norhayati mohd salleh ads 465 topic 8 1 topic 8 the employment act 1955 upon completing this topic,...

Norhayati Mohd Salleh ADS 465 TOPIC 8

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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 INTRODUCTIONThis is an important labour legislation that :

i. regulates the relationships between employer(s) and non-unionised employees

ii. establishes minimum working conditions for private sector employees who are not represented by any trade union

iii. it applies to employees earning up to RM5,000 per month (there has been amendment to the Employment Act in late 2000)

iv. This Act is governed and enforced by the Labour Department.

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 …. Cont’d

• "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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• 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.

Norhayati Mohd Salleh ADM 465 TOPIC 8

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• 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)

CharacteristicsAny existing contract of service must possess the following

elements:• Understanding• Agreement• Rights and responsibilities• Binding


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CONTRACT OF SERVICE… cont’d

LimitationsSec.7 (A)(B) provides the followings:i. Terms and conditions of service cannot be

less favorable than provisions in the EA.ii. The contract cannot prohibit workers from

joining and taking part in trade unionism.iii. In the most conditions, it must be in writing.iv. Methods of terminating the contract must be

explained.v. To avoid any problems, other matters can be

included in the contract (removal of doubt).


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CONTRACT OF SERVICE … cont’d

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 … cont’d

(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 MISCONDUCTDefinitionSec. 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’…”

SourcesThere 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:i. Insubordination: gambling and intoxication.ii. Disobedience: theft and dishonesty.iii. Lateness and absence: cheating and

misappropriation.iv. Dereliction of duty: fraud and

misrepresentation.v. Threat and intimidation: breach of the duty of

fidelity; and vi. Assault and fighting: breach of the duty of carevii. 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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GuidelinesThere 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:

i. The inquiry is to be instituted as early as possible after the suspension of the employee.

ii. 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.

iii. Wherever applicable, the employee is to be accompanied by his union or committee representative, if any, at the inquiry.

iv. 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.

v. Examination of relevant witnesses is to be allowed at the reasonable discretion of the officer-in-charge of the inquiry, and

vi. 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 … cont’d

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 … cont’dThe principles of natural justicei. 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.

ii. No one should be condemned unheard. The worker charged has the right to speak on his behalf (or union representative/ colleague to assist).

iii. 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.

iv. The Domestic inquiry must be conducted by an unbiased party.

v. 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 employeeii. downgrade the employeeiii. 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:i. wage/ salary, ii. wage period,iii. time of payment of wage,iv. methods of payment, v. advance of wages, vi. deduction from wages, vii. priority of wages and liability to pay wages

(principals, contractors and subcontractors).


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WAGES AND SALARIES … cont’d

8.2.1 DEFINITIONThe 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: -

i. The value of house or the supply of food, water etc;ii. Any contribution paid by the employer on his own

account to any fund or scheme e.g. EPF, SOCSO etc.;iii. Any traveling allowance or value of any traveling

concession;iv. Any sum payable to employee… due to nature of his

work;v. Any gratuity on discharge or retirement; orvi. Any annual bonus or any part of any annual bonus.


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WAGES AND SALARIES … cont’d

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 … cont’d8.2.3 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 employee’s 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 … cont’d8.2.4 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 :

i. To enable him to purchase a house or build or improve his house; or

ii. To enable him to purchase land; oriii. To enable him to purchase livestocks; oriv. To enable him to purchase motorcar, motorcycle or bicycle;

orv. For any other purposes as approved by the Director General

of Labour; orvi. For any purposes as approved by the Minister of Human

Resources.(Sec. 22, EA)


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WAGES AND SALARIES … cont’d8.2.5 DEDUCTION FROM WAGES

An employer can make any deductions from the wages of an employee under the following circumstances:

i. Deductions to the extent of any overpayment of wages by the employer to the employee by the employer’s mistakes (immediately preceding three months from the month of such deductions);

ii. Deductions for the indemnity due to the employer by the employee under Sec.13 (1);

iii. 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 payiv. Deductions on the request made by the employees for

reasonable matters (e.g. loans etc).


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WAGES AND SALARIES … cont’d8.2.6 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 employee’s 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.

norhayati mohd salleh ads 465 topic 8 1 topic 8 the employment act 1955 upon completing this topic,...

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