of the Employment Act,
an employee in his

contract of service

SHALL NOT BE required

to work:

> 5
consecutive
hours
without a
period of
leisure of not
< 30 min
duration

> 8
hours
in one
day

However, under Sect. 60(2) of the
Employment Act, an employee
may be required to exceed the

above limitation by the employer

when:

Accident,
threatened
in or at
workplace

Work
that
involves
the
defence
of
Malaysia

Overtime

Overtime means the number of hours of work carried out in excess of the normal
hours of work per day.

Therefore, the employee shall be paid at the rate NOT LESS than one & half (1.5)
times the hourly of pay.

Any work carried out by an employee employed on a daily, hourly or other rate of
pay who WORKS ON REST DAY shall be paid

• 1 day’s wages if he works less than half his normal hours of work
• 2 day’s wages if he works between half the normal hours and the full hours
• If employee employed on piece rate who work on a rest day, he shall be paid twice his ordinary rate

per piece

Shift Work

The shift worker may be required to work for more than 8
hours a day or more than 48 hours a week BUT must have
a break of 30 min for every 5 consecutive hours of work

However, the average number of hours worked over any period of
3 weeks shall NOT exceed 48hours/week

Employers will normally provide several types incentives to their
employees for e.g. free transportation from house to workplace,
free food & shift allowances

There are two shift patterns;

We have double-day shift : two shifts in one day and triple
shift work – three shifts in one day

In the double shift pattern, we can have a normal eight-hour
shift or twelve-hour shift

In the triple shift pattern, we can have a three eight-hour
shift

Morning shift 7 a.m. – 3 p.m.
Afternoon shift 3 p.m. – 11 p.m.
Night shift 11 p.m. – 7 a.m.

Flexitime

Flexitime or flexible working hours is a system of working
hours where the starting and stopping times are decided by
the individual worker within a number of limitations set by
the employer

Flexitime refers to variations in
starting and quitting times but
assumes that a constant number of
hours (8 hours) are worked each
day

In other words, the employees can
work any time they choose, but per
day they have to put in 8 hours of
efforts or 48 hours per week.

Compressed Work Week

Any arrangement of
work hours that permits
employees to fulfil their
work obligation in fewer
days than the typical 5
day or 6 day workweek

An example will be 4
days workweek and the
length of the work day
will be increase to 10 or
more hours

Advantages of Compressed Work

Employees can schedule their leisure
time for family life, personal
business & recreation

Lower absenteeism & lateness rates
at companies

Tend to be more productive during
scheduled work days

Time for personal care

Motivation to work

Work life balance

Disadvantages of Compressed Work

Longer work day is physically and mentally
challenging

Employee morale could suffer due to the long
hours.

Difficult to arrange dependent care or
transportation around the longer workday

Managers may be required to work the same
schedule as the employee for support and to
provide supervision

May result in overtime expenses, creating
salary equity issues among those not
participating in the program

Partime

An employee can be working during the normal
working hours but he/she is employed on an
hourly basis

They can earn extra income through part-time
work without being tied to the organization.

Organization use part-time jobs to increase in
the number of employees to complete a certain
demand or projects.

WAGES/SALARY

Wages means basic salary & other payments in cash to an employee due under the
contract of service excluding

• Annual bonus
• Overtime payments
• Commissions
• Subsistence allowances (Elaun Sara Hidup) • Travelling allowances
• Any gratuity payable on discharge or retirement
• Any contribution paid by the employer account’s to any pension fund, provident fund, superannuation
scheme, retrenchment, termination, lay off or retirement scheme established for the benefits of
employee
• The value of house accommodation or supply of food, fuel, light,water, or medical attendance.
• Any retrenchment or termination benefits.

Wage Periods

Must be paid at
least once every
month.

The employer must
make payment of
wages not later
than 7 days after
the end of that
wage period

Wage Payment

Wages paid to
employees must be in
legal tender

However, the Employment
Act Section 25(10) do
allow payment to be made
in the following form:

Payment on the name of
the employee through
any bank accounts in

Malaysia

Payment through
cheque issued directly to
the worker

ADVANCES ON WAGES

The Employment Act allows employers an advance
on wages

this is not encouraged to be practice
because lending money to employees may lead to
all kinds of industrial relations problems

offer an advance on wages to
their employees, particularly before the various
religious festivals

DEDUCTIONS FROM WAGES

Deductions from employees’ wages are only allowed in
certain restricted circumstances

The maximum monthly total deduction must not exceed
50 per cent of the employee’s wages unless the amount
to be deducted includes repayment of a housing loan

permission of the Director-General of
Labour, the total deductions may be increased to 75
percent of the monthly wage

Main topic

Leaves

Also known as the period of time during which you are
absent from work or duty with the permission from your
employers

Several types of leaves that include:
 Rest days
 Public holiday
 Annual leaves
 Sick leaves

Rest Days

All employees are entitled to at least ONE (1) rest day per week

It can be on a Sunday, Friday, or any other day.

For employees who do not work the normal work hours (e.g. shift work), the
employer will prepare a roster for the employees’ rest days & this roster will be
informed to the employees in advance

When a daily rated employee agrees to work on his rest day at the request of his
employer he is entitled to a higher than normal rate of pay: • If he works less than half his normal hours of work, he is paid one (1) full days’ wages. • If he works between half the normal hours & the full hours he is entitled to two (2) day’s wages.

The term "layoff" originally meant a temporary suspension or
permanent termination of employment of an employee for business
reasons,

- E.gs: personnel management or downsizing an organization

Layoffs are not caused by any fault of
the employees but by reasons such as
lack of work, cash, or materia

Public Holidays

The Employment Act entitles workers
to 11 public holidays per year whereas
Malaysia has 16 or 17 (depending on
the state) such holidays

Five of 11 gazette public holidays are:

Workers Day

Malaysia Day

Independence Day

Birthday of the Yang di-Pertuan Agong

Birthday of the State Ruler

Examples of the remaining six gazette public holidays
are:
Hari Raya Puasa Christmas Chinese New Year
Deepavali New Year’s Day Wesak Day
Thaipusam Awal Muharram Hari Raya Korban

Annual Leaves

Employees are only entitled to annual leave once they
complete a year of service

The duration of annual leave granted to workers depends
on their length of service with their employer

Length of Service No. of Days of Annual Leave
1 to 2 years 8 days
2 to 5 years 12 days
5 and above 16 days

Sick Leaves

Before employees can avail themselves of this privilege,
they must undergo an examination by a registered
medical practitioner appointed by the employer (known
as a panel doctor) and be certified unfit for work by the
doctor

The employer is required to pay for
this medical examination and he
also pays for any treatment

recommended by the doctor

Length of Service No. of Days of Sick Leave
Less than 2 years 14 days
2 to 5 years 18 days
5 and above 22 days

Benefits

Something that aids or promotes well-being, an advantage to the
employee that includes:

Termination
benefits

Layoff benefits

Retrenchment
benefits

Resignation
benefits

Medical
benefits

Maternity
benefits

Termination
benefits

Voluntary : An employee may quit because
of resignation due to other job outside or
retirement (employees ARE NOT entitled
to termination benefit)

Involuntary : Referred to dismissal or
being retrenched due to company
economy problems

Length of Service Amount of Benefit
1 to 2 years 10 days’ wages for every year of service
2 to 5 years 15 days’ wages for every year of service
5 and above 20 days’ wages for every year of service

Notice of Termination

•The Employees Rights Under The Employment Act 1955

The notice of termination in accordance with the contract of
service but shall not be less than those specified in the
Employment Act 1955

Layoff
benefits

The term "layoff" originally meant a temporary suspension or
permanent termination of employment of an employee for business
reasons,

- E.gs: personnel management or downsizing an organization.

Layoffs are not caused by any fault of
the employees but by reasons such as
lack of work, cash, or material.

Usually a layoff occurs as a costcutting measure

Length of Service Amount of Benefit
1 to 2 years 10 days’ wages for every year of service
2 to 5 years 15 days’ wages for every year of service
5 and above 20 days’ wages for every year of service

Medical
benefits

Employee medical benefits are the additional benefits provided to the
employees by the company

Almost all the companies provide their employees with medical benefits
so that they can give their best during their working hours without any
fear

Examples of medical benefit are:
 Employee Medical Plan.
• There is a regular medical check up for the employees to provide the healthy

working condition to the employees.

• Employees are provided with healthy and hygienic food by the company.