Norhayati Mohd Salleh

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TOPIC 8THE EMPLOYMENT ACT 1955

• UPON COMPLETING THIS TOPIC, STUDENT SHOULD BE
  ABLE TO
• Identify groups of workers covered under the
  Employment Act 1955
• Explain the term contract of service and
  ways of terminating the contract of service.
• Identify the proper way to conduct due inquiry.
• Describe the important matters on hours of work.
• Discuss the types of paid leave.
• Explain on protection for female workers.

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8.0 INTRODUCTION

• This is an important labour legislation that
• regulates the relationships between employer(s)
  and non-unionised employees
• establishes minimum working conditions for
  private sector employees who are not represented
  by any trade union
• it applies to employees earning up to RM5,000 per
  month (there has been amendment to the Employment
  Act in late 2000)
• This Act is governed and enforced by the Labour
  Department.

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8.1 Employees covered under this Act

• Constructional workers mean employees who work in
  the "constructional work" includes the
  construction, reconstruction, maintenance,
  repair, alteration or demolition of any building,
  railway, harbour, dock, pier, canal, inland
  waterway, road, tunnel, bridge, viaduct, sewer,
  drain, well, dredge, wireless, telegraphic or
  telephonic installation, electrical undertaking,
  gas work, water work or other work of
  construction, as well as the preparation for, or
  the laying of , the foundations of any such work
  or structure, and also any earthworks both in
  excavation and in filling
• foreign employee means an employee who is not a
  citizen

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Employees covered under this Act . Contd

• "domestic servant" means a person employed in
  connection with the work of a private
  dwelling-house and not in connection with any
  trade, business, or profession carried on by the
  employer in such dwelling-house and includes a
  cook, house-servant, butler, child's nurse,
  valet, footman, gardener, washer-man or
  washer-woman, watchman, groom and driver or
  cleaner of any vehicle licensed for private use

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Employees covered under this Act . Contd

• Workers in industrial undertaking i.e any works
  include the following
• (a) disturbing, removing, carting, carrying,
  washing, sifting, melting, refining, crushing or
  otherwise dealing with any rock, stone, gravel,
  clay, sand, soil, night-soil or mineral by any
  mode or method whatever
• (b) industries in which articles are
  manufactured, altered, cleaned, repaired,
  ornamented, finished, adapted for sale, packed or
  otherwise prepared for delivery, broken up, or
  demolished, or in which materials are transformed
  or minerals treated, including shipbuilding and
  the generation, transformation and transmission
  of electricity or motive power of any kind
• (c) constructional work
• (d) transport of passengers or goods by
  road, rail, water or air, including the handling
  of goods at docks, quays, wharves, warehouses or
  airports
• (e) any industry, establishment or undertaking,
  or any activity, service or work, declared under
  subsection (5) to be an industrial undertaking.

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Employees covered under this Act . Contd

• Employees in underground working means any
  undertaking in which operations are conducted for
  the purpose of extracting any substance from
  below the surface of the earth, the ingress to
  and egress from which is by means of shafts,
  adits or natural caves
• Employees in agricultural undertakings means any
  works in which any employee is employed under a
  contract of service for the purposes of
  agriculture, horticulture or silviculture, the
  tending of domestic animals and poultry or the
  collection of the produce of any plants or trees.

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8.1 CONTRACT OF SERVICE

• 8.1.1 DEFINITION
• any agreement, whether oral or in writing and
  whether implied or express, whereby one person
  agrees to employ another person as an employee
  and that other agrees to serve his employer as an
  employee and includes an apprenticeship
• (Sec. 2, EA)
• Characteristics
• Any existing contract of service must possess the
  following elements
• Understanding
• Agreement
• Rights and responsibilities
• Binding

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CONTRACT OF SERVICE contd

• Limitations
• Sec.7 (A)(B) provides the followings
• Terms and conditions of service cannot be less
  favorable than provisions in the EA.
• The contract cannot prohibit workers from joining
  and taking part in trade unionism.
• In the most conditions, it must be in writing.
• Methods of terminating the contract must be
  explained.
• To avoid any problems, other matters can be
  included in the contract (removal of doubt).

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CONTRACT OF SERVICE contd

• 8.1.2 TERMINATION OF EMPLOYMENT CONTRACT
• The EA describes how the contract of service can
  be terminated
• (i) Termination by effluxion of time / Normal
  termination a contract for a specified period
  of time or for performance of a specified piece
  of work terminates then the period of time for
  which the contract was made has expired or when
  the piece of work specified in the contract has
  been completed.
• (Sec. 11, EA)
• (ii) Termination by notice a contract of
  service may terminated whereby either party
  giving notice to the other party of his intention
  to terminate the contract. Minimum length of
  notice
• 4 weeks - less than 2 years service on the
  date the notice is given.
• 6 weeks - 2 years service or more but less
  than 5 years.
• 8 weeks more than 5 years service.
• (Sec. 12, EA)

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TERMINATION OF EMPLOYMENT CONTRACT contd

• (iii) Termination without notice a contract of
  service may be terminated by either party
  whereby
• Either party terminates without notice, or
• A notice is given but, without waiting for the
  expiry of that notice, or without payment of an
  accrued indemnity to the other party, or
• In the event of willful breach by the other
  party of an important term or condition of the
  contract.
• (Sec. 13, EA)
• (iv) Termination for special reasons an
  employer may dismiss without notice an
  employee for misconduct after due inquiry or
  an employee may terminate his contract of service
  with an employer if he is or his dependents are
  immediately threatened with bodily danger through
  violence or disease (but not stated in the
  contract.
• (Sec. 14, EA)

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8.1.3 MISCONDUCT

• Definition
• Sec. 14, EA impliedly defines it as,
• is conduct by an employee that is
  inconsistent with the fulfillment of the express
  or implied conditions of his service
• Sources
• There are two possible sources
• i. Based on the rights of employers (in terms of
  established rules and regulations and private
  conduct of employees especially when they are
  away from the workplace and outside the work
  time).
• ii. Based on the responsibilities of employees.

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Kinds of misconduct

• Too many for us to consider such as
• Insubordination gambling and intoxication.
• Disobedience theft and dishonesty.
• Lateness and absence cheating and
  misappropriation.
• Dereliction of duty fraud and misrepresentation.
• Threat and intimidation breach of the duty of
  fidelity and
• Assault and fighting breach of the duty of care
• Misuse of employers facilities computer game
  etc.

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8.1.4 DUE INQUIRY

• Definition
• Due inquiry means a proper inquiry i.e. a
  domestic inquiry that is held in conformity with
  the principles or the rules of natural justice.
• It is required by Sec. 14, EA.
• It must be conducted before taking disciplinary
  action against an employee for misconduct.

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Guidelines

• There are no specific set rules as a standard
  procedure to be followed by all presiding
  officers at a domestic inquiry. But, the
  following guidelines are useful to observe
• The inquiry is to be instituted as early as
  possible after the suspension of the employee.
• The employee is to be given particulars of the
  misconduct, preferably in writing, and a
  reasonable time before the inquiry to enable him
  to prepare his case.
• Wherever applicable, the employee is to be
  accompanied by his union or committee
  representative, if any, at the inquiry.
• The inquiry is to be conducted, as far as
  possible, by such officer(s) as are not directly
  connected with the investigation of the
  misconduct, so as to give the hearing
  impartially.
• Examination of relevant witnesses is to be
  allowed at the reasonable discretion of the
  officer-in-charge of the inquiry, and
• Notes in the form of questions and answers and
  the final decision are to be recorded to show
  that the inquiry is proper, and that the decision
  made was fair.

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DUE INQUIRY contd

• The rules of natural justice
• The Industrial Court has clearly stated what they
  are. The concept has two basic components
• i. The rule of fairness (requires fair hearing)
• ii. The rule against bias (justice must be done
  and manifestly seen to be done)

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DUE INQUIRY contd

• The principles of natural justice
• The right to know the worker has the right to
  know of what he is accused. Therefore, he must be
  presented with a written charge, which clearly
  sets out the nature of the misconduct.
• No one should be condemned unheard. The worker
  charged has the right to speak on his behalf (or
  union representative/ colleague to assist).
• The worker must be given time to reply to
  accusations. Domestic inquiry should not be
  unduly delayed. If worker request more time to
  prepare his defence, within reason this should be
  granted.
• The Domestic inquiry must be conducted by an
  unbiased party.
• The punishment must be appropriate to the
  seriousness of the misconduct and take into
  account any mitigating factors.

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8.1.4 DISMISSAL, DOWNGRADING AND SUSPENSION

• These are possible actions taken by employers if
  the due inquiry proved that the employee has
  committed misconduct
• i. dismiss without notice the employee
• ii. downgrade the employee
• iii. impose any other lesser punishment as he
  deems just and fit.
• (Sec. 14(1), EA)
• An employer can suspend an employee for a period
  not exceeding two weeks but shall pay him not
  less than half of this wages for such period (for
  the purpose of an inquiry)

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8.2 WAGES AND SALARIES

• The EA, 1955 provides the definition of
• wage/ salary,
• wage period,
• time of payment of wage,
• methods of payment,
• advance of wages,
• deduction from wages,
• priority of wages and liability to pay wages
  (principals, contractors and subcontractors).

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WAGES AND SALARIES contd

• 8.2.1 DEFINITION
• The EA defines wages as follows
• wages means basic wages and all other payments
  in cash payable to an employee for work done in
  respect of his employment contract but does not
  include -
• The value of house or the supply of food, water
  etc
• Any contribution paid by the employer on his own
  account to any fund or scheme e.g. EPF, SOCSO
  etc.
• Any traveling allowance or value of any traveling
  concession
• Any sum payable to employee due to nature of his
  work
• Any gratuity on discharge or retirement or
• Any annual bonus or any part of any annual bonus.

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WAGES AND SALARIES contd

• 8.2.2 THE WAGE PERIOD
• This term refers to the period whereby the wages
  earned by an employee is payable.
• It is usually determined in the contract of
  service.
• If not specified, shall be deemed to be one
  month.
• (Sec. 18, EA)

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WAGES AND SALARIES contd

• 8.2.3 THE PAYMENT OF WAGES (This refers to the
  time for and form of payment of wages that the
  employer must pay.
• Time
• Time not later than 7th day after the last day
  of wage period.
• Form (Truck System) in the form of legal tender
  (any other form shall be illegal, null and void).
• other permitted ways with the written
  consent of the employee
• Payment into the employees account at a bank or
  a registered finance company or
• Payment by cheque made payable to or to the order
  of the employee.
• (Sec. 25 25A, EA)

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WAGES AND SALARIES contd

• 8.2.4 ADVANCES ON WAGES
• This concept refers to a situation where by an
  employer makes advance of wages not already
  earned by an employee, which exceeds the amount
  of wages earned by the employee in the preceding
  month of his employment, exceptional purposes
• To enable him to purchase a house or build or
  improve his house or
• To enable him to purchase land or
• To enable him to purchase livestocks or
• To enable him to purchase motorcar, motorcycle or
  bicycle or
• For any other purposes as approved by the
  Director General of Labour or
• For any purposes as approved by the Minister of
  Human Resources.
• (Sec. 22, EA)

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WAGES AND SALARIES contd

• 8.2.5 DEDUCTION FROM WAGES
• An employer can make any deductions from the
  wages of an employee under the following
  circumstances
• Deductions to the extent of any overpayment of
  wages by the employer to the employee by the
  employers mistakes (immediately preceding three
  months from the month of such deductions)
• Deductions for the indemnity due to the employer
  by the employee under Sec.13 (1)
• Deductions for the recovery of advances of wages
  made under Sec. 22 (provided without interest
  deductions authorized by any other written law).
• (Sec. 24 (1) EA)
• Not exceeding 50 of his/ her pay
• iv. Deductions on the request made by the
  employees for reasonable matters (e.g. loans etc).

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WAGES AND SALARIES contd

• 8.2.6 THE PRIORITY OF WAGES OVER OTHER DEBTS
• A person who is liable to pay wages due to an
  employee or to a subcontractor for labour can be
  forced by a court to sell off his properties and
  assets to pay debts. Employees van only claim a
  maximum of four months wages.
• 8.2.7 THE LIABILITY TO PAY WAGES
• An employer is liable to pay wages due to any
  employee for work done in the course of the
  performance of any contract.
• Employers can be principals, contractors or
  subcontractors. They are jointly liable to pay
  those wages.

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Discussion Questions

1. Explain the terms principals, contractors and
   subcontractors
2. Elaborate on the term priority on wages over
   other debts
3. Discuss on FOUR (4) main circumstances that allow
   the deduction of an employees wage.
4. Explain on any six (6) situations where advances
   of wages are allowed by the Malaysian labour law.
5. Explain FOUR (4) methods to terminate a contract
   of service.