Employer And Employee Relation

CHUA AH LEY, 012-6309328, alchua@mohr.gov.my DEPUTY DIRECTOR OF LABOUR, NEGERI SEMBILAN.

In Malaysia, employer and employee relation or specifically name as industrial relation which deal with personnel management or management of people at work in organisation is governs by written law or common law.

Written Labour Legislations

Employment Act 1955; Labour Ordinance Sarawak; Labour Ordinance Sabah; Industrial Relation Act 1967; Trade Union Act 1957; Children And Young Person (Employment) Act 1966; National Wages Consultative Council Act 2011;

Employment Act 1955; Labour Ordinance Sarawak; Labour Ordinance Sabah; Children And Young Person (Employment) Act 1966; National Wages Consultative Council Act 2011;

The above laws regulate statutory benefits and terms and conditions of employment such as wages, working hours , maternity protection and leaves.
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Industrial Relation Act 1967;

The above law regulate:Recognition of trade union; Collective bargaining; Trade Dispute; Unfair Dismissal.

Trade Union Act 1957;

The above law regulate formation of trade union and its administration.

Generally personnel or human management can be outlined into three area, i.e Recruitment And Termination; Compensation And Training; and Managing Discipline at Work Place within the ambit of law.

Recruitment And Termination;

Contract of Service/Employment

In the all the Labour laws, in order to have employer and employee relationship, party need to enter into contract of service/employment.

Contract of Service
contract of service means any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as an employee and the other agrees to serve his employer as an employee and includes an apprenticeship contract.
( section 2, Employment Act 1955)

Contract of Employment
A contract of employment is any agreement, whether oral or in writing and whether express or implied, whereby one person agrees to employ another as a workman and the other agrees to serve his employer as a workman.
( section 2, Industrial Relations Act 1967)

Distinction between Contract of Service and Contract of Employment

In American International Assurance Co. Ltd. v Dato Lam Peng Chong & Others, I/C Award 275/88, the Industrial Court held that there is NO distinction between the terms contract of service and contract of employment.

Determination of Contract of Service

The following tests are used by the court to determine whether contract of service exists or not:a) Control Test; b) Organization Test; c) Composite Test; and d) Multiple Test .

Control Test
Laid down in the case of Short v J & W Henderson Ltd [1946]62TLT 427 in which 4 indicia to be considered in determining the existence of a contract of service, there are:a) the masters power of selection of his servant; b) the payment of wages or other remuneration; c) the masters right to control the method of doing the work; d) the masters right of suspension or dismissal.
Approved by Federal Court in Employee Provident Fund Board v. M.S. Ally & Co. Ltd [1975]2 MLJ 89 and Supreme Court in Kuala Lumpur Mutual Fund Berhad v. J. Bastian Leo & Anor [1988]2 MLJ

Organization Test
Developed by Lord Denning in the case of Stevenson, Jordan and Harrison Ltd v MacDonald and Evan [1952] 1TLR 101. He said a common element in a contract of service, the person concerned works as part of the organization and his work forms an integral part of organization, whereas on a contract foe services, even though the work is done for the organization, it is not integrated into it but is only accessory to it.
Followed by High Court in Mat Jusoh v Syarikat Sebarang Takir Sdn Bhd [1982]2 MLJ 74

Composite Test
Suggested by Lord Wright in the case of Montreal Locomotive Work Ltd [1947] DLR. This test involves the following elements:Control Ownerships of the tools Chance of profit Risk of loss

Multiple Test
Enunciated by McKenna J in the case of Ready Mixed Concrete (South East) Ltd v Minister of Pensions and Social Insurance [1968]2QB 497 , the court held that the following factors need to be fulfilled before a contract of service is established:a) the employee or servant agrees that he will use his own expertise and the employer pays him wages or remuneration; b) the employee or servant agrees, whether impliedly or expressly, that he will be bound by the employers instruction; and c) all other terms and condition in the agreement are consistent with the nature of the job, which is a contract of service.

Application of The Tests

No test can be conclusive. The question whether or not there is a contract of service is a mixed one of law and fact. In Malaysia the courts generally favour the control test.

Relationship between the PartiesContract of Service

- Employer and employee. - Master and servant. - Employee or servant must provides personal service.

Relationship between the PartiesContract for Service

- Principal and contractor. - Contractor and subcontractor. - Contractor or subcontractor provides service but not personal service.

Termination of Contract of Service

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Under Employment Act 1955

- Under Terms and Conditions of Service or Common law

Situations Under Which Contract Of Service Is Terminated Or Terminates

a) Contractual termination under section 12 of Employment Act 1955 or terms and conditions of service. b)Dismissal due to misconduct. c) Termination on wilful breach of contract. d)Expiry of fixed term contract.

e) Termination at the end of

probation. f) Retrenchment due to redundancy. g) Lay-off. h) Constructive dismissal. i) Forced resignation. j) Frustration of contract.

Contractual Termination Under Section 12 Of Employment Act 1955 Or Terms And Conditions Of Service

Contractual Termination of contract with notice

At any time giving the other party notice of his intention to terminate such contract of service as provided under section 12(1), Employment Act 1955 or terms and conditions of service .

Length of Notice As Provided Under Section 12 Employment Act 1955

Shall be the same for both parties and shall be determined by a provision made in writing for such notice in the terms of the contract service. In the absence of such term, the length of notice shall not be less than a) 4 weeks, if the employee has been so employed for less than 2 years; b) 6 weeks, if the employee has been so employed for 2 year or more but less than 5 years; c) 8 weeks, if the employee has been so employed for 5 years or more. (section 12(2) EA 1955)

Contractual Termination or Termination Simpliciter

Termination Simpliciter
Termination by giving due notice or by payment indemnity in lieu of notice without reasonable cause is amounting to termination simpliciter.

Effect of Termination Simpliciter

In Federal Court case , Goon Kwee Phoy v J & P Coats (M) Bhd [1981] 2 MLJ 129, Raja Azlan Shah CJ said the following: We do not see any material difference between the termination of the contract of employment by due notice and a unilateral dismissal of a summary nature. The effect is the same and the results must be the same

Effect of Termination Simpliciter An employee who is terminated by the employer with due notice or payment indemnity in lieu without reasonable cause and excuse may seek reinstatement to his job under section 20 of Industrial Relations Act 1967, if he considers the dismissal is unfair or unreasonable.

Compensation And Training

Compensation
Wages;
Statutory Benefits Under Employment Act 1955;

Termination Benefits; and

Benefits Under Collective Agreement;

Wages
Amount of wages is determined under contract of service or through negotiation under collective agreement ; From 1.1.2013, Minimum Wages under National Wages Consultative Council Act 2011 will be implemented in which the amount for Peninsular Malaysia is RM 900.00 per month and foe Sabah, Federal Territory Labuan is RM800.00 per month.

Payment of Under EA 1955

Basic wages after lawful deduction not later than 7 days after the last wages period; Overtime payment not later than the last days after the last wages period;

Payment must be made through account; and

Payment by cash or cheque can only be made by consent of employee.

Statutory Benefit Under EA 1955 - Maternity Protection

Scope of Coverage

In the recent amendment to Employment Act 1955 which came into force on 1 April 2012, the maternity protection for female employee has been extended to every female employee who is employed under a contract of service irrespective of her wages.

Maternity Leave Under the Employment Act 1955, female employee is entitled to not less than 60 days of maternity leave for each confinement .

Maternity Leave Before 1 April 2012, to qualify the meaning of confinement under the Employment Act 1955, the female employee needs to have at least 28 weeks of pregnancy. With the latest amendment which comes into force on 1 April 2012, the period of pregnancy has been reduced to 22 weeks.

Payment of Maternity Allowance

A female employee shall be entitled to receive her full wages during her 60 days of maternity leave from her employer if(a ) she has been employed by the employer for a period of, or period amounting in the aggregate to, not less than 90 days during the 9 months immediately before her confinement; and

(b) She has been employed by the employer at any time in 4 months immediately before her confinement.

Payment of Maternity Allowance

A female employee shall not be entitled to maternity allowance if at the time of her confinement she has 5 or more surviving children.

Statutory Benefit Under EA 1955 Rest Day, Hours of Work , Public Holiday and leave.

REST DAY Every employee shall be allowed in each week a rest day of one whole day as may be determined from time to time by the employer; s 59(1) Employment Act 1955

REST DAY

where more than 1 day in each week is allowed , the last day shall be the rest day for the purpose of Part XII. s 59(1) Employment Act 1955

REST DAY
Not entitled to rest day when employee is on maternity leave, sick leave, workmen compensation leave or SOCSO leave. For shift workers any continuous period not less than 30 hours shall constitute a rest day. s 59(1) Employment Act 1955

Payment On Working on Rest Day

Monthly rated:- ORP for work done < normal hours of work - 1 ORP for work done > normal hours of work but does not exceed normal hour of work Daily rated, hourly rated:- 1 ORP for work done < normal hours of work - 2 ORP for work done > normal hours of work but does not exceed normal hour of work Piece rated:-twice his ordinary rate per piece

Payment On Working on Rest Day

For any work carried out in excess of the normal hours of work on rest day by an employee, whether he is monthly rated, daily dated or hourly rated , he shall be paid overtime payment at a rate which is not less than two times his hourly rate of pay.
S 60(3) (c) Employment Act 1955

HOURS OF WORK

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HOURS OF WORK Employees shall not be required under his contract of service to work : more than 5 consecutive hours without break 30 minutes, more than 8 hours in one day, more than 10 hours of spread over period in one day, more than 48 hours in one week.
s 60A(1) Employment Act 1955

COMPUTATION OF HOURS OF WORK

Hours of work meansthe time during which an employee is at the disposal of the employer and is not free to dispose of his own time and movements

Overtime

Overtime work on normal day -1.5 x hourly rate of pay irrespective of the basis on which his rate of pay is fixed
s 60(3)(a) Employment Act 1955

Overtime
Overtime means the number of hours of work carried in excess of the normal hours of work per day: Provided that if any work is carried out after the spread over period of ten hours, the whole period beginning from the time that the said spread over period ends up to the time that the employee ceases work for the day shall be deemed to be overtime

Normal hours of work

Normal hours of work means the number of hours of work as agreed between an employer and an employee in the contract of service to be the usual hours of work per day and such hours of work shall not exceed the limits of hours prescribed in subsection (1)
s 60A(3)(c) employment Act 1955

Limitation Of Overtime
No employer shall require or permit an employee to work overtime exceeding 104 hours per month. Any work carried on a rest day or paid gazetted public holiday shall not be construed as overtime work for the purpose of computation of limitation.
S 60a(4)(A) Employment Act 1955 & Employment (Limitation Of Overtime Work) Regulations 1980

Limitation of Hours of Work In One Day Except in the circumstances described in paragraph (2)(a),(b),(c), (d) and (e), no employer shall require any employee under any circumstances to work for more than twelve hours in any one day.

GAZETTED PUBLIC HOLIDAYS

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PAID PUBLIC HOLIDAYS (S60D Employment Act 1955)

PAID HOLIDAYS AT ORDINARY RATE OF PAY ON THE FOLLOWING DAYS IN ANY ONE CALENDAR YEAR:-

11 days of which four of which are compulsory and Any special day declared by the Federal under section 8 of the Holidays Act 1951

4 Days Are Compulsory (Cannot Be Substituted) As Below:

the National Day the Birthday of the Yang di-Pertuan Agong

the Birthday of the State Ruler or TYT

Negeri

the Workers Day

Malaysia Day

Notice On Remaining Six Gazetted Public Holiday Before the commencement of each Calendar year, the employer shall exhibit conspicuously at the place of employment a notice specifying the remaining six gazetted Public Holidays in respect of which his employee shall be entitled to paid holidays

Working On Paid Holiday

An employee may be required by his employer to work on paid holiday and in such event he shall, in addition to the holiday pay, entitled toTwo days wages at ORP rate for monthly, weekly, daily hourly rate employee. Twice the ordinary rate per piece for Piece rate employee.

Regardless that period of work done on that day is less than normal hours of work.

Overtime on paid holiday Not less three time his hourly rate of pay Holiday falls on half working day

Ordinary rate of pay payable shall be that of a full working day.

Gazetted Public Holiday Pay

Wages at his ORP for one day holiday;

[ s 60D(1) EA 1955 ]
For monthly rated employee, he shall be deemed to have received his holiday pay if he continue to receive his monthly wages without abatement in respect of the day on which he is on holiday.

[ s 60D(2A) EA 1955 ]

SICK LEAVE Entitlement Per Calendar Year

Less than 2 years service

2 to 5 years service

- 14 days
- 18 days

More than 5 years service - 22 days

Hospitalisation leave

- 60 days

Conditions Certified by registered medical practitioner appointed by the employer (including dental surgeon) Inform employer within 48 hours

Exception: Not entitled when receiving maternity allowance or while receiving payment under Workmens Compensation Act or under the SOCSO Act.

ANNUAL LEAVE

Entitlement Per 12 Months Less than 2 years service - 8 days 2 to 5 years -12 days More than 5 years -16 days

Conditions
Absent more than 10 % - forfeited Upon termination entitled to in lieu ( unless dismissed for misconduct) When on annual leave he becomes sick with a sick leave certificate annual leave shall be considered not taken.

The process of discipline employees misconduct is having of Inquiry which is required :By Law ; By terms of employment whether express or implied; and By Industrial Code that recognized by the court.

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Requirement Of Inquiry by law

An employer may, after due inquiry on the grounds of misconduct inconsistent with the fulfillment of the expressed or implied conditions of his service (a) dismiss without notice the employee; (b) down-grade the employee; or (c) impose any other lesser punishment by as he deems just and fit, and where a punishment of suspension without wages is imposed, it shall not exceed a period of two weeks
Section 14( 1 ) , Employment Act 1955 ( Act 265 )

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Requirement Of Inquiry by terms of employment

Required under express or implied terms of employment as per (a) contract of service; or (b) collective agreement

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Requirement Of Inquiry by Industrial Code

The reasonableness of the dismissal may well depend on the procedure followed. In this context, it is pertinent to point out that art 42 of the Code of Conduct of Industrial Harmony (the Code) jointly agreed upon on 9 February 1975 by the Malaysian Council of Employers Organisation and the Malaysian Trade Union Congress, with the approval of the Minister for Labour and Manpower provides, inter alia, for pre-dismissal inquiry with the right to be informed in writing of the misconduct alleged, an opportunity given to the Employee to state his case , the right to be represented by his workers representative or trade union official and where appropriate, a right of appeal. Said Dharmalingam bin Abdullah v Malayan Breweries (Malaya) Sdn Bhd [1997] 1 MLJ 352
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What is Misconduct ?

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What is Misconduct ?

Employment Act 1955 or Industrial Relation Act 1967 does not formally define employee or workman misconduct

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The Industrial Court in Liew Ken & Ors and Malayan Thung Pau Bhd (Award 37 of 1974) observed:
Insofar as the relationship of industrial employment is concerned, a workman has certain express or implied obligations towards his employer. Any conduct on the part of an employee inconsistent with the faithful discharge of his duties, or any breach of the express or implied duties of an employee towards his employer, unless it be of a trifling nature, would constitute an act of misconduct.`
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The word misconduct has been judicially defined by Willes J in the judgment of the Court of Appeal in Harmer v. Cornelius 141 ER 91, at p. 98 as:

The failure to afford the requisite skill which has been expressly or impliedly promised, is a breach of legal duty, and therefore misconduct.

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O.P. Malhotra in the Law of Industrial Dispute defines "misconduct: as:"Any conduct on the part of an employee inconsistent with the faithful discharge of his duties towards his employer would be a misconduct. Any breach of the express or implied duties of an employee towards his employer, therefore, unless it be of trifling nature, would constitute an act of misconduct. In industrial law, the word "misconduct" has acquired a specified connotation. It cannot mean inefficiency or slackness. It is something far more positive and certainly deliberate. The charge of "misconduct", therefore, is the charge of some positive act or conduct which would be quite incompatible with the express and implied terms of relationship of the employer".
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Misconduct Includes:

An Act which an employee should not have done but he had done it e.g falsifying a medical chit. An omission is something which the employee must do, but has failed to do e.g failed to exercise care in doing the work.

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Major Misconduct - Examples

Misappropriation Theft/pilferage Fraud/dishonesty Fighting Assaulting Willful insubordination or disobedience Smoking in prohibited areas Habitual late coming Sexual harassment Habitual absenteeism ( the lists are not exhaustive )
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Minor Misconduct - Examples

Coming late
Absenteeism

Failure to wear uniform

Loitering during working hour Consuming food while working

( the lists are not exhaustive )

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Fiduciary Relation Between Employer And Employee

B.R. Ghaiye in his text Misconduct in Employment Chapter XIX at pages 650 states:"The servant stands in a fiduciary relation The relation between an employer and an employee is of fiduciary character. The word "fiduciary" means belonging to trust or trusteeship. It means that whenever an employer engages a worker he puts trust that the worker will faithfully discharge the service and protect and further the interest of the employer. A fiduciary relationship exists between employer and employed:

: (a) whenever the former entrusts the latter with property, tangible or intangible, eg, confidential information and relies upon the other to deal with such property for the benefit of the employer, or for purposes authorized by him, and not otherwise,

, (b) whenever the employer entrusts the employee with a task to be performed, eg, the negotiation of a contract, and relies on the servant or agent to procure the best terms available. If the employee does an act which is inconsistent with the fiduciary relationship, then that will be an act of bad faith for which his services can be terminated. The said obligation is an implied obligation, ie, an obligation attached to every contract of service even when there is no express mention in the contract. The obligation to serve his master with good faith and fidelity arises out of necessary implication which is deemed to be engrafted on each and every contract of service. This implied condition is recognized on account of realization of the need of full confidence between the employee and the employer and this implied condition continues even after an employee has left the service. If an employee continues in service, then one of the obvious remedies for breach of faith is to dismiss him

In Pearce v. Foster And Others [1886] (71) QBD 536 C.A., Lopes, L.J. said as follows: -

"If a servant conducts himself in a way inconsistent with the faithful discharge of his duty in the service, it is misconduct which justifies immediate dismissal. That misconduct, according to my view, need not be misconduct in the carrying on of the service or the business. It is sufficient if it is conduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, not only if he discovers it at the time, but also if he discovers it afterwards, in dismissing that servant."

Negligence Or Carelessness [QUOTES]

[1] I n strict legal analysis, negligence means more than heedless or careless conduct, whether in omission or commission: it properly connotes the complex concept of duty, breach, and damage thereby suffered by the person to whom the duty was owed. (Lochgelly Iron & Coal Co v. M'Mullan [1934] AC 1 ) [2]Employees have an implied duty under their contract of employment to work with due care. Failure to exercise this care is a serious misconduct.(Termination of Employment, Understanding The Process" oleh Maimunah Aminuddin )

THANK YOU
Sayonara..

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