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EXPLORE HRM Maimunah Aminuddin is a well-known

lecturer, writer and consultant on human

with resource management. Books she has
written include:
MAIMUNAH Human Resource Management (2nd ed,
2011, Oxford University Press)

Malaysian Industrial Relations and

Employment Law (7th ed, 2011, McGraw

Termination of Employment: Understanding

the Process (2010, CLJ Publication)

Chapter One - The Role of Human Resource Management
1. The key responsibilities of human resource management
2. Efficient and effective human resource management
3. Challenges facing human resource management
4. Challenges facing human resource officers
5. Setting up a human resource department

Chapter Two Recruitment

1. Human resource planning and
2. Recruitment of employees

Chapter Three Selection of Employees

1. Problems that may arise in the Selection Process
2. The Selection Process
3. Offering Employment

Chapter Four Induction

1. Organising Induction for New Employees
2. Preparing an Employee Handbook
3. Conducting an Exit Interview
Chapter Five The Legal Environment of Employment
1. Key Provisions of the Employment Act, the Sabah Labour Ordinance and the
Sarawak Labour Ordinance
2. Key Requirements of the Social Security Laws

Chapter Six Wages and Benefits

1. Wages
2. Benefits
3. Ensuring Compensation Packages are Attractive

Chapter Seven Training

1. Determining the Types of Training Needed and Who Needs Training
2. Establishing a Training Section within the Organisation
3. Developing Training Skills

Chapter Eight Safety and Health

1. The Law Relating to Occupational Safety and Health
2. Actions to make the Workplace Safe
3. Responding to an Accident
4. Health Issues

Chapter Nine Employee Performance Management

1. Creating a Performance Management System
2. Developing a Performance Appraisal Scheme
3. Rewarding Good Performance
4. Dismissing Employees for Poor Performance

Chapter Ten Employment Relations

1. The Significance of Effective Employment Relations
2. Communicating with Employees
3. Encouraging Loyalty and Commitment from Employees
4. Creating a Conducive Work Environment for Employees
Chapter Eleven Industrial Relations
1. The Right to Form or Join a Trade Union
2. Activities of Trade Unions
3. Employers Responses to Trade Unions

Chapter Twelve Disciplinary Systems

1. Employees Rights to Challenge a Dismissal
2. Procedures for Punishing an Employee
3. Common Examples of Misconduct

Chapter Thirteen Termination of Employment

1. Managing the Resignation of Employees
2. Managing Probationers
3. Retrenching Employees
4. Retiring Employees
5. Ending a Fixed-term Contract
6. Frustration of the Employment Contract
Chapter One:

In this chapter, the key topics will be:

1. The key responsibilities of human resource management

2. Efficient and effective human resource management
3. Challenges facing human resource management
4. Challenges facing human resource officers
5. Setting up a human resource department

If you have responsibility for human resource management in a small or medium sized
organisation, this e-book is for you. Topics to be covered include:

1. Introduction to Human Resource Management

2. Recruitment
3. Selection
4. Induction
5. The Legal Environment of Employment
6. Wages and Benefits
7. Training
8. Safety and Health
9. Employment Relations
10. Industrial Relations
11. Performance Management and Performance Appraisal
12. Disciplinary Systems
13. Termination of Employment

You may have other tasks assigned to you, for instance, finance and administration, but
these do not relate to human resource management so they will not be covered in this e-
book. All the material in the book relates to Malaysia unless an example of a human
resource management practice from another country is given.
The list above provides you with the key functional areas that fall within human resource
management (HRM). Although each topic will be discussed separately to minimize
confusion, anyone involved in HRM could be required to carry out tasks relevant to several
of these functions all at one meeting!

Some people think that HRM is all about managing people. It is not. HRM is a process of
establishing and maintaining systems that will allow an organisation to hire, train, and
support its people in such a way that the organisation can achieve its objectives. Employees
responsible for HRM must be able to draw up procedures and policies for all aspects of HRM
and ensure that these are followed. Managers have departments to run. They are experts in
their own areas of production, marketing, finance and so on. They need staff to help them
accomplish the goals set for their department. They will manage these staff. Employees
assigned to HR can help them in this task. HR staff provide a support service throughout the
organisation so that managers can be sure that they have the right employees, in the right
numbers, properly trained and committed to getting quality work done.

Reduce Disagreements over Who does What

It is helpful if organisations decide who is responsible for which aspects of HRM. You do not
want to be arguing with your managers or the chief executive officer (CEO) as to your
authority limits. In most cases people in non-finance positions would not give suggestions
to the finance officer how to keep accounts; production staff would not advise marketing
people how to sell the companys products; and there would be astonishment if the sales
staff told the production supervisors how to maintain the machines in the factory. Yet, all of
these staff may tell employees responsible for human resource management what to do or
not to do.

Let us take an example of how disagreements and conflict can make a mess of HRM.

Recruitment and selection of new staff, which will be discussed in the next two chapters,
require preparatory work such as preparing job descriptions and person specifications, after
which some effort has to be made to inform possible applicants that a vacancy is available.
When a number of people have applied for the vacancy, information must be collected
about each applicant so that they can be compared and the most suitable person for the job
can be offered the position. Is this all HRM work? No. It is a joint venture between the head
of department or manager to whom the job-holder will report, the CEO, possibly the finance
officer who will give input on a possible compensation package for the job-holder and the
person responsible for HR. It may also involve outside parties such as employment agency
staff. Who is going to do what?
If there is no clear understanding as to who does what, certain key activities may not be
done at all or one party may resist doing something on the grounds that it is not his job. It is
impossible to have team work and efficiency in a messy situation where no one is sure what
they are supposed to do.

For every function and action needed to carry out the function a list should be drawn up. It
could be a flow-chart showing what is to be done and who is responsible for each action. To
revert to our earlier example, recruitment and selection, who makes the final decision to
offer a candidate the job? Certainly, not the HR person. Normally, the manager to whom the
job-holder will report will make the final decision even though the work of informing the
candidate and ensuring he or she is welcomed into the organisation is the responsibility of
the HR officer.


Good human resource (HR) people try to be:

Efficient and

An efficient HR person gets as much done as possible with the least resources. This means
you need to work smart and use technology to assist in your work and to make your systems
run smoothly.

An effective HR person does the right things. They do not ignore any key aspects of HRM
and they are constantly looking for ways to improve the HR systems in their organisations.
You need to scan the Internet where a great deal of information relating to HR practices can
be found. Contact other HR people who are usually willing to share ideas and practices.

Join an Employers Organisation

If possible, persuade your CEO to affiliate the organisation to any suitable organisation
which can assist you in HR matters, especially the complex employment law related issues.
The Malaysian Employers Federation and the Federation of Malaysian Manufacturers are
examples of large organisations which have regional meetings where you can learn more
about HR as well as talk to other HR practitioners and get expert help, if needed.

Learn the Right way to Conduct Human Resource Management

There is no right way to conduct human resource management and no wrong way either.
But, some policies, procedures and actions are better than others. You have to be willing to
experiment with new ideas. To get approval for new ideas, you will surely have to persuade
your managers and your CEO that the ideas are good for the organisation. To do this, you
need facts, and wherever possible, examples of how these ideas have helped other
organisations improve their financial position. Most Malaysian CEOs and managers are very
conservative when it comes to introducing new HR ideas. What can you do to overcome this

1. Experiment on small groups or in one section of your organisation before introducing

an idea across the whole organisation. Start small wherever practical.
2. Talk to your employees and get written feedback to show the CEO and other
managers that the workers like an idea or practice.
3. Do not burden managers with frequent changes to procedures. If, before they have
become comfortable with a new procedure, you make changes to it, they will
become unwilling to cooperate with HR policies in the future.
4. HR policies must be consistently upheld throughout the organisation. Discuss the
policies thoroughly with all managers before they are implemented. Once they are
agreed to, ensure they are unfailingly implemented by all managers.
5. As you scan the Internet or attend meetings with other organisations, keep a record
of practices implemented by these parties that you would like to copy. Print out
from the Internet, or the newspapers (use the on-line versions) examples of
Malaysian and foreign companies which are doing things which you think would be
helpful in your organisation. If you can find a Malaysian organisation doing
something you want to imitate, you could request that their HR representative come
and explain their practice to your management team. In this way, they can see that
your new idea is workable.


Talent Management

All employers are competing for the same limited pool of workers. Malaysia has:

1. A shortage of workers
2. A shortage of skilled workers
3. A shortage of talented workers

These shortages are not about to go away any time soon. Further, your organisation is
competing with other employers for the same limited pool of workers. You are competing
with the big boys the government-linked companies, the multi-national companies, even
the government itself wants to employ the best people. You have to continuously look for
creative ways to attract and retain good workers. You probably cannot compete by giving
wages and benefits comparable to those offered by large employers. Still, there are actions
you can take which will increase your ability to recruit and keep your prized assets the
workers you have invested in. You might like to think about these examples:

1. Encourage flexibility. With a small workforce you can provide flexible work hours. Or,
you can permit workers to apply for a half-day off to settle any personal problems.
Make sure the same working hours privileges apply to all employees, not just those
who are favourites with a particular manager.
2. Share rewards. Promise workers (and make sure the promise is kept) a reward,
which does not have to be financial, if they achieve a certain target or complete a
particular project within time guide-lines.
3. Provide a cheerful working environment. Dirty, unwashed, work rooms are a turn-
off. You may even find that if you provide the paint, brushes and other equipment,
the workers will volunteer to do some painting in their spare time.
4. Organise some fun activities. If you can find some space for workers to play games,
all the better. Sports competitions always help to achieve good spirits; so do other
less active games, even computer game competitions. Simple birthday parties are
great too. Let the workers do most of the organising. HR only needs to provide
assistance. Involve family members of employees wherever possible.
5. Never say: goodbye, dont come back to good workers; keep the entrance door
open. People leave their jobs for all sorts of reasons. If your organisation is a good
company to work with, they may wish to come back after leaving and trying out
another employer.

Integrating Diverse Groups of Workers

An HR officer is expected to find ways to integrate and encourage team work amongst the
various groups of employees working in your organisation. You may have people from
different generations this problem is discussed later in this chapter. You probably have
both men and women and you do not want improper sexual behaviour causing conflict and
even complaints from co-workers or outsiders. You may have foreign workers from a
number of countries who may have arguments amongst themselves as well as arguments
with the local workers.
Foreign workers cause a number of problems for HR officers. Because of cultural and
language issues, you will normally need special induction and training programmes for
them. Safety training must be carefully designed so that foreign workers can understand.
Find a translator and do not lose him or her! Organise Bahasa Malaysia classes for your
foreign workers. Bahasa is not a difficult language to learn. Within 3 months, most of your
foreign workers should understand enough for simple, direct messages.

Prepare contingency plans in case physical fighting should occur between your foreign
workers and other persons, whether at work or elsewhere. If there is an argument at the
Pasar Malam between your workers and others, the Police will call you to take charge of
your workers.

Prepare contingency plans in case your foreign workers decide to strike. Many of them
come from countries where strike action by workers is common and they understand the
power of the strike. They know that if as a group they stay firm they can wield a lot of power
over an employer. It may not be practical to terminate the services of all foreign workers
just because they have participated in a strike (even though the strike was most likely
illegal). It is important to have regular sessions with them to discuss any problems they are
facing before they get upset enough to strike.

Changing Legal Environment

One of the more important responsibilities of an HR officer is to ensure the organisation

complies with the employment laws. These do not change frequently but they do change. In
2012 amendments to the Employment Act will be enforced. There may be more
amendments to this law coming up. The Employees Provident Fund Act regulations have
been amended so that as of 2012 there is an increase in the employers contribution for
employees earning RM5,000 per month and less.

A new law on retirement age is expected soon. A minimum wage will be enforced by 2013.

Managing Different Generations Expectations

Generation X and Y
Are your managers and the company CEO a different generation to the majority of the
workforce? It is very common for managers to be Generation X and workers in Generation
Y. You may even have employees who belong to Generation Z.
Generation X were born between 1965 and
Generation Y were born after 1980
Generation Z were born after 1990

A generation gap between older workers and Generation Y

junior entrants to the workforce is not a new issue
but there is more research now available showing Do not like to hear stories
the very large differences between the
about the old days when
generations. These affect the ability of the
organisation to gain maximum commitment to nasi lemak was 20c a
organisational goals from the younger employees.
Let us take some examples here: Do not want to be ordered

Technology and Generation X and Y around. They want orders

Generation X has learned to use the technology
explained to them.
needed for their jobs but they may not be entirely
comfortable with it. Do not want to have to

Generation Y cannot live without electronic and wear formal clothes at

mobile technology. They expect the appropriate work.

hardware (mobile telephone with Internet capacity
or I-pads and so on) to be provided by their Do not want to stay at
employer for their use. They are embarrassed by
work after 5.30pm. They
employers who only provide equipment used in
the dinosaur age. have a life to live. But they

will continue their work at

Employment Mobility of Generation X and Y
Both generations are mobile and willing to quit home or at Starbucks, if
jobs and employers who do not satisfy their needs.
But, Generation Y employees are exceptionally necessary.
willing to move out at any time they are unhappy
with their work environment. Partly, they move on
because they have not made up their minds what career or industry is most attractive to
them but, more importantly, they move because they can. They move because they have
choice. Malaysia has faced a labour shortage for decades now and this situation is likely to
continue. The more experience the employee has, the easier it will be for him to move to
another employer.
What does this mean for HRM? You will need to:

1. Find out why employees are leaving. Do not assume it is for more money; it is
equally probable that an employee who leaves is running away from an unbearable
supervisor or manager.
2. Work on tactics to keep the best employees in the organisation. Excessive levels of
employee turnover affect productivity and profitability.
3. Think about how to front-end load your wages and benefits package. Generation Y
employees do not think long-term. Their idea of long-term is 3-5 years. They want
high wages now; they are not attracted by benefits to which they will become
eligible after 5-10 years service.
4. Work with your managers to respect the opinions of their Generation Y subordinates
and to invite ideas from them. Formalize a scheme to do this and measure the
performance of the managers on how well they are able to excite their Generation Y

Managing Older Workers

Fifty-five years of age has been the normal retirement age for employees in the private
sector since the 1950s. A clear trend has emerged whereby this retirement age is
considered unacceptable. A law has been introduced to prohibit employers from retiring
workers younger than 60. In years to come, this number will probably be raised further, at
least to 65 years of age, in line with the practice in developed countries.

This means that HR officers will need to learn how to manage the career and work of older
workers. Health issues may become more important. Decisions will have to be made as to
how best older workers can contribute to the organisation. In some jobs, older workers who
are more mature and more experienced can perform better than younger workers. But
there are also jobs which require a high level of physical ability. Some older workers are
healthy and able to continue to work to the expected standard, while others who have not
looked after their health may have difficulties.

Dealing with New Issues

New issues are frequently arising which challenge human resource management officers.
Examples of these issues are:
1. Reducing sexual harassment at the workplace
2. Managing employees who are People Living with HIV/Aids (PLHIV) and their co-
3. Improving the health of employees
4. Ensuring employees do not abuse technology
5. Ensuring employees do not abuse social net-working sites

A few years ago, no one would mention sexual behaviour in formal work settings. It was
considered a personal matter and of no concern to employers. Now employers are required
to introduce written policies to prevent and eliminate all forms of sexual harassment at
work. They are required to train employees on what is and what is not sexual harassment,
and it is essential to investigate and take appropriate disciplinary action whenever an
employee complains that he or she has been sexually harassed.

Ignorance leads many employers to dismiss employees who are found to have HIV/Aids.
This discriminatory treatment is unnecessary and could lead to a legal suit against the
employer. Providing proper systems are in place, employees with HIV/Aids can continue to
contribute to achieving the organisations objectives. HR officers need to provide sufficient
knowledge to all employees and management so that discrimination does not take place.

Safety has always been an important function which is often assigned to HR officers in
companies which have no full-time safety officer. With life-styles changing, and costs of
medical care increasing, employers are now taking steps to improve the health of their
employees. Activities known as wellness programmes are long-term efforts to reduce
medical costs of lessening medical bills. Healthy employees visit the doctor less often and
take less medical leave. The productivity and profitability of an organisation is directly
affected by the health of its employees.

More and more jobs require access to electronic technology. Computers and mobile
telephones are necessities in increasing number of jobs. Do your staff have clear, written
policies on the use of these devices at work and even outside working hours? If you do not
have these policies, it will be more difficult to take disciplinary action against any employee
who abuses the equipment.

Social networking has escalated at a tremendous rate. The number of people visiting these
Internet sites cannot be calculated. Have you checked what your employees might be saying
about management in your organisation? Are they happily giving away confidential
information thinking that you wont notice? Are you using the social network sites to screen
job applicants. Photographs of job applicants in silly poses may not be an issue but overly
sexy photographs may be.

The Belief that HR is an Easy Job

People who have never been employed in a human resource management position often
say, Anyone can do HR work. It is easy. It is only when they find themselves responsible
for human resource management that they find it is not so easy. Dealing with people is
never easy. Dealing with stressed out managers is never easy. Dealing with ambitious chief
executive officers is not easy either. As explained earlier, HR officers commonly do not have
complete authority to make decisions on their own because their decisions will affect other
parties in the organisation directly. This means that a number of personal qualities are the
key to success in human resource management.

Personal Qualities for Success in HR

In order to be successful in human resource management, a person needs:

1. Patience
2. Persuasive skills
3. Communication skills

You need patience in large quantities because you will be expected to listen to employees
problems. HR officers are expected to act as middle-man between workers, especially at the
lower levels, and management. Whatever worries, concerns and issues they have may be
brought to you. The issues raised by workers may be work-related and they may also be
personal. Many workers do not have a relationship with their managers whereby they feel
comfortable talking about personal problems. HR thus provides a counselling service to
workers. Worried workers are not productive workers so this assistance should be part of
your job duties. Counselling will require a combination of patience, listening and asking the
right questions as well as knowledge of where help can be obtained for workers with major

You need persuasive skills because, as described above, you need to get buy-in from
managers and your CEO whenever you want to introduce some new or modified practice
which will benefit the organisation. You may also, from time to time, have to persuade the
organisations workers that a new policy or procedure will bring benefits. While you and
your management can order them to comply, undoubtedly there will still be a need to
persuade them why they should do things differently. There are always argumentative
individuals who will complain about every change in procedure and policy. As employees,
they have to follow orders, but it is good to explain why and how a change has come about.
You need communication skills in very, very large quantities. You will be required to make
formal presentations, you will have to explain policies or plans in meetings and you will have
to write reports. Some of these presentations will be to the top management of your
organisation or your reports may be read by the most senior officers. They need to be clear
and understandable.


Employ the Services of a Professional

Have you been assigned to establish a human resource (HR) department in your
organisation? This is an important task for which, if you have no experience in a set-up
situation, you might want to get help from a consultant. Of course, using the services of a
consultant can be expensive, but at least you can be assured that HR will be off to a good
start if it is established by a professional. Check with the professional association for human
resource consultants (Malaysian Association of Human Resource Consultants) and see if the
consultant you wish to hire is endorsed by them.

Another alternative would be to employ a very experienced human resource manager on a

short-term contract to do the job for you. A contract for a 6-month period should be more
than adequate. A human resource manager who has recently retired may also be interested
to take on the task on a contract for services basis. This means that he will not be a
company employee while doing the job but will come into your office as and when
necessary to have discussions and carry out the responsibilities you agree with him.

Do the Task Yourself

If your company does not have funds to pay a professional to help you, then here are some
suggestions which may help:

Prepare a Plan and Get Agreement from the CEO

1. Decide what policies you will need

2. Decide what procedures will be needed
3. Decide on company rules, including safety rules
4. Prepare suitable standard Forms and Letters
5. Consider purchasing suitable software for payroll, personnel records, training
records and administration of leave, attendance and so on; ensure any system
purchased can accommodate an increasing number of employees
6. Migrate any paper personnel records into the computer system; Scan original
employee documents into the system
7. Audit who is currently doing what human resource management work
8. Identify which jobs should be prioritized
9. Prepare job descriptions for the HR people who will staff the HR department


Examples of written policies that you will need include:

1. Safety (required by law if you have more than 5 employees)

2. Sexual harassment
3. Leave
4. Use of computers, Internet, emails, telephones, company property
5. Dress code
6. Security


Examples of written procedures that will be needed are:

1. Recruitment and selection

2. Training
3. Disciplinary action
4. Resignation
5. Confirmation of new employees
6. Evaluation of employees performance
7. Grievance handling
8. Requests for leave or time-off
9. Safety


At the least, you will need to introduce rules to cover:

1. Safety
2. Discipline
3. Use of illegal substances

Forms and Letters

A range of standard letters and forms should be prepared to make administrative work
easier. Examples of letters and forms which are useful include:
1. Job requisition forms to be filled in by managers who want to recruit
2. Job application forms to be filled in by people looking to be employed by your
3. Selection interviewers evaluation forms
4. Letter of appointment
5. Personnel record forms
6. Performance evaluation forms
7. Leave application forms
8. Warning letters for minor misconduct and record of counselling sessions
9. Accident/injury reports
10. Exit interview forms for employees leaving the organisation
Chapter Two:
In this chapter the key topics will be:

1. Human resource planning and

2. Recruitment of employees

Responsibility for recruitment of employees in an organisation is a key HRM task. You need
to carry out this task carefully and thoughtfully. Hiring the wrong people is expensive. For

1. Incapable employees make mistakes which are costly.

2. Incapable employees cause customers to take their business elsewhere.
3. Incapable employees upset their fellow workers who may resign, which leads to
increased recruitment costs.
4. Incapable employees cause accidents.
5. The services of incapable employees have to be terminated which may lead to a law
suit and payment of compensation to the employees concerned.

Every employee hired into a business must have a clear role to play and must be able to
carry out the tasks assigned to him or her. Careful recruitment and selection will help
achieve this objective. (Selection will be covered in the next chapter). Unfortunately, there is
NO guarantee that recruitment and selection decisions will turn out successfully, even when
a proper procedure, as outlined in this and the next chapter, is followed.


In an ideal world, you would prepare a human resource plan so that your organisation will
always have the right number of people as and when they are needed. As the world of
business now changes very fast, a fixed plan may not be practical. Still, the top management
team should take some time to sit together and draw up business plans which are
accompanied by staffing plans. These planning sessions should probably look at a six-month
to one year period to be useful. It may not be helpful to try to copy the Government and
draft 5-year plans!

The purpose of a human resource plan is to determine how many employees will be needed
during the period under consideration.
If it is likely that the organization may have too many employees, retrenchment or
some other method of reducing the workforce must be found.
If it is likely that the organisation may face a shortage of employees, specific steps
will have to be taken to hire more workers or find alternative sources of labour.
If no major changes are planned to the business, the number of workers will
probably be stable. Still, actions must be taken to reduce the possibility of the best
workers in the organisation leaving.

Human resource planning is all about avoiding crises:

You do not want to have too many staff. Retrenching staff is a miserable task. It is
also potentially expensive in the short term as retrenched staff may have to be paid
termination benefits. If business picks up after a retrenchment exercise, you may
find that not only are you short of employees but it also may be more difficult to
attract new staff who might boycott an organisation known to retrench staff.
You do not want to have a shortage of staff which makes it impossible to complete
customer orders according to schedule. Customers will source other suppliers if this
happens. You need to have some contingency plan to deal with this situation.
Identify the key jobs in the organization. Key jobs in this context means those jobs
which, if there was no employee available, must still be done or your production or
service will come to a halt.


It is not so difficult to If at all possible, you want to ensure demand for staff at all
hire a new employee; times equals the supply of staff.

It is very difficult to
remove an employee!


Suggestions on recruitment and selection are included in this

chapter as well as the chapter to follow. How to undertake a
retrenchment exercise will be described in a later chapter.
The Need to Hire New Staff
Are you sure there is a need to hire new staff? You will want to avoid hiring new staff which
will increase your payroll costs unless absolutely necessary.

Before starting the recruitment process, you and your management team need to take into
consideration the following possibilities:

1. Could the workload be re-organised so that there is no need to hire a new

2. Can the work for which a new employee has been requested be outsourced to
another company? Could the work be done by an individual on a contract for
services basis?
3. Do you need a permanent employee or could the work be offered on a fixed-term
contract basis?
4. Is the job to be offered full-time or might it be done part-time?

Recruitment should only be carried out when it has been agreed by the Chief Executive
Officer and the Head of Department making the request. A written requisition form is
usually required when a Head of Department asks for staff to be recruited. Prepare a simple
form which allows the Head of Department or other officer making the recruitment request
to state:

1. His/her name
2. Date of the request
3. Job title and copy of the job description of the position to be filled (if it already
4. Reason for the request i.e. replacement of someone who has left the organisation or
expansion of the department
5. Target date for new employee to start work

The requisition form should be signed by the manager making the request and counter-
signed by the chief executive officer before further steps in the recruitment process are

Recruitment and selection are the processes used to hire employees. In this chapter we will
discuss recruitment while selection will be covered in detail in a later chapter. Both of these
processes aim to ensure you have the right employees. This means certain procedures need
to be followed and, even then, a hiring decision may not turn out as well as you hoped.

The two major activities involved in recruitment are:

1. Determining what sort of person is suitable for a specific job vacancy and
2. Attracting a number of applicants

Get a Clear Picture of the Job which is to be Filled

Developing a clear picture of what sort of person is needed to fill a vacancy is helpful before
any recruitment effort takes place. You need to know, at the minimum, what are the
characteristics and tasks of the job being offered. With this information, you can decide
what sort of person would be most likely to be successful in the job.

Job Analysis

When you study a particular job to learn about the tasks and responsibilities involved, you
are carrying out a process called Job Analysis. This process may have already been done in
the past, in which case, see if a Job Description and Person Specification exist. If they do,
ensure they are up-to-date. Jobs change over time and the documents may be no longer
current. If no job analysis has been conducted previously, you will have to collect the
necessary information.

How do you collect information about a job? If the job already exists in your organisation,
you can:

1. Observe the person or people employed in this job and note down what they do
2. Discuss with the persons doing the job to find out what skills and knowledge they
believe are important for their job
3. Discuss with the supervisor/manager of the persons doing the job what skills and
knowledge he or she thinks are important for the job

If the job is a newly created one, your approach will be different. You can:

1. Hold a discussion with the relevant Head of Department. Ask him to describe the job
to you as well as list out the skills and knowledge needed for this job.
2. Look at the Internet. Do a search to see if there are descriptions of jobs with similar
3. Ask contacts in other companies whether they have a similar job and if so, request a
copy of the job description and person specification. Compare this information with
that given by the Head of Department.
What sort of information should you collect?

1. What are the tasks to be completed by the job-holder? Frequency of each task can
be included. Is the task done throughout the day, once a week, monthly or
2. Who will the job-holder interact with? Others doing the same job, people in other
departments, customers, suppliers? Be specific. Do not merely describe the job-
holder as working in a team. State which group of people make up the members of
the team.
3. What skills are needed to do the job? Try to divide the skills into two groups: those
skills which are essential and those which are helpful but not essential.
4. What knowledge is needed to do the job?
5. What machines, tools or equipment are used to do the job?
6. Under what conditions is the job conducted? In an air-conditioned office or
outdoors? Is there travelling involved? Is it a 9-5 day job or does it involve shift
working or overtime?

Once you have collected as much information as possible about the job which needs to be
filled, you are ready to prepare two documents: a Job Description and a Person
Specification. If you are applying for ISO certification you will need these documents. They
are also useful when making decisions about what training should be given to employees
and how their performance should be evaluated.

Job Descriptions

Completed job descriptions can be sourced from the Internet where there are many sites
providing a wide range of job descriptions. You should only use these as a guide. They will
have to be adapted to fit your job vacancy. Most job descriptions use the following

Job Title
Overall purpose of job (a brief statement is sufficient)
A list of duties and/or responsibilities to be carried out by the job holder
Relationships between the job-holder and other parties
Key terms and conditions of service that relate to the job

Person Specification
Once the job description has been drafted, a person specification can be drawn up. A person
specification is a description, in words, of the requirements needed by the person who is to
fill the job vacancy.

Involve the relevant Head of Department or supervisor in the preparation of the person
specification. Beware of personal prejudices. Some people believe that certain jobs are not
suitable for women (or men), or that only a particular age group are capable of being
effective in a job. In most situations, these forms of prejudice only limit the organisations
chances of recruiting the most suitable person.

Decisions relating to the personal characteristics needed for a job depend upon the job
description. Typical headings used in a person specification are:

Knowledge and educational requirements needed to do the job

Skills needed to do the job
Physical characteristics needed to do the job (if any)
Personality requirements needed to do the job

Look for Suitable Candidates

Recruitment involves two processes:

1. Understanding the job which needs to be filled and

2. Looking for suitable candidates

There are a variety of techniques available for attracting job applicants. It is not easy to
attract talented applicants, especially if your organization is small and not so well known.
You will need to be persistent and creative to find workers.

If any job-seekers contact you by email or telephone, or by making a personal visit, even
though there are no vacancies at the time, keep a file with information on these people.
They are a cheap source of job applicants later on when you do have a vacancy.

Inform Existing Employees

When a vacancy arises, it is always a good idea to inform your existing employees and allow
them the opportunity to apply to move into the position. If any one of them matches the
person specification and has a positive attitude as well as a good work record, they should
be permitted to make the move. Of course, when you move one employee into another
position, another vacancy will then arise which will have to be filled.
If you allow existing employees to move into jobs which interest them, you will likely retain
their services longer. This is good for the organisation if these employees are dynamic,
effective and hardworking. Do not force them to leave your organisation to look for a
change of job elsewhere.

You need to be very transparent with any worker who applies to fill a vacancy in the
organisation and whose application is rejected. He will want to know why he is not suitable
for the position. Explain to him the reasons.

Your managers should act as recruiting agents at all times. If they meet people who they
think would be ideal employees, they should collect their names, and telephone numbers
and pass them on to the HR officers. Again, if a vacancy arises, they can be contacted and
asked whether they are interested to apply to join the organisation.


Advertising options are many. Choose according to:

The budget available

The level of the position
The organisations location

Advertise on the Organisations Website:

If the organisation has a website of its own, this should be the first place to advertise. There
is little or no extra cost involved in adding material relating to job vacancies. However, if the
organisation is not well known, traffic to the website may be limited. You may need,
therefore, to combine detailed information about job vacancies on the website with a brief
advertisement in the newspaper which highlights the website address.

Ask Existing Employees to Recommend Suitable Persons:

Ask existing employees in the organisation to recommend their friends or family to apply for
the vacant position. A financial incentive is usually offered for this purpose. The employee
who introduces a job applicant will be given a cash payment if the applicant accepts the
position and successfully completes a probation period.

A brief form needs to be prepared for this purpose which is presented by the employee who
recommends a job applicant. The form will require:

The name and identification of the employee introducing an applicant

The name of the applicant
The job title of the position applied for
The form must also have a section for the management to state:

The starting date of the applicant, if offered the position

The probationary period of the new employee and
The date upon which the financial incentive is paid to the employee who introduced
the applicant

Advertise in the Newspaper/Magazines

Advertising in the newspaper is still a popular method of attracting job applicants. You will
need to decide:

In which newspaper or newspapers you wish to advertise

The day of the week that the advertisement will be inserted and the number of days
during which the advertisement will be shown
The size of the advertisement
The content of the advertisement

Cost is a major factor in newspaper advertising. Certain newspapers charge more than
others for job advertising but those that charge more also have wider readership.

Some magazines will accept advertisements for job vacancies. Generally, the cost of these
advertisements is far cheaper than that charged by newspapers. However, most magazines
are only issued monthly so placing an advertisement in a magazine is only possible if the
organisation is not in a hurry to employ a new member of staff.

Put up a Notice in Public Places

For unskilled or semi-skilled positions, advertisements can be put up in a number of public
places. For instance:

At the front door/gate/wall facing the main road of the organisations premises
On a notice board provided by public providers such as supermarkets and
convenience stores
On public transport vehicles (for which a payment will be required)

Keep in mind that permission from the authorities may be needed to put up notices or
banners in public areas. A fee may be incurred for this purpose. Check with the local
authority responsible for the location where you wish to place your advertisement.
Make sure these advertisements in public places are easy to read at a distance and neatly
presented. Banners and notices with spelling mistakes on dirty materials are not likely to
attract anyone to apply for the vacant position.

Do not place notices on public utilities such as light poles, traffic signs or road signs. It is an
offence to do this and you will only annoy local residents and the local authorities.

Distribute Flyers to Households in Surrounding Areas

If you are looking for unskilled or semi-skilled workers, prepare simple one-page flyers
which can be placed in the letter boxes of houses in suitable locations. A number of
companies offer the service of distributing flyers to your specifications. Choose the locality
for the flyers carefully. For instance, in low-cost apartments you may find people interested
in working in non-executive jobs but you will not find many experienced professional
engineers or accountants.

Information to be Included in an Advertisement

If you are advertising in a newspaper, the cost of the advertisement will increase with the
length of the advertisement. This issue usually does not arise with on-line advertising
whereby each advertisement may have a fixed cost regardless of the amount of information

An incomplete advertisement is a waste of money. Make sure that wherever you place your
job vacancy advertisement, the following information is included:

The job title

Location of the job
A brief list of the main job duties, if the job title does not make it obvious what the
job involves
Any essential educational qualifications, skill areas or work experiences needed. Do
not be too narrow about these requirements or you may not attract anyone to
Any special characteristics of the job which could cause some people to decide that
the job is not suitable for them. You do not want people applying for the job, wasting
your time and effort in short-listing them, only to find they are unable or unwilling to
fulfil certain key requirements of the job such as night work, public holiday work,
frequent travelling.
Any application deadline
The name, email and telephone number of a contact person in the organisation
A brief description of the organisation if it is not a house-hold name. Do not
exaggerate or be vague in this description.
Contact Local Colleges

Although you may not have a large number of executive and managerial positions to fill, you
can try to make contact with suitable schools, training centres, colleges and even
universities. Most educational institutions have one or more officers responsible to help
their students find employment. They will advertise any job vacancy you may have and
some may also provide facilities for you to interview candidates on campus.

If you are able to offer practical training to students who are required to undertake training
as part of their programme or to those who wish to learn about the world of work during
their term break you can learn a great deal about potential employees. If they are good
workers, you may wish to offer them employment upon completion of their studies. If you
can offer an allowance to these trainees, you will have a better chance of attracting the
better students to learn with you. They generally appreciate companies which offer
sufficient allowance to cover any transport and food costs incurred.

Contact an Employment Agency

Employment agencies can offer significant help in the recruitment and selection process.
However, with the exception of JobsMalaysia, an agency organised by the Ministry of
Human Resources, you will have to pay for the service provided by an agency.

To reduce recruitment and selection costs, JobsMalaysia should be the first agency that you
turn to for assistance. If you are considering hiring foreign workers, you will need to place
advertisements with JobsMalaysia before your application to hire foreigners is approved.

A number of well-known private agencies exist, most of which use both on-line methods to
find suitable candidates as well as advertising in the newspapers.

Some agencies specialize in helping companies source and employ foreign workers. The
rules relating to the process of employing foreign workers change frequently. It is important
to use the services of a reliable and experienced agent when undergoing this process. You
will have to work closely with the agent to provide the information required by the
authorities as, in the end, your organisation will be responsible for the foreign employees
and any problems which may arise out of their employment.
Chapter Three:
In this chapter the key topics will be:

1. Problems that may arise in the Selection Process

2. The Selection Process
3. Offering Employment

When you want to employ new staff, first you conduct recruitment activities (See Chapter 2,
on RECRUITMENT) whereby you try to attract a group of people to apply for the job or jobs
which need to be filled. If you are successful at attracting a number of applicants, you will be
able to select or choose the most suitable person from the group. Once you have chosen
the applicant you think most capable of doing the job well, you will offer them employment
and, if they accept, you will arrange an induction programme for them. (See Chapter 4, on

The three HR functions of recruitment, selection and induction are essential to making sure
your organisation has the right people, in the right jobs at the right time.


Take note of the following problems that you may face during the selection process:

Managers who Pressure you to Speed up the Selection Process

Selection needs to be carried out carefully to ensure a suitable person is employed.
However, the manager who requests that recruitment of a new employee be conducted
may want you to fill the vacancy as speedily as possible. If he is short of employees, his
departments output and targets may be affected. It is your responsibility to take note of
the need of the manager for new staff as soon as possible and, at the same time, not to
make a hasty selection decision which will be regretted later on.

Managers who Recommend the Employment of Family Members or Friends

In the Chapter entitled RECRUITMENT, it was suggested that you can source job applicants
by asking your existing employees to recommend their family members or friends. You may
even pay them a reward for introducing employable job-seekers to you. Problems may arise
when managers who may be equal in rank to you or higher in rank than you insist on hiring
people they recommend, whether suitable or not!

There are advantages and disadvantages in hiring family members of existing staff.

The advantages include:

Newly recruited workers who are related to employees already working in the
organisation may be more loyal and tend to work harder so as not to embarrass or
disappoint the family member who recommended them.
Team work is easier when people know and trust each other.

The disadvantages include:

It may be difficult to discipline these people if they do not perform well as they are
protected by the family member who recommended them for employment.
Hardworking employees may see that there is no possibility of promotion for them
as all higher-level positions are filled by family members of the senior management.
This may cause high turnover of talented workers.
Family squabbles may cause conflict at work.

It may be sensible to hold a discussion with the management team and agree on certain
policies and rules relating to employment of family members. These include:

Only competent family members will be offered positions in

the organisation

Once employed, family members will be treated like all other


Poor performance from family members will not be tolerated

Failure to Recognise that Recruitment and Selection are Public Relations
Many SMEs find it difficult to compete with large organisations when it comes to recruiting
and selecting employees. It may be helpful to remember that every action your company
takes affects its ability to attract talented workers. Once you have a bad reputation, word
will spread in your community. Workers check out companies before they apply for jobs in
them. They ask their friends; they do an on-line search; they may also talk to your existing
workers about working conditions and treatment of employees in your organisation.

During the recruitment and selection processes, you will be coming into contact with many
job-seekers. If you treat them unprofessionally and without respect, they can tweet their
feelings to many people very quickly. They may take photographs of dirty workplaces. Not
only will they reject any offer of employment that you may make to them, but they may
advise all the people they know to stay away from your company. In this way, you not only
lose talented people that you want to employ, you may also lose potential customers and
suppliers. Try to keep this in mind while you are processing job applications and job-


Employers no longer choose employees

Employees choose in which organisation they want to work


Selecting the most suitable candidate from amongst a group of candidates is the process of
selection. You are not looking for the applicant with the highest qualification, or the most
work experience. You are looking for the applicant who most closely matches the person

The selection process consists of collecting information about the applicants and
determining which of them is most likely to be able to perform well on the job and to fit into
your organisation.

Re-read the person specification before you begin the selection process.
Performance Fit

The key steps in the selection process are:

1. Require all applicants to complete an application form. Require

executive/managerial level applicants to submit a resume as well.
2. Call applicants for an interview
3. Conduct selection tests
4. Check references


If your recruitment efforts have been successful, you will have attracted a group of
applicants who are interested to join your company. You need to have an application form
ready for them to complete. You may also ask executive or managerial level applicants to
submit a resume. Once you have these documents, you can decide who to call for interview.
Even if the number of applicants is few, do not call for interview anyone who does not meet
the requirements of the person specification.

Prepare one or more standard application forms which can be used every time you want to
recruit new staff. Have two forms ready:

1. An application form for non-executive employees and

2. An application form for executive level staff and managers

An application form is not a personal record form. An application form is used to gather
basic information about a job applicant so you can see whether he matches the essential
areas outlined in the person specification. If he does not, his application is rejected. This
process of determining which applicants meet the basic requirements is known as short-
listing. A personal record form is a form to be completed by a new recruit once he joins the
organisation, usually on the first day. (This form will be examined in the Chapter on

Issues Relating to the Design of Application Forms

You do not have to design application forms entirely by yourself. There are many sample
forms on-line or you may possess a copy of a form from another company. Still, you will
need to modify other organisations forms for your use.

Here are some hints on designing application forms.

Prepare the forms in both English & Bahasa Malaysia

APPLICATION Keep the forms as short as possible. People dislike filling in long forms

Make sure there is sufficient space after each question for people to write in
the required information
APPLICATION Do not include questions & topics which are not relevant to deciding whether
FORMS a person is suitable for the job

Prepare the form so that it can be emailed to applicants and they can also
APPLICATION return the completed form to you by email

Information which can be Collected from an Application Form

The following information is essential in the selection process.

1. Title of position applied for

2. Personal information name, postal address, e-mail address, hand-phone number,
identity card number
3. Academic and professional qualifications
4. Work experience including positions held and last drawn salary
5. Skills possessed by the applicant languages (spoken and written), IT abilities
6. Reason for leaving last employment
7. Date available for employment
8. A declaration signed by the applicant that the information provided is accurate to
the best of his knowledge
Applicants Photograph
Do you need applicants to include a photograph with the application form? It is a common
practice but unnecessary. For most jobs, the applicants appearance is not relevant. A
photograph will not provide you with important information which may be relevant in some
jobs such as cleanliness, ability to dress smartly and appropriately, and so on.

Expected Wages
It is common practice to ask applicants the wages they expect to receive. This is useful to
determine whether they understand the market rate for the job. It would be better to
include the wage range that you are offering when you advertise the job. This will prevent
applicants who believe the wage is too low from applying for the job and wasting your time
and their time.


If a person is offered a job on the basis of information received at any point during the
selection process, for example written in an application form or resume or told to an
interviewer during an interview, and it is later found out that this information is false, the
employee can be dismissed on the grounds of misrepresentation. The dismissal will be valid
providing the incorrect information given by the person related to key criteria in the
selection process. For example, if you wish to employ a professionally qualified accountant
and a candidate assures you he has the required qualifications whereas you find out later
that he never completed the examinations for the qualification, he could be dismissed.

How do you use a resume to help you decide whether a candidate is suitable to be
shortlisted or not? Reading resumes can take up a lot of time so you need to decide what
factors in the resume will help you decide to shortlist or to reject the applicant. Here are
some factors that may be helpful:

Overall appearance attractiveness of layout, neatness, business-like.

Information which is not included this may be as important as that which is
included. The applicant may be hiding some significant information.
Exaggeration many applicants overstate their role in leadership, their achievement
of results which may have been team work, and their abilities.
Frequency of job change too frequent change may suggest that the applicant gets
bored easily and develops no commitment to an employer. Experience in the same
job but in different industries may be useful to you as the applicant will bring a wider
understanding to the job. Experience in different jobs may also be useful as the
applicant should have developed a familiarity with different aspects of business.

When reading a resume, keep in mind the following:

1. The resume was probably not written entirely by the applicant. There are dozens of
Internet sites and books which provide sample resumes and templates for preparing
2. Resumes only highlight the favourable aspects of an applicant. It is rare for an
applicant to provide any negative information in a resume.

To aid the shortlisting process, you could prepare a points scheme.

If applicants have the right academic or professional qualifications, they receive 5

If applicants have appropriate working experience, they receive between 1-5 points.
If applicants fulfil other requirements listed in the person specification, they receive
1-5 points for each requirement.

This will make it easier to decide who to call for interview and ensure that the shortlisted
applicants match the person specification as closely as possible.


Prepare for Interviewing

Before an interview session:

1. Inform the applicants the time, date and place of the interview. Be flexible with the
interviewing time. If the applicant is working, he may prefer to come for an interview
after normal working hours or at the weekends.
2. Prepare a location map so that applicants can find your organisation easily.
3. Inform the applicants if they are expected to bring materials with them such as
originals and copies of their educational qualifications for verification.
4. Book and prepare a suitable room.
5. Decide how many interviewers are needed. For most jobs, two will be adequate. The
head of the department where the job is vacant and the person in charge of HR.
6. Ensure interviewers, if there are more than one, will be available.
7. Prepare a waiting room. Provide drinking water and some reading material.
8. Inform your gate/entrance security staff, if any, and receptionist that interviews are
being scheduled. Tell them where the interview is to be held so they can assist
applicants find the room.
9. Prepare interviewers evaluation sheets for each applicant.
10. Prepare documentation for interviewers such as job description, person
specification, completed job application form and resume, if any.
11. Have a list of topics and questions that can be used during the interview so that
similar topics can be asked of all applicants.
12. Identify an employee who can take applicants on a tour of the organisation before or
after the interview. This employee should be someone trustworthy who can answer
applicants questions honestly. This is known as providing a realistic job preview. You
do not want someone to accept employment with the organisation and then resign
after only a day or two because the job is not what he thought it would be.
13. If you are conducting frequent recruitment exercises, it may be helpful to organise a
short workshop with company managers to improve their interviewing skills. If they
cannot afford even a half-day for this purpose, prepare some handouts on
interviewing skills. Ask the CEO to order all managers to read these. Encourage
feedback to make sure they have read them and understood the principles of good

Hold an Interview
Here are some guidelines for interviewing:

1. The interviewers must behave professionally. This means:

During the interview, no eating, no talking to each other, no use of mobile
Job applicants must be treated with respect and politeness. Remember they can
Tweet and send messages on Facebook telling the whole world how they have
been treated.
2. The room should be suitable for the interview.
3. Questions asked should be relevant to determining whether the applicant is suitable
for the job. Questions of a personal nature should be strictly limited.
4. Try to keep to the schedule if you have prepared one. You do not want applicants
waiting a very long time for their interview. Expect to take, at the minimum, 10-20
minutes for a non-executive job and 20-40 minutes for an executive or managerial
position. The longer the working experience of the applicants, the more time should
be allocated to the interview as there will be more to discuss. For senior managerial
positions, consider having at least two interviews, the second of which will include
the CEO. Allow time between each interview so that the interviewers can evaluate
the applicant and take a quick break themselves.
5. Answer truthfully any questions raised by the applicants. An intelligent applicant will
have questions about the job, about the company culture, about its training, and
about its terms and conditions of service. It is old-fashioned to be insulted when
applicants ask about wages and other benefits. They need this information in order
to decide whether they want any job you may offer them.
6. Either before, or during the interview, an officer of the organisation should check the
applicants documents submitted for verification, especially educational qualifications.
Forgeries or tampered documents are not uncommon. If you are not sure whether the
qualifications are genuine, check with the issuing authority (the Ministry of Education or the
college concerned).

Consultants or training providers may try to persuade you to pay for training programmes
relating to interviewing which guarantee that after the programme you will be able to select
the right applicant every time. Do not waste your money. There are no guarantees that after
an interview you will be able to select a perfect employee.


Earlier in this chapter, the purpose of the selection procedure was described as a process of
deciding which job applicants can be expected to perform well on the job and fit into the
organisations culture. Selection involves evaluating the applicants past behaviour and
performance to predict how they might perform in the future. Examining completed
application forms and resumes and holding interviews are evaluation tools which can be
combined with selection tests.

There are many types of selection test including:

Personality Medical fitness
tests tests

Knowledge Work sample

tests tests
Personality testing is expensive as it must be conducted by a professional who is certified to
offer a test to applicants and to analyse the results. You should not conduct any personality
test without the assistance of a qualified professional. Some HR consultancy firms offer this

A medical fitness test may be required when the person specification states the need for
the job-holder to have certain physical characteristics, including being free from
communicable disease and fit for work. If applicants are required to undergo a medical
fitness test before being considered for employment, the doctor should be given a copy of
the job description and person specification so he knows what areas to test for.

Group assessment exercises are useful when you need to decide whether an applicant has
leadership skills, communication skills and persuasiveness abilities. They can also be used to
determine if the applicant has decision-making abilities and a wide general knowledge or
knowledge of a particular industry. In this type of test a small group of applicants are given
various tasks to achieve or a problem to solve. One or more persons from the company will
observe the applicants as they work through the tasks to identify who has the required

Knowledge testing is usually in the form of a written examination whereby the answers are
completed by the applicant on paper or by completing a quiz on the computer.

Work sample or performance testing requires an applicant to prove to the companys

satisfaction that he has certain skills or abilities necessary to do a job. This type of test is
probably the most useful test and easiest to devise. For example, if a job description
requires a job-holder to frequently prepare PowerPoint materials for presentations, before
he is called for interview, he could be provided with a computer, given some materials and
told to turn them into a 15 minute PowerPoint presentation to be given by the companys
CEO at a meeting of the Board of Directors.

Note that tests do not give perfect results. Job applicants who get high scores on tests may
not perform well on the job. They are a useful addition to examining written documents
about the applicants as well as gathering information through a face-to-face interview.

For some jobs, you should make the effort to check with referees concerning the
background of applicants. For example, applicants for jobs in which cash is handled or
employees who will work with young children should have their references checked
It is best to contact a referee by telephone as most people will not put negative information
in writing. Try to speak to the supervisor of the applicant, although this will not be possible
if he is still working. Prepare a list of questions to ask. Check that information given on the
applicants application form is correct. Ask about his job duties and last drawn wages. Ask
the key question: Would you be willing to re-hire him? If not, why not?


Once you have decided which applicant is the most suitable, you are ready to offer
employment. Do not delay too long before contacting the applicants. The best, most
talented applicants may have several job offers. If you delay, you may lose the person you
chose to another organisation.

Contact the successful applicant by telephone or e-mail but follow up with an official letter
immediately. If they are working they will only give notice once they receive your letter.

Withdrawal of an Offer of Employment

Can you withdraw an offer of employment? You can, but you should not unless some totally
unforeseen change has taken place in the few days since the offer. If you withdraw an offer
of employment, the job applicant could sue the company for breach of contract if they have
already accepted the job. Furthermore, such an action will definitely have a negative impact
on the companys reputation and image.

Conditional Offer of Employment

An offer of employment can include certain conditions, i.e. the job offer depends upon
these conditions being met. Common conditions include:

1. Completion or graduation from an academic or professional programme (suitable for

students who apply for a job before they complete their studies).
2. Declaration by a doctor that the person is fit for work and not taking illegal
3. Positive feedback by referees.
Inform the Unsuccessful Applicants

It is good practice to inform the unsuccessful applicants. This should be done through a
polite rejection letter. These letters will be sent out once the selected applicant has
accepted the offer of employment. You may wish to keep the second-best candidate in
reserve, in case the person to whom you offer the job rejects it.
Chapter Four:
In this chapter the key topics will be:

1. Organising Induction for New Employees

2. Preparing an Employee Handbook
3. Conducting an Exit Interview

If you have spent a lot of money, time and effort in recruiting and selecting a new employee,
you surely do not want to lose the new member of staff within a week or two. This chapter
will explain how to organise an induction programme for new employees. To retain workers
you need to welcome them into the organisation, but you also need to be creative about
finding ways to keep them satisfied and proud to be employed in your company. Tactics
which can be used to retain talented workers will be examined in a future chapter. Finally,
we will look at exit interviews which may provide information about problems in the
organisation which are causing workers to leave.


Many people assume that an induction programme is an introductory programme for a
group of new employees. Induction programmes should also be provided for individuals
when they first enter the organisation. There is no advantage in waiting until you have a
group of new recruits in order to organise an induction programme. Even if you are only
recruiting a few employees per year, you still need to conduct a welcoming programme.



For every new employee hired, you need to carefully plan his or her first day at work. There
are many cases of employees who report for duty one day and do not come back the next!
If this happens, your organisation will have to repeat the recruitment and selection process
which increases your costs.

As a contingency plan, if your chosen job applicant does not report for duty or if he leaves
within a few days, you should have chosen a second-best candidate during the selection
process who may still be available to take up the job.

The first day at work can be a stressful experience, even for employees with working
experience. It is definitely a challenge to workers fresh from school or college. When
planning an employees first day, keep in mind the following:

1. New employees will usually feel many emotions on their first day, including anxiety
and excitement.
2. New employees should not be overloaded with information on the first day. They
will not be able to absorb all the new information with which they are bombarded.
3. On their first day, new employees must feel welcome and wanted.

Activities for the First Day

Record keeping

A personal file of the new employee will need to be opened when a new employee reports
for duty. For this purpose, you need to have a standard form ready to be filled out and a
checklist of documents to be included in the file.

A personal record will include information such as:

1. A photo of the employee, if one is not attached to the job application form
2. The employees current mailing address, telephone numbers and e-mail address
3. Personal information including name, identity card number, address and contact
telephone number of spouse, names of all children and their birthdates
4. Name and telephone numbers of persons to be contacted in case of emergency
5. The employees Employees Provident Fund registration number as well as his
membership number of the Social Security Organisation.

Documents to be included in the personal file include:

1. The employees completed application form

2. Resume, if any
3. Copies of employees educational and professional qualifications including
certificates showing training he or she has attended
4. Letter of appointment duly accepted by the employee
5. Medical report by doctor, if any
From time to time, further documents will be added to an employees personal file.
Documents that may be added include:

1. Referees reports collected during probationary period

2. Checklist showing topics covered during induction programme
3. Letter of confirmation
4. Insurance application forms, where group insurance is purchased
5. List of company rules with receipt to show employee has received a copy
6. Job description
7. Wage deduction authorizations
8. Leave application forms
9. Training programmes attended including safety training
10. Additional qualifications gained
11. Medical certificates
12. Any grievances or complaints filed by the employee
13. Disciplinary warnings and records of counselling sessions
14. Record of any accusations made against the employee and the investigation report
15. Medical reports relating to use of illegal substances (illegal drugs)
16. Performance appraisal records
17. Performance improvement programme records
18. Accident/injury report
19. Letters confirming wage increases
20. Letters confirming promotion
21. Letters of transfer
22. Letters stating amount of bonus paid
23. Exit interview report
24. Letter of termination

As can be seen from the list above, a paper file will grow rapidly in size. If possible, scan the
necessary documents and keep them in a computerized record system.

Do not allow anyone to write on the margins or on any other part of a document stored in
an employees personal file. You never know whether the document may need to be
produced as evidence in a court of law. The hand-written comments could embarrass the

The personal file of an employee is the property of the employer. It is normal to allow
employees access to the file, if they make a request to see it. They should not be permitted
to make any copies but they can read the file. The information in a personal record file is
strictly confidential. Other than human resource department staff and the employee
concerned, no one should have access to these files. If they are computerized, ensure
appropriate password control is introduced.
Note that all information about an employee is confidential. Outside agencies, such as
banks, must not be given copies of documents in the files. If an employee is applying for a
bank loan, he may need a letter confirming his length of service and current wages. This
letter may be produced for him. Do not be persuaded to exaggerate his wages so that he
will be eligible for a larger bank loan. This practice may cause problems later on.

Payroll records may be kept in each employees personal record file or in a separate set of
files. If a separate set of files is kept, all documents relating to wages, allowances and bonus
will be kept in this file.

You are required by the Employment Act 1955 to keep the above information for inspection
by the Department of Labour. Complying with the law is discussed in the Chapter entitled

Personal record files should be kept for at least 6 years after an employee leaves the

Registration with the EPF and SOCSO

New employees who have not yet registered with the Employees Provident Fund (EPF) or
the Employees Social Security Organisation (SOCSO) must fill out the required forms and go
personally to the local EPF and SOCSO offices to submit their forms.

Preparing and Issuing Company Property

Depending on the organisations systems, and the nature of the employees job, you may
have to issue him with door access cards, identification card, personal protective
equipment, uniform, telephone and so on.

Explaining Company Rules

You should have a written list of rules which apply to your employees. They should be given
a copy of these rules, as explained in the next section, and you need to have a face-to-face
discussion with each new employee to ensure he or she understands them. This activity is
essential if the new employee is a fresh school or college leaver.

Not every organisation has the same rules. If your organisation has not yet prepared a set of
rules, give priority to this task. You do not have to start from zero when drafting rules for
your organisation. Use the Internet and other companies to look at samples of rules. But,
you must examine each of these rules and ask:

1. Is this rule relevant to our business?

2. Is this rule common in Malaysia (ask HR experts)?
Try to have as few rules as possible. Make sure they are worded in such a way that all
employees can understand them.

Employees need to know what they can do and what they cannot do. Do not assume that
everyone understands what behaviour is acceptable.

Without written rules, you can still take disciplinary action against an employee who does
something wrong, but it is good practice to ensure all employees know the rules. If you have
not given employees a copy of the rules, it will be hard to prove to the satisfaction of a court
that you have informed all employees of the rules.

Signing of Special Documents

A number of documents may need to be given to the employee on his first day of work. The
contents of each document must be explained to the employee. After the briefing he will be
required to sign a copy of the documents which will be placed in his personal record file.

Examples of special documents include:

1. Rules of the company

2. Safety rules and policy
3. Confidentiality policy, if relevant
4. Internet policy, if relevant
5. Sexual harassment policy
6. Employee handbook, if any
7. List of company property to be provided to the employee which must be returned
when he leaves the company, including personal protective safety equipment,
mobile telephone, door access card, identification tag and so on.

The employees signature on documents relating to rules and policies should be attached to
a statement such as:

I have received a copy of the rules; I understand them; and I agree to comply with them to
the best of my ability.

The special documents should be signed and dated by the employee.

Payroll Requirements

Obtain the necessary information from the new employee for the purposes of wage
payment. Normally, this will involve the employee in providing information about his bank
account so that wages can be credited into his account. If the employee does not have a
bank account, he can be assisted to open one.

Tour of the Premises

In the chapter on SELECTION, giving job applicants a realistic preview of the workplace and
the job was suggested. Even if you have done this, a tour of the workplace is helpful on the
first day of work. This task can be conducted by an HR officer or delegated to any senior
employee. Prepare a checklist of places that the new employee must be taken to see. This
might include:

New employee's work station

Induction Rest-break area

Induction Prayer room

Locker or storage area for bags, motorbike helmet, etc

Induction Exits including emergency exit


Do not try to introduce the new employee to everyone in the organisation on the first day.
Prepare a checklist. On the first day, he should be introduced to his immediate supervisor
and the supervisors boss. He should also be introduced to a co-worker who will be assigned
to look after him for a week or two. Later he can be introduced to the chief executive

Assign a Buddy or Big Brother/Sister

Even in a small organisation, employees can feel uncomfortable in the first few days of
work. Assign a buddy, also known as a big brother or sister, to the new recruit. Brief the
buddy on what they are expected to do for the new recruit and for how long they are
expected to be the employees buddy.

Welcoming Event
Try to do something special so that the new employee feels welcome. Perhaps you can
organise afternoon tea with his supervisor and colleagues? How about putting a welcome
to the company sign at his workstation?

Content of an Induction Programme

You should choose which of the following topics are to be included in your induction
programme. Some topics will depend upon the level of the new employee. Managers may
need a different briefing compared to non-executive staff.

1. Introductions to colleagues and management

2. Tour of the premises
3. Explanation relating to time-keeping, responding to requests to work overtime,
applications for leave and other administrative requirements
4. History and planned future of the organisation
5. Vision and mission of the top management
6. Safety rules and procedures
7. Dress code, if any
8. Briefing on the organisations products or services

You will have to decide:

Who should present or organise the topics above

How the topics will be presented

If you have a group of employees undergoing induction together, one or two formal
presentations are acceptable, but keep them short and interesting. You do not want your
managers boring your new employees during the induction programme. As a general rule,
no presentation should be longer than 20 minutes.

Some induction topics are best presented by HR staff, others may need heads of
departments or job specialists. For example, if your organisation has a safety officer, he or
she will be the best person to present the companys safety rules, show the employee how
to wear his personal protective equipment and explain the emergency evacuation rules.

Some topics can be written into a handbook for future reference by employees.

Other than presentations, written hand-outs are useful to new employees. These will
include the rules, policies and procedures of the organisation, all of which may be in the
employee handbook; safety rules and procedures, and even a list of the names and a very
brief biodata of the top management with a photograph of each manager.
Introduction to the Job
The last topic to be included in an induction programme will be an introduction to the job.
This part of the programme is usually conducted by the employees immediate superior. It
may be part of an informal training programme or it may be offered before the employee is
sent to attend a formal training programme.

Feedback Sessions
Schedule one or two sessions after the employee has started work to see if he has any
further questions or problems that need dealing with. Do not assume that a new employee
will volunteer to raise his questions or problems with his supervisor or with you. At this
point, he may not trust either the management or the HR department. Gaining an
employees trust takes time.

Talk to the employee away from his work-station and where he cannot be heard by his
supervisor so that he will feel comfortable to talk about any problems he is facing.

Induction for Foreign Workers

Induction programmes for foreign workers are an important aspect of ensuring that these
workers become productive as soon as possible after they are hired. They may have had
some briefing about Malaysia before they left their country of origin. You will still need to
hold a formal programme for them. The content of their induction programme may differ
from that for locals. Also, you may need an interpreter so that they understand the
information in the programme.

Topics to be Included

Other than the topics that have been listed above which are needed for all workers, some
subjects are only relevant to foreign workers. These include:

1. Rules relating to employee hostel, if accommodation is provided

2. Norms of shopping including night markets
3. Emergency telephone numbers in case the workers face a problem after work
An employee handbook is a useful tool for saving valuable HR time. Although preparing an
employee handbook may take some effort initially, it will pay off in the long term. The
handbook can answer many employee questions without it being necessary for explanations
from HR staff.
Prior to drafting a handbook, the
A handbook usually includes a variety of materials
writers need to decide:
such as:
What content should be
1. An introductory statement by the chief included
executive officer Which language(s) should
2. Employees terms and conditions of be used
employment Who will be the readers
3. Procedures which must be followed by and
employees when applying for benefits Whether to prepare an
4. Company rules, including safety rules online or printed version.
5. Disciplinary procedures Human Resource Management:
6. Company policies Principles and Practices, by
Maimunah Aminuddin, 2nd ed, Oxford
University Press

Employees must be aware of company policies and

procedures. A handbook helps achieve this objective. Written policies are guidelines to
everyone in the organisation so that undesirable behaviour can be minimized. Procedures
are essential so that employees know what is expected of them and how they can take
advantage of the various benefits the organisation offers them. Consider preparing and
including in the handbook policies on:

1. Confidentiality of company information

2. Sexual harassment
3. Zero tolerance towards workplace bullying and violence
4. Use of company vehicles
5. Use of company computers, Internet and telephones
6. Conflict of interest situations
7. Safety policy
8. Sponsorship of employee study programmes

Prepare procedures for:

1. Applying for leave

2. Applying for other benefits, e.g. an advance on wages
3. Informing the organisation when the employee is on sick leave and submission of
medical certificates
4. Taking disciplinary action in cases of both minor and major misconduct
5. Safety and health
6. Applying to attend training programmes
7. Application for company sponsorship of an employees study programme
8. Making a complaint of sexual harassment or other matter
9. Reporting of accidents and injuries
10. Making claims for overtime and reimbursement for expenses

When drafting a procedure, think about:

Who has to do what?

Is there a deadline?
Are there forms to be filled out? Where can these forms be found? Are the forms on-
line or paper forms? To whom must the forms be submitted?

Once appropriate policies and procedures have been drafted, they must be implemented
fairly. Exceptions should only be permitted on rare occasions and with good reasons, which
should be recorded.

A handbook does not need to be written on paper. You can prepare an e-version which is
easier to update. If some of your employees do not use a computer at work on a regular
basis, you should allow them to access the e-handbook on selected computers during their
break time or after working hours.

Make sure the handbook is updated regularly.

If the company employees are represented by a trade union and a collective agreement has
been signed between the company and the union, a handbook is not necessary as most of
its contents will be included in the collective agreement.

Policies and procedures can be changed by an employer at any time, without requiring
agreement from employees. Include a statement on this right of the employer in the
Even after all your efforts of selecting an employee who is capable of performing well on the
job and can fit into the culture of your organisation, employees still resign. Even when you
conduct induction and try to make them feel welcome, they still resign. When employees
resign, you need to find out why. To find out why employees are leaving your organisation,
conduct an exit interview.

An exit interview can be held:

1. On the last day of a workers employment, or

2. A few days after he has left his employment

It may be easier to hold the interview with an employee who has resigned on his last day of
work but his answers to your questions may not be so truthful. He may not want to provide
negative information about anyone or any system in the organisation. You will need to
persuade the employee that his information will be used to improve the human resource
management in the organisation.

As an alternative, you could try to ring the employee a week or two after he has left. By this
time, he may feel more comfortable about answering questions.

What questions can be asked? Do not prepare too many questions. The questions can be
asked orally and the interviewer will record the answers or you could write them in the form
of a questionnaire. Here are some examples of questions that may be asked.

1. Why are you leaving?

2. What did you enjoy most about working here?
3. Did you have any problems with your job?
4. Did you have any problems with your supervisor/manager?
5. Did you have any problems with your co-workers?
6. Is there anything you would change in the organisation if you could?
7. Would you come back to work here if the opportunity arose?
8. Would you recommend your friends to work here?
9. Can you give any comments about how the company is managed?

Most of the questions above are Yes or No type questions. Leave some space if you
have prepared a written questionnaire for the employee so that he can add any comments
if he wishes. Do not expect employees to write long, detailed answers.
The information given in the exit interview should be carefully analysed. See if workers who
leave consistently point out the same weakness in the company. If this is the case, some
action needs to be taken.
Chapter Five:
In this chapter the topics will be:

1. Key Provisions of the Employment Act, the Sabah Labour Ordinance and the Sarawak
Labour Ordinance
2. Key Requirements of the Social Security Laws

A key function of every human resource practitioner is ensuring compliance with the
employment laws. In this chapter, the most important employment laws will be discussed
with the exception of the Trade Unions Act 1957 and the Industrial Relations Act 1967.
These two laws will be examined in detail in the chapter entitled INDUSTRIAL RELATIONS.
The requirements of the Occupational Safety and Health Act 1994 will be explained in the

Other than the laws mentioned above, you need to be familiar with the following laws:

1. The Employment Act 1955

2. Sabah Labour Ordinance, amended 2004
3. Sarawak Labour Ordinance, amended 2004
4. The Workmens Compensation Act 1952
5. The Employees Social Security Act 1969
6. The Employees Provident Fund Act 1991



Employment Laws

Sabah Labour Sarawak Labour

Employment Act
Ordinance Ordinance
The content of the 3 employment laws is similar, although not identical. Not all employees
are within the scope of these laws. You must determine which of your organisations
employees are covered by the Acts and which are not. You will probably have two groups of
employees: those within the scope of the Employment Act and those who are outside the
scope of the Act.

The terms and conditions of employment of the first group must comply with the law or the
terms will not be valid. You can provide better terms and you can also provide terms which
are not found in the Act. It is entirely up to the employer what terms (wages, benefits and
so on) should apply to employees who are not within the scope of the Employment Act. The
terms that apply to these employees will be found in their individual letters of appointment
or in an employee handbook.

The Employment Act

Coverage of the Employment Act

It is possible that all of your non-executive staff and even some of your executives are within
the scope of the Employment Act. Depending upon the nature of your business, it is also
possible that very few of your staff are covered by the Act. The criteria for a person to be
within the scope of the Employment Act are:

1. The person must be an employee i.e. he or she must be employed under a contract
of service, also known as a contract of employment, working in the private sector
2. The employee must be earning monthly wages of not more than RM2,000.
3. The employee earns more than RM2,000 per month but is employed in manual
labour, or supervises manual labourers.
4. The employee is earning more than RM2,000 per month but works as a driver or a
vehicle mechanic.
5. The employee must be working in Peninsular Malaysia or the Federal Territory of

Any persons doing work for you under a contract for services are independent contractors.
They are not employees. These contractors may have a number of clients at the same time.
They may have their own employees who work in your premises carrying out various tasks
such as security staff, landscaping, cleaning work and provision of canteen services. Be very
clear about the relationship between your organisation and the people who do work for
Employees may be full-time or part-time. Employees may be hired on a permanent basis or
for a fixed-term (temporary) contract. If they fulfil the above 5 criteria, they are within the
scope of the Employment Act and their terms and conditions of employment must comply
with the Act.

For the purpose of deciding whether a worker is within the scope of the Employment Act,
wages refers to basic wages as well as all fixed allowances paid to the worker under his
contract, except for any travelling allowance.

Are your employees manual labourers? Examples of manual labourers, people who work
mostly with their hands and body strength, include:

1. Construction workers
2. Plantation workers (but not including the estate office staff)
3. Machine operators in factories
4. Hospitality house-keeping staff

If you are not sure about the status of your employees,

contact the nearest Labour Department, make an
appointment, and discuss the job descriptions of the Any time you are not
relevant employees with the Departments officers.
sure about a matter
Skilled workers with certificates or diplomas are not relating to the
usually considered manual workers.
Employment Act,
All types of drivers are covered by the Employment Act:
van drivers, lorry drivers employed by organisations,
contact your nearest
tractor drivers, bus drivers and so on, providing they are Labour Department
Benefits Provided in the Employment Act

Details of the benefits provided under the Employment Act will be discussed in the Chapter
entitled WAGES AND BENEFITS. These details will include:

1. Payment of wages
2. Maternity leave
3. Sick leave
4. Annual leave
5. Rest days

In this chapter, we will focus on:

1. Notice prior to termination
2. Women and night work
3. Working hours and overtime

Notice Prior to Termination

When you draft the terms of employment to be offered to a new employee, decide how
much notice must be given by each party (employer and employee) to the other in the
event of termination of the contract of employment.

It is common practice to include a notice period of between one month and three months in
the contract. During a probationary period, the normal notice period is between 24 hours
and one week to make it easy for either the employer or the employee to bring the contract
to an end. You can insist on notice being for a longer period, but remember that whatever
notice period is decided, it must be the same for both the employer and the employee. If
the employer decides to retrench or terminate the contract for reasons other than
misconduct, the employee will be entitled to the agreed notice period or wages in lieu of

The Employment Act provides that if there is no notice period included in a contract of
employment, the following will apply:

1. If the employee has less than 2 years service: 4 weeks notice

2. If the employee has more than 2 years service but less than 5 years service: 6
weeks notice
3. If the employee has more than 5 years service: 8 weeks notice

If either party prefers to pay the other wages in lieu of notice, they have the right to do so.
For example, if the notice clause says that notice of termination is one month, then the
party who decides to end the contract can pay the other one months wages.

A clause on notice prior to termination in a contract of employment does not give an

employer the right to terminate an employees contract without good reason and without
following an appropriate procedure. TERMINATION of an employees contract is discussed
in a later chapter.

If an employee leaves without giving notice and without paying the required indemnity, you
can file a complaint at the nearest office of the Labour Department.
Women and Night Work

The Act lays down some restrictions on employing women at night in industrial and
agricultural businesses. Industrial business includes manufacturing but not service

Women are permitted to work at night on condition that:

1. Transport is provided for those women working on the night shift

2. A shift allowance is paid and
3. A rotating shift system is in place

Working Hours and Overtime

Working Hours
According to the Act, workers are not permitted to work more than 8 hours per day unless
they work a 5 or a 5 1/2 day week, in which case the maximum working hours per day is 9.
The trend today is to offer a 5-day week. If at all possible, to improve the companys ability
to hire talented workers, offer a 5-day week.

A rest break of at least 30 minutes must be given to all employees after every 5 hours of
work. If workers are permitted a long lunch-break, during which time they are free to go
where they like and do what they like, the break is not working hours.

The Act does not permit workers to work more than 12 hours per day, including overtime. If
an employee works 8 hours in a day, he can work 4 hours of overtime. If he or she works 9
hours per day, the overtime limit will be 3 hours.

If an organisation wishes to introduce a working hours system that does not conform to the
rules above, a request may be made to the Director General of Labour. A form for this
purpose can be downloaded from the Department of Labours website.

Rest Days
Employees within the scope of the Employment Act are entitled to at least one rest day per
week. Employees cannot be ordered to work on their rest day, except in limited situations
such as when an accident has occurred at the workplace or if there is urgent maintenance
work to be done to machinery or plant.

Employees who are paid on a monthly basis and who agree to work on their rest day are
entitled to an extra days pay.
With the current shortage of workers, many employees are expected to be willing to work
overtime. Employees can be asked to work overtime, but they cannot be ordered to work
overtime except in very limited situations. If you know that workers will be called upon to
work overtime, you should mention this fact when advertising the job vacancy as not all
workers are keen to work overtime on a regular basis. Some may have personal
commitments to family which make it difficult to work overtime.

Introduce a system which ensures:

1. Overtime work is fairly shared amongst those workers who are interested to work
the longer hours
2. Proper records are kept of overtime work including payment

When an employee works any hours outside his normal hours of work (the hours of work
stated in his contract of employment), he must be paid at overtime rates. Overtime rate is
1.5 x the employees hourly wages. If he is paid on a monthly basis, divide his monthly
wages by 26, then divide this amount by the normal hours of work per day. This will result in
the hourly rate of pay which is to be multiplied by 1.5.

Do not allow employees to work more than 104 hours of overtime per month. The company
will have committed an offense under the Employment Act if you permit any worker to work
more than 104 overtime hours.

Foreign Workers and the Employment Act

Foreign workers have the same rights under the Employment Act as Malaysians. Take note
that people with permanent residency are not considered foreigners for the purpose of the
employment laws.

You are required by the Act to provide a similar package of wages and benefits to foreign
workers who are doing the same job as locals. Discrimination is not permitted. If either the
foreign workers or the Malaysians believe they are being discriminated against in relation to
their wages or benefits package, they can file a complaint at the Labour Department.

Foreigners must be treated equally with locals according to the Employment Act. However,
if you are retrenching staff, this rule does not apply. Foreigners must be retrenched first,
before any Malaysians lose their jobs.

Enforcement of the Employment Act

The Employment Act is enforced by the Department of Labour. Officers from this
department are authorized to:

Power of Power of Power of

Labour Labour Labour
Department Department Department Prosecute
Inspect places of Hear & decide on employers who do
work complaints not comply with
Employment Act


Department of Labour officers have the authority to enter your organisations premises at
any time, without giving you any advance notice. They carry out regular, random inspections
on places of work. Items they may wish to check include:

1. Wages (frequency of payment, mode of payment, deductions)

2. Overtime and holiday payments
3. Maternity leave registers
4. Workers entitlement to leave and other terms and conditions of employment

If, during an inspection, a Department of Labour officer finds that your organisation is not
complying with some requirement of the law, they will advise you to make the necessary
changes and give you a deadline to do so. If you do not comply, the organisation may be


Employees can file a complaint at the nearest Department of Labour office if:

1. They do not receive a benefit to which they are entitled under the Employment Act
2. They do not receive a benefit to which they are entitled under their contract of
3. They believe a penalty imposed on them for misconduct is not fair or deserved

The most common complaints filed by employees relate to:

1. Non-payment or late payment of wages

2. Non-payment of overtime, public holiday pay or rest day pay
3. Non-payment of maternity benefits
4. Non-payment of indemnity when employee is terminated without notice
5. Non-payment of termination benefits
6. Non-payment of sick leave pay or medical bills
7. Employment of foreigners
8. Failure to comply with the employment contract

The right to file a complaint at the Department of Labour extends to employees who are
earning more than RM2,000 (and who are therefore not within the scope of the Act) but
not more than RM5,000 per month. They can file a complaint if they do not receive their
wages or any other financial benefits, such as contractual bonus or allowances. They do not
have other rights under the Act.

Employers can also file a complaint against an employee. If an employee has resigned
without giving notice and without paying the required indemnity, an employer can file a
complaint against him or her at the Department of Labour.

When an employee files a complaint, the employer will receive a letter from the
Department requiring a representative to attend at the Labour Department in order for the
matter to be settled. If the employer does not agree that he owes the employee money or
that the organisation has not complied with the law, a formal hearing will be held. A senior
Labour Officer will be appointed to hear evidence from both the employee and the
employer and make a decision. This process is
known as the labour court. If the court finds that The Labour Court
the employees complaint is valid, the employer When a dispute arises
will be ordered to pay the money concerned.
between an employer and his
Decisions of the labour court can be appealed to employee concerning
the High Court, however this is an expensive entitlements under the
process. Any appeal must be lodged within 14 Employment Act, the Labour
days of the labour court decision.
Officers are empowered to
Any employer who fails to implement a Labour hear the dispute. This labour
Department order can be charged with contempt court should not be
of court, have his property seized or made confused with the Industrial
Prosecution Malaysian Industrial Relations &
Employment Law by Maimunah
Any employer who fails to comply with the
Aminuddin, 7th ed, McGraw-Hill
Employment Act can be prosecuted and fined if
found guilty.

The Sabah Labour Ordinance and the Sarawak Labour Ordinance

If your business or organisation is in the state of Sabah or Sarawak your employees are not
within the scope of the Employment Act but are protected by the relevant state ordinance.
The two Ordinances have similar content to the Employment Act with a few exceptions
which will be explained in the next section.

The Differences between the Employment Act and the two Ordinances

The differences between the Employment Act and the two state ordinances are:

Scope Wage Ceiling

To be within the scope of the Employment Act, an employee must earn no more than
RM2,000 per month unless he is employed in one of the groups who are exceptions
to this rule (manual workers, supervisors of manual workers, drivers and mechanics)
To be within the scope of either the Sabah Labour Ordinance or the Sarawak Labour
Ordinance, an employee must earn no more than RM2,500 per month.

However, employees earning between RM2,000 and RM2,500 per month are not protected
under the following sections and not entitled to these benefits:

1. Section 105 Hours of work

2. Section 105A - Shiftwork
3. Section 105 C Work on a Rest day

Public Holidays

Under the Sabah Labour Ordinance, employees are entitled to a minimum of 14

public holidays per year.
Under the Sarawak Labour Ordinance, employees are entitled to a minimum of 16
public holidays per year.
Malaysia has three laws which provide social security protection for employees.

Social Security Laws

Employees Workmen's
Employees Social
Provident Fund Compensation
Security Act
Act Act

The Workmens Compensation Act

If you employ foreign workers you must purchase an insurance policy to cover
compensation to any worker in this category who has a work-related accident or who
contracts a work-related disease. The premium for this policy is paid entirely by the
employer and must not be deducted from the wages of the workers concerned. The list of
insurance companies who are permitted by the Ministry of Human Resources to offer this
insurance can be found on the Department of Labour website (

Should any of your foreign workers be involved in a work-related accident, you must inform
the nearest office of the Labour Department within 10 days.

The Employees Social Security Act

Make sure your organisation is registered with the Employees Social Security Organisation
(SOCSO or, in Bahasa Malaysia PERKESO). All employees who are Malaysian citizens or
permanent residents who earn RM3,000 or less per month are within the scope of the Act.
Once an employee is registered as a member, even if his wages increase to a sum above
RM3,000 per month, he remains a member of the Organisation and you must continue to
pay monthly contributions on his behalf.

If you hire a new worker, who has not yet registered with SOCSO, it is your responsibility to
make sure he fills out the SOCSO forms and registers as a member.
Every month you must remit to SOCSO the required contributions which amount to

1. 1.75% of the employees monthly wages (the employers contribution) and

2. 0.5% of the employees monthly wages deducted from his wages (the employees

The exact amount of the contribution can be found on the SOCSO website
( under the Schedule of Contributions.

Any work-related accident for which the employee is on medical leave for more than 4 days
must be reported to SOCSO so that the appropriate claims can be made by the employee.
The appropriate forms must be completed and submitted together with a copy of the
employees punch-card or other attendance record, a copy of the employees medical
certificate and a copy of his identity card.

The Employees Provident Fund Act

Similar to the requirements of SOCSO, every organisation must register with the Employees
Provident Fund (EPF) and pay monthly contributions to the Fund. These contributions
include both an employers contribution and the employees contributions which are
deducted from their wages and remitted to the EPF.

Currently, the monthly contributions are approximately as follows:

1. Employers contribution for employees earning RM5,000 and below: 13% of wages
2. Employers contribution for employees earning above RM5,000: 12% of wages
3. Employees contribution: 11%

The exact amount of the contribution can be found on the EPF website (
under the Schedule of Contributions.

Failure to pay EPF contributions is a serious offence. If you have questions about paying EPF
contributions, read their website or contact your nearest EPF office.
Chapter Six:
In this chapter the key topics will be:

1. Wages
2. Benefits
3. Ensuring Compensation Packages are Attractive

One of the most important tactics used to attract job applicants and to retain talented
employees is the wages and benefits package offered. This means that you must give
considerable thought to this package. Furthermore, for employees within the scope of the
Employment Act, Sabah or Sarawak Labour Ordinances, the benefits must comply with the
law. Employers can offer better benefits than those laid down in the law and they can also
provide benefits which are not stated in the law.

In this chapter, the legal aspects which relate to wages will be discussed. We will also look at
how you decide what to pay each employee. The law relating to benefits will be examined in
detail. The type of benefits you can offer to attract job applicants and retain your best
workers will also be examined.

While there is no legal requirement to provide the benefits provided in the Employment Act
to employees who are outside its scope, it is a common practice to do so. In fact, executives
and managers usually get more generous benefits than those laid down in the Act.


Compliance with the Employment Act

Frequency of Payment

Wages must be paid at least once a month. It is becoming a trend to pay twice a month,
especially to non-executive workers. This practice helps them balance their budget. It may
reduce the possibility of the workers becoming indebted to a money-lender (Ah Long).

Wages also have to be paid not later than 7 days after the end of each wage period. Your
payroll system, whether computerized or manual, must be sufficiently efficient that wages
are paid regularly. A wage period is the time period between each payment of wages. If you
have chosen to pay monthly and the company has decided that the beginning of the wage
period will be, for example, the 15th of each month, then the end of the wage period will be
the 14th of the next month (this is one month). Your wage system should ensure payment is
made on or before the 14th of each month. The Employment Act allows employers 7 extra
days to make payment, after which a breach of contract has occurred. Although the Act
gives you extra time to pay wages, workers rely on receiving their wages on a known
schedule. You must have a wage payment system which includes contingency plans in case
the employee in charge of payroll is absent or leaves the company suddenly. Consider
outsourcing the payroll system completely to a company which specializes in this task.

Method of Payment

The Employment Act now requires that all employees wages be credited into a bank
account. This is a sensible practice as payment in cash is extremely dangerous both for the
employee who has to collect the cash from the bank and for the employees who are
carrying cash home on pay-day.

Deductions from Wages

Deductions from the wages of employees within the scope of the Employment Act can only
be made according to the law. For all other employees (those outside the scope of the
Employment Act) deductions can only be made if the contract of employment gives the right
to the employer to make the deduction concerned or if the employee agrees to the
deduction. Any agreement reached between an employer and an employee relating to
deduction of wages must be in writing and kept in the employees personal record file. See
the Chapter on INDUCTION.

Deductions from Wages and the Employment Act

1. Some deductions are compulsory. These include

a) the employees contribution to the Employees Provident Fund and the
Employees Social Security Organisation
b) any order from a court ordering the employees wages be deducted for a certain
2. The deductions which an employer can make without permission from an employee
a) Withholding of all or part of an employees last wages when he resigns
without giving notice to offset the indemnity due
b) Repayment of any advance on wages made to the employee, providing no
interest charge is incurred
c) Repayment of any overpaid wages made in the immediate 3 months before
the deduction is made

3. The following deductions require the employees written request:

a) Payment of entrance dues or monthly dues to a trade union
b) Payment to a registered cooperative society
c) Payment for any shares in the employers business sold by the employer to
the employee

4. Some deductions require the employees written permission as well as approval

from the Director General of Labour. These include:
a) Deductions for payment into a savings scheme, employer-run employee
welfare scheme or insurance scheme
b) Deductions for repayment of an advance of wages where interest is
c) Deductions for payment to a third party, such as a bank
d) Deductions for payment of company products sold by the employer to
the employee
e) Deductions for accommodation rental or food provided under the
employees contract of employment

Take note that the Employment Act applies to foreign workers as well as locals. The levy
payable to the government for each foreign worker must not be deducted from the
workers wages but must be paid wholly by the employer.

An employer is not permitted to deduct more than 50% of an employees wages, even when
the employee requests various deductions be made. Keep a careful check on this matter. If
any of the employees deductions are for repayment of a housing loan, the maximum
deduction amount is 75% of the wages.

Advances on Wages

Employees may request an advance on wages. You need to establish a policy on whether
you will reject all such requests or whether you will agree on a case-by-case basis. Keep in
mind that you must ensure fairness. If you allow one worker an advance on wages, others
should have the same privilege.

If you wish, you can offer any employee who makes a request for an advance on wages up
to one months wages. Tell him the number of deductions that will be made from his future
wages to repay the advance.

If the employee asks for more than one months wages, the organisation can only approve if
the money is for:

i. Buying a car
ii. Buying a house or a piece of land or renovating a house
iii. Buying a computer
iv. Paying educational fees for the employee or his children
v. Paying medical fees for himself or his immediate family

If the employee needs the money for any other purpose, you will have to apply for
permission from the Director General of Labour.

Think carefully about your organisations policy on giving advances on wages to employees.
If you have given out an advance and the employee resigns before paying back the advance,
it will be a hassle to get the money back from the employee.

Non-payment of Wages

If your organisation fails to pay wages, or is late in paying wages, an employee can file a
complaint at the Labour Department, if he is earning not more than RM5,000 per month.

You do not have to pay wages to any employee who is detained by the police, is imprisoned
or who attends a court case unrelated to his employment.

Contractual Bonus

A contractual bonus is a term written into an employees contract of employment.

Contractual bonuses, like wages, have to be paid no matter whether the organisation can
afford the payment or not. It is not good practice to promise a contractual bonus. It is better
to make bonuses discretionary rewards for good performance. The same principle applies to
increases in wages. Do not make them contractual.

How Much to Pay?

How much should each worker be paid? This is an extremely difficult question to answer.
For sure, if you pay too much, the organisations financial position may be jeopardised. If
you pay too little, you will not be able to attract talented workers and you will have high
employee turnover rates which will increase your costs. As far as possible, you should aim to
have as few workers as are absolutely necessary to get the work done, and pay them the
highest amount you can afford. If your business is particularly labour intensive, examine
every possibility for automating work or introducing methods which require less labour. In a
later section of this chapter, methods of checking whether or not the wages your
organisation offers are competitive is examined.

Minimum Wage

A minimum wage which applies to all employees has been introduced for the first time in
Malaysian history in 2012. Enforcement of this minimum wage is expected to begin in
December 2012 or at the latest the first quarter of 2013. The minimum wage is established
by the National Wages Consultative Council and for the present has been set at RM900 per
month in Peninsular Malaysia and RM800 per month in the states of Sabah and Sarawak. It
is likely that this amount will be regularly reviewed and increased if there has been a rise in
the cost of living.

The only group of workers who are exempted from the right to receive the national
minimum wage are domestic servants. This means that all full-time employees, whether
local or foreign must be paid according to the monthly rate of RM900 (or RM 4.33 per hour
if the employees are hourly rated).


Maternity Benefits

All female employees, those within the scope of the

Employment Act and also those who are not covered by
the Act are entitled to the maternity benefits as provided
for in the Act

Maternity Leave

Every time an employee gives birth, she is entitled to 60 days maternity leave (calendar
days). There is no limit on the number of times an employee is entitled to take maternity

If an employee gives birth before 22 weeks of pregnancy, she is not entitled to maternity
leave, even if her baby should survive. She will be entitled to sick leave if a doctor certifies
her not fit for work.

Maternity Allowance

Employees on maternity leave are entitled to be paid their normal monthly wages providing:

1. They have worked with the employer for at least 90 days and
2. They have no more than 5 children

If an employee has given birth to her sixth child, she will only be entitled to unpaid
maternity leave.
Maternity Register

The Employment Act requires that every employer keep a register of maternity leave taken
and the payment received by all employees. A format for the register is provided in the First
Schedule to the 1957 Employment Act Regulations.

Payment of Maternity Expenses

Employers are not required to pay for their employees maternity expenses. However, it is a
common benefit which is popular with workers. In order to control your benefit costs,
especially if the organisation has many female workers, you may wish to place a limit on
how much employees can claim for maternity expenses. Check with several local maternity
clinics so that you know the current rate charged for their services.

Sick Leave
The Right to Paid Sick Leave

Employees within the scope of the Employment Act are entitled to paid sick leave depending
upon their length of service with your organisation.

Employees entitlements to sick leave per year are:

1. If the employee has less than 2 years service: 14 days

2. If the employee has more than 2 years service but less than 5: 18 days
3. If the employee has more than 5 years service: 22 days

An employee who is certified unfit for work by a doctor but who has taken all of his sick
leave entitlement must be given unpaid leave.

To be entitled to paid sick leave, an employee must inform the employer within 48 hours of
taking sick leave and submit a medical certificate (MC) from a registered medical doctor
upon his return to work. If he does not submit an MC, he can be considered absent without
leave and disciplinary action should be taken against him or her.

Introduce and enforce a clear policy on who is to be informed when an employee is sick.
Decide whether he is required to speak by telephone to a company officer or whether he is
permitted to send an e-mail or telephone message.

Many employers appoint one or more panel doctors. If your organisation has appointed
panel doctors, employees cannot visit any other doctor if they wish to be paid during their
sick leave. In other words, if an employee visits a non-panel doctor who gives the employee
an MC, the employee will be entitled to unpaid sick leave. There are two exceptions to this
1. If the employee is faced with a medical emergency, he can visit the nearest doctor
2. If the services of the panel doctors are not available because they are all closed or
the employee is outstation, he can visit any doctor, including a doctor in a
government clinic or hospital

You do not have to appoint any panel doctors, in which case your employees are free to visit
any doctor and you will be required to pay the employees if they are certified unfit to work
by the doctor.

Payment of Medical Bills

Employers are required by the Employment Act to pay doctors bills for the examination of
their employees. The law is not clear whether you also have to pay for treatment provided
by the doctor including medicines. It is usual for employers to either:

1. Pay all medical bills presented by employees, or

2. Pay employees medical bills but set a limit on how much the company will pay per
visit, per month or per year. Employees will be appreciative if the limit set by the
company is on an annual basis.


If an employee requires hospitalization, his paid sick leave entitlement per year increases to
60 days inclusive of ordinary sick leave.

Abuse of Sick Leave

Abuse of sick leave is a wide-spread problem. Be vigilant. If any MC looks suspicious, check
with the clinic which issued it.

Medical Benefits for Employees Not Covered by the Employment Act

For employees who are not covered by the Employment Act each organisation must decide
what benefits to offer and the value of each benefit. It is not a good practice to discriminate
between one group and another in relation to medical benefits.

Public Holidays
Public Holidays and the Employment Act

The Employment Act states that employees are entitled to a minimum of 11 paid public
holidays each year. Five public holidays are compulsory. These are:

1. Workers Day
2. Independence Day
3. Malaysia Day
4. Agongs Birthday
5. State Rulers Birthday

Each employer has the right to choose the other 6 holidays for his employees. Choose
carefully. Try to balance the needs of your business and the preferences of your employees.

When a public holiday falls on an employees rest day, automatically the next work day will
be a holiday for the worker.

If you need the employee to work on one of the public holidays to which he is entitled, you
have two choices:

1. Order the employee to work and pay him two extra days
wages or
2. Ask the employee if he agrees to work on the public
holiday and take a day off at some other time Dont be like the company which
proudly announced to a gathering
Public Holidays and the Sabah Labour Ordinance of all staff that it was about to
offer a valuable new benefit.
The Sabah Labour Ordinance lays down the same rules on public
holidays as apply in the Employment Act except that workers Employees were excited and
within the scope of the Ordinance are entitled to a minimum of leaned forward in their chairs to
14 public holidays per year. hear the announcement.

Public Holidays and the Sarawak Labour Ordinance The CEO said, We are extending
maternity leave from 60 days to 80
The Sarawak Labour Ordinance lays down the same rules on days with immediate effect.
public holidays as apply in the Employment Act except that
The disappointment amongst the
workers within the scope of the Ordinance are entitled to a
employees was obvious to all
minimum of 16 public holidays per year.
observers as nearly all the staff
were male. The company only
employed 2 women, both over 45
years old!

Annual Leave
Employees within the scope of the Employment Act are entitled to annual leave after they
have completed one year of service. The entitlement is as follows:

1. Employees with 1-2 years service: 8 days leave

2. Employees with more than 2 but less than 5 years service: 12 days leave
3. Employees with more than 5 years service: 16 days leave
Introduce a system so that all employees know how to apply for leave. Clarify who is
responsible to approve or reject any application for leave. Keep records of all leave taken.

Many disciplinary issues result from employees going on leave without getting permission.
Do not allow such a practice. If any employee goes on leave before approval has been
issued, take disciplinary action on this matter. At the same time, encourage managers to
approve employees application for leave as long as the workers absence will not cause a
major problem.

If, at the end of the year, an employee has applied to take some or all of his leave and his
application has been rejected, the company has to pay the employee wages in lieu of the
leave not taken. If an employee has 12 days leave entitlement of which he has taken 10
days but was not permitted to take the remaining 2 days because of a shortage of staff or
some other reason, the company will have to pay him the 2 days wages.

Other Benefits
The law does not require any other benefits be provided to workers, except for
contributions to the Employees Provident Fund and the Employees Social Security

In order to attract employees to work in your organisation and to get those employees to
stay you need to offer benefits other than those required by law. The choice of possible
benefits which you can offer is endless so discuss with the management team which
benefits can be afforded and which will help achieve these objectives. Remember what we
said in the chapter on THE ROLE OF HUMAN RESOURCE MANAGEMENT: Generation Y
prefer higher wages and lesser benefits. As workers increase in age, their interest in benefits
increases (although their need for high wages does not decrease), as their family
commitments grow.

Here are some suggestions on benefits that may be offered to employees. Some of these
may be too expensive for an SME but try not to reject any idea. Think about whether you
can modify the benefit so that it is affordable and attractive to workers.

Remember that once a benefit has been offered, it cannot be withdrawn. This means that it
is better to offer only a few benefits while your company is small and less stable. As you
grow, and if profitability increases, you can reward your employees with more benefits.

Possible Benefits


There are many types of leave which may be offered to employees. These include:
1. Paternity leave (for male employees whose wives have given birth)
2. Unpaid leave to attend to personal crises
3. Study leave

Medical Benefits

Employees are attracted to companies which offer medical benefits to their spouse and
children. An annual limit should be placed on the amount which the company will pay for
this benefit.

Dental and optical benefits can also be added to the basic medical package.

A Relaxed Workplace

This benefit may not cost the company anything at all. Some talented employees would like
to work in an atmosphere in which stress is at a minimum. To reduce stress, try the
following where appropriate:

1. Allow informal clothing if the employee does not need to interact with customers
2. Allow workers to use headphones and listen to music if it does not disturb their work
3. Cater lunch once a week and have everyone eat together

Flexible Working Hours

Individuals differ in their life-styles. Some people work well early in the morning; others
prefer to work at night. If possible, depending upon the nature of your business, try to allow
workers to work the hours which suit them best. Think about whether it is possible for any
of your workers to work from home if that is what they want.

Insurance Packages

If you employ foreign workers, you are required by the Workmens Compensation Act, to
buy insurance to cover your liabilities if any of these workers are involved in an accident.
The Employees Social Security Act makes it compulsory for employers to pay monthly
contributions so that if any Malaysian workers has a work-related accident, or attracts a
work-related disease, his wages and medical bills will be paid by the Social Security
Organisation (SOCSO).

You should talk to an insurance company about other insurance that can be bought to cover
your employees. There are many insurance policies available which when paid for by an
employer are greatly valued by employees.
Childcare and Eldercare

It may not be practical for a small or medium sized organisation to provide a childcare
centre on the premises. However, you can provide a subsidy to help pay for childcare to
those employees who have pre-school children.

Increased Provident Fund Contributions

Currently, the Employees Provident Fund (EPF) contributions made by employers on a

monthly basis are 12% of an employees salary, except for those earning less than RM5,000
whereby the contribution is 13%. Many employers pay a higher rate of contribution per
month. Most employees today value this extra money in their EPF accounts. Additional EPF
contributions can be tied to employee loyalty. This means that the longer an employee stays
with the company, the higher his EPF contribution.


The Market Rate for Wages

The minimum wage is the minimum amount that must be paid to any worker. If you offer
the minimum wage and no more, you cannot expect to attract the most talented workers.
You may not be able to offer the highest wages in your industry or area but you must try to
at least offer the market rate. This means that the wages for each job in your organisation
should be roughly the same as those offered in other comparable businesses. There are a
number of ways that you can collect information on the market rate for wages, also known
as the going rate. These include:

1. Read the job recruitment advertising in the newspapers and on-line. Look for job
titles similar to those in your organisation. It is not very common for newspaper
advertisements to include information on the wages being offered but some do,
especially those inserted by recruitment agencies.
2. Contact a recruitment agency and ask them what is the going rate for any job for
which you cannot find the necessary information elsewhere.
3. Study the collective agreements (CA) agreed to recently. A discussion on collective
agreements can be found in the chapter on INDUSTRIAL RELATIONS. To read the
recent agreements, open the Industrial Courts website ( On the
home page, you will see the heading Collective Agreement. Click on this heading.
Under the subheading Sector, you can choose which industry is most relevant to
your business and then click Search. A list of recent CAs will appear. The
cognizance number will give you an idea of the year in which the CA was signed.
Choose and open an agreement. The agreements can be
downloaded if you wish. Collective agreements not only
give you information about the wages being paid to Benefits can help
various jobs but also list out all the various benefits reduce turnover:
offered. Provide more attractive
4. Many professional bodies and employers organisations benefits to workers who
conduct annual surveys of wages and benefits. These can
stay with the
be quite expensive for non-members to buy. See, for
example, the website of the Malaysian Employers organisation for a longer
Federation ( period.

Ensuring Benefits are Attractive

An employer must provide the statutory benefits provided for under the Employment Act
and other employment laws. However, if you are trying to offer a package of benefits which
will attract and retain workers, you have to find out which benefits are seen as valuable by
the employees. What you want is not necessarily what other executives want or what the
companys non-executive staff want. To find out which benefits are attractive to employees,
ask them to fill out a short questionnaire. Ask them to rank in order of their preference a list
of benefits. This will give you some idea of which group of workers value which benefits.

Think seriously about offering a flexi-benefits package. This means that as an extra to the
statutory benefits, employees can choose several benefits from a listing. Their choice will be
valid for one year, after which, if they wish, they can change their choices. For example, a
single employee may choose extra days of annual leave rather than extended medical
coverage to a spouse and children. A married employee may choose the opposite. In this
way, employees are more likely to appreciate the benefits offered to them.

When designing a benefits package, keep in mind that once benefits have been granted to
employees they cannot be withdrawn or reduced without the employees consent. For this
reason, and to keep employees motivated, it is better to offer an extra benefit or an
improved benefit as and when the company can afford it, rather than to offer a high level of
costly benefits which the company finds a burden to sustain.
Chapter Seven:
In this chapter the key topics will be:

1. Determining the Types of Training Needed and Who Needs Training

2. Establishing a Training Section within the Organisation
3. Developing Training Skills

Employees cannot perform their duties without adequate training. No matter how small
your organisation, no matter what business you are in, employees must be given on-going
training. As well as increasing company productivity, training is a useful tool to attract
talented staff. In this chapter we will examine what should be done to ensure your
employees have the training they need, how to set up a basic training section within your
organisation and how to improve your training skills so that you can conduct some of the
training needed by your employees or so that you can assist senior employees to train their


On the one hand, training employees is one of the best ways to increase productivity. At the
same time, it is easy to waste company funds (or your HRDF levy funds) on training which is
irrelevant and badly organised.

To maximise your investment in training, the following is important:

1. Carry out a thorough training needs analysis

2. Plan who is to provide the training and determine whether the training provider is
3. Work with the trainer to ensure smooth implementation of the training
4. Evaluate the training efforts
Training Needs Analysis

While you can pay for the services of a consultant who will conduct a training needs analysis
(a.k.a training needs identification, TNI, or learning needs analysis, LNA) for your
organisation, you should be able to conduct
this task yourself. Training needs analysis
(TNA) is a task that needs to be conducted
Training Must be Relevant
on a regular basis. Once a TNA has been
All training given to employees
carried out, you will know whether there is
any gap between the skills, attitudes and
must be relevant to their current
knowledge that your employees currently or future jobs
possess compared to the skills, attitudes
Training undertaken should be a
and knowledge needed now and in the
short-term future of your organisation. combination of skills development,
knowledge acquisition and
A TNA provides information such as: attitude change

1. What training is needed for

employees in your organisation?
2. Who are the employees that need training?
3. What should be the content of the training?

Once you have this information, you can make other decisions such as:

Who should conduct the training?

What detailed content and delivery methods will be most suitable?
Where will the training be held?
What are the budgetary requirements for the programmes?
When will the training be held?

Some training programmes will be needed for all employees. These include induction and
safety training. Other programmes will depend upon the needs of individual departments
and individual jobs.

Sit with managers to determine the skills and knowledge needed in their respective
departments. These will range from technical skills need to work with equipment or
machinery, communication skills, computer-related skills, customer-relationship skills and so
on. If the managers provide a long list of skills needed by their staff, ask them to prioritize
these skills. You can also ask senior workers to identify the most useful knowledge areas and
skills needed in their jobs. Examine job descriptions and person specifications drafted for
the different jobs in your organisation.

Compile all the information gathered. Determine which skills are best provided to
employees by senior staff or supervisors. Decide which areas may need an external trainer.

Appoint suitable senior staff to conduct training for their junior or inexperienced colleagues.
If necessary, organise a train-the-trainer programme so that these people are comfortable
conducting training. Work together with these internal trainers to develop suitable
programmes. A training programme may not be a class-room session held in a training
room. It may be in the form of coaching of one or a small group of employees at their
workplace. It may involve e-learning if you can purchase suitable e-learning packages for
your employees.

Choosing a Trainer
Trainers may be sourced from:

1. Existing staff, particularly senior workers

2. Supervisors or managers
3. HR staff
4. External free-lance trainers or training providers

The trainers chosen for a particular type of training will depend on its content. Specialised,
technical training is usually conducted by senior employees or supervisors. This training may
be conducted one-on-one or in small groups. Many generic skills are offered by training
providers who, if you have sufficient trainees, will run a programme in your premises or who
organise public programmes to which you can send the employees. Look at the list of
programmes offered by training providers listed on the HRDF website.

If possible, having decided to use an external trainer, check with the trainers previous
clients to determine whether they were satisfied with the trainer. Ask the trainer for the
name and contact number of clients for whom he has provided the same training
programme so that you can do this.

Be sure to require the trainees to evaluate the trainer after the programme is complete. See
the section later in this chapter on Developing Training Skills.

Coordinate the Training

Whether one of your company staff is conducting training or whether you have invited an
external trainer to conduct training for your staff, you will need to work with the trainer and
assist in coordinating the programme. Trainees can become demotivated when training
logistics are badly managed. A series of checklists are useful for this purpose. Here are some
suggestions which can be developed into a checklist:

Trainees: Have trainees been informed in advance in writing that they are required to
attend training on a particular date? What arrangements are to be made if a trainee cannot
attend the training? Have the trainees signed an attendance list? Are evaluation
questionnaires ready for completion at the end of the programme?
Venue: Has a training room been booked? Has the training room been arranged according
to the wishes of the trainer? Is all equipment in the room in working order?
Notes and Handouts: Have sufficient notes or handouts been copied and printed for
trainees? Is writing paper available for trainees?
Refreshments: Has food been ordered in sufficient quantities for lunch or other breaks in
the training session? Are drinking water and sweets available?
Trainer: (When an external trainer is involved) Has the trainer been given a map to show the
location of the company premises and how to find the training room? Have arrangements
been made to meet the trainer at the entrance to the company premises? Does the trainer
need reserved parking? Have entrance security guards been informed that the trainer will
be arriving? Has the trainer been informed where he or she can find the bathroom?

You may wish to invite the chief executive officer to officially open a training programme, or
if it is a short session, he or she may be requested to join the trainees during a break. In this
way, the importance of training is made clear to the trainees and it will be obvious to them
that the management supports their learning efforts.

Evaluating Training

Training efforts must be evaluated. You may not be able to prove that training of employees
leads to higher productivity or even improved profitability. You should still try to collect
information to determine whether the programmes organised achieve their objectives. At
the very least, you should:

1. Prepare a questionnaire to be completed at the end of the training session by

trainees which asks them to rate various aspects of the trainer, the venue, and the
contents of the programme.
2. Plan methods to test whether the trainees have developed the knowledge or skills
for which the programme was designed, and
3. Interview managers whose subordinates have attended a training programme. Are
the managers satisfied that the employees are now competent in the area for which
training was conducted? Are they performing better than before the training?
All organisations need a training section. An SMI does not need a training centre and you
may not even be able to create a room dedicated to training. You will probably have to use a
multi-purpose room for in-house training sessions. Here are some points to take into
consideration when setting up a training section within your organisation.

Training Room

A room dedicated to training can only be justified if it is to be used regularly. If in-house

programmes are conducted infrequently, you should explore near-by venues that are
suitable for training and their cost per day or per hour. You may even be able to rent a
training room in a large company in your area. If you decide to use external facilities, check
out the following:

1. Is the size of the training room suitable for the number of trainees in your
programme? You need a room which is neither too big nor too small.
2. Is there suitable furniture available? Moveable tables and chairs will be needed.
3. Is presentation equipment available or do you have to bring your own? Screen,
computer, projector, white-board easels?
4. Are the bath-rooms close by and clean?
5. Are there facilities for food-breaks?

If you prefer to hold training sessions in your own premises, note there are some
advantages and disadvantages such as:

Advantages: Logistics are easy; cost is minimal; less time wasted getting to and from training
venue; more control over electricity and other requirements

Disadvantages: Room used for other purposes such as meetings and not available for
training; Furniture in room unsuited to training; Trainee boredom at being in the same
venue for all training.

Training Equipment and Supplies

Whether you have a room used only for training, or whether you have to use a multi-
purpose room for training, the following
equipment and supplies must be available:

1. Tables that seat 2-3 persons, which can be

moved around the room and positioned as
required by the trainer. These tables
should be reasonably light-weight, can fold
and be stacked away when not in use.

Training Tables
2. Chairs in sufficient quantities.
3. A table and chair for the trainer. The table must be large enough for the trainers
notes, handouts, water and glass and so on.
4. A projector and suitable computer for presentations.
5. A screen, preferably wall-mounted. Projection can also be effectively achieved on a
light-coloured flat wall, although never on a white-
board. For this reason, ensure suitable walls are painted
with a light colour and not wood-panelled or otherwise
6. White-board easels to which large sheets of
paper can be attached. If possible, have at least two of
these which are used for group presentations.
7. Stationery: White-board marker pens. Never
Flip Chart Easel allow permanent marker pens into a training room;
White-board erasers; Sheets of paper for easels; Rough
paper for participants; Printing paper for notes and handouts.
8. Drinking water and sweets or cough lollies.
9. Lockable storage cupboards for stationery.
10. A microphone may be useful if the training room is large and at any one time a
programme has more than 20 participants.

The best quality training equipment you can afford. It gets some rough wear and
Mobile equipment which provides maximum flexibility in the training room.

You may need specialised training equipment, depending upon the nature of the business
and work carried out by your employees.

Here are some more guidelines:

1. Try to lay out the training room so that the entrance door is at the back of the room.
People opening and closing a door at the front beside the trainer are a distraction.
2. Try to install doors that are totally silent when opened or closed.
3. Have variable lighting i.e. ensure some lights, especially those in front can be
lowered in density or even turned off without affecting the light in the rest of the
4. If the room has any glass walls, ensure blinds can be pulled down to reduce
distractions from outside the room.
Training skills are a useful asset to a human resource (HR) professional. You will be called
upon to organise and conduct formal induction programmes (see the Chapter entitled
INDUCTION), safety training, and possibly programmes in other general areas including
communication skills. The stronger your training skills, the more valuable you are to any

A good trainer:

1. Practices as often as possible

2. Prepares thoroughly for any training session
3. Prepares a contingency plan for each training session
4. Collects feedback from participants
5. Encourages an open, learning climate
6. Manages time well

The suggestions that follow relate to formal, class-room style training sessions. Many of the
ideas will also be useful for other training scenarios including on-the-job training and
computer-aided training. You may want to combine formal sessions and training conducted
by supervisors or senior staff on the job.

Training Skills need Practice

Training is a skill; like any other skill, practice is needed. Volunteer for opportunities to
conduct training. Ask colleagues to sit in on the training and give feedback so that you can
improve. If you get the opportunity to attend training sessions outside your organisation to
improve your own knowledge and skills, carefully examine not only the content material of
the training but how the trainer presents this material. Whatever the trainer does that is
effective in your eyes, take note to try and copy his actions; equally whatever the trainer
does that is ineffective, be sure that you do not replicate the same actions. The more
training you attend, the more you will realize that there are many different ways to present
content, different ways to keep the interest of participants and different ways to ensure
trainees understand the material. Use methods and tactics with which you are comfortable.
If possible, attend a train-the-trainers course.
Preparation for Training

Great trainers spend a lot of time preparing for each session.

Trainees cannot learn to play
What needs to be prepared?
the piano by reading a book
about it, or by watching a video
Before any major decisions can be made about materials or
of one of the worlds greatest
learning methods, you have to know as much as possible about pianists or by listening to a
the trainees. If you are not sure, find out: lecture on how to play.

The only way to learn to play the

1. What language the trainees are comfortable with?
piano or develop any other skill is
2. Have they attended similar training before (and if so, by doing it, i.e. trying to play,
why are they attending again?)? making mistakes, being
3. What do the trainees already know about the topic or, corrected and trying again.
what level is their current skill?

The training will need to be scheduled which will also impact on

your preparation. As far as possible, have short sessions which
last no more than a half-day. If there is too much material for a
half-day session, conduct a second session some days later. In
this way, the trainees work is not interrupted for a long period,
revision at the beginning of the second session helps the
trainees remember the material or improve their skill levels and
interest is easier to maintain. In-between sessions, assignments Human Resource
can be given to the trainees so that they keep practising the Management: Principles &
Practices, by Maimunah
required skill or thinking about the learning content of the
Aminuddin, 2nd ed, Oxford
programme. University Press

Choosing Delivery Methods

The choice of delivery methods largely depends upon the Training programmes
nature of the training programme. Some methods are
must be designed to
best when used to develop trainees knowledge; others
are for skills development. Certain training methods are focus on the needs of
more expensive than others, so when your budget is the learner, not the
limited you have to choose methods that do not involve
a high level of expenditure. trainer.
Some delivery methods require high levels of
participation by the trainees. These methods are always better. Passive learning methods
whereby the trainer does most of the work, while the trainees sit like sponges waiting to
absorb knowledge, do not work so well, especially for skill development.

The most popular delivery methods include:

1. Group discussions and projects

2. Practice sessions with a coach or observer
3. Demonstrations and role plays
4. Mini-lectures

Group work is a delivery method which encourages

involvement of all trainees, providing the group size
is not too large. For most group work, whether
Group Work discussion or project, 5 to 6 members is ideal. Make
sure you tell the group or groups:

1. What they are supposed to do

2. How much time they have to complete their task
3. What will be the outcome of the group work

When groups of trainees work together, they are able to share any knowledge or skills that
the members may possess. This gives them confidence that they can learn from each other
as well as from the trainer.

The range of assignments that can be carried out during group work is limitless. Trainees
can be given a series of questions to answer, which may be based on their experience or on
a lecture previously delivered. They may read a short case study or watch a video and then
answer questions related to the material. They may have to prepare an oral presentation or
solve a problem relating to their work.

If employees already have basic skills but need to refine and further improve a skill, practice
sessions with a coach or observer are helpful. The coach should be able to watch a trainee in
action and provide him with feedback on his strengths and weaknesses. The coaching can be
done at the employees normal workplace but there may be too many distractions from co-
workers or customers or noise for him to be able to concentrate on improving his
performance. The coach must be a skilled worker who is able to detect mistakes and give
useful hints on how to improve. Coaches also need to be patient and interested to help the
trainee. All managers and supervisors should be provided with coaching skills.

Skill-development activities can benefit from demonstrations of how to do something,

provided the demonstration is followed up by practice activities by the trainees.
Short lectures are useful for extending employees knowledge but they must be kept to a
minimum. A lecture delivered during a training session should never be longer than 30
minutes. A lecture must be combined with suitable visual aids and handouts so that trainees
can refer to the content after the session. Lectures should never be used by themselves but
can be combined with other content delivery methods.

Contingency Plans

An effective trainer identifies in advance problems that may arise during a training session
and prepares contingency solutions. Some common problems include:

1. Breakdown of equipment or electrical power

2. Trainees have carried out similar activities in other programmes
3. Illness of the trainer
Exercise Regularly
Rule Number One for trainers: do not rely on equipment that
you do not know how to repair in an emergency.

Rule Number Two for trainers: do not rely on equipment.

Any electrical or electronic piece of equipment can break
down or malfunction. Have spare equipment available. If you
are using PowerPoint or some other software to help explain
your points, have sufficient printed copies of the material
which can be handed out if necessary.

Rule Number Three for trainers: Look after your fitness and your health. If you are
conducting in-house training, postponing a session because you are not well is not difficult
but your reputation will be affected if you frequently postpone on health grounds.

Rule Number Four for trainers: Always have spare material which can be used in case
trainees have previously carried out a particular activity. Extra material is also useful in case
you find that you have completed your planned delivery although the allocated time for the
session is not over.

Collect Feedback from Trainees

Whether you are conducting training or whether you have engaged an external trainer or
whether you have sent your employees on a programme organised by a training provider,
feedback must be collected from the trainees.

Feedback can be collected by issuing a questionnaire to trainees or by interviewing

programme participants, or both. If the HR officer is the trainer for a programme, a
questionnaire is more likely to give honest feedback. If you are the trainer analyse the
feedback carefully. One or two negative comments are normal. No trainer can please all
participants all of the time. But, if you find after several programmes that you are
consistently getting a low evaluation on certain aspects of the training, it is time to get
assistance to determine what is wrong.

The questions asked in a training evaluation questionnaire vary depending upon where the
training is held, the purpose of the training and even who is chosen as trainer. Items that
you may wish to consider including in an evaluation questionnaire

Venue: Was the room too cramped or too big? Was it too hot Dr R. Palan, one of
or too cold? Malaysias foremost
Facilities: Were the bathrooms OK? Was the food sufficient? trainers says:
(Note that it is a norm to ensure trainees are provided with
plentiful food supply) FUN CONTENT
Trainer: Did the trainer explain the relevance of the session to
the trainees work? Were the objectives of the session made
clear? Was the trainer interesting? Was the trainer easily RESULTS
understood? Was the trainer helpful when asked questions?
Did the trainer motivate trainees to want to learn? Did the Fun helps hold
trainer provide sufficient breaks? learner
Content: Was the content too easy or basic compared to the attention
needs of the job?
Fun ensures
Handouts: Were the handouts useful? Were the handouts
easy to read?
Fun ensures
Encouraging an Open Learning Climate retention
A trainer plays a major role in establishing a learning climate during a The Magic of Making
training session. A learning climate is an atmosphere whereby the Training Fun by R.
trainees want to learn and have no fear during the session. Many Palan, SMR USA Inc.
trainees have had bad experiences with the learning process during
their school days. Any worries or anxiety they have about learning will
be a barrier to the process of assisting them to learn new skills or knowledge.

To establish the right climate, a trainer must:

1. Encourage questions
2. Ensure participation by trainees
3. Understand that trainees have differences in learning styles
4. Create interesting activities for trainees
5. Be skilful at managing trainees negative behaviours

Do not discourage questions on the grounds that you might not be able to answer them.
When you first start training, there may be some questions from trainees for which you do
not know the answers. This is normal. You can ask the trainees if any of them would like to
answer the question. This approach is helpful if some of the trainees are senior and
experienced. Alternatively, you can openly tell the participants that you do not know the
answer, but you will find out. Make sure you do research an answer. If it was a general
question, give the answer to all the trainees. If it was a question specific to the person who
asked, inform him alone.

If it becomes obvious to the trainees that you cannot answer any of their questions, they
will definitely question your credibility. You should also ask yourself why you are conducting
training when your knowledge of the content is limited.


Encourage as much participation as possible. Participation means that the trainees talk,
discuss, ask questions and answer questions during the session. Participation is achieved by:

1. Using participatory delivery methods

2. Creating activities which encourage questions
3. Creating group activities, as discussed above

Here are some examples of activities which require trainees to participate:

1. Instruct groups to summarize the key learning points of a session. Let the groups
choose a spokesperson to present the summary. (Thank the group and give
appropriate praise).
2. Prepare a simple True-False or Yes-No type quiz relating to content material. Give it
to groups to answer. Let a group spokesperson read out and explain their answer.
Make the activity into a competition with marks allocated for correct answers.

When training sessions start to stretch more than 2 to 3 hours, trainees become fatigued
and need increasingly long rest-breaks. Conduct activities known as energisers to keep
trainees motivated. Energisers are physical activities which are enjoyable and help to keep
trainees focused on the learning content by allowing them an organised break. Sometimes
energisers are called Yawn-busters. At minimum, an energiser allows participants to stand
up and do some on-the-spot exercises. Have some music ready for this purpose. There are
many books and on-line sites which offer suggestions and examples of energisers.
Learning Styles

Different people learn in different ways. You need to take this fact into consideration when
designing and delivering a training session.

Some workers prefer the written word and learn well with notes, handouts and
Some workers are more comfortable with the spoken word. They listen carefully and
learn by focusing on what the trainer and co-workers say.
Some workers need to know why for everything they do. They want explanations not
only relating to what needs to be done but the reasons for these procedures. Others
are entirely practical. They are only interested in what has to be done and not why it
is being done.

Negative Behaviour by Trainees

An effective trainer is skilled at managing negative behaviours of trainees. Here are some
examples of problems that may arise with trainees and how to deal with them.

The Bored Trainee who Complains Frequently

Only once in a while does a trainee make it clear to his fellow-trainees as well as the trainer
that he has no interest in attending the training but is present because he has been ordered
to do so. Most trainees who are unhappy about being forced to attend training sessions
keep their feelings hidden. But some will make sarcastic and even rude comments about the
programme. A gentle probing of the cause of this behaviour may be helpful. For instance,
the trainee may explain that:

He has attended a similar programme recently.

He believes the content to be irrelevant to his job.
The timing of the programme is bad for him or her.

If he is obviously familiar with the content material, the trainer could ask him to assist in
helping those who have zero-knowledge. Identify the trainees who have the least
knowledge and make them sit with the problem trainee. Give him the title Master
Tutor. If he cannot see the relevance of the programme to his job, the trainer should
explain to him and to all the other trainees at the same time why the programme is
important to them. If the timing of the programme is not suitable for an individual, there is
nothing much the trainer can do other than asking the trainee to cooperate by not
distracting the other participants.
The Dominating, Talkative Trainee

On the one hand, trainers usually welcome input from trainees. On the other, they prefer
participation to come from as many trainees as possible. If one person dominates, others
may keep quiet. It is the responsibility of the trainer who has a dominating trainee in his
programme to manage this persons behaviour. It needs to be recognized that trainees who
dominate a training session by offering lots of opinions and comments are typically keen
learners and excited to share their knowledge. It is unlikely that they are purposely trying to
disrupt the training in any way. One way to encourage other trainees to speak up is to ask
their opinions by calling out their name and inviting them to give a comment or to answer a
specific question. At the same time, the trainer must carefully not look at the talkative
trainee, or if absolutely necessary, ask him to give other trainees an opportunity to
comment. This request should be accompanied by a compliment on his interest, or the
relevance of his questions or opinions.

The Quiet, Unresponsive Trainee

Some trainees never voluntarily say anything when questions, comments or opinions are
solicited from the class. If they do not speak up, it is difficult to know whether they are
having problems with the training content, or with understanding the trainer or whether
they simply do not wish to speak.

The quiet trainees could be called upon to respond to a question or request for a comment
or opinion. The trainer should wait patiently for an answer, even if the trainee seems to be
taking a very long time. Only if it is clear that the trainee does not want to or cannot answer
should another persons response be asked for. Some trainees do want to answer but they
are slow to think and put their thoughts into words. Many trainees are too shy to speak in
front of others, particularly if they believe their language skills are lacking. They do not wish
to make fools of themselves in front of fellow-trainees.
Chapter Eight:
In this chapter the key topics will be:

1. The Law Relating to Occupational Safety and Health

2. Actions to make the Workplace Safe
3. Responding to an Accident
4. Health Issues

Employers spend a lot of money and time to recruit, select and provide induction for
employees. They make sure they comply with the employment laws. But they fail to provide
a safe workplace. Sometimes workers have accidents. Workers may even die as a result of
these accidents. The human resource officer will have to inform the workers family if he has
had a fatal accident. This is probably the most difficult task an HR officer will ever face.

A company should not only do everything it can to reduce the number of accidents at the
workplace; it should take proactive steps to improve the employees health. This will
improve productivity and reduce medical bills.

In this chapter, we will examine both safety and health issues at the workplace, including
how to comply with the safety laws.


The two most important laws relating to occupational safety and health are:
Safety and Health Laws

Factories & Machinery Act Occupational Safety & Health

1967 Act 1994

Other than the Factories and Machinery Act and the Occupational Safety and Health Act,
there also exist some very specific laws which are relevant to particular industries such as
the Petroleum Act (Safety Measures) 1984. In this chapter, the emphasis will be on the
Occupational Safety and Health Act (OSHA) because this law applies to all workplaces.
However, some employee health requirements can be found in the Factories and Machinery
Act so these will be discussed briefly.


The laws relating to safety have to be complied with, but you should be more concerned
with keeping your employees safe and healthy so that accidents can be reduced and
workers are fit to work. Recruitment and selection are examples of human resource
activities that may only be carried out once in a while, as and when new employees are
needed. Safety is different. Safety at work has to be thought about every single day.

Safety Policy
All organisations with more than 5 employees must have a written safety policy displayed in
an easily visible place in the company. A safety policy
describes what the organisation wants to achieve in
relation to safety, how these objectives are going to be No workplace is
achieved and who is responsible for achieving them.
perfectly safe
If your company currently has no safety policy, it is the
responsibility of HR to introduce one with immediate Accidents can happen
effect. It is an offence for a company not to have a safety
policy. Like other HR documentation, you do not have to
write a safety policy starting from zero. Search the
Internet and ask for copies of safety policies from other
companies, especially in the same industry as your organisation. Pick two or three samples,
call a meeting of all senior managers to discuss the samples and finalize your companys
policy. The policy must be signed by the chief executive officer and dated.
Once the policy has been agreed upon, all employees must be informed. Copies of the policy
should be given to every worker who must declare, in writing, that he has received a copy,
understands the policy and agrees to implement it to the best of his ability. This declaration
will be kept in his personal record file. As new employees join the organisation, they too will
be given copies of the policy during their induction programme.

Safety policies do not need to be updated or changed often. As long as the organisation
conducts the same type of business, the policy will not need changing.

Safety Committee
All organisations with more than 40 employees must establish a safety committee. A safety
committee is an excellent tool for involving workers in ensuring safety at the workplace.
Safety committees can handle many of the issues that arise in relation to safety, thus
reducing the burden of the HR officer in charge of safety and health.

The role and responsibilities of a safety committee include:

1. Drafting and ensuring implementation of policies, procedures and rules on matters

relating to safety and health
2. Investigating accidents
3. Keeping accident records
4. Developing plans to improve the health of employees
5. Reviewing the effectiveness of safety programmes in the organisation
6. Drafting and implementing emergency procedures and drills
7. Reviewing standard operating procedures in all jobs, especially hazardous jobs, to
reduce the likelihood of accidents
8. Conducting regular safety inspections

Structure of the Committee

Safety committees can be quite large. The chief executive officer (CEO) of the organisation
should act as chairman. However, if the CEO travels frequently or for some other reason
may not be available for meetings, another senior officer can be chosen as the committee

The committee will need a secretary. If your organisation has a full-time safety officer, he or
she will act as secretary; otherwise the secretarial duties will be carried out by the human
resource officer responsible for safety. For meetings to be useful the following should be
kept in mind:

1. An agenda must be distributed to committee members in advance of the meetings,

together with the notice of meeting. As far as possible, safety committee meetings
should be scheduled on a fixed date and time and members must not be permitted
to be absent, except in case of emergencies.
2. The meeting room chosen must be suitable in terms of size and comfort.
3. Minutes of the meetings must be kept. They may be inspected by officers from the
Department of Occupational Safety and Health (DOSH).
4. All members of the committee should be encouraged to participate in discussions.
The chairman should establish a climate which encourages involvement by all.

If the company has less than 100 employees, the law states that the safety committee must
consist of at least 2 representatives from management and two employee representatives.
If the organisation has more than 100 employees, the number of management and
employee representatives doubles. If the workers belong to a trade union, at least one of
the employee representatives should be chosen by the union. If the workers are not
unionized, you can either:

1. Call for volunteers to become committee members or

2. Appoint workers who you believe are capable of contributing or
3. Organise elections so that the workers from each department can choose their own

The employee and management representatives should be formally appointed for a period
of 2 years. If the appointment period is too short, the representatives will not have
sufficient time to become effective in their duties.

You can also invite one or more of your panel doctors to attend the meetings. They should
be able to give advice on health-related issues.

Make sure that the committee members represent the

widest possible scope of different sections or departments in Consult Your Employees
your organisation. Do not exclude departments just because About Safety & Health
they are perceived to be safe. Accidents can happen
anywhere. Health issues affect all workers in all departments. Talk to them
The committee must meet at least once every 3 months. If Listen to them
there has been an accident, you may wish to call an Hold two-way discussions
emergency meeting.

Safety Training

OSHA makes it compulsory for every employer to:

1. Train the members of the safety committee

2. Train all employees in procedures and methods which will reduce accidents

If an employee has a serious accident and it is found that one of the causes of the accident
was that the employee had not been trained in safe work procedures, the employer may be
prosecuted. If found guilty by a magistrates court, the fine may be large and the reputation
of the company will be negatively affected.

A number of training providers provide safety training. Not all training has to be outsourced.
You may be able to save costs by conducting some of the training yourself. If you have
experienced employees who are interested to train others, organise a train-the-trainers
course for them.

Safety committee members need training in:

1. The law relating to safety and health

2. The functions of a safety and health committee
3. How to hold effective meetings
4. How to recognize hazards
5. How to conduct a safety audit
6. How to investigate accidents

All employees need safety training. Some safety training may be offered during formal
programmes which teach the employee how to do his job. For example, safe ways to use
machinery and equipment will be taught as the employee learns to use these facilities.
Other training may need to be held in formal sessions. After a period of time, employees
who have been taught safe methods of working may need re-training, especially if new
equipment or machinery has been introduced in the workplace.

Other examples of specific training may relate to:

1. First aid
2. Electrical safety
3. Working in confined spaces
4. Safe working with chemicals
5. Use of fire extinguishers
6. Fire, evacuation and emergency drills
7. Safe driving skills
8. Self-defence skills

An increasing number of organisations are offering training programmes on safe driving

skills, especially if they have a large number of drivers or if many of the workers drive to
work on a motorcyle.
Road Accidents are Common

Self-defence Lessons

As the rates of violent crime increase, companies are organising programmes to teach self-
defence to workers, especially females. Your employees are at risk not only at work but also
coming to work and going home from work, especially if they are required to work at night.
Help them stay safe.

Safety Inspections

Safety inspections are usually conducted at least once every 3 months, with the results of
the inspection being presented at the Safety Committee meeting. Safety audits, which may
involve an external auditor being hired, should also be conducted on an annual basis if the
organisation is in a hazardous industry.

Safety inspections look for unsafe acts and unsafe conditions. To guide the committee
members conducting the inspection a checklist may be prepared. Here are some examples
of items that could be included in the checklist:

1. Fire extinguishers (in place, checked recently)

2. Fire doors (not blocked)
3. House-keeping of each section or department (clean, tidy, no spillage of water,
chemicals or oil)
4. Welfare (clean rest areas and toilets)
5. Lighting (in working order and bright enough)
6. First-aid kits (complete and available)
7. Safety signs (sufficient, easy to read, written in the right languages)

A copy of the completed inspection checklist report should be given to the head of each
section or division in the organisation for him or her to take action. During the next
inspection, the committee members should look to see if the appropriate action has been
Qualified Safety Officer
If your organisation has more than 100 employees and is listed in the Regulations to OSHA
as a hazardous industry, you are required to employ a qualified safety officer.

The hazardous industries required to employ a qualified safety officer are:

1. Shipbuilding
2. Gas and petroleum
3. Chemicals
4. Metal
5. Woodworking
6. Cement

All manufacturing firms with more than 500 employees must hire a qualified safety officer.

Qualified safety officers are much in demand. There is a shortage of these officers currently.
Even if your organisation is not required by law to hire a full-time safety officer, you should
ensure that at least one person is assigned the task of safety officer along with his or her
other duties.

Safety Equipment
Some of your employees may need safety equipment (also known as personal protective
equipment or PPE). Buy the best quality safety equipment you can afford. Ensure the
equipment is suitable for the job it is supposed to do protect your workers from injury.
Buy one or two pieces first and have your workers test them out before you buy for all the
workers who need them. Different brands and different companies produce safety
equipment with different features.

A list of approved safety equipment and the suppliers of this equipment can be found on
the website of the Department of Occupational Safety and Health (
Typical Personal Protective Equipment Items

Enforcing Rules on the Wearing of Safety Equipment

Some employers find it frustrating that although they have spent a lot of money on buying
safety equipment, workers refuse to wear it. What should be done in this situation?

1. Try to find out why workers fail to wear their PPE. Sometimes, the reason is because
the equipment is not suited to hot climates and makes it difficult for the workers to
do their jobs. In this case, you may need to try and find more suitable equipment.
2. Remind the employees of the rule that they are required to wear the PPE. You can
also point out to them that it is an offence under OSHA to refuse to wear PPE
provided by the employer.
3. Take disciplinary action if necessary. (See the Chapter on DISCIPLINARY SYSTEMS)
4. Make sure that supervisors and managers set a good example. If they do not wear
protective equipment when they are in the work-area, do not expect the workers to.
5. If PPE is required in some but not all areas of the workplace, put up appropriate signs
to remind workers that they are entering a place requiring a particular type of PPE
(Ear plugs, gloves, masks and so on).
6. Encourage supervisors to praise workers who are complying with the requirement to
wear PPE.

Getting workers to wear their safety equipment is a never-ending battle! Do not give up.

Employee Involvement in Safety Activities

The more employees are involved in safety activities, the more likely they will work safely.
Here are some suggestions on activities which can increase employee involvement in safety
and health related activities:

1. Instead of buying commercial safety posters, have a competition open to employees

children requiring them to prepare suitable safety posters to be used in the
workplace. Provide the necessary art materials. Give out small prizes to the winners.
Put as many posters as possible on the walls of the workplace. Make sure the artists
name is clearly highlighted as well as the name of his or her parent.
2. Organise a special campaign to emphasize the importance of safety and health. Call a
local VIP to launch the campaign. Invite employees family members to the function.
It is better to make the campaign memorable rather than hold it too often. Once in
two years should be fine.
3. Establish specialized committees to look into areas for which the company safety
committee has no time. These committees should be project based. For example, a
committee could be formed to simplify or translate any safety documentation which
is being used. This would be helpful if you have a large group of foreign workers.
4. Organise visits to companies which have won safety awards. Ask them to explain to
your staff how they go about ensuring safety in their organisations.

The Role and Powers of DOSH

Enforcement of OSHA

The task of enforcing the Occupational Safety and Health Act (OSHA) is in the hands of the
Department of Occupational Safety and Health (DOSH). This department in the Ministry of
Human Resources also enforces the Factories and Machinery Act.

DOSH has the power to inspect workplaces and carries out regular checks for this purpose. If
the inspection officer finds that some part of your premises is not safe he is authorised to
issue either an Improvement Order or a Stop Work Order. The order will specify what aspect
of safety is not adequate and needs to be remedied.

The Department will prosecute employers who fail to comply with a requirement of any of
the occupational safety and health laws. If found guilty, the employer will be fined.
Information on which companies have been fined and the amount of fine imposed by the
courts can be found on DOSHs website.

Codes of Practice

DOSH has drafted a number of codes of practice. Some are for specific industries or jobs and
others are relevant to all employers. The Codes, which can be downloaded from the DOSH
website include:

1. The Code of Practice for Road Transport Activities 2010

2. The Code of Practice for Safe Working in a Confined Space 2010
3. The Code of Practice on Indoor Air Quality 2010
4. The Code of Practice on the Prevention and Management of HIV/AIDS at the
Workplace 2001
5. The Code of Practice on the Prevention and Eradication of Drug, Alcohol and
Substance Abuse 2005

The Department has also prepared for the use of employers a series of guidelines on a
number of safety and health related issues such as:

1. Occupational Health and Safety in the Office

2. First-Aid Facilities in the Workplace
3. Labelling of Hazardous Chemicals
4. Prevention of Stress and Violence at the Workplace
5. Standing at Work
6. Prevention of Falls at Workplaces

All of the guidelines are available on the DOSH website.


Requirement to Inform DOSH in case of Accident, Occupational Poisoning or

Occupational Disease
Regulations under OSHA make it compulsory for an employer to inform DOSH in the event

1. A fatal accident or one which causes serious bodily injury (one which leads an
employee to be absent from work)
2. Occupational poisoning
3. Occupational disease

When an accident occurs, the employer must inform the local DOSH office as soon as
possible by telephone or other means. Within 7 days a report must be sent to DOSH by
completing the required form. Do not forget that you will also have to report to the Social
Security Organisation, or the Labour Department if any of the employees injured is a

Records of Accidents

Records must be kept of all accidents, dangerous occurrences, incidents of occupational

poisoning and occupational diseases. By the 31st of January each year, the employer must
send the previous years record to DOSH. This record must be kept for at least 5 years.
Accident Investigation
If an accident occurs, no matter how minor, it should be investigated. The chairman of the
Safety Committee must be authorised to appoint an investigation committee whenever
there is an accident. Investigations must commence without delay before important
information disappears.

An investigation into an accident can be conducted by a team consisting of:

1. The chairman of the safety committee,

2. The officer responsible for safety at work
3. One or two committee members

The investigation team should be experienced in conducting accident investigations. If no

one in your organisation has adequate experience, organise training for a group of staff so
that they will have the necessary skills when needed. Try to ensure that employees who
have undergone training in accident investigation (and other safety-related skills) pass on
their knowledge and skills to other employees in the organisation.

Many questions should be answered by the investigation. Here are some examples:

1. When did the accident occur?

2. Where did the accident occur? Photographs will be useful.
3. Who was involved in the accident?
4. Did anyone witness the accident?
5. What injuries or damage were sustained?
6. Was first-aid provided to injured workers? If so, by whom?
7. What equipment or machinery was being used at the time of the accident?
8. What was the injured worker doing at the time of the accident?
9. What happened?
10. Was there a requirement for PPE to be worn in the area where the accident
occurred? Was it worn by the workers involved?

The information gathered can be used to identify the causes of the accident which, in turn,
lead to ideas how to prevent such an accident happening in the future. The purpose of an
accident investigation is not to determine who is to blame. It is to look for ways to make the
workplace safer.
The investigators may recommend:

More training for employees

Introduction of PPE or a change of PPE
Stricter implementation of safety rules
Better written procedures and signage for workers to follow
Modification of machinery or equipment
Modification of standard operating procedures

This chapter has only examined topics of a general nature relating to safety which apply in
every workplace. The safety problems and issues of each workplace are different
depending upon the type of industry you are in. You are advised to seek assistance from a
consultant who has experience in your industry and from the Department of Occupational
Safety and Health (DOSH) if you are not sure how to go about reducing the potential
hazards at your workplace.


Health issues are either related to:

Occupational diseases or health problems caused by an employees work or

The general fitness of an employee influenced by his life-style

Employers are concerned with both of these issues, either because of legal requirements or
because of the costs associated with employees lack of fitness and sickness.

Occupational Health

The occupational health problems of an organisation depend upon the nature of its
business. Examples of possible occupational health problems are:

1. Loss of hearing
2. Stress, bullying and violence
3. Pregnancy issues where employees work with chemicals
4. Radiation
5. Back pain and repetitive strain injuries (RSI)

Occupational health and disease problems are more complicated than safety issues because
your employees may not become aware that their work is causing health problems until it is
too late to do anything about them. The effects of accidents are instant; the effects of poor
working conditions may not be seen for years but they are irreversible. For example, hearing
loss is usually permanent although hearing aids can help amplify whatever hearing ability
remains. Workers who are stressed out by poor management, bullying by supervisors or
colleagues or the constant threat of violence at work may decide to resign. Talented
workers may leave and you may never know why. Do not forget to conduct an exit interview
as described in the chapter on INDUCTION. Information from an exit interview may help you
to identify health problems at work.

Stress, bullying and violence will be discussed in the chapter entitled EMPLOYMENT
RELATIONS. Find out which occupational health problems may potentially affect your
workers and get professional advice on how to minimize these risks.

Wellness Programmes

The most common components in a wellness programme are:

Medical checkup

Exercise and weight loss

Stop smoking campaign

Wellness programmes are designed to improve the health of your workers so that they will
take less sick leave, which will reduce the organisations medical costs and will lead to
higher rates of productivity.

Before starting on a wellness programme, you need expert advice from a doctor. If you have
a panel doctor, ask him to assess your staff and to identify their health problems, if any. The
health issues of workers will vary depending whether they are young or old, male or female,
as well as the type of jobs they do.

Wellness Programme Issues


Wellness programmes do not have to be expensive. They do not have to involve setting up
an expensive gym room or buying costly equipment. If you have absolutely no space, inside
or outside your premises, suitable for exercise, can you meet before work at a local park?
Does a neighbouring company have sufficient space? Would they agree to joint exercise
sessions? How about you provide the exercise instructor and they provide the room?

Large companies provide employees with a subsidy so that they can join a fitness centre or
sports club. This option may be too expensive for an SMI. If there is a fitness centre nearby
your premises, ask for a special discount for group membership.

Voluntary or Compulsory?

You can include a clause in employees contracts of employment requiring them to undergo
a medical check-up when ordered to do so. Other components in a wellness programme are
usually voluntary. While you can prohibit smoking within your premises, you certainly
cannot force workers to stop smoking after working hours, after they leave work.
Programmes to assist workers stop smoking, reduce alcohol intake, reduce weight and such
like are offered to workers who are interested.

An incentive or prize may be provided for workers who join a programme and succeed in
reaching its objective.

Sustaining the Programme

One of the most difficult aspects of organizing a wellness programme is sustaining interest
in the wellness activities. In many cases, employees are excited about joining the
programme at first, but after a while they lose interest and drop out.

Think about how to motivate workers to stay with the programmes. Be creative:

Have competitions, both internal and with other companies.

Provide incentives.
Once in a while add new activities.
Get volunteers to join public fun runs, marathons, bicycle races and so on.
Chapter Nine:
In this chapter the key topics will be:

1. Creating a Performance Management System

2. Developing a Performance Appraisal Scheme
3. Rewarding Good Performance
4. Dismissing Employees for Poor Performance

Performance appraisal is possibly one of the most unpopular tasks required of a manager.
Performance appraisals, if they are not perceived as fair by employees cause a lot of
dissatisfaction. Yet, without a performance appraisal system there is no way of determining
who deserves financial or other rewards and who needs help so that they can perform more
efficiently. A performance appraisal system cannot exist unless it is part of a performance
management system. Performance appraisal is one part of a performance management
system. It is not a stand-alone system.

Performance appraisal is so unpopular in some companies that the employer may use
different names for appraisal schemes such as performance review or performance
evaluation. If you look at the Internet, you will find dozens of articles suggesting that
performance appraisal should be abolished. You will also find many thoughtful articles
which outline how an effective performance management system, which includes some
form of performance appraisal, may be introduced. In this chapter, we will examine what is
needed in order to create a performance management system, how to develop a workable
performance appraisal scheme, the importance of rewarding good performance, and how to
go about dismissing employees whose performance is not satisfactory.


A performance management system is made up of the following subsystems:

1. A system to recruit and select suitable employees who are capable and willing to
perform the tasks assigned to them. (See the chapters on RECRUITMENT and
2. A system to train employees so that they have the skills and knowledge to carry out
their tasks. (See the chapter entitled TRAINING);
3. A system to set individual employee targets and to monitor employee performance;
4. A system to appraise employee performance and, if
necessary to take action to improve upon the
employees performance; and
5. A system to reward good performers. The problem is
not in the concept
All of these subsystems must be in place and work efficiently, of performance
failing which employees will not provide output to the best of
appraisal, the
their abilities. Worse still, a performance management system
problem is in the
which is perceived by employees to be unfair or unreasonable
will lead the most talented employees to leave the
Dr Goh Chee Leong
organisation. quoted in Human
Resource Management:
As recruitment, selection and training have been examined in Principles & Practices
other chapters; we will focus on monitoring and appraising (2010) by Maimunah
performance as well as rewarding good performers and Aminuddin
removing poor performers.

Target Setting and Monitoring Performance

Target Setting

Setting targets is a management skill which is beyond the scope of this discussion as we are
focusing on human resource management. Still, a company cannot have a performance
management system, nor a performance appraisal scheme,
without clear targets set for each individual employee. Once
one or more targets have been established, an employees A manager should be
performance can be monitored to see that he is moving in the ambitious and aim high
right direction. when setting targets for
staff. Challenging yet
achievable goals are
Targets must be shared with employees. They cannot be
essential to keep
expected to work towards achieving a target if they do not employees motivated to
know the target exists. Sometimes, targets are set for groups of improve performance and
employees rather than individuals, depending upon the nature maintain high standards.
of the work being done.
The Managers Guide
Monitoring Performance

While an employee carries out his tasks and assignments, he needs to be monitored by his
supervisor or manager. Monitoring performance has two purposes:

1. To ensure the worker is doing the work to which he has been assigned; and
2. To see whether the work is being done correctly or whether mistakes are being

The frequency and methods of monitoring depend upon the level and type of job. Some
workers have a supervisor who does nothing else but observe the workers to see that they
are doing what they are supposed to. Some other employees only see their manager once a
week or so because they are out of the office, making sales. However, their manager may be
monitoring the number of sales calls made and the number of successful sales every day by
examining computerized records entered by the salesperson.

One of the decisions that has to be made for each job in the organisation is how monitoring
will be conducted. The trend is to empower each worker to carry out his tasks without
excessive monitoring once he has undergone basic training and is able to do the job on his
own without help.


One of the key components of an employee performance management system is

performance appraisal. Managers continuously monitor their subordinates performance
and make decisions as to whether the employees performance is satisfactory or not. A
formal performance appraisal system is designed to make sure:

1. A managers decisions concerning the performance of his subordinates are shared

with the employee; and
2. A fair system exists for making decisions concerning promotion and rewards.

In some very large organisations, complex systems of performance appraisal have been
devised, yet these systems are not necessarily any better or fairer than a simple system.

If you are introducing a formal appraisal system for the first time in your organisation, or if
you would like to improve on an existing system, you have to sit with the management team
and answer certain questions together. It is not good practice to draft a scheme and try to
impose it on your managers. If they do not like the scheme, they simply will not implement

Whatever performance appraisal scheme your organisation decides to introduce, keep it

simple. You do not want to confuse either managers or their subordinates. Everyone should
understand the scheme; everyone should understand on what basis they are being
evaluated; everyone should understand that if their performance is not satisfactory, they
will be helped to improve; everyone should understand that good performance will be
rewarded. These are the basic requirements of an effective performance appraisal scheme.

You must be prepared to modify or amend the performance appraisal scheme if necessary.
No scheme is perfect the first time it is introduced. Ideas for improvement may come from
managers as well as workers who are being appraised.

A performance appraisal scheme cannot be introduced until the management team have
1. Do clear objectives or targets exist for each job in the organisation?
2. Who will provide information on employee performance?
3. How often will appraisal be conducted?
4. What appraisal documents will be drafted?
5. Will an appeal system be established?


Performance appraisal systems are used to decide what level of performance an employee
has achieved within a stated time period:

5-No 3-Acceptable 2-Very good 1 -Excellent
performance performance performance performance

If employees performance can be fairly categorized in this way, rewards can be given to
those in categories 1-3, whereas those who achieve only 4 or 5 will be immediately placed
on a scheme to improve their performance, failing which they will be dismissed.

Every manager has to have a clear idea of what is meant by excellent, very good, acceptable,
unsatisfactory and no performance. Every employee also has to understand these
categories. They must be linked to the objectives or targets set for the employee.

In some jobs, it is not very difficult to set targets. Targets are numbers. In jobs where output
can be counted, a target may be exceeded, met or not met by the employee. Target setting
is an important managerial skill. If a target is not realistic or achievable, employees may get
frustrated. If the target is too low, everyone will reach it and no one is stretched to achieve

Managers need to be reminded that just because something can be counted, it does not
mean it should become a target which is used in a performance appraisal system. As an
example, hospital authorities can count the number of patients operated upon by surgeons.
Does this mean that the more surgeries conducted by an individual surgeon, the better his
performance and the more rewards he should receive? Introducing a performance measure
such as this will only encourage the surgeons to operate on as many patients as possible,
even when they do not really need an operation.

Output targets are not the only measures which are used in performance appraisal. Targets
can be used to determine whether an employees behaviour is acceptable. Sometimes
workers achieve targets but cause other problems. For instance, if an employee works very
fast so as to achieve output targets but ignores quality issues, his output may be useless as it
is full of mistakes. Behaviour such as helpfulness or cooperativeness, willingness to assist
the management in a crisis, patience with customers are useful measures which can be
appraised, even though they can be subjective. If traits such as these are measured,
managers must be able to justify their judgement of the employee with examples of what
he did or did not do. This means that managers must keep records of their employees

Input into a Performance Appraisal

Managers have a responsibility to appraise their subordinates. HR can assist by reminding

the managers when the appraisals are due. As this is such an important managerial duty,
any manager who fails to conduct appraisals will himself lose marks on his own appraisal,
even if in other ways he achieves good results. Managers cannot pick and choose the
assignments they want to carry out. They cannot choose to carry out assignments which
increase their popularity and ignore duties which may be unpleasant. Any manager who
refuses to conduct performance appraisals may have to be dealt with under a performance
improvement programme as described in later sections of this chapter.

To be fair to employees, other parties can also give input into performance appraisals of an
individual employee. If the employee is a manager, his or her subordinates should be
requested to fill out an evaluation sheet. This appraisal form should also be simple and not
too long. It must be analysed and the manager concerned given feedback on his
performance. There is software available for this purpose. An employees co-workers are an
excellent source of information on his behaviour. Again, a simple form will get a better and
more accurate response than a complex questionnaire many pages long.
Frequency of Appraisal

It is still common practice to conduct a formal performance appraisal once a year. However,
a twice-yearly appraisal is far better. Although more time is taken by having appraisal two
times a year, the usefulness of the appraisal will increase. If an employees performance is
not satisfactory, it must be dealt with as soon as possible after the manager becomes aware
that there is a problem. Some managers ignore problem employees, hoping the problem
will disappear without any intervention by the manager. This is unlikely. In the meantime,
the costs to the organisation of the employees poor performance increase. Performance
counselling sessions and appropriate assistance to help the employee improve must be
given immediately. When a formal performance appraisal scheme is conducted, the
employees progress or lack of it can be documented and decisions made about his future in
the organisation.


The best performance appraisal forms are as short as possible. The longer the form, the less
likely managers will cooperate in filling it out and the more arguments will take place
between managers and their subordinates.

Most performance appraisal forms use a rating scale which allows employers to give marks
for different items being measured. The marks given for all the items can be totalled so that
employees can be categorized as excellent, very good and so on. Some items can be given
more weightage than others, depending how important they are to success in the
organisation. The rating scale can be 1 to 5 or 1 to 10.

Appeal system

Employees should be permitted to appeal if they are not satisfied with an appraisal
conducted by their superior. Decide to whom they can appeal and what dead-line must be
met for an appeal to be filed.

Criticisms of Performance Appraisal

It is not only managers and employees who are unhappy with performance appraisals. Many
experts have criticized appraisal systems too. There is plenty to suggest that on the one
hand, performance appraisals can bring about benefits for employees and organisations, but
also, if the appraisal system is not carefully designed and implemented, it can do a lot of

Employees whose performance meet managers expectations or exceed their expectations

should be rewarded. Rewards can be either financial or non-financial or both.

Financial Rewards
The most common financial rewards are:

1. Bonus
2. Annual increment and
3. Promotion

A non-contractual bonus (also known as a

discretionary bonus) should be given to
employees when their individual performance is
sufficiently good to deserve a reward and when
the employers financial position is strong. Bonuses are commonly seen as a major
component in an employees compensation package. They may be disappointed and
frustrated if they receive no bonus at all, even though they committed their maximum effort
to the organisation. For this reason, unless the organisation is facing a financial crisis, an
effort should be made to pay some bonus to workers.

Annual increments in wages are typically not fixed. The wage increase awarded to each
employee depends upon his performance and the increase in the cost of living since the last
wage increase. Collecting information on the increase in the cost of living is discussed in the

Promoting an employee to a higher level position or grade is a reward in that higher level
jobs offer higher wages and more benefits. Promotions are given to:

1. Employees who have performed well in the past and

2. Employees who have shown that they are capable of performing well in a higher
level position

Not all workers can be promoted to supervisory or managerial positions of which there are a
limited number in a small company. Therefore it is useful to have grades within job
groupings. A machine operator, for example, can be promoted from Grade One to Grade
Two and up to Grade Three as he improves his skills over time. Similarly, junior executives
can be promoted to executive and then to senior executive. Many workers like to see that
they are progressing in their chosen job or career.
Non-financial Rewards

Non-financial rewards are not necessarily free to the employer. They are frequently offered
to groups of employees when particular targets are met. Popular group rewards include:

Dinner at a

Create a wall
of fame for
teams who
achieve their

Company trip
paid by

The list of possible individual rewards is long. Some are expensive, such as a thank you in
the form of a gold bar; others cost very little, for instance, some vouchers to eat at a local
restaurant or supermarket vouchers.

When choosing rewards that can be extended to workers to motivate them to continue to
perform well, remember the following:

1. A simple thank you, presented both orally and in writing, can serve as a much
appreciated reward
2. Choose rewards that are valued by the employees who are to receive them


Employees who are unable or unwilling to carry out their duties in a satisfactory manner will
eventually have to be dismissed. Before they are dismissed, however, a proper procedure
must be followed, failing which a dismissed employee may make a claim for reinstatement
under the Industrial Relations Act 1967 as described in the chapter entitled TERMINATION
The procedure to be followed when dismissing an employee for poor performance is not the
same as that for misconduct, which was explained in the chapter on DISCIPLINARY

It is essential that all managers are briefed on how to deal with performance problems faced
by their subordinates. Most of the steps in the pre-dismissal procedures will be handled by
them, as they are in the best position to identify when an employee is not performing

In the chapter TERMINATION OF EMPLOYMENT, the position of probationers is discussed.

When probationers are not confirmed at the end of a probationary period, it is usually
because their performance is not satisfactory. Probationers have similar rights to confirmed
staff. All employees, whether probationer or confirmed staff, have the right to be treated
fairly before they are dismissed for poor performance. What actions are necessary before
an employee is dismissed for poor performance? The steps to be taken include:

1. Try to identify the cause of the poor performance and take appropriate steps to help
the employee improve
2. Give written warnings to the employee

Identifying Poor Performance and its Causes

Poor performance may occur when an employee:

1. Makes too many mistakes

2. Works too slowly, thus misses output targets and deadlines
3. Fails to take appropriate action
4. Makes incorrect decisions

In order to identify poor performance when it occurs, managers need to have a clear idea of
what good performance looks like. They need to be able to describe the aspects of the
employees behaviour which is not acceptable. To do this, clear objectives and targets must
have been set for the employee to achieve, as described above. Second, the employee must
know what they are supposed to do, how the work is to be done, and what standard is
expected of them.

Managers need to try to identify what is causing the poor performance. There are many
possibilities including:

1. The employee has not been given adequate training

2. The employee has forgotten some of the knowledge and skills provided to him
during training sessions
3. The employee is not aware that he is supposed to carry out certain actions
4. The employee does not have the right tools or equipment to perform well
5. The employee is having problems with co-workers
6. The employee is not suited to the job to which he has been assigned
7. The employee is not interested in performing well
8. The employee is not focusing on his job requirements because of some personal
9. The employee may be having some physical problems which cause accidents or
mistakes in his work

To find out the cause or causes of poor performance, managers must observe the
employees work and hold discussions with the workers who are having difficulties.

Performance Counselling Sessions

Performance counselling sessions are not easy to conduct. For this reason, some managers
postpone them, giving the excuse that they are too busy. Yet every managers responsibility
is to ensure his departmental or sectional targets are achieved. This will only happen if every
worker in the department achieves their individual targets. Managers have to tackle the
issue of poor performance, even if they are uncomfortable doing it.

Performance counselling sessions are held as part of the performance appraisal process as
described above but managers must not, having identified an employee as a poor
performer, wait until the end of the year for an annual appraisal before holding a
counselling session. By that time, the employees mistakes will have increased and the
employer may be losing a lot of money as a result.

One or more performance counselling sessions must be held as soon as a manager realizes
that a subordinate is under-performing. Each session must have the following

1. It must be non-threatening to the employee. When workers are nervous because

their superior is obviously angry, shouting at them and possibly using foul language,
their stress levels increase and they are less likely, not more likely, to be able to
improve their performance. Many managers routinely use harsh language with their
employees, perhaps in the mistaken belief that such behaviour is acceptable and
normal. Mostly such behaviour worsens the situation; it does not help the employee
focus on improvement.
2. Performance counselling sessions must focus on:
a. Describing to the employee what is wrong with his performance;
b. Listening to the employees explanations, if any, for his poor performance; and
c. Discussing what steps will be taken to help the employee improve.
3. A session should not try to cover too many issues or problems at once if the
employee has many performance weaknesses. The manager should choose the key
problems to solve first.
4. The session should finish with a reminder to the employee that if he is unable to
meet the performance standards required of him, he may be dismissed. This should
be said in a manner calculated to make clear to the employee the seriousness of the
situation but not to frighten him or increase his anxiety.
5. The session should be documented. The manager must keep a record of when and
where the meeting was held, the key discussion points and what has been agreed
relating to helping the employee improve. A copy of this record should be given to
the employee. This counselling session record is not a warning letter. Only if the
employee fails to make any significant improvement will a warning letter be issued.

Before a manager begins a performance counselling session, he may already have an idea of
what is causing an employees poor performance. Still, he should listen with an open mind
and encourage the employee to speak up. This will only happen if he has a good relationship
with the employee which has been built up over time.

Helping Poor Performers to Improve their Performance

Let us look once again at the possible causes of poor performance and what might be the
solution to each of them. Keep in mind that an employees poor performance may be a
result of several causes.

1. The employee has not been given adequate training

Check the training records. Was the employee given any training in the area of his
performance which is causing problems? Did he have previous work experience in this area?
If the employee has never undergone any formal training in a particular skill or knowledge
area, and if had never used the skill in a previous job, it would appear that training may
solve the problem. As described in the chapter entitled TRAINING, a training effort
organised for an employee having performance problems does not have to be a formal,
class-room based programme. Such a programme is not practical for one employee. Instead,
one or more one-on-one coaching sessions may be needed. The manager may be the coach
or he may prefer to delegate the coaching to an experienced subordinate, if such a person is

2. The employee has forgotten some of the knowledge and skills provided to him
during training sessions

It is possible that an employee has undergone training but has forgotten the skills and
knowledge provided during the training programme, usually because it has been a long time
since the programme and the skills were not implemented immediately after the
programme. If this is the situation, some revision and re-training efforts are needed.
3. The employee is not aware that he is supposed to carry out certain actions

Check the employees job description. Does it list down all the duties required of the
employee including those with which he is having problems? Was the employee told that
certain duties are his responsibility? Alternatively, does the employee insist on carrying out
tasks which are not required of him; which may be someone elses responsibility? If this is
the case, a clarification of the employees duties and responsibilities is called for. If there are
deadlines to be met for certain duties, has the employee been clearly told of this fact?

4. The employee does not have the rights tools or equipment to perform well

Many employees blame the lack of tools or equipment or a shortage of resources when they
are accused of poor performance. They may mention poor quality raw materials which lead
to poor output. These possible causes of poor performance should not be rejected without
some checking.

5. The employee is having problems with co-workers

Employees having performance issues will blame everyone else in their department,
including their colleagues and even their manager, for their poor performance. They may be
right or they may simply be offering weak excuses for their performance problems.
Managers have to use their judgement on this matter and investigate any claims made by
the poor performer. The employee may be a victim of bullying or he may have an aggressive
personality which has caused other employees to decide that they cannot work with him.

Bullying at the workplace may not be easily visible to the manager. Victims of bullies often
do not make formal complaints, especially if they are afraid of physical violence by the bully.
Bullying does not have to be physical to have a negative impact on an employees
performance; psychological bullying, including sexual harassment, causes many problems to
the victims including ill-health and eventually their resignation.

It is possible that other employees in a department have conspired to withhold cooperation

from the employee concerned because of his behaviour towards them. A quiet questioning
of other employees should reveal the truth.

6. The employee is not suited to the job to which he has been assigned

If an employee is clearly unsuited to the job to which he has been assigned, there has been
a mistake in the recruitment and selection processes. Still, the fact is that no matter how
careful organisations are during the recruitment and selection processes, sometimes the
wrong people are employed and placed in jobs for which they are not able to perform, even
after training and other forms of assistance.
If there are any other positions available in the organisation to which the employee could be
transferred, this would be a possible solution to an unfortunate situation. If there are no
such vacancies, the employee will have to be dismissed using the procedure described

7. The employee is not interested in performing well

Many managers when asked why an individual employee is not performing well will answer
that the worker is not interested, that he has a bad attitude, or that he is not motivated.
They may be right about the employee but such an assumption needs to be carefully tested.
Most people, in fact, do want to do well in their jobs. If they are truly not interested, they
will resign and look for another job elsewhere.

The solution to the problem of an employee who is not interested in performing to a

reasonable standard is easy. He must be informed clearly that he has to shape up or ship
out. In other words, his performance must improve with immediate effect or he will be
dismissed. A warning of this nature usually leads to a short-term improvement but, after a
while, the effect of the warning wears off and the employee falls back to his unsatisfactory
default performance.

8. The employee is not focusing on his job requirements because of some personal

If an employee has performed well in the past, but is now having difficulty reaching targets;
is making frequent mistakes; is causing stress to co-workers by his behaviour and so on, he
may be facing a personal crisis which he has not shared with anyone at work. Particularly
where the personal problems are serious and potentially embarrassing, employees keep
quiet about their difficulties but are unable to focus on their tasks.

Employees who are going through a health crisis, or who are undergoing a divorce or who
are battling substance abuse issues, for example, not surprisingly, do not perform their
duties well. Managers cannot solve these problems for the employee. The employee has to
solve them himself. The manager can show empathy and can offer help in some cases,
either personally or through assistance provided formally by the employer. The manager
can give a certain amount of time for the employee to sort himself out. In return, the
employee must provide a reasonable level of performance, which perhaps may not be the
best level of which he is capable, but is still satisfactory. The role of HR in helping employees
in these situations is discussed in the chapter entitled EMPLOYMENT RELATIONS.

9. The employee may be having some physical problems which cause accidents or
mistakes in his work
An employee may be having difficulties performing his duties because of physical problems,
which he may not even be aware of. For instance, if an employees eye-sight is weakening
and his job requires strong eye-sight to see faults in raw materials or finished goods, he may
miss blemishes which he is supposed to see. Eye-sight is an example of a physical weakness
which can usually be solved relatively easily. The first step in dealing with an employees
physical problems will be to send him for a thorough medical check-up. Hopefully, the
doctor may be able to identify medical issues which are causing the employees
performance problems.

Psychological problems also belong in this category of possible causes of poor performance.
If the employee is aware that he has psychological problems, a medical solution may be
possible. At the least, if the employee takes appropriate medication he may be able to
provide a reasonable output. Unfortunately, many employees refuse to accept that they
have psychological issues which need diagnosing and managing. In this sad situation, the
employee may have to be dismissed, especially if his behaviour at work has a negative
impact on customers or his co-workers.

Give Written Warnings

Once an employee has been counselled about poor performance and appropriate measures
taken to help him improve, if no substantial progress is made, a formal warning letter must
be issued to the employee.

A warning letter must include:

1. A description of the unsatisfactory performance or behaviour of the employee

2. Reference to performance counselling sessions held
3. Reference to measures taken to help the employee improve
4. A statement that if the employee does not improve by a certain date, he may be

It would be reasonable to give at least three warnings to an employee. If he still does not
improve satisfactorily, he may be dismissed with notice.

The time period between each warning must not be too short; nor too long. The period
given to the employee to improve depends upon the level of the job and the type of
performance problem. At the very least, a period of one month should be given between
the issuing of each warning letter.

A warning letter should be brief and state only proven facts. It should not include any
emotional language. Many managers dislike writing warning letters. They find it an
unpleasant task but it is an important part of their job. Copies of every warning letter must
be sent to the HR officer for filing purposes. Employees should be required to acknowledge
receiving a warning letter.

Some managers in SMEs believe that in a small firm there is no need to issue formal written
warnings; oral warnings to employees are sufficient. They are not. Should an employee
dismissed for poor performance decide to challenge his dismissal at the Industrial Court (see
the chapter on DISCIPLINARY SYSTEMS to explain the method by which an employee can
challenge his dismissal), the Court will want proof that the employee concerned was given
warnings about his poor performance prior to his dismissal. The written warnings, which
have been kept in the employees file, will form the necessary evidence.
Chapter Ten:
In this chapter the key topics will be:

1. The Significance of Effective Employment Relations

2. Communicating with Employees
3. Encouraging Loyalty and Commitment from Employees
4. Creating a Conducive Work Environment for Employees


In the chapter on INDUSTRIAL RELATIONS, we talk about the relationship between
employers and trade unions which represent the workers. The significance of industrial
relations is lessening as the numbers of workers who belong to a trade union steadily
declines. At the same time, the importance of developing a strong relationship with each
and every employee in the organisation is increasing because Malaysia is facing a shortage
of labour which makes it difficult to replace good workers who resign. Employment relations
is a key issue of concern for every employer, especially SMEs who are usually not able to
compete with major employers in relation to wages and benefits provided. Human resource
officers in SMEs have to look for other methods to retain employees and to encourage their
commitment to assist in achieving the organisations objectives.

This chapter brings together many themes and suggestions, some of which may have been
mentioned in other chapters. The ideas and recommendations in this chapter will focus on
the need for constant communications with workers, tactics to encourage loyalty and
commitment from employees and hints how to create a conductive work environment for

Think about how much is invested in every employee. At the least, the company investment

1. The cost of recruitment

2. The cost of selecting suitable employees
3. The cost of training employees

If you can create an effective employment relations climate, you have a better chance of
reducing turnover costs and retaining talented employees. Your organisation is likely to
achieve higher levels of productivity and profitability. Successful employment relations
require on-going effort. It is probably not possible to create a perfect employment relations
system, but it is a worthwhile goal to aim for.

Do not try to introduce the ideas in this chapter all at once. Most employees do not like too
much change. Furthermore, you will need to experiment to see what works in your
organisation and what does not. Discuss with your CEO what changes he would most like to
see taking place in the organisation; then prioritize programmes which will help to make
these changes happen.

Problematic Employee Relations

How do you know when you need to improve the relationship between your employees and
the management? You need to regularly measure certain human resource (HR) related
practices. You also need to compare the results with other organisations. If you benchmark
with similar companies and you find that their results are much better than yours, then
clearly, there is room for improvement. The following should be measured and monitored:

1. Turnover rates
2. Absence rates
3. Employee sickness rates
4. Employees opinions

Employee Turnover Rates

To calculate the employee turnover rate, add up the number of people who left in the
previous 12 months and divide this number by the total number of employees in the
organisation in this period. Multiply the result by 100 so that you can state the turnover rate
as a percentage. For example:

In the last year 5 employees left; if the organisation had 50 employees. The turnover rate
will be 10%.

You can also calculate the turnover rate on a monthly or quarterly basis.

When calculating turnover rates, you must decide which types of employee termination you
will include and which may be omitted. The most important figures to capture are those
relating to resignations of employees, but are you going to include dismissals (including non-
confirmation of probationers), retirements, and retrenchments? You could have two rates:
one for voluntary termination (resignations) and one for non-voluntary termination
(retirement, retrenchment and dismissal).

In the chapter entitled INDUCTION, we discuss the usefulness of holding an exit interview.
When an employee resigns, try to find out why he or she is leaving. A short questionnaire
followed by a quick discussion with the employee is helpful. This exit
interview may be conducted on the employees last day of work or a
few weeks after he has left. If the employee tells you that he is
The Wall Street Journal
leaving for higher pay, inquire how much he is expecting to be paid
provides some advice
on reducing employee in his new job. This information is valuable when you review your
turnover: wages and benefits policy.

Hire the right people Absence Rates

make sure they fit into
Another symptom that there is something wrong with the
the companys culture
companys employment relations is a high absence rate amongst
Provide the right wages employees.
& benefits
To calculate absence rates, work on a monthly basis. Add up the
Review wages & number of working days in the month and multiply this by the
benefits at least number of workers. Determine the number of days of absence.
Divide the number of days that workers were absent by the total
Offer as much flexibility working days for the month and multiply by 100 to give a
as possible percentage.

Provide learning For example, if you have 50 workers who each work 6 days a week.
opportunities Assuming there were no public holidays in the month of April, the
Provide a working total possible workdays will be 25. Fifty x 25= 1250 work days. Total
environment where number of absences in April = 10 days. The absence rate will be 0.8
everyone respects each per cent.
Again, you will have to determine what constitutes an absence. Are
you including absent on annual leave, sick leave, maternity leave
and so on, or only absent without permission?

Dismissal for absence without permission is discussed in the chapter


Employees who are absent without leave should not be ignored. Every time an employee is
absent without leave, including going on leave, having applied for annual leave but not
having received any response from the person authorized to grant leave, is a serious
misconduct for which disciplinary action must be taken. Do not allow the practice of
employees taking leave without first getting permission.

Have a clear policy on annual leave. The policy must include answers to the questions:

1. To whom should an employee apply for leave?

2. How much in advance should an employee apply for leave?
3. What forms must be completed by the applicant?
Do not allow employees to take emergency leave, except in genuine emergencies for which
they are able to show proof.

Employee Sickness Rates

Employee sickness rates can be calculated in the same way as absence rates described
above. If any department has particularly high rate of employees on medical leave on a
regular basis, try to find out why this is happening. Is the high rate of sickness amongst the
departments employees caused by stress? Stress may be a result of the nature of the work
or it may be a symptom of an abusive supervisor. If sickness rates are high, perhaps a
wellness programme is needed as described in the chapter on SAFETY AND HEALTH.

Employees Opinions

One of the most useful indicators of an effective employment relations climate is the level
of satisfaction felt by employees with their jobs. To find out what employees are thinking, a
short survey questionnaire can be prepared. The questions can be completed by employees
using paper and pencil or on-line, although the former may be considered more anonymous.
Include simple yes/no questions or questions which require employees to measure
something on a 1-5 scale. Do not make the questionnaire too long or employees may fail to
answer carefully. Include one or two open questions which ask the employees to give
written opinions on important matters.

The drafting of employee opinion survey questions is not easy. For this task, you may wish
to request assistance from a consultant with experience in survey work, even if you choose
to implement the survey and evaluate the results yourself.

An employee opinion survey is usually conducted once a year, so that you can compare the
results and see if any changes have taken place, especially if new programmes have been
introduced designed to maintain the loyalty of workers.

Do not conduct an employee opinion survey unless your management, especially the chief
executive officer (CEO), is committed to making changes if the workers show strong levels of
dissatisfaction with some aspect of the company.

Topics which are commonly included in an employee opinion survey include satisfaction
with Training Benefits Recognition
managers & provided offered & rewards


In a small company, regular communication with employees is not difficult. Decide which
formal channels of communication suit your company best, and use them frequently. You
may have to persuade your CEO and other senior managers that frequent sharing of
information with employees is helpful to get their support and loyalty. Some managers are
not very keen on sharing information about the business with lower level workers but you
need commitment from these workers. You want them to stay with the firm and help it be
productive and profitable. The most talented workers want to know what is happening. In
fact, when you conduct an employee opinion survey whether or not employees feel they
receive sufficient information about the business is one of the topics that may be included.

Communication within an organisation is important and so is communication between the

members of the organisation and people in the external world of business. To succeed in a
competitive environment, your executives and managers need to be understood by their
workers when they give instructions. At the same time, they need to be able to motivate
and inspire workers when they speak to them on a daily basis. They need to be able to make
clear what the company has to offer when talking to potential customers. They need to be
able to persuade bank managers and various government institutions to provide them with
help and so the list goes on.

As far as possible recruit workers who already have strong communication skills. If job
applicants chosen for employment have technical skills but are weak in communication
abilities, prepare training programmes for these workers. Communications training includes:

1. Language skills (written and oral)

2. Public speaking
3. Report writing
4. Effective meeting organisation

You may have employees who can train others in these areas. If not, you must source an
external trainer. Communications training programmes, especially language skills, will not
be successful if they are one or two-day programmes. Employees can only develop language
skills over a lengthy period of time. Thus, short modules, with plenty of opportunity to
practice between modules, is the ideal schedule. Make sure that if you have an external
trainer that they introduce vocabulary and phrases tailored to your industrys needs.

"We embarked on
COMMITMENT FROM EMPLOYEES consciously building
Virgin into a brand which
stood for quality, value,
Well-planned Learning Strategies fun and a sense of
challenge. We also
developed these ideas in
Employees today value learning opportunities. They the belief that our first
understand the new economy does not guarantee priority should be the
security of employment in the same organisation or people who work for the
companies, then the
even the same industry for long periods of time. customers, then the
Business is changing too rapidly to allow for such shareholders. Because
security. But, employees believe their employers if the staff are motivated
then the customers will
should help them stay employable. be happy, and the
In the chapter on TRAINING, it is recommended that shareholders will then
an employer should develop a suitable training plan benefit through the
company's success."
for all employees at all levels. There is always
something new to learn; even experienced workers Richard Branson of Virgin
and executives need to be exposed to changes in Airways quoted by Andy
technology and processes. As much budget as Parsley
possible needs to be set aside for this purpose.
Training is an investment. Results may not be seen
immediately but training not only helps to improve
productivity but also reduces turnover of staff. Employees who see that they are being given
plenty of opportunity to learn will stay longer. While it is true that some individuals who
have been given training will leave to join an employer who pays a higher salary, on the
whole, if all other aspects of the job, the work environment and the supervision received are
positive, employees will not resign when they have the chance to further improve their skills
and knowledge within the organisation.

Keep in mind that training does not have to take place in a training room or class-room.
Many skills are learnt on the job when an employee is given new responsibilities and
coaching by his supervisor or other experienced worker. Organised visits to other firms can
also create a learning opportunity.

Zero-tolerance for Bullying, Violence or Harassment

Any organisation in which there is widespread bullying, violence or threats of violence and
harassment, including sexual harassment, will find it difficult to retain talented workers. The
best workers, who find it easy to get jobs elsewhere, will quit such a workplace. It is stressful
and unproductive. Sometimes, bullying or harassment from just one employee is enough to
cause high turnover.

A number of steps can be taken to reduce bullying, violence and harassment. These include:

1. Training of supervisors so that they recognise the behavioural symptoms of victims

2. Training of supervisors so that they can offer counselling to victims
3. Strict zero-tolerance policies and rules. Offenders must know that, if caught,
disciplinary action will be taken against them. Victims must be confident that if they
lodge a complaint, action will be taken against the offender and the complaint will
not be ignored.
4. Training of all workers so that they recognise and can
offer help to victims Consequences of
Workplace Sexual
A written policy prohibiting bullying, violence and harassment
should be made known to all employees. It can be included in
A negative & hostile work
the employee handbook (described in INDUCTION).
Physical, psychological &
Sexual harassment can occur in any organisation. The victims
economic stress for the
may be males or females. The harassers may be male or female.
To reduce instances of sexual harassment, read the Code of
Adverse effects on
Practice on Prevention and Eradication of Sexual Harassment at
the Workplace, which can be downloaded from the Department
of Labour website ( The Code provides a
A Guide to the Malaysian Code of
definition of sexual harassment, which has now been included in
Practice on Sexual Harassment
the Employment Act. The Code recommends: at the Workplace by Tengku
Dato Omar & Maimunah
1. A written policy on sexual harassment be prepared and Aminuddin, Leeds Pubs., 2000.
disseminated to all employees. It is suggested in the
chapter on INDUCTION that employees be given an
individual copy of this policy during their first day of
work or very soon after joining the organisation and they
must sign a receipt to state that they have received the policy statement, have read
it, understood it and promise to abide by it.
2. A clear grievance procedure is made known to employees so that they know to
whom they can complain if they are the victims of sexual (or other) harassment.
3. Employees assigned to investigate claims of sexual harassment be given proper
training as sexual harassment is a sensitive matter and skill is needed to conduct an
investigation well.

Employment Assistance Programmes (EAPs)

An employment assistance programme (EAP) is a package of measures introduced to assist

workers who have personal problems. Employees who are worried about personal issues
may not be able to focus on their jobs and this loss of concentration can lead to mistakes
and accidents.

An EAP with a wide range of offerings is usually only available in large organisations but
SMEs can provide some of the normal components of these programmes. Typically, an EAP
is run on an outsourced basis, i.e. the employer contracts with a company which specialises
in provision of the required services. This is necessary (1) because most companies do not
have the in-house expertise needed to provide the services and (2) because it is essential
that employees who use the service perceive that information provided by them will be
kept confidential.

An EAP could include any of the following:

1. Marital counselling
2. Drug counselling and rehabilitation advice or assistance to persons with other
addictions including alcohol
3. Financial counselling and assistance
4. Advice on day care for children or elder-care facilities
5. Outplacement service to employees who are about to be retrenched
6. Legal advice
7. Bereavement counselling

Essentially, when employers pay for these services for employees, they are providing a
valuable benefit to them and at the same time helping to maintain productivity of individual


Employees quit organisations because of poor managers

more often than they leave for more money.

Employ and Train Suitable Managers

To retain talented workers, your organisation has to establish a work environment which
encourages workers to do the very best work they can. At the same time, you want to
develop a culture whereby employees are happy to come to work every day and are not
constantly thinking about leaving. The recruitment and selection of suitable supervisors and
managers is crucial to achieving the right work environment. Inappropriate behaviour by
managers can destroy the work environment within just a few weeks or months. Re-
examine your procedure for hiring managers. When employing a manager, find out:

1. The reasons why he left his previous job. Check whether he was dismissed for poor
performance. Contact his previous employers. Ask them whether they would re-
employ him; if not, why not?
2. Whether he thinks output or results are more important than the people in his
3. Whether he thinks workers are able to contribute ideas for the improvement of the
organisation. Ask him how he will obtain ideas from workers.

Technical skills are useful to a manager but they do not need to be experts in every job
carried out in their department. Many highly skilled technicians do not have the personality
to manage other people. Choose managers who have a good general knowledge of the
business of the department which they will run or who can learn its functions quickly but
who have strong people skills. Managers can usually be taught any technical skills they need
quite easily but teaching them people skills is far harder.

Monitor new managers progress carefully during their probationary period. This probation
period should be at least 6 months duration. Schedule a formal appraisal and a discussion
between the new manager and his superior in the 3rd month and another formal meeting
two to three weeks before the end of the appraisal period. Look carefully at how he or she
communicates with subordinates. If the manager is aggressive and demanding, a high level
of results may be achieved in the short-term but talented workers will leave as soon as
possible. Remember that talented workers are difficult to replace.

Training and upgrading managerial skills should be an on-going process. You do not have to
send your supervisors and managers to expensive, external training programmes. If your
senior managers are good managers, train them to train other managers. Organise a train-
the-trainers course for them so that they can offer short but frequent training sessions for
the more junior managers. As all the participants will have extensive working experience,
make sure the methodology used in these sessions is based on discussions and projects.

Flexible Working Hours

Many SMEs are not in a financial position to offer generous wages and benefits but, because
of the smaller number of employees, some flexibility can be offered which may be of great
interest to workers. Here are some suggestions.

Depending upon the type of business your company is involved in, you may be able to offer
workers a flexible working hours scheme. This could take the form of:

Allowing workers some freedom to choose the time they start and stop work. For
example, they may be required to work a minimum of 8 hours per day but can
choose whether they wish to start work at 7.30am, 8.00am, 8.30am or 9.00am.
Different workers may choose to start at different times depending upon their
personal circumstances and preferences. This type of flexi-working is suitable when
employees work independently and do not need constant supervision.

Where workers are outside the scope of the Employment Act, even more freedom of
working hours is possible. Flexible working hours also includes allowing employees
to take off a half-day if they have some personal issues to settle. This time off can
either be replaced by the worker in the evening or during their off day or it can be
taken as annual leave.

Encouraging Ideas and Input

Employees at all levels have ideas on how to improve the business. Encourage these ideas.
Set up a system so that employees ideas are listened to. A small company does not need a
formal suggestion scheme but there should be rewards for workers who give good ideas
which lead to higher levels of productivity. A senior manager may be appointed to receive
ideas from individual workers or from work teams. If the workers concerned are not able to
put their idea in writing, they should be encouraged to explain the concept to the manager
who will act as secretary. He will also take responsibility for checking out the feasibility of
the idea and, if it is found to be useful to the organisation, he will make sure the workers
who submitted the idea receive a reward.

Provision of Effective Feedback to Employees

In the chapter EMPLOYEE PERFORMANCE MANAGEMENT, we see how important it is for

workers to receive regular feedback from their managers so that they know how well they
are doing. When managers give feedback they praise employees who are doing a good job
and they criticise when the employee makes mistakes. Employees who receive praise for
good work can accept criticism when they do wrong. Feedback allows employees to
improve their performance but it also helps employees feel that they are important
contributors to the success of the organisation. Giving feedback is a skill that all the
companys managers must learn to do well.

Feedback must be:

1. Given in a timely manner, preferably soon after an incident of good or bad

2. Specific. The manager must make clear what the employee has done right or what
he has done wrong.
3. Within the employees control. He should not be advised to do something which he
is clearly not capable of doing.

Creating Team Spirit

Employees are most productive when they work together as a team, help each other when
necessary and have pride in their organisation. An effective way to build this team spirit is to
encourage workers to carry out projects together.

Corporate Citizenship Programmes

Helping the environment and helping members of society who need assistance are excellent
methods of promoting your organisation and, at the same time, developing friendship and
team spirit amongst employees. If funding of projects is a problem, your company may be
able to team up with a larger company or a non-government organisation (NGO) which will
act as sponsor with your employees providing the manpower for the project. Talk to the
management to determine what sort of project they would like to be associated with. They
may prefer a variety of different projects spread over the year, or they may wish to assist an
orphanage or home for the elderly on a regular basis. Examine the skills that can be found
amongst your employees. Do they have skills and knowledge that can be shared with
people, especially children and young persons, who cannot afford to pay for tuition?

Some companies prefer to carry out projects which are good for the environment such as
replanting trees and cleaning up waterfalls and rivers.

Send your employees to the local blood bank collection point so that they can donate blood.

Blood Donation Replanting Mangroves Donating to the Disadvantaged

Eat and Play Together

Nothing improves team spirit better than eating together. Find a budget so that your
employees can eat together on a regular basis, even if you can only afford a nasi lemak
breakfast for everyone once a month. A pot luck lunch where everyone brings some food
from home is also fun, although some organising is helpful otherwise everyone may bring
the same dish. It also allows the good cooks amongst your employees to show off their

A recreation committee should be established to lessen some of the burden of organising

social activities from the HR officer. The committee should consist of volunteers who
represent the various groups of workers in your organisation. It does not matter if some
workers do not join in the activities organised by the committee. No employee should be
forced to participate. Try to ensure the committee organises a variety of activities.
Chapter Eleven:
In this chapter the key topics will be:

1. The Right to Form or Join a Trade Union

2. Activities of Trade Unions
3. Employers Responses to Trade Unions

In the chapter EMPLOYMENT RELATIONS, we discuss how to build an effective relationship

between employers and employees. Industrial relations is a sub-set of employment
relations. Industrial relations is about the relationship between an employer and a trade
union that represents his workers. It is also about the role played by trade unions in
influencing the laws and policies of the government. The rights of various parties, including
employers, trade unions and trade union members are laid down in the relevant laws so
these also need to be examined carefully.

Industrial Relations Laws

Industrial Relations Act 1967 Trade Unions Act 1959

It is not common for workers in SMEs to join a trade union, but as an organisation increases
in size, the possibility grows that workers will want to be represented by a union. In this
chapter we will examine the rights of employees to join a trade union, look at what unions
do and describe the decisions your organisation will have to take once workers are
interested in a union.
Workers have the right to form or join a trade union. If an employer interferes with this
right, he could be charged with an offence. Later in this chapter we will discuss what actions
an employer might take when his workers show an interest in unionizing.

If workers decide to establish a new union to represent their interests, they have to apply to
the Department of Trade Unions to register the union. A minimum number of 7 members is
required for this purpose. If their plan is to unionize employees working in different
companies throughout the country, they will try to set up a national union. If they prefer to
start up a union which will only be open for membership amongst workers in their company,
the union will be described as an in-house union. Either way, the procedures for applying for
registration are the same. Alternatively, the workers could join an existing trade union.

An employer may be faced with any one of 3 possibilities:

1. His workers join one of the existing national unions

2. His workers, probably along with workers in other companies, try to establish a new
national union
3. His workers decide to establish an in-house union

Which of the above three options is chosen is entirely up to the workers. An employer must
not be seen to meddle in this decision of the workers. Many employers believe that it is
easier to work with an in-house union which is more likely to understand the needs of the
company and any problems it may face.

Restrictions on Union Membership

Trade unions can only be registered and become legal organisations if certain conditions are
met. These include:

1. The members of a union must all work in the same trade, occupation or industry.
2. The members of a union must all work in Peninsular Malaysia or Sabah or Sarawak.
Combinations of workers working in these geographical areas are not permitted
even if the workers all work in the same company.
3. The members of a union must all be in either the private sector or all in the public
sector. If your organisation is a small private hospital, for example, your workers
cannot join a union which represents hospital workers in the public sector.
4. For the purpose of collective bargaining (which will be discussed in a later section of
this chapter), members of a union must be from the same level in the organisation,
i.e. all non-executives, or all executives, or all managers.
5. Workers who are employed in confidential positions or security work also can only
join a union whose members are in similar positions. Confidential positions in an
organisation include finance, IT, personal secretaries or assistants to the top
management team i.e. people who have access to confidential information.

Most unions in Malaysia currently consist of employees working in non-executive level jobs.
The biggest unions in the private sector, with thousands of members, are mostly national
unions, i.e. their members are working in different companies in the same industry
throughout Peninsular Malaysia. Some examples of these well-known unions are:

National Union of Bank Employees

National Union of Hotel, Bar and Restaurant Workers
Transport Workers Union Why do Workers Join
Electrical Industry Workers Union Trade Unions?
Metal Industry Workers Union
There are 3 main
National Union of Commercial Workers
reasons which explain
Nearly every major industry has a national union to represent the why workers form and
workers, with the exception of electronics which has regional join trade unions. They
unions in Peninsular Malaysia and the information technology
sector which so far has not been unionized. Nearly half of the
unions in the private sector in Malaysia today are in-house unions
To improve their
which represent the workers in one company only. economic situation
To ensure their
In a few large companies the executives, who may number several
thousands, have formed their own in-house unions. Examples of
rights are
these unions can be found in some banks and in the utility protected
companies such as TM Bhd and Tenaga Nasional Bhd. For social reasons
Malaysian Industrial
Managers have the right to join a trade union, providing all the Relations & Employment
members are also managers. Yet managers do not join trade Law, by Maimunah
unions. Managers are the people who represent the employer. Aminuddin, 7th ed,
They make decisions on behalf of the employer and the McGraw Hill
organisation. They are usually not in danger of being exploited so
it would be extremely odd if managers were to join a trade union.
Highly paid professionals who are not managers may join a union to look after their
interests. For example, Malaysia Airlines pilots belong to an in-house union which speaks
on behalf of the companys pilots.
The Right Not to Join a Trade Union

Employees have the right to join a trade union but also they have the right to choose not to
be a union member. This can cause conflict and arguments amongst workers when they are
trying to set up a union and want as many workers as possible to join or when a national
union is holding a membership drive.

If employees ask HR for advice on their rights, it is OK to provide explanations. However, do

not try to influence workers to join or to withdraw from a union. Do not make any
comments on the advantages or disadvantages of workers being represented by a union. Be
very careful what you say.


Collective Bargaining
One of the major functions of a trade union is to negotiate with each employer where the
union has members over the terms and conditions of employment of the workers. If a union
is in-house, it will only negotiate with the management of the company and no one else,
whereas a national union may have members in dozens of companies and the union will try
to negotiate with each one of these. The process of collective bargaining must follow the
rules laid down in the Industrial Relations Act.

Recognition Process

When a trade union wishes to commence collective bargaining with an employer for the
first time, the union must get recognition from the employer concerned. This is a crucial
process for the trade union whose members may be impatiently waiting for an increase in
wages and other benefits. Once a union has been recognised by the employer it has the
right to represent the workers i.e. to speak on their behalf.

In order to get recognition, the union must submit a form (Borang A) to the relevant
employer. This form can be viewed or downloaded from the website of the Department of
Industrial Relations ( The employer must reply within 21 days.

When an employer receives a claim for recognition, he has 2 options:

1. Grant recognition or
2. Inform the union that its claim is rejected and provide reasons

Which option will be taken by the employer will depend upon the policy of the company
towards trade unions as discussed later in this chapter. If the employer decides to reject the
claim for recognition (or does not give any reply), the union may report the matter to the
Director General of Industrial Relations (DGIR).

The DGIR will examine a number of factors before advising the Minister of Human
Resources whether to order the recognition of the union. These factors include:

1. Whether the union is the right union for the workers in your company, i.e. does
the union represent workers in the same
trade, occupation or industry as your workers.
This is called determining the competency of
Recognition of a
the union to represent your workers. If the
union requesting recognition is an in-house Trade Union
union, this issue will not arise. The DGIR may During the recognition
order you to provide information about the process, the relationship
nature of your business and copies of the job between management and
descriptions of the workers for whom the the workers who support
union is requesting recognition. the union can become very
2. Whether the union represents a majority of strained and emotional.
your workers who are eligible to join the
union. For this purpose, an officer of the
Department of Industrial Relations will
conduct a secret ballot amongst your workers. The officer will discuss with you when
would be a suitable date and time for the ballot, and where it will be held. A
majority is defined as 50% plus one of the eligible workers.

During the recognition process, which may take some months, employees cannot be
dismissed except for misconduct. Employees also are forbidden from some activities
including picketing or going on strike.

Once the Director General of Industrial Relations has completed the process of determining
whether the union which has claimed recognition is competent to represent the workers
concerned, and has conducted a secret ballot, the matter will be reported to the Minister of
Human Resources who will inform the employer and the union of his decision. If the
Minister orders recognition, the employer need take no further action but await the next
move by the trade union.

The Department of Industrial Relations has an easy to read handout on the recognition
process which can be viewed on its website. The title is Pengendalian Tuntutan
Pengiktirafan Kesatuan Sekerja.

Collective Bargaining Process

A trade union that has been recognised by an employer has the right to invite the employer
to commence collective bargaining. The invitation will come in the form of a letter from the
union accompanied by a proposed collective agreement.

The employer who receives this invitation is required to reply within 14 days. The employer

1. Agree to commence bargaining and suggest a date for the first negotiating session,
2. Reject the invitation to commence bargaining.

Once a trade union has been granted recognition, delaying the collective bargaining process
is not recommended as it will only make the workers in the company very frustrated. They
will have hopes of higher wages and benefits, especially if the company is profitable and the
economy is stable.

Before the company sits with the union leaders to negotiate the terms and conditions to be
included in the collective agreement, a negotiating team will be appointed which typically
consists of the person responsible for human resource management and industrial relations,
the finance manager, and one or two heads of department. They will hold some pre-
bargaining meetings to work out strategy and to decide how much the company is able to
increase the workers wages and benefits. The amount of increase the company is willing to
agree to is known as a mandate. To decide on the teams mandate, research needs to be
done into the state of the economy in the next 3 years. If the economic future looks to be
unstable, the company may decide that it cannot afford any increase at all in wages or
benefits. At the same time, the company has to maintain wages which are equal to the
norms in the market. Further research may be needed for this purpose.

Appoint financial
Get Decide on
bargaining position &
mandate tactics
team market

The negotiating team and the union will sit together and use various strategies and tactics
to achieve what each side wants i.e. typically, the management team wants to minimize any
increase in wages or benefits and the union wants to increase wages and benefits to keep its
members satisfied.

If the two sides are able to reach an agreement, it will be put in writing. This collective
agreement must be submitted to the Industrial Court which verifies that it confirms with the
law, after which it becomes an enforceable contract.

Collective Agreements

A collective agreement (CA) is a written agreement negotiated between a trade union and
an employer covering the terms and conditions of employment in the company concerned
for those who are eligible to join the union. All workers who are eligible to join the union are
within the scope of a collective agreement, not only the union members.

The law requires that the minimum duration of a collective agreement be 3 years. This
means that once a CA has been approved by the Industrial Court, the terms and conditions
of the employees involved have been set for that time period and during that time can only
be changed with the agreement of both parties, the employer and the union.

Although collective agreements are mainly concerned with the terms and conditions of
employees, other materials may also be included such as procedures for handling
grievances, discipline, promotion and transfer of workers.

Collective agreements from a wide variety of industries and employers can be read on the
website of the Industrial Court, Look at the Home Page under Collective
Agreements and choose the industry or sector you would like to look at. Taking some time
to examine other companys collective agreements is worthwhile even if your workers do
not belong to a union. You can see the going rate for wages in various jobs and what
benefits are provided to workers in the different sectors. This is helpful when you are
deciding what to pay workers and what benefits to provide under the workers contract of
employment as was described in the chapter on WAGES AND BENEFITS.

Failure to Reach Agreement

If, after a number of negotiating sessions, the management team and the union are unable
to reach an agreement, they may decide to stop negotiating and declare that a trade
dispute exists. Either side may report this dispute to the Department of Industrial Relations
which will help the parties look for an acceptable compromise. If this effort fails, the dispute
will be referred to the Industrial Court. This Court has the power to decide on those terms
and conditions which the parties were unable to agree to during collective bargaining.

Once a trade dispute has been referred to the Industrial Court by the Minister of Human
Resources, a picket or strike is not permitted. Both the employer and the workers must wait
for the outcome of the court hearing. (More information about the Industrial Court can be
found in the chapter entitled TERMINATION OF EMPLOYMENT)

Representing Employees with Grievances

Trade unions not only bargain with employers to get better terms and conditions of
employment for workers, they also assist and speak on behalf of any worker who has a
problem at work. For example, when an employer decides to take disciplinary action against
a worker, the union will help him, including acting as lawyer for the defence during a
domestic inquiry. (See the chapter on TERMINATION OF EMPLOYMENT for a discussion on
this topic)

Industrial Action
Employees who belong to a trade union have some rights, limited by law, to take industrial
action to try and force an employer to give in to their demands. Commonly, trade union
members take action against an employer when they believe that the employer is not taking
their demands for increases in wages and benefits seriously enough. If they think the
employer is purposely delaying negotiations, for example, they may decide to stop
negotiating and start picketing. It is unlikely they will strike as it is extremely difficult for
employees to strike in Malaysia as will be explained in the next sections.
Workers Picketing


Workers in Malaysia who belong to a trade union may decide to picket in order to draw
attention to a dispute that they are having with their employer. A picket is legal providing
certain conditions are met including the following:

1. The workers who participate in the picket must be members of a registered trade
2. The workers who picket must have declared a trade dispute with their employer
3. The workers dispute must not have been referred to the Industrial Court
4. The picket must be held at or near the workers workplace
5. The picket must not block the entrance or the exit to the workplace
6. The picket must be peaceful

During a picket workers will stand outside the companys premises holding notices and
banners. They may be noisy, shouting slogans and trying to get support from passers-by,
especially cars driving by. They will ask car drivers to honk their horns to show their support
to the workers.

Because it is almost impossible to strike in Malaysia, when workers decide to picket they are
still working normally. This means that they will hold their picket outside working hours,
perhaps before work, during lunch break or after work.

If your workers are holding a picket outside your premises but not complying with the law,
for example if people who are not your employees and neither are they trade union officers
are joining the picketers or, if the workers are becoming unruly, and it seems fighting may
take place, you should contact the police and ask for their presence.

The potential consequences of a strike are far more serious than a picket. For this reason
the Industrial Relations Act and the Trade Unions Act lay down very strict rules on
procedures to be followed before workers can go on strike.

Only workers who have a trade dispute with their employer can strike. To comply with the
law, trade union members who want to strike have to:

1. Hold a secret ballot of the members who are involved in a dispute with their
employer. A two-thirds majority must approve the strike action or it will not be valid
2. The ballot papers have to be sent to the Department of Trade Unions no later than
14 days after the ballot has been taken.
3. Wait at least 7 days after submitting the ballot paper to the Department of Trade
Unions before commencing the strike.

Trade Dispute

Not all disputes between a trade union and an employer are considered trade disputes. A
trade dispute is a dispute over terms and conditions of service. Neither a picket nor a strike
is permitted over any issue which is not a trade dispute.

The law prohibits strikes in the following situations:

1. Over the issue of whether a union should be granted recognition

2. Over a collective agreement which has been endorsed by the Industrial Court
3. Over any issue defined in the law as a management prerogative which includes the
choice of who to employ, transfer and promotion of workers and dismissal of any
4. Once a dispute between a union and an employer has been referred to the Industrial
Court for arbitration

Penalties for Illegal Strikes

It is an offence for any employee to participate in an illegal strike. If a trade union organises
an illegal strike, it may be de-registered. The Department of Trade Unions can order the
union to strike off the membership of any workers who participate in the strike.
If your workers organize and participate in an illegal strike, they have committed a serious
misconduct. After following the proper procedures, you may terminate their service. These
procedures are described in the chapter TERMINATION OF EMPLOYMENT.

Other Forms of Industrial Action

When workers become frustrated with the management of their company they may work
together to take various actions with the aim of persuading the company to give in to their
demands. If the workers belong to a trade union, these actions may be carried out at a time
when they are also picketing.

Joint action by workers can take many forms only limited by their creativity. Common
examples of this informal industrial action include:

1. Mass visits to the doctor which reduces output as

many workers manage to get an MC
2. Constant visits throughout the working day to the
toilets on the grounds the workers do not feel well
MEMBERSHIP 3. Wearing protest clothing: badges, caps or arm bands
WORLDWIDE IS which may have a message written on them
If the employer has proof that the visits to the doctor were
Even in countries organised by the workers, disciplinary action can be taken
like Sweden in against those involved on the grounds that they have
which nearly every organised an illegal strike. Under Malaysian law, a strike does
not have to be a complete stoppage of work. Any attempt to
worker used to
reduce output or slow down the rate of output is considered a
belong to a union,
membership is
down, especially Wearing protest clothing, providing output is not affected, is
amongst Generation not misconduct except where the employer requires
employees to wear a uniform and the company rules make it
clear that failure to wear the uniform correctly is misconduct.

Chief executive officers and senior managers may become
extremely angry when workers organize industrial action.
Their immediate response may be to order the dismissal of all the workers concerned. This
is not the best solution as:

1. It may lead to a shortage of trained workers which will affect output

2. It may sour even further the relationship between managers and workers

A compromise solution needs to be found. Assistance can be sought from the Department
of Industrial Relations in the Ministry of Human Resources.

Representing the Nations Workers

Trade unions main function is to speak on behalf of their members and try to get better
terms and conditions of employment for the workers in an organisation. Each union gives
priority to the needs of its own members. However, many unions belong to the Malaysian
Trades Union Congress (MTUC). This body carries out a number of functions including:

1. Research into employment related matters

2. Training union leaders
3. Representing workers throughout the nation, including those who do not belong to a
trade union

It is the third function listed above that often brings the MTUC into the news. The MTUC is
not a trade union (it is registered under the Societies Act) and therefore cannot conduct
collective bargaining, picket or organise a strike. Only the individual unions which are
members of the MTUC have the legal right to conduct these activities.


You should discuss with your organisational management team and decide on a policy on
trade unions.

The policy options include:

1. Try to discourage workers from joining a trade union but respect their right to do so,
if that is what they want
2. Take steps to actively prevent the workers from forming a union or joining a union
3. Try to actively work with the union which represents the workers in your company

Whatever decisions your management make, remember that you are discussing your
organisations workers. If you take action to frustrate their attempts to form or join a union,
their productivity will be affected. Higher rates of turnover may be the outcome of actions
taken by the company to stop unionization. There may even be instances of sabotage by
angry workers.
Long-Term Strategies to Reduce the Likelihood of Unionization
If your company would prefer that workers did not join a trade union, a number of long-
term strategies must be put in place to achieve this objective. There is no guarantee that
they will be effective. Sometimes, workers are quite content without a union until a new
recruit is hired who has extensive union experience and believes strongly that all workers
should belong to a union. He or she may be able to persuade his co-workers to join a union
as insurance against future changes in the company, especially a change in the top
management team.

Read the chapter entitled EMPLOYMENT RELATIONS. All the suggestions in that chapter are
relevant to reducing the likelihood that workers will join a union. These include:

1. Introducing a variety of channels of communication between employees and the

management. It is not possible to have too much internal communication.
2. Holding regular dialogue sessions with workers.
3. Insisting that managers have regular meetings with their subordinates at which
these employees are encouraged to express their views on a variety of issues.
4. Setting up formal schemes for encouraging employees to give ideas on how to
improve productivity.
5. Looking for ways to make the workplace less stressful.
6. Training managers so that they are able to prevent and reduce harassment and
bullying amongst workers.

Other steps which need to be taken on a continuous basis are:

1. Upgrading the wages and benefits package as far as possible (see the chapter
2. Ensuring an effective performance management system is in place (see the chapter

Managing with a Trade Union

If your organisations workers have joined a trade union, you and your management team
have to learn how to work with the union rather than constantly fight the union leaders.
Conflict may occur, but it can be managed. The same strategies and tactics mentioned
above should continue to be the focus of your human resource management efforts.

As well as these strategies and tactics, you should:

1. Schedule regular meetings to discuss any problems or issues with the union leaders.
Do not wait until a serious problem arises.
2. Involve trade union leaders in as many decision-making committees as possible.
3. Organize joint supervisor-trade union leader training programmes.
4. Ensure that your knowledge of the rights of trade unions and the rights of
management is up-to-date.
Chapter Twelve:
In this chapter the key topics will be:

1. Employees Rights to Challenge a Dismissal

2. Procedures for Punishing an Employee
3. Common Examples of Misconduct

An employer needs to be firm and fair in taking disciplinary action against employees. No
matter how carefully you select employees, one or two will cause you disciplinary problems
or performance problems. The chapter entitled EMPLOYEE PERFORMANCE MANAGEMENT
explains the steps to be taken if you need to dismiss an employee for poor performance.

If you ignore wrongdoing by employees, they may keep repeating their misconduct which
could cause major financial losses to your organisation. Ignoring misconduct does not make
it stop. In fact, when other employees see that no action is taken against an employee who
is exploiting the employer, they will follow suit.

At the same time, employees rights are protected by the law. When you take disciplinary
action against an employee, if you fail to respect his rights because you do not follow
accepted procedures, he may file a claim against the company which may be ordered to pay
him compensation. This chapter will explain the procedures to be used when punishing
employees for misconduct. We will also examine common examples of misconduct. But we
will begin by explaining what may happen if your organisation dismisses an employee for


In the chapter THE LEGAL ENVIRONMENT OF EMPLOYMENT it was explained that an
organisations employees can be divided into two groups: those within the scope of the
Employment Act and those who are not within the scope of this Act. Let us examine the
rights of the employees covered by the Employment Act first.
The Employment Act and Dismissal of an Employee
If an employee within the scope of the Employment Act is punished by demotion,
suspension without pay or by being dismissed, he or she can file a complaint at the
Department of Labour if the worker believes the punishment was undeserved.

All employees within the scope of the Employment Act are also covered by the Industrial
Relations Act. This Act provides a means for employees to challenge a dismissal as well, as
will be described in the next section. An employee cannot make a claim under both laws.
They must choose whether to file a claim at the Labour Department under the Employment
Act or at the Industrial Relations Department under the Industrial Relations Act.

If the employee chooses to file a claim at the Labour Department, the employer will be
called by the Department so that they can determine whether or not the employer accepts
that the punishment was wrong. If the employer insists the punishment of the employee
was deserved, a formal hearing will be heard with both parties giving evidence. At the end
of the hearing the Labour Officer in charge will make a decision.

The Labour Officer may decide, after hearing the evidence, that the
punishment was not deserved.

1. If the employee had been demoted, the employer will be

Termination Benefits:
ordered to restore the employee to his previous position.
2. If the employee had been suspended without pay, the If employee has less than 2
employer will be ordered to pay the employee the wages years service: 10 days
wages for each year of
which had been withheld.
3. If the employee had been dismissed, the employer will be
ordered to pay: If employee has more than 2
a. Termination benefits based on the employees but less than 5 years
service: 15 days wages for
length of service, and
each year of service
b. Wages in lieu of notice and
c. Wages in lieu of annual leave not taken If employee has more than 5
years of service: 20 days
If any of your companys employees file a complaint at the Labour wages for each year of
Department, do not victimize them in any way. It is their right to file service
a complaint. If they are treated harshly after making a complaint,
you may end up with more legal suits against the company.

Many employees, especially those who have been dismissed, make

claims against their employer at the Labour Department. Foreign
workers have the same rights as local employees and they also file claims at the Labour
Department. The matter is usually settled within 2-3 months and from the employees point
of view, it is an easy process.
The Industrial Relations Act and Dismissal of Employees
All employees in private sector organisations are within the scope of the Industrial Relations
Act no matter what they earn. If they have been dismissed, for any reason, they have the
right to file a claim for reinstatement. This claim must be filed within 60 days of their
dismissal at the nearest Department of Industrial Relations.

Once an employee files a claim for reinstatement under the Industrial Relations Act (Section
20), the process will be as follows:

Employee Conciliation Arbitration
refers claim
files claim conducted at Court
to Court

Process of Claiming Reinstatement

1. Employee files a claim by filling out a form provided by the Department of Industrial
2. The employee and the ex-employer are called to a conciliation meeting.
3. During conciliation, an Industrial Relations Department officer will assist the parties
to settle the dispute.
4. If the dispute is not settled, the Minister of Human Resources will decide whether or
not to refer the matter to the Industrial Court.
5. If the Minister refers the dispute to the Industrial Court, the Court will arbitrate.
6. The Court will decide whether the employees dismissal was with or without just
cause or excuse.


If one of your employees claims reinstatement under the Industrial Relations Act, you will
receive a letter from the Industrial Relations Department requiring a company
representative to attend a conciliation session. Make sure you attend. If the date or time is
unsuitable, contact the Department and suggest an alternative date. If you fail to attend,
the dispute will most likely be referred to Court.

Prepare before you attend the conciliation session. Here are some guidelines on

1. Collect the necessary documentation including the employees letter of

appointment, letter of dismissal, any previous warning letters, letters relating to the
domestic inquiry process (this will be explained in a later section), and proof of
employees last drawn wages.
2. Discuss with your chief executive officer how he wants you to respond during the
conciliation process. Your options are:
a. To offer reinstatement, or
b. To offer some compensation for the loss of the employees employment. The
amount is negotiable with the employee, or
c. To refuse to reinstate or refuse to pay a sum of compensation which is
acceptable to the employee.

The Industrial Relations officer conducting the conciliation session is neutral. He or she is
not supposed to decide whether the dismissal was fair and proper or not. But, the officer
will advise you whether you have followed the requirements of the law and have a strong
case or not. You can request a discussion in private with the officer if you wish. Lawyers are
not permitted to represent parties at conciliation sessions. You may wish to discuss your
options with a lawyer or consultant.

If you agree to offer reinstatement to the dismissed employee, a date will be set for him to
report back for duty and you will have to pay him wages for the period between his
dismissal and his reporting back for duty. Many employers prefer to pay compensation to
the employee so that the case will be settled immediately and not drag on. If the
organisation does not settle with the employee and the case is referred to the Industrial
Court, you can expect to wait at least 2 years before the case is heard and the delay could
be as long as 4-6 years.

Arbitration at the Industrial Court

When an employees claim for reinstatement is not settled at conciliation, the dispute will
be reported to the Minister of Human Resources who will decide whether it should be
referred to the Industrial Court for arbitration. You will receive a letter from the office of the
Minister telling you whether or not the dispute has been referred to the Court. Your
company can still settle the dispute with the employee. If you are able to negotiate a
settlement, the employee will write to the Court withdrawing his claim.

The Industrial Court is a special court which only hears employment related disputes. In the
chapter entitled INDUSTRIAL RELATIONS the role of the Court in settling disputes between
trade unions and employers was mentioned. The reason the Court was established in the
early 1970s was to ensure a speedy settlement of trade union-employer disputes. However,
it spends far more time today on arbitrating dismissal cases; each year more than a
thousand cases are heard and decided by the Court.
If your employees claim for reinstatement reaches the Industrial Court, you will need the
services of a lawyer unless your company belongs to the Malaysian Employers Federation.
This organisation represents its members at the Industrial Court. Your chief executive
officer, or a director of the company could represent the firm at Court, but not many people
have the necessary knowledge or skills for this task, unless they have legal training.

If the Industrial Court finds that your organisation has dismissed the worker concerned
without just cause or excuse, the Court will either order you to reinstate the worker or to
pay compensation to him or her.


The usual formula for calculating compensation for loss of
employment is:

One months wages for every year of service


Backwages from date of dismissal until date of Court decision but

with a maximum of 24 months


It is clear that dismissing a worker without having a good reason and without following fair
procedures can lead to expensive consequences. If the employee challenges his dismissal,
the consequences include:

1. Time loss preparing for and attending conciliation and arbitration

2. Cost of legal fees and compensation to the dismissed employee
3. Possible negative publicity as Industrial Court hearings are open to the public
4. Negative impact on the HR officers reputation as he or she may have failed to warn
the employer about the problems associated with improperly conducted dismissals

At the same time, take note that if you ignore employee misconduct, there will also be costs
to the organisation. Hardworking and honest employees will become frustrated if they are
aware of colleagues committing misconduct without anyone in the company taking any
action against these employees. Further, when employees commit misconduct and no
action is taken against them, they may become bold enough to carry out more acts of
So, what are your choices? When you become aware that misconduct may have been
committed, take action; take the right action and do so immediately. Do not delay. When
taking action for misconduct, there are two possible scenarios: minor misconduct and major
misconduct. The procedures to be followed are not the same, so we will discuss them

Minor Misconduct
Minor misconduct consists of wrongdoing by an employee; behaviour which is wrong but
not so serious as to deserve a heavy punishment. Not every misconduct committed by an
employee deserves dismissal. The courts expect employers to be reasonable. They like to
say that workers are not angels. They may do wrong but if they are punished, they may
improve upon their behaviour and not repeat their misconduct.

If an employee commits a minor misconduct for which he has been punished and later on
he repeats the same misconduct, his unacceptable behaviour becomes more serious and he
may deserve a heavier penalty. If he keeps on repeating the misconduct, dismissal may be
the only solution because he obviously has not learned his lesson.

Deciding whether an Act of Misconduct is Minor or Major

Whether a single act of misconduct is considered minor or major depends upon the type of
job the employee holds and the nature of the industry. You should hold a session with your
senior managers, examine the rules of the company and decide whether each example of
misconduct is minor or major. It is not possible to provide a
list of minor acts of misconduct which apply throughout all APPROACH TO REDUCING
industries and jobs. MISCONDUCT
One of the key steps in reducing
Here are some suggestions on behaviour which may be misconduct is to have clear
considered minor misconduct: policies on disciplinary action.
These policies must be:
1. Smoking in the premises where there is a no-
Communicated to all
smoking rule usually minor misconduct unless the
smoking occurs in a place where there is a high level
Current and relevant
of danger which could result from a lit cigarette
(such as near inflammable materials). Consistently upheld
Termination of Employment by
2. Absence for one or two days without permission
Maimunah Aminuddin, 2010 CLJ
whereas absence for 3 days or more without leave Publication
may be considered major misconduct
3. Arriving at work late or leaving early
4. Being absent from the employees workstation during working hours
5. Use of rude language to co-workers
Taking Action against Acts of Minor Misconduct

In cases of employees committing minor misconduct, supervisors should be authorized to

take action against the employee. They must be trained in this task so that they know what
to do and how to do it. They must know what punishments can be imposed.

Oral Warning

The usual punishment for minor misconduct is a warning. The first time an employee
commits an act of minor misconduct, he should be given an oral warning. This means that
his supervisor must:

1. Ask him whether he has any explanation for his behaviour,

2. Remind him that the behaviour is not acceptable, and
3. Warn him not to repeat the misconduct, or any other type of misconduct.

This warning, although it is an oral warning, must be recorded by the supervisor. If he does
not keep a record, he will not remember whether he has issued any previous warnings. The
supervisor must keep a written note, which is dated, stating the type of misconduct and any
comments or explanations given to him by the employee.

Written Warnings

If an employee repeats an act of misconduct for which he has been given an oral warning, a
written warning must be issued. A written warning can be in the form of a standard letter to
the employee. The warning letter should be signed by the employees immediate superior,
with a copy to the HR officer so that a copy can be placed in the employees personal file.

The contents of a warning letter are:

1. A statement describing the misconduct committed by the employee,

2. The time, date and place when the misconduct was committed,
3. Reference to any policy or rule of the company which has been broken,
4. Reference to any previous warning given (both oral or written),
5. A reminder that the rules of the organisation were given to the employee and he had
agreed to comply with them,
6. A statement that if the employee repeats the act of misconduct or any other act of
misconduct he may be dismissed.

Before a written warning is issued, it is essential that the manager check the facts to ensure
that the employee is guilty of the misconduct.

It is considered fair practice for an employer to issue up to three written warnings before a
heavier penalty is considered. When the warning letter is issued, the employee concerned
must sign a copy to prove that he has received the letter. If he refuses to sign acceptance
(which is an act of insubordination), his supervisor should read the letter to him in the
presence of another manager who signs the letter as a witness that it had been read to the

Major Misconduct
If an employee is suspected of committing a major act of misconduct, or if he has been
given a final warning for having committed a minor act of misconduct several times, a
different procedure to that outlined above is needed.

The procedure to follow when an employee is alleged to have committed major misconduct
is as follows.

2. Prepare 3. Hold
4. Follow-up
1. Investigate for Domestic Domestic
Inquiry Inquiry

Each of the 4 steps in the procedure will be described briefly in this section.


Before any penalty is imposed on an employee for an act of major misconduct, the first
requirement is that a thorough investigation be conducted. Who is best qualified to
investigate depends upon the nature of the complaint against the employee. For example,
any misconduct which involves organisational money should be investigated by an audit
officer if you have one. Stealing or fighting might be investigated by a security officer;
absence is usually investigated by HR and so on.

The investigation must answer the following questions:

1. What misconduct was committed?

2. What rules or policies were broken?
3. Who was involved?
4. When and where did the misconduct occur?
5. What evidence is there that the misconduct occurred? Are there witnesses,
photographs, or documents which prove the guilt of the accused employee?

Above all else, there must be sufficient proof that the employee is guilty of misconduct. If he
is accused by one person, whereas he denies the charges and there is no other independent
evidence available to prove his guilt, the case against him cannot proceed.

Show Cause Letter

It is a sensible practice to issue a show cause letter to the accused employee either at the
beginning of the investigation or after the preliminary investigation is complete. A show
cause letter lists out the accusations against the employee and orders him to explain them
by a deadline, usually 3-5 days.


During an investigation into an alleged misconduct, an employer has the right to suspend an
employee. The rights of the employee depend on whether he is within the scope of the
Employment Act or not, as described in the chapter entitled THE LEGAL ENVIRONMENT OF

Employees who are within the scope of the Employment Act can be suspended on half-pay
for up to two weeks while they are being investigated for suspected misconduct. If for any
reason the investigation takes longer than 2 weeks, the employees suspension can be
extended but he must be paid full wages. If it is decided that there is insufficient proof that
the employee is guilty, or if he is found not guilty by a domestic inquiry panel, the half-
wages which had been withheld must be restored to him.

If an employee accused of misconduct is not protected under the Employment Act, he can
still be suspended during an investigation, but he must be paid full wages during this period.

Prepare for Domestic Inquiry

If an investigation reveals evidence which suggests that the accused employee is guilty, a
domestic inquiry (DI) must be held. Preparation needed for a domestic inquiry includes the
Appoint a Prosecutor
Preparation for a Appoint a DI Panel
Domestic Inquiry

Prepare the DI Room

Preparation for a Appoint a Secretary
Domestic Inquiry

Issue Notice of Inquiry & Charges to

Preparation for a Employee
Domestic Inquiry

A domestic inquiry (DI) is an internal trial to determine whether the employee accused of
misconduct is guilty or not. The employer must appoint a prosecutor from amongst the
senior executives. The prosecutor represents the company. His role is to prove to the DI
members that the accused employee is guilty.

A DI panel, consisting of 3 people, including a chairman, are required to listen to the

evidence presented by the Prosecutor and any defence offered by the accused employee
and decide whether the accused is guilty or not guilty of the charges against him. The panel
should consist of senior executives or managers.

A suitable room should be booked for the DI.

A secretary must be appointed. The secretary is required to record the DI proceedings

verbatim, i.e. write down everything said during the DI, which is conducted in question and
answer format.

A notice must be issued to the employee informing him when and where the inquiry is to be
held. Together with the notice, the charges against the employee will be included. Each
charge must include a precise description of the alleged misconduct, and when (time and
date) and where the misconduct took place. Vague statements must be avoided.

Hold a Domestic Inquiry

A domestic inquiry does not have to be complicated or over-formal. However, if a senior

manager is accused of misconduct, it may be sensible to take advice from a consultant or
from a lawyer. If the HR staff have never attended a domestic inquiry, they should attend a
training programme on this topic. Many such programmes are offered by training providers.
The order of proceedings in a domestic inquiry is as follows:

1. The Chairman of the inquiry panel, who is responsible to ensure the smooth
implementation of the DI, checks who is present and makes any introductions if
necessary. He explains the purpose of the DI to the accused employee and outlines
any rules on how the DI will be conducted.
2. The prosecutor (or the Chairman of the inquiry panel) reads out the charges to the
employee and asks whether he wishes to
plead guilty or not guilty.
3. If the employee pleads not guilty, the MORE GUIDELINES ON
Prosecutor, who represents the employer, DOMESTIC INQUIRIES
begins the case by calling his first witness.
No party should
Questions are asked of the witness who must
make a speech
during the DI,
4. When the Prosecutor has completed his
except during the
questioning of the first witness, the accused
final summaries
employee is allowed to cross-examine the
Make sure a
witness, i.e. ask him questions.
verbatim record
5. The Prosecutor may wish to re-examine, or
is made. Do not
ask more questions of the witness to clarify
rely on a tape-
any matters. After which, the next witness
will be called.
Allow the
6. The process of calling witnesses who are
accused to read
examined, cross-examined and re-examined
any documents
continues until the Prosecutor has no more
presented as
evidence against
7. Once the Prosecutor has completed his calling
of witnesses, the accused employee may call
his witnesses, if any, and the same processes
are repeated in reverse.
8. Once the employee has finished with his witnesses, both prosecutor and employee
may make a final summary of the evidence.
9. After the final submissions, the panel of inquiry will sit together to make a decision
as to whether the employee is guilty or not guilty of the charges against him. They
will write up their decision into a report and submit the report to the manager who
appointed them.

Here are some guidelines on common issues related to conducting a DI.

HR staff must not be appointed as DI panel members. They may act as prosecutor or
The DI panel members must, as far as possible, be people who are neutral and not
directly involved in the case in any way.
If the employee fails to attend the DI, postpone it and try to find out why he was
absent. Set a new date for the DI after informing the employee accordingly. If he still
does not attend, hold the inquiry without him.
A DI panel should not be briefed in advance or given any information concerning the
The employee has no right to representation by a lawyer during a DI. Do not allow
this. If he belongs to a trade union, he has the right to be represented by a union
If any party, including the accused employee becomes very emotional during the DI,
a break is adviseable.
The DI panel must not ask questions of the accused employee. Their role is to listen
to the evidence given and evaluate it.

If you need more help on how to organise a DI, read the book Termination of Employment:
Understanding the Process. This book includes a guideline which you can copy and give to
your managers for training purposes.

Follow-up Actions

After a DI has been held, a number of actions will need to be taken including the following:

1. If the DI panel has found the employee guilty, the top

management of the company must decide on a suitable
penalty. The choices of penalty are demotion,
suspension without pay (for a maximum of 14 days), or Lateness
dismissal. The penalty must be in proportion to the Absence
misconduct. Theft
2. The employee must be informed about the outcome of Fighting
the DI process. If he has been found not guilty, he will
Sexual Harassment
return to work (if he had been suspended).
Conflict of Interest
Misuse of employers

Some examples of misconduct are very, very common. Others

are not common but must not be ignored. Here are a few suggestions relating to these
types of misconduct:

Calculate how much time could be lost if every employee comes late by 10 minutes twice a
week. If those same employees leave work at the normal leaving time, they are earning
money for work they have not done. You may be able to set up a flexi-time scheme. This can
help reduce the problems relating to lateness.

When workers come late to work, they will usually have an excuse. Having an excuse does
not make the workers behaviour acceptable. Discuss with your managers how many
instances of lateness will be forgiven before a penalty such as a warning is imposed. All
managers should be consistent in their actions. It is not good practice for one manager to
ignore lateness amongst his subordinates and another to demand warning letters be issued
every time a worker is late.

Lateness is usually considered a minor misconduct and by itself would not be cause for a


Absence without permission is a misconduct which must not be tolerated. An employee

who is absent for even one day without an acceptable excuse, should be given a written
warning the first time. If he repeats the offence, a second warning or third warning and
finally dismissal may be the best response to an employee who is regularly absent without
permission. He is no use to your organisation if he is frequently absent.

If an employee is absent without permission for 3 consecutive working days or more, he

may be dismissed. He must first be given the opportunity to explain his absence. If he has
not returned to work by the third day of absence, a registered letter should be sent to his
address demanding that he explain his absence and return to work. A deadline should be
set. The letter should state that if he does not return to work, it will be deemed that he is no
longer interested in his employment which will come to an end on the last day he actually

Do not simply ignore employees who disappear from work. Make an effort to find out
whether they have quit or whether they are dealing with some personal emergency which
would excuse their absence.


Hundreds and thousands of ringgit worth of company property is stolen every day,
according to experts. If you catch any employee stealing company property, including cash,
you need to take firm action. The Industrial Court has no sympathy with employees who
steal from their employers. The Court will uphold a dismissal even if the item taken has low
value. Even if you catch the employee with the stolen goods in his hand, a fair disciplinary
system still has to be followed. Follow the guidelines as described earlier in this chapter.

At the same time you should think about how best to install a security system which will
reduce the possibility of major theft both from outsiders as well as employees. Introduce
written procedures so that employees know that they can borrow equipment providing they
get permission from a senior officer of the organisation. Have clear policies on the disposal
of scrap and waste materials.


In some work environments, physical fights are common. When investigating a fight,
determine if there are witnesses, try to establish who started the fight and get evidence of
what exactly happened during the fight i.e. what injuries were sustained, what was said by
one party to the other, whether any weapons were used. If damage to property, material or
equipment has taken place as a result of the fight, take a photograph of the property

Usually, the same penalty will be issued to all workers involved in a fight unless it is proven
that one person provoked the other thereby causing the fight.

Sexual Harassment

If an employee claims that he or she is being sexually harassed by anyone in the

organisation, you must investigate and take the appropriate action. Do not ignore these
claims or inform the employee that sexual harassment is a private matter and that she
should solve the problem herself. Employees whose claims of sexual harassment are
ignored can bring the matter up to the Department of Labour who will order an
investigation. Victims can also take their story to the media, both on-line and print, which
will lead to negative publicity for your organisation.

Sexual harassment victims can be either male or female. Harassers also may be either male
or female although statistics show that most victims are female and most harassers are

Read the Code of Practice on the Prevention and Elimination of Sexual Harassment at the
Workplace which can be found on the Labour Departments website ( It
describes briefly what can be done to reduce incidents of sexual harassment at work,
behaviour which greatly reduces productivity, leads to higher turnover as victims resign and
causes a stressful working environment.
Claims of sexual harassment should be treated like any other misconduct, i.e. investigate
and, if there is sufficient evidence that harassment has occurred, call for a domestic inquiry.
The usual penalty for sexual harassment is dismissal.
Chapter Thirteen:
In this chapter the key topics will be:

1. Managing the Resignation of Employees

2. Managing Probationers
3. Retrenching Employees
4. Retiring Employees
5. Ending a Fixed-term Contract
6. Frustration of the Employment Contract

In the chapter entitled DISCIPLINARY SYSTEMS the procedures for taking disciplinary action
were discussed including how to dismiss an employee on the grounds of misconduct. In this
chapter we will examine how to manage the resignation of employees, how to manage
probationary employees including how to terminate their services, how to conduct a
retrenchment exercise, how to manage the retirement of employees, issues related to the
ending of fixed-term contract and frustration of the employment contract.


resignation letter for an
Employees have the right to resign at any time. You cannot stop an employee. Let him write it
employee resigning. himself. If he is not literate,
suggest someone who can
An employee is required to give notice to his employer before he help him write the letter.
resigns. The length of the notice period will be stated in the
Employees have been known
employees letter of appointment. The issue of notice periods was
to request assistance from
discussed in the Chapter entitled THE LEGAL ENVIRONMENT OF their HR officer to write a
EMPLOYMENT. An employee who fails to give notice will be resignation letter and later
required to pay an indemnity, i.e. wages in lieu of notice if: have claimed that they were
forced to resign the proof
1. He is within the scope of the Employment Act, or being that HR drafted the
2. A clause requiring an indemnity has been included in his letter of resignation!
letter of appointment.
Depending upon the situation, you can allow an employee to leave without giving notice if
you wish. For example, if an employee is leaving to further his studies and he is only
informed a few days in advance of registration that he has been offered a place in the
college of his choice, you can let him go without the giving of notice.

Resignation letters must be in writing and they must be written by the employee himself.
Do not draft or prepare a resignation letter for an employee.

You may experience a situation whereby an employee appears to resign, after which he files
a claim for reinstatement under the Industrial Relations Act on the grounds that he was
forced to resign. If he can show that he was forced to resign, your company will either have
to pay him some compensation to settle the dispute or his case may be referred to the
Industrial Court. Again, if his evidence of forced resignation is strong, the Court may order
the company to pay a substantial amount of compensation and you will also have incurred
legal costs. Do not, therefore, advise those workers whom you no longer want to employ to
resign. If you have good reason to dismiss them, do so. Some employers say that they
recommend employees resign when they catch them doing something wrong in order to
protect the employees reputation. You should not worry about an employees future when
he commits misconduct.

Investigating Turnover
In the chapter entitled INDUCTION, it was recommended that when an employee resigns,
an exit interview should be held, either on the employees last day of work or within a week
or two after he leaves. The purpose of this interview is to find out why employees are
leaving your organisation and to determine whether there are any issues or weaknesses
that can be improved so as to reduce future staff turnover.

Suggestions for reducing employee turnover is discussed in the chapter on EMPLOYMENT



Before discussing the right of an employer to terminate the services of an employee on
probation, we need to examine the basic issues concerning probationers.

Contractual Clause on Probation

It is a sensible practice to hire new employees on probation. To do this, you need to have a
clearly written clause in the employees letter of appointment stating that he is employed
on probation and the duration of the probationary period. It is up to you to decide how long
the probationary period should be. Typically, the probationary period for non-executive
staff is 3 months and 6 months for executive and managerial level employees.
If no statement on probation is included in an employees letter of appointment, he cannot
be considered a probationer. He is confirmed staff from the first day of work. The advantage
of requiring employees to undergo a probationary period is that they understand that they
are being tested. If they perform well on the job and fit into the organisational culture
without any problems, they will have proven their worth to the employer and will be
confirmed in their employment. A probationary period is useful because, as was pointed out
in the chapter entitled SELECTION, it is not easy to be sure that a person chosen to fill a
vacant position will be successful.

If you recruit a very senior manager with years of experience, he may insist that no
probationary clause be included in his contract. There is no harm in purposely omitting a
probationary clause. If, later on, you find that his performance is not satisfactory or if there
is any other problem with his service, he can still be dismissed, providing you have an
acceptable reason and the company follows the proper procedure prior to the dismissal.

Notice Period during Probation

It is also common that an employees letter of appointment will provide for a short period of
notice by either party during the probationary period. Some employers require a 24-hour
notice period, others one week. Whatever is chosen, it will be a significantly shorter period
than that required of confirmed staff, which is often one to three months. This allows an
employee who is uncomfortable with a job to leave easily.

Although a short notice period is included in an employees letter of appointment, this does
not mean that the employer has the right to dismiss the employee without good reason as
will be explained later in this section.

During Probation

Other than providing an induction programme to new workers, as has been discussed in the
chapter entitled INDUCTION, two further activities are important during an employees
probationary period. These are:

Monitor &
Conduct Provide
Induction training

Monitoring an employees performance, giving him feedback and appraising his

performance are normal activities for all employees and are discussed in detail in the
chapter entitled PERFORMANCE MANAGEMENT. But, they are also essential activities
which must be conducted for all employees on probation.

Supervisors must pay special attention to probationers. Unless they are very experienced
employees, they will still be learning the job in this period. They will need help, even after
training to perform well. Some workers need more attention than others. At least one
formal appraisal should be conducted with the new employee during his probationary
period. The appraisal can be half way through the probationary period. A second formal
appraisal will be conducted at the end of the period. Although these appraisals must be
documented, they do not have to be as comprehensive as those conducted for confirmed
employees. If the employee is not performing well, a discussion must be held with him to
discuss his lack of progress. Notes should be taken of this discussion and the employee
should be required to sign a copy of the notes.

Dismissal of a Probationer

If a probationers services are terminated at the end of his probationary period, he has the
same rights as a confirmed employee, i.e. he can make a claim for reinstatement under the
Industrial Relations Act. If the dispute is not settled after the process of conciliation carried
out with the help of the Department of Industrial Relations conciliation officer, it may be
referred to the Industrial Court, as described in the chapter entitled DISCIPLINARY

The Industrial Court requires that at least one warning be given to a probationer before it is
decided that he is not suitable for the job and his services should be terminated. This
termination for poor performance or inability to work with colleagues should take place at
the end of the probationary period. In other words, the employee should be permitted to
work until the end of his probation. Only in very rare situations should he be terminated

At the end of a probationary period, the employer may decide to allow the employee some
extra time to increase his competency to a satisfactory level. When the probationary period
is extended, the employee must be told, in writing, the duration of the extended period and
what are his weaknesses so that he can take action to improve.

If an employee is totally unable to perform, there is no need to extend the probationary

period. He may be dismissed at the end of the period. When a new employee turns out to
be very ineffective in his job, you should discuss with his supervisor and try to determine
what went wrong in the recruitment and selection process.
If an employees probationary period comes to an end, after which you do not formally
extend his probation with a letter nor do you terminate his
services, he remains a probationer until he receives written
confirmation that he has been granted permanent status. It is A probationer remains a
the responsibility of HR staff to make sure all supervisors probationer until he is
appraise their new recruits and, near to the end of the either confirmed or
probationary period, decide whether or not to confirm the terminated from service.
employee. Do not leave the employee in the dark, not knowing
whether he is confirmed or not. His productivity levels will fall
and he may perceive the organisation and its HR in a negative


Employers have the right to hire employees and employers have the right to terminate the
services of employees when they no longer have a need for them. However, because
employees cannot survive for long without a job, the law protects their security of
employment. If you have to retrench any employees, the following procedures must be
implemented carefully and thoroughly.

Genuine Retrenchment
If your company finds it necessary to downsize or retrench one or more employees, it is
possible that the employees will file a claim for reinstatement at the Department of
Industrial Relations as is discussed in the chapter entitled DISCIPLINARY SYSTEMS.
Whatever the reason for termination of an employees contract, he has the right to claim
reinstatement under the Industrial Relations Act. Alternatively, he may file a claim at the
Labour Department if he is within the scope of the Employment Act.

If a dispute relating to a retrenched employee reaches the Industrial Court, the employer
will be required to prove that the employee was genuinely redundant or surplus to the
needs of the employer. The employer will need to show evidence of at least one of the
following situations:
Financial losses


Re-organisation or restructuring

Changes in technology or production processes


Redundancy does not mean that a job has totally disappeared. The workload of a particular
job may be reorganised and assigned to other employees. This means that the job-holder is
no longer needed and is redundant. If, however, you retrench a worker on the grounds he is
redundant, and then replace him with a newly hired employee, there is no genuine

Alternatives to Retrenchment

Before retrenching any employee, consider the following options. Some of the options may
not be possible, depending upon the situation facing the organisation. The options are:

Do not recruit new employees, even if vacancies arise as a result of retirement or

resignation. Transfer redundant workers into the vacant positions if possible.
Retraining may be necessary for this option to be practical.
Cut back on working hours. Stop overtime work, work on rest days or public holidays
unless the nature of your business requires work on these days.
Ask workers to agree to a wage cut. Their agreement needs to be in writing.
Offer workers a voluntary separation scheme (VSS). If the financial position of your
company is still healthy, decide how much you can afford to offer employees if they
will agree to leave the organisation. Prepare a formal offer and distribute it to all
employees. If workers apply to join the scheme, decide whether to accept or reject
their application and inform them of your decision.
Cut back all unnecessary expenditure.
Notice Prior to Retrenchment
If you have to retrench employees, they are entitled to notice.

If the employees are outside the scope of the Employment Act, give them notice as
stated in their contracts of employment.
If they are within the scope of the Act, they must be given notice as stated in their
contracts on condition that the notice period in their contract is not less than:
1. Four weeks for employees with less than 2 years service;
2. Six weeks for employees with more than 2 years but less than 5 years service;
3. Eight weeks for employees with more than 5 years service.

If the notice period in the employees contract is less than the above, then follow the 4, 6 or
8 weeks. If you do not want to give notice to workers who are being retrenched, you will
have to pay them wages in lieu of notice.

Inform the Department of Labour

The Department of Labour has to be informed one month in advance whenever employees
are retrenched. There are forms for this purpose which can be downloaded from the
Departments website (

Choosing who to Retrench

The guidelines on choosing which employees should be retrenched must be strictly adhered
to. If an organisation does not follow the requirements described in the next section, it is
very likely that if the workers file a claim under the Industrial Relations Act, the Industrial
Court will find that the retrenchment exercise has not been properly conducted and the
workers concerned will be entitled to compensation.

There are two key criteria for deciding who to retrench. They are FOF and LIFO.
Retrenchment Criteria



The law requires that foreign workers be retrenched before locals, i.e. Foreigners out first
(FOF). If your organisation has no foreign workers, then the Last in First out (LIFO) rule
applies. In each group of employees, the most junior must be retrenched and the more
senior employees keep their jobs. For example, let us take a company which had two
managers in marketing jobs. One of the managers was responsible for sales and the other
for marketing and promotion. These are related fields. If the company decided to merge the
two positions, the manager who joined the company last will be retrenched.

Retrenchment Compensation
An employee who is outside the scope of the Employment Act is not entitled under the law
to any retrenchment compensation unless his contract stipulates this benefit. If you can
afford to pay some compensation to an employee who is being retrenched, you are more
likely to gain a reputation as a fair employer.

Employees within the scope of the Employment Act are entitled to termination benefits
when they are retrenched. The amount of benefit to be paid depends upon the length of
service of the employee as follows:

1. For employees with more than 1 year of service but less than 2 years service: 10
days wages for each year of service.
2. For employees with more than 2 years service but less than 5 years service: 15
days wages for each year of service.
3. For employees with more than 5 years service: 20 days wages for each year of
Helping Retrenched Employees

There are many ways you can help retrenched employees. Some will be looking for new jobs
in which case:

1. If they need help to draft a resume, provide this assistance. If they need to copy
personal documents, allow them the use of the company copier.
2. Allow them paid time off to attend interviews. If your company has a driver and a car
or van, offer transport to the interview venue.
3. Contact HR managers in other companies to see if they have any suitable vacancies.
4. Encourage the workers to register online with JobsMalaysia
5. Prepare a reference letter for each employee.
6. Find out about government schemes for re-training and helping retrenched staff and
inform your workers about the type of assistance for which they are eligible.

It is good practice when retrenching employees to provide them with a letter of termination
which clearly explains why retrenchment is necessary and that their termination is not
related to their individual performance.

Expect workers to become emotional when a retrenchment exercise is carried out. Those
who are losing their jobs will be anxious about the future. Those who keep their jobs will
also worry about the future of the organisation and will be concerned about their colleagues
who are leaving. Be sensitive to the fears and discomfort felt by workers at this time.

Helping retrenched workers to re-organise their lives is known as out-placement. This

service is offered by a number of consultants but the activities described above can be
conducted by HR staff if you do not have sufficient funds to hire a consultant.


Before 2012 there was no fixed retirement age in Malaysia in the private sector. Employees
retired at the age stated in their contract of employment. For many years, it was widely
accepted that 55 years of age was a suitable retirement age. It is expected that the
Minimum Retirement Age Act will come into force late 2012 or early 2013. This Act
disallows employers from retiring employees before they reach the age of 60.

Many employers are hiring workers who are more than 55 years of age or who have
officially retired. They may be their own employees or people who have retired from other
companies. It is common to employ these people on short-term contracts of one or two
years. When the contract period expires, if the employee is still healthy and able to perform
his work satisfactorily, and if the company needs employees, another contract may be
offered to the employee.

Take advantage of the long experience of older workers. Get them to train new employees.

If you find it difficult to hire sufficient workers, consider offering part-time work to retirees.
Some retired workers are happy to work on a part-time basis. The benefits that must be
offered to part-time employees are different to those who work full-time. The benefits are
stated in Regulations to the Employment Act and apply to all part-time workers, not only
retirees. These benefits are described in the following section. Part-time employees may be
employed on a short-term contract or on a permanent contract, depending upon the

Benefit Entitlement of Part-time Workers

Sick Public Annual

Rest day Overtime
leave holidays leave

Rest Day

Part-time workers are entitled to a rest day each week if they work at least 20 hours a week,
and at least 5 days a week.

Overtime Payment

Part-time workers who work longer than their agreed hours per day must be paid at the
hourly rate of pay for these extra hours as long as they do not exceed the normal hours of
full-time workers per day, which is typically 8 hours. If they continue to work after 8 hours,
they must be paid 1.5 x their hourly rate of pay. Thus they get the same overtime rate as
full-time workers.

Public Holidays
Part-time workers are entitled to 7 paid public holidays per year. Four of these are

1. The Agongs Birthday

2. The State Rulers Birthday
3. Independence Day
4. Workers Day

Annual Leave

Annual leave for part-timers, as with full-time employees, depends upon their length of

1. Part-timers with less than 2 years service: 6 days

2. Part-timers with more than 2 years service but less than 5 years: 8 days
3. Part-timers with more than 5 years service: 11 days

Sick Leave

Paid sick leave for part-timers, as with full-time employees, depends upon their length of

1. Part-timers with less than 2 years service: 10 days

2. Part-timers with more than 2 years service but less than 5 years: 13 days
3. Part-timers with more than 5 years service: 15 days


If there is a genuine need, organisations can employ workers on fixed-term contracts, i.e. for
a temporary period. Fixed-term contracts are usually for short periods of time ranging from
one month to 3 years. A fixed-term contract clearly states the beginning and ending dates.

When an employees fixed-term contract is about to expire, you should give him a letter
thanking him for his services, and reminding him to return any company property issued to

If the work for which the employee was hired is not complete or, if for any other reason his
services are still needed, a further short-term contract can be offered to him. But be
warned! If you keep on offering several short-term contracts to the same employee, and
later on it is decided that the organisation does not want his services any more, he may
have a good case to show that his contract was, in reality, permanent. This may lead to
problems for the organisation if the employee files a claim for reinstatement and the
dispute reaches the Industrial Court.

As a general rule fixed-term contracts should only be offered in the following circumstances:

1. The worker is a foreigner issued with a work permit by the authorities

2. The work to be done is a special project. The work is not on-going.
3. A worker is needed temporarily to cover for a permanent employee on long leave
(such as maternity leave or study leave).
4. Seasonal work.

Dismissal of an Employee on a Fixed-term Contract

If an employee hired under a fixed-term contract commits misconduct, disciplinary action

should be taken following the procedures outlined in the chapter DISCIPLINARY SYSTEMS.
He has the same rights as an employee on a permanent contract to file a claim for
reinstatement under the Industrial Relations Act so take the required action before he is

Similarly, if the employees performance is found to be unsatisfactory, procedures outlined

in the chapter on PERFORMANCE MANAGEMENT must be followed carefully.


From time to time, some of the following circumstances may occur:

1. An employee contracts a serious illness and becomes too sick to work or, as a result
of an accident, an employee is disabled and unable to perform his work duties.
2. An employee is arrested, charged and found guilty of some crime for which he is sent
to jail.
3. An employee who requires a licence for the purpose of his job has his license to
practise withdrawn by the issuing authority.

In situations such as those outlined above, an employees contract comes to an end by

reason that it has been frustrated. The employee cannot do the work which he has agreed
under his contract of employment to do for your organisation. In this case, you should issue
a letter to him stating that the contract has come to an end because of his inability to do the

Before issuing any letter to an employee in these circumstances, it is adviseable to get

expert advice.