Fixed Term Employment Contract Malaysia

In Ahmad Zahri bin Mirza Abdul Hamid v AIMS Cyberjaya Sdn Bhd, an expatriate (“complainant”) was a consultant to the AIMS 2 Sdn Bhd (“ADC”) data centre. Three months after his appointment, the claimant received a one-year fixed-term advisory contract from ADC, which allowed him to participate in a performance bonus program. The contract was renewed annually for three consecutive years, during which ADC`s merger with AIMS Cyberjaya Sdn Bhd (“respondent”) led to the reclassification of the Appellant`s position. With the fourth contract extension, the Respondent decided to cancel the Appellant`s application for the performance bonus system. Following the Appellant`s rejection, the Respondent offered him a three-month employment contract stipulating that it would replace all previous contracts entered into by the Appellant with ADC and the Respondent and that this contract could be determined by a period of two months. In the alleged exercise of this clause, the respondent announced to the Appellant a two-month notice period to terminate the contract. The complainant complained to the Industrial Relations Department that he had been wrongly dismissed from the employment relationship. This decision is favourable to employers. It assures employers that their liability to employees on fixed-term contracts is limited to the unexpired duration of their contracts if these employees assert unjustified dismissal claims. Employers should consider including provisions on probationary periods in fixed-term contracts in order to obtain more flexibility in the termination of employment of workers whose performance is not satisfactory to their organisation. A real contract has no legal explanation. However, the employer should have a real reason if a contract is not renewed.

Fixed-term employment contracts are service contracts of a certain duration. The High Court held that the probationary period in the employment contract did not alter the nature of the contract as a fixed-term contract. Even if the employee had successfully completed her probationary period, her employment relationship would still have ended at the end of her contract. Paying the employee 12 months` salary, even though the contract was due to expire in five and a half months, would therefore have been incompatible with the parties` intention to enter into an employment relationship only for a specified period of 12 months. In determining whether a fixed-term employment contract is genuine, the courts also consider the employer`s subsequent conduct during the employee`s employment and the employee`s overall employment with the employer. However, many employers do not realize that fixed-term contracts do not necessarily allow this under the provisions of Malaysian labour law, and in this way, they could very well expose themselves to the risk of an illegal dismissal request if they choose not to renew an employee`s contract. The Labour Court considered the facts of the case and concluded that, while there might be a real need for fixed-term contracts when the school was established in 1951, there was no such need when it had been successfully established that some teachers had been teaching at the school for more than 20 years and that their contracts had been extended without exception during those years. Therefore, the Labour Court held that fixed-term contracts were not used out of real necessity, but as a means of controlling and subjugating teachers. In Malaysia, it is common for employers to hire workers on fixed-term contracts. A fixed-term employment contract is only a contract for a certain period. The primary intention of an employer to offer a fixed-term employment contract is generally that the employer does not have to engage in the permanent employment of the new employee. However, employers should bear in mind that in the event of an action brought by the employee before the Labour Court for unfair dismissal, the courts may consider whether a particular fixed-term contract is in fact a contract of indefinite duration.

This question and dispute generally arises when the employer does not renew the employee`s fixed-term contract. This article sets out the legal principles governing industrial relations with fixed-term contracts. The employee or employer may terminate an employment contract at the end of its term. An employer may dismiss an employee without notice for misconduct, incompetence, or a criminal or civil offence. In the event of an intentional breach of the employment contract, no dismissal is required from either party. The employer and the employee may waive their right to dismissal or make a payment in lieu of dismissal of the amount of wages that the employee would have accumulated during the notice period. “. there are real fixed-term contracts where both parties acknowledge that there is no agreement that the contract will be renewed after expiry. The Court is aware that such genuine fixed-term contracts for specific fixed-term one-off activities constitute an important part of the range of employment relationships. Some of these jobs can be found in seasonal work, in work to fill gaps caused by the temporary absence of permanent employees, in training and in performing specific tasks such as research projects funded outside the employer`s company. These are the types of work provided for in section 11 of the Employment Act 1955, which may be included in employment contracts for a certain period.

This type of fixed-term contract must therefore be distinguished from so-called fixed-term contracts, which are in reality current employment contracts of indefinite duration. Before hiring the employee, employers must also ensure that there is a mutual understanding that the agreement is only valid for a certain period of time. Some employees may misunderstand the temporary arrangement and think they would be offered a permanent position if they did a good job. If this is not the case, they must be told from the outset that permanent employment is not guaranteed and that it is in fact based on other factors such as the needs and business requirements of the company. Employment contracts in Malaysia are usually in written form. It must specify terms and conditions of employment such as place of work, job description, wages, overtime, hours of work, leave and rights, health and safety issues, probation and termination. Written contracts must include language that sets out the terms of termination of the contract. Employment contracts can be fixed-term or open-ended. A fixed-term contract of more than one month must be in writing. However, if an employee`s fixed-term contract is renewed several times, that worker is considered a permanent employee in the event of dismissal. The trial period is limited to three months and an employer has the right to terminate the contract during the trial period if the employee is incompetent. Pre-employment background checks are not prohibited, but may be subject to the Privacy Policy.

A fixed-term employment contract has recently been defined as follows:- The nature of this employment is favourable to the recruitment of an employee for specific work to be performed within the framework of a specified period of employment. For this reason, employers and employees should always bear in mind that their rights and obligations are not strictly limited to the terms of the employment contract alone. The courts ensure that the safety of employees is protected from false, inappropriate and complicated manoeuvres and devices. Employers should consider seeking legal advice and assistance when reviewing their existing fixed-term employment contracts with their employees, in particular when deciding whether or not to renew such contracts. Like newly immigrant workers, employers are strongly advised to ensure that there is a real need to enter into fixed-term contracts that take into account the duration, nature of the business and the work required by each employee. .