INTRODUCTION,

EMPLOYMENT LAW UNFAIR DISMISSAL,

EMPLOYERS
DEFENCE,
REDUNDANCY
INTRODUCTION
The main legislations related to employments are the
Employment Act 1955 and the Industrial Relations
Act 1967.

However, other legislations includes, among others:

i)Trade Unions 1959
ii)Employees’ Social Security Act 1969
iii)Employees’ Provident Fund Act 1991
iv)Workmen Compensation Act 1952
v)Wages Council Act 1947
EMPLOYMENT ACT 1955
Law relating to the relationship between employer and
employee.
The main objective of the law is that the employees should get
fair wages, amenities and at same time protection against
exploitation.
These laws aim at protecting workmen against victimisation,
therefore effective mechanism for the complaints, investigation
and settlement of industrial disputes.
Other characteristic, they provide for contract of service, notice
to be given for termination, rules regarding payment of wages,
provisions for deduction of wages and etc
DEFINITIONS OF
EMPLOYER AND
EMPLOYEE
Section 2 of the Employment Act 1955-
An employer is any person who has entered into a
contract of service to employ another person as an
employee.
The term employee means a person or class of
persons – included in any category of the 1st
Schedule; or in respect of who the Minister may
make an order.
 EMPLOYMENT OF YOUNG
PERSONS AND FOREIGN
WORKERS
Young Persons (at least 14 but below 16yrs old)
Refer to Children and Young Persons ( Employment )
Act 1966

Foreign Workers
Part XIIB of the Employment Act 1955
Must have a valid working permit
Required to inform the Director General of Labour
CONTRACT OF SERVICE
A Contract of Service means any agreement (whether oral
or in writing)and whether express or implied, where the
employer agrees to employ a person as an employee and
such person agrees to serve his employer as his employee
and includes an apprentice-ship contract.
A contract of service is actually a contract of employment.
A contract of service is just like any other contract.
Therefore, the general principles of contract , developed by
the common law and the Contracts Act 1950 are applicable
to a contract of service.
A contract of service must contain the terms and conditions with
respect to category of employment;
o commencement salary including other allowances & bonus,
o probation period;
o working hours;
o overtime payment or leave in lieu thereof;
o annual leave and public holidays of days;
o sick leave and medical bills;
o employees Provident Fund [EPF] and Social Security protection
[SOCSO],
o provision for termination, including rules regarding notice etc.
There should not be any clauses that contravenes any provision of
the law.
Section 10 of the Employment Act 1955 requires that a contract of
service must be in writing when the employment is for a specified
period of time and is to exceed one month.

Section 15 of the Employment Act 1955, provides the circumstances

when a contract of service is deemed to be broken by employer
and employee. Section 15 (1) provides that the employer is deemed
to break the contract if he fails to pay wages in accordance with the
Employment Act 1955. By virtue of Section 15 (2), the employee is
deemed to break the contract if he is absent from work for a
continuous period of more that 2 days.

Section 18 of the Employment Act 1955 provides that the contract

of employment must state the wage period not exceeding 1 month.
If no period is states , it is deemed to be 1 month
 The Employer needs to contribute to the Employees Provident Fund
under the Employees Provident Fund Act 1991. This is a mandatory
savings for an employee.

The Employer also needs to contribute to the Social Security Fund under
the Employees Social Security Act 1969 (SOCSO)

The Employer is under a duty to ensure that employee is safe from any
harm or injury at workplace as prescribed under the Occupational Safety
and Health Act 1994.
BENEFIT OF
EMPLOYMENT
Section 59 of the Act - every employee must get a rest
day in every 7 days
Section 60A - Hours of Work
Section 60D - Public Holidays
Section 60E - Annual Leave - none in the 1st year, 1 to
2 years service = 8 days, 2 to 5 years=12 days
Section 60F - Sick Leave - less than 2 years -14 days
sick leave, 2 to 5 years- 18 days, 5 years – 22 days
 CONTRACT OF SERVICE
VS CONTRACT FOR
SERVICE
The Employment Act 1955 in the 1st schedule define an
employee by reference to his wages. But sometimes its difficult
to determine whether the concerned person is an employee or
not.
When a person is labelled as employee does not mean he is an
employee.
Therefore, it becomes necessary to distinguish between a
contract of service and contract for service.
An employee works under a contract of service. The employee
personally performs a task or tasks allocated to him by his
employer. He is subject to the control and direction of the
employer.
Some people are hired under Contract for Service, and not
under Contract of Service.
Such persons are not employees but may be self employed
persons or independent contractor.
 TEST TO DETERMINE WHETHER IT
IS CONTRACT OF SERVICE VS
CONTRACT FOR SERVICE.
1) Control Test
The crux of this test is that an employee should work
according to the directions given by the employer. Such
person has to work under the control of the employer as
regards what he must do and how to do.
In the case of Mat Jusoh bin Daud v Syarikat Jaya
Seberang Takir - The judge observed that with ever
changing nature especially for professionals and work
involving technical know how, the control test may not
be suitable.
In the case of Bata Shoe Company (Malaya) Ltd v
Employees Provident Fund Board,
the Court resorted to the Control Test. The Court held
that the company did not have sufficed control over
the salesman, and therefore, the salesman were not
employees of the company. For this reason, the
company was not bound to contribute to the EPF.
However, the salesmen were found to be employees
of the individual shop managers.
Thus the control test is basically answering the
following qs: Was the person subject to the
employer’s orders and directions.. If the answer is
yes- then the person may be an employee
2) The Organization or Integration Test
In the case of Stevenson, Jordon and Harrison Ltd v
Macdonald and Evans, - for resolving the issue
whether a person is an employee or not, the court
examines the person is part and parcel of the
organization or not.
The test looks at whether the work is being done as an
integral part of the business. If yes, then thee worker is
an employee
3. The Mixed or Multiple Test
In the case of Short v J & W Henderson Ltd, Lord
Thankerton refered to four elements – the power of
selection, the payment of wages or other
remuneration, the right to suspend or dismiss, and
the right of control. These 4 elements are critical
determinants to decide the actual relationship
between the parties.
 WAGES
Section 2 of the Employment Act 1955 – wages means basic wages and all
other payments in cash payable to employee for work done under contract
of service but does not include --
(a) value of house accommodation or supply of food, fuel, light or water or
medical attendance, or any approved amenity or approved service;
(b) contribution paid by employer on his own account to pension fund,
provident fund, superannuation scheme, retrenchment, termination, lay-off
or retirement scheme, thrift scheme or any other fund or scheme established
for the benefit or welfare of the employee;
(c) travelling allowance or value of any travelling concession;
(d) sum payable to employee to defray special expenses entailed on him by
nature of his employment;
(e) gratuity payable on discharge or retirement; or
(f) annual bonus or any part of any annual bonus;
 COMMON LAW DUTIES OF
EMPLOYEES
oWork in skillful manner
oObey employer’s lawful and reasonable command
oMaintain confidentiality
oHand over inventions made during course of
employment
oAccount for money and property received during course
of employment
oDisclose information relevant to employer
oMaintain confidentiality after leaving employment
 COMMON LAW DUTIES OF
EMPLOYER
oDuty to Pay the Employee on time
oObserve Health & Safety Regulations
oHealthy and safe working environments
 TERMINATION OF
CONTRACT OF SERVICE
•Termination with notice – employee can terminate
contract by giving notice in accordance with terms of
contract
•Termination without notice – amount to breach and can
be sued. If employee terminates, it is not worth for
employer to pursue the matter – no point forcing
someone to stay if they do not want to. If employer
terminates, it is known ‘summary dismissal’ –
employer have to show there was misconduct which
amounted to a serious breach and it involved a
repudiation of the contract by the employee. If this is
not established, it can amount to unfair dismissal.
 TERMINATION UNDER
EMPLOYEMENT ACT 1955
Section 11 – contract for specified time and for specific type of work will
terminate when period of employment expires or when work completed.
Section 12 - if no notice of termination in contract – 4 weeks notice if
employed for less 2 yrs, 6 weeks notice if employed for 2 to 5 yrs, 8
weeks notice if employed for more than 5 yrs.
Section 13 – termination without notice by paying indemnity to other
party a sum equal to amount of wages accrued during term of such notice
or during term of unexpired notice.
Section 13 – termination without notice where there is willful breach by
other party.
Section 14 – termination without notice where there is misconduct by
employee.
 EXAMPLE SERIOUS
MISCONDUCT OF EMPLOYEE
1) Absence from work without notice and excuse
S 15 (2) Employment Act 1955 - employee shall be
deemed to have broken contract of service with
employer if continuously absent from work for more
than 2 consecutive working days without prior leave
from employer, unless he has reasonable excuse for such
absence and has informed or attempted to inform
employer of such excuse prior to or at earliest
opportunity during such absence.
2) Unproductive, uncooperative (Attitude Problems)
3) Breach of Duty of Confidentiality
 UNFAIR DISMISSAL

•Where the contract is terminated by either party

without complying with the terms for notice, then there
is a breach of contract. Whether it amounts to an unlawful
termination, or an unfair dismissal on the part of the
employer, will depend on the breach and whether:
a)It is an unlawful prohibited reason against dismissal;
such as temporary absence from work due to sickness or
injury, membership or non-membership of a union , rage,
color, age, martial status, pregnancy, religion, politics,
nationally or social background; and
b. The dissmisal can be acessed as being ‘harsh, unjust or
unreasonable’ based on an objective analysis of all the facts
available to both the employer and the employee in the
particular case.
• In assessing whether the reasons given for unfair dismissal are
valid, industrial tribunals must take into account:
• i) any valid reasons such as the ability or conduct of the
employee or workplace operational requirements;
• ii) any notification of reason given to the employee;
• iii) opportunity given to the employee to respond to the
employers stated reason;
• iv) any warning given about unsatisfactory work performance;
• v) operational requirements of business
•If a breach is proved, a tribunal may make an order directing
an employer to:
i)re-employ or reinstate the employee in their original position
or to an alternate position;
ii)Order compensation if re-employment is not a viable option;
iii)In the case of unlawful termination, impose a penalty on the
employer.
The main law on unfair dismissal is contained in the
Industrial Relations Act 1967.
By virtue of section 20 of Industrial Relation Act 1967, when
the employee considers that he has been dismissed without
just cause or excuse , he can make a representation to the
Director General of Industrial Relations and may request that
he should be reinstated.
This representation must be filed within 60 days of the
dismissal. In the case the employee has been dismissed with
notice, such representation must be made any time but in no
case later than 60 days from the expiry thereof. (if exceed
time frame= loses his right to make representation.
Case: Fung Keong Rubber Manufacturing v Lee Eng Kiat
Case: V Sinnathamboo v Minister for Labour and Manpower
When the representation had been filed by the employees against the
employer. The burden to proof whether the dismissal was lawful or not was
shifted to the employer.
If the employer successfully give the valid and reasonable reason, therefore
dismissal consider lawful and with good cause. In order to determine whether
such dismissal valid or not, the test is very subjective. Based on Goon Kwee
Phoy v J & P Coats (M) Bhd where Raja Azlan Shah JCA stated that:-
‘…Section 20 (1) is, in our view deliberately, couched in subjective terms.
Where a non-union workman considers that his dismissal is without just cause
or excuses, he may make representations for his reinstatement. It is not
whether he had been dismissed without just cause or excuses; but it is how he
considers he had been treated by his employer that constitutes the test for his
action.”
While in the case of Dr. Dutt v Assunta Hospital, Federal Court of Malaya
stated that there is no different between termination of contract of services
with notice or without notice .If the employees thinks that he/she had been
terminated wrongfully or without good cause, therefore he/she can used
Section 20 (1) IRA to filed an action against the employe
(Ifa Shhirhu Bt Samsuddin (AGC) (2011)
ADDITIONAL CASES ON
UNFAIR DISMISSAL
Case 1: Wong Yuen Hock v Syarikat Hong Leong
Assurance Sdn Bhd & Anor (1995) 3 CLJ 344
Facts: The Appellant was employed as an insurance claims
manager by the respondent. He was dismissed from
services as he had purchase a car wrecked in an accident,
which was insured with the respondent company. It was a n
unwritten rule of the company that staffs are prohibited
from purchasing wrecks. He challenged the dismissal on
the ground that his services were terminated without any
just cause or excuse, and therefore be reinstated under
section 20 (3) of the Industrial Relations Act 1967.
The Industrial Court held that the Appellant was dismissed from services
without just cause or excuse on the sole ground the employer had failed to
hold a domestic enquiry as required under the terms of the Appellants’
contract of employment. However, Court awarded the Appellant limited
compensation of RM43,200. Both employer and employee appeal.
High Court uphold the decision of the Industrial Court dimissed both
appeal
Appeal to the Federal Court.
Held : Federal Court gave judgement in favour of the
Respondent. (Company)
Case 2: Dreamland Corp (M) Sdn Bhd v Choong Chin Sooi &
Anor (1988) 1 MLJ 111
Facts: The Appellant’s company had dismissed the respondent
with immediate effect on February 1984, on the ground that the
respondents’ attitude towards the company was casual and
indifferent and he instigated and provoked dissatisfaction
amongst fellow workers. The Industrial Court upheld the
dismissal but held the order of dismissal was valid from April
28, 1986 , the last date of hearing in the Industrial Court on the
ground that no inquiry was held by the employer before
passing the order of dissmisal. The Respondent was awarded
26 months back wages of RM62,700. Appeal was made to the
High Court and High Court upheld decision of Industrial
Court. Appellant appeal to Supreme Court.
Held: Failure to make an enquiry before dismissal is not fatal to the
employer and he would be entitled to justify it before the Industrial
Court. Accordingly, the learned Judge, held that the Respondent was
lawfully dismissed as was held by the Industrial Court and High Court.
However neither the Industrial Court nor High Court was correct in
amending the date of dismissal and in awarding back wages as
consequence of such amended date.
Case 3: Milan Auto Sdn Bhd v Wong Seh Yen (1995) 4 CLJ
449
Facts: The appellant company had dismissed the respondent
from its employ for alleged disciplinary reasons. (undiscipline,
unproductive, sleep during work, arrogant) The company did
not conduct any inquiry into the alleged indiscipline but had
informed the latter of the grounds of his dismissal.
Pursuant to a reference made to it by the Minister under s. 20
Industrial Relations Act 1967, the Industrial Court took the
stand that, such being the circumstances, it was unnecessary for
it to examine the evidence and determine whether the
company's allegations against the respondent were in fact
established, or whether such misconduct if established
constituted "a just cause or excuse" for the dismissal.
The Court also concluded that it was sufficient to dispose of
the dispute purely on account of the company's failure, not
only to comply with the principle of natural justice but also
with the statutory requirement of "due inquiry" before
dismissal under s. 14(1) of the Employment Act 1955.
The Court, in consequence, ruled that the dismissal herein was
without just cause and excuse. Following an application for
certiorari by the appellant, the High Court ruled that no
jurisdictional error had been committed by the Industrial
Court, and hence, affirmed the award. The appellant appealed
and before the Federal Court, the main issues that arose were:
1. Whether upon a reference under s. 20 Industrial Relations
Act 1967, the Industrial Court was duty bound to examine the
evidence adduced and decide on the merits of the dismissal.
2. Whether, in dismissal cases, the initial defect in natural justice in not
holding a domestic inquiry could be cured by an inquiry held before the
Industrial Court.

3. Whether the requirement of "due inquiry" before dismissal stipulated by

s. 14(1) of the Employment Act 1955 could in any way affect or change the
policy of the law expounded by s. 20 of the Industrial Relations Act 1967.
Held: Allowed the appeal.
•The function of the Industrial Court in dismissal cases on a
reference under s. 20 is two-fold. It has to determine whether
the misconduct complained of by the employer has been
established, and secondly, whether the proven misconduct
constitutes just cause or excuse for the dismissal.
•The initial defect in natural justice in not holding a statutory
or contractual domestic inquiry is "curable" by the inquiry
held by the Industrial Court itself. Industrial Court could not
therefore shy away from determining the two issues required
to be determined in dismissal cases under s. 20 reference. In
omitting to carry out its basic functions, the Industrial Court
in the present appeal had clearly committed a jurisdictional
error. It follows that the learned High Court Judge, in
dismissing the appellant's application, had fallen into similar
error.
CONSTRUCTIVE
DISMISSAL
There are times when the employee feel that he is
being picked on by the employer. The employer
may be doing this intentionally, for example by
giving the employee a greater work load, while
not doing the same for other employee.
Employee’s desk may have been shifted into
basement or close to the store room or toiler and
some employers may even demote the employee
or reduce salary after job appraisal.
Whether this is done intentionally for the purpose of forcing
the employee to resign, or even if it is done genuinely with
good intentions, the employee may take the step of resigning
on the grounds of constructive dismissal and can treat himself
as being dismissed.
This term ‘constructive dismissal’ is used to cover a situation
where although it is the employee who leaves the job, he
wants the Industrial Court to treat it as though he was unfairly
dismissed from work by his employer.
This is because of the conduct of the employer.
In this situation, the employee after leaving the job can make
a representation within 60 days to the DG of Industrial
Relations to seek reinstatement together with back pay.
 EXAMPLE CASES OF
CONSTRUCTIVE
DISMISSAL
Case 1: Amanah Butler (M) Sdn Bhd v Yike Chee Wah- the
Court of Appeal held that the reduction of salary without just
cause or excuse amounts to squeezing an employee out of the
employment.
Case 2: Anwar bin Abdul Rahim v. Bayer (M) Sdn. Bhd (1998) 2
MLJ 599 -“ It has been repeatedly held by our courts that the
proper approach in deciding whether constructive dismissal has
taken place is not to ask oneself whether the employer’s conduct
was unfair or unreasonable (the unreasonableness test) but
whether ‘the conduct of the employer was such that the employer
was guilty of a breach going to the root of the contract or whether
he has evinced an intention no longer to be bound by the
contract.’
Case 3: Chua Yeow Cher v. Tel Dynamic Sdn. Bhd, (2000)
1 MLJ 168
Azmel J: “ It is now trite law that in a reference before the
Industrial Court by an employee complaining that he had
been constructively dismissed by his employer the burden is
on the employee to prove that he had been dismissed
unlawfully. ”
And in a reference under section 20(3) of the Act, once the
dismissal is established, the Industrial Court moves into the
second limb of inquiry to determine whether the employer
had just cause and excuse for the dismissal. And here the
burden shifts upon the employer
EMPLOYER’S DEFENCE
oEmployers have to prove dismissal is just and cause.
oEmployers must make sure that all procedures have been
followed.
oIn other words, The Industrial Court also takes into
account “procedural fairness”, so it is also entirely
possible that an employer may have good grounds for
dismissal but still lose the unfair dismissal case because
the dismissal was procedurally unfair or against the rules
of natural justice
REDUNDANCY
An employment relationship in Malaysia may be
terminated for redundancy.
Special provisions under the 1980 Regulations govern
termination by retrenchment or the take-over or
cessation of a business, and mandate that retrenched
EA employees are entitled to specific termination
indemnities.
In a retrenchment situation, employers should select
the employees of the same category to be
retrenched based on objective criteria.
For a claim to be made, the employee must be
dismissed for means of redundancy.
Examples where there is a redundancy:-
a)Cessation of Business;
b)The employer moving his place of business; and
c)Surplus Labour.
REDUNDANCY
The Principle of ‘Last in, first out’ has been recognized and applied
by the Malaysian Court also.
It is also known as the rule of first come, last go or last come, first
go.
The employer has power to terminate the services of an employee if
the employer has surplus labour.
But this power of the employee is controlled by the ‘Last in, first
out’ principle.
Where other things are equal, this rule has to be followed in
effecting retrenchment of a workman.
When there is no justification for redundancy, in such a case, it shall
be deemed that the termination was without just cause and excuse.
 In the case of Goon Kwee Phoy v J & P Coats (M)
Bhd (1981) 2 MLJ 129 – on the finding that there was
no redundancy as suggested by the company, the
conclusion is inevitable that the termination was
without just cause or excuse.
In the case of Aluminium Company of Malaysia Bhd
v Jaspal Singh (Award No .363 of 1987 , Industrial
Court) - the employee was retrenched by the company
on the ground of redundancy, which was challenged on
the ground that there was no such redundancy.
VICARIOUS
LIABILITY
DEFINITION OF
VICARIOUS LIABILITY
Vicarious liability refers to a situation where A is
liable to C for damage or injury suffered by C
due to the negligence by B.

The most important condition for imposing

liability on A is the nature of the relationship
between A and B and the Tort is committed by B
is connected to the nature of this relationship.
 ELEMENTS OF VICARIOUS
LIABILITY
An Employer is vicariously liable for the torts of his
employee if 3 conditions are satisfied:-
a)There must be an employer and employee relationship;-
there must be a contract of service; (refer notes on
Contract of service vs Contract for Service and the Test)
b)The employee must have committed a tort ie breach of
duty, any wrongful act;
c)The employee must have been committed a tort in the
course of the employment - express or impliedly by the
employer.
THE TORT MUST HAVE BEEN COMMITTED
IN THE COURSE OF THE EMPLOYMENT-
EXPRESS OR IMPLIEDLY BY THE
EMPLOYER.

An employer is only vicariously liable for the

torts which occur in the course of employment.
Whether an act is construed as what ought or
should be done in the course of doing the job
depends on the facts of each case.
CASES
Case 1: Century Insurance Co Ltd v Northern Ireland Road
Transport Board -
The Defendant’s worker who was the driver of an oil tanker had
stopped at the Plaintiff’s petrol station to transfer petrol from the
lorry to an underground tank at the garage. He lit up a cigarette
and threw the burning match on the floor. An explosion ensues and
the Plaintiff’s property was destroyed.
Held: The Court held that the Defendant is liable for his worker’s
employment, even though the actual act of smoking did not benefit
the employer. Liability was based on the fact that the driver did
what he was employed to do which was to deliver the petrol.
Case 2: Mohd Yeanikutty v Far East Truck Inc
Manufacturing, -
A was a mechanic at D’s shop. He together with
another worker, were sent to repair a machine at a lift factory.
A’ hand was crushed due to their negligence. D stated that
A was to be blamed for his own injury as there was
disobedience of instructions. A was contributorily negligent
but since other worker was partly negligent, D as employer
was vicariously liable.
Case 3: Rand v Craig –
the employer was not vicariously liable when his
employee deposited some rubbish on the Plaintiff’s
unfenced land as the employees were instructed to carry
rubbish from a certain place to another soecific palce
and not merey to carry rubbish generally.
The employee were doing something which was
forbidden and as such Employer not vicariously liable.
Case 4: Morris v CW Martin & Sons Ltd, The
Defendant’s employee stole the Plaintiffs mink which
she had sent to be cleaned. The employer is liable for
the theft committed by his employee so long as the
theft occurred within the course of employment.