Sunday, February 08, 2009

Understand Retrenchment Labor Law in Malaysia

Since this may or may not happen to anyone of us but I think this is something good to know your rights or how you’re protected by labor law in Malaysia especially when you’re being retrenched. I only highlight the most critical one which is how much the employer should pay you back.

Under the Employee Act 1055 or Industrial Relation Act 1967, labour law in Malaysia, this is the minimum amount of money the employee should compensate us if they decide to retrench us. If you have been working for a company:

  • Between 1 to 2 years, you should get minimum of 10 days salary for each year of your service.
  • Between 2 to 5 years, you should get minimum of 15 days salary for each year of your service.
  • Above 5 years, you should get minimum of 20 days salary for each year of your service.
It will be pro-rated if the number of years of services is not a whole number. For example, if you work for 1.5 years, the formula will be something like this:
($1 Year Salary / 365 Days) X (1.5 Years) X (10 Days)

If you look at it, the compensation law is not that much if the company decide to pay you the minimum. All the while I have the wrong impression that compensation for retrenchment is very good because of our labor law. Perhaps I do not aware those company specifically Intel used to compensate way more than the minimum amount that protected by Malaysian Labor Law. It may not happen again in the future with the current economy situation. Don’t you think so?

22 Comments:

Alvin said...

Labor law in Malaysia is never strong, as you can see from those $$ employers are supposed to pay us. To make things worse, most employees do not know their rights and are not aware of such things. So they get retrenched without anything.

But for those who know, they can still be forced to take unpaid leave, which is not part of retrenchment and which, I think, is not covered by the labor law.

ChampDog said...

Which country is the strongest in terms of retrenchment compensation?

Kris said...

Intel gives such a good rate?? Wow..must be good to be their employee, Champ Dog.

ChampDog said...

Used to, might not be true anymore now. :) They even hire back those who get retrenched when the economy is recovered.

sexy kitten said...

Hai Champ,

If say that we resigned, but then the employer asked us to leave earlier... say u need to give 3 months notice but instead they asked u to leave in a week time, is this law still applicable?

ChampDog said...

I honestly no idea on this. When I was resigned, they usually asked me to stay longer and not to stay earlier instead. But with the economy situation now, I can understand. If you found another job, isn't that good for you to start early too?

I'm sure the company should pay you for the leave balance that you have on the day you resign but as for forcing you resign early, I have no ideas on this. I believe if you really want to, you can insist. Sorry, I hope this helps and let me know the outcome.

forex-tiwisue said...

Thanks for the sharing, I have no idea on the retrenchment compensation at all. Wondering, where to get the information?

ChampDog said...

I kind of forgot where I get it, maybe from the government website. I think I have the whole PDF explaining this labour law in Malaysia. I just captured some of the key points here. :)

steph said...

sigh, who haf a better lawyer firm to suggest? i haf no idea in dis circumstances situation to face on ex employer haven pay for me the salary. How cud i do for this?

ChampDog said...

It depends how big your company is. For those Multi-national companies, they usually won't simply do stuff. Based on my experiences on those small local companies, they usually don't care so much even though you try to complain. Why don't you try to file a complain? But, don't put high expectation on it...

niki yokota said...

very nice information.
thank you very much champdog chan :)
i didnt get any money when i was retrenched by indian company before.
gotta be careful next time.

ChampDog said...

You worked in Malaysia before?

Curious said...

Wouldn't it be unfair to those work less than one year being retrenched? No compensation at all?

ChampDog said...

That's usually how the labor law works. It rewards employee who is loyal to the company. The longer you stay with a company, the more rewards that you will get in terms of the compensation.

Think about it again, we should think twice before we want to leave a company especially you have been working for many years for a company.

Anonymous said...

I have been working for an American company for > 10 years. Recent year, there was a upper managment change and recently, my manager wanted to switch my position from managment to individual contributor and the desciption does not match to what I want to do. The reason given was lame by the way. It is office politics. We are discussing a package for me to leave the company. Does anyone here know my right on this and the minimum package that I should be entitiled to? Appreciated.

ChampDog said...

You may want to check with the US labor law because different countries have different labour law. If not mistaken and sorry to tell you that U.S. labour law is not strong as compared to the rest. - http://www.dol.gov/


Yes, I agree sometimes it is due to the office politics that someone may just want you to leave. It happens to my company too which is based in U.S. So, wish you all the best and good luck! :)

Kris said...

Change department or something? Or if the package is good..then take it. At least they are discussing a package for you to leave. Most people get zilch when leaving either desired or forced.

gilagolf said...

Recently got laid off, we believe it was unethical layoff, as management made no indication of lay off. In fact, quarter results were good, and senior management assured all was ok. One week later, 200 people in the region were sacked without warning and told to leave immediately. Any case similar to this?

Steve
Visit my site: soyouarefired.wordpress.com

ChampDog said...

Yes, it can happen with all the sudden and usually this is the case. Company is doing good, doesn't mean there will not be any layoff. It could due to many reasons (e.g. company restructuring, cost cutting and etc.)

If layoff, they should compensate you. Didn't they? We suppose to be protected under the labor law.:)

stock market and investing said...

For me it's a good thing that they already have those labor law.. Since other countries don't have that minimum take home pay during retrenchment especially time of crisis. I just don't know what country has the best policy during retrenchment

stock market for beginners said...

Is Malaysia really has the strongest retrenchment labor law in the whole world?

ChampDog said...

I think UK or Europe countries have the strongest labor among all the countries. :)


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