Employment Law: A Self-Help Guide to Review Employment Contract (for Employer)
Employment Law: A Self-Help Guide to Review Employment Contract (for Employer)

Employment Law: A Self-Help Guide to Review Employment Contract (for Employer)

If you ever encountered the right talent to work for your organization, the next thing to do is to have an employment contract which sets out the rights and obligations between you, as an employer and the employee, and it must be consistent with the offer letter (if any).

We have highlighted a few important points of review below:-

  1. Commencement

It is important that we should start everything on the right footing. There ought to be a clause to spell out the date the employee will start the employment with you.

Such provision varies for situations such as if you are changing the existing employee’s terms and offering him new terms, or if the employee were transferred within the group company, or seconded another company, or renewal of fixed-term employment contract.

  1. Job description

There should be at least a job title stated.

In addition to this, you might want to reserve some form of flexibility to allocate other duties to the employee to meet the business needs of your organization.

Lastly, you should set out the reporting line for the employee which may subject to any changes by notification.

  1. Full time employment

Should you require the employee to devote to full-time attention during normal working hours to the carry out of your duties under this contract, and  not engage in any activities which would conflict with the proper performance of his duties or with your business interests, do state them in the employment contract.

However, if you do agree to the employee working for another employer, it is apt to put the employee on duty to disclose this, in order to ensure that your business will not be adversely affected.

  1. Probationary period

This is critical to assess performance and to ensure that performance issues are dealt with during the probationary period.

You would want to avoid problems being left unaddressed until after the probationary period has ended. 

Refer detailed article here.

  1. Hours of work / Shift work

This is to set out your standard hours/days of work arrangements, breaks, or such overtime arrangements with overtime pay rates, if any. 

Refer detailed article here.

  1. Salary

This needs to be expressly stated to ensure the necessary employment deductions or contributions required by law are properly accounted.

  1. Place of work and mobility

It is always prudent to provide for some flexibility to ask the employee to work from time to time in other locations despite stating the initial place of work. 

Refer detailed article here.

  1. Public Holidays and Ad Hoc Public Holidays

It is best to state clearly the employee’s entitled public holidays, as some are optional.

As for Ad Hoc Public Holidays, it should not be viewed as a difficult issue to deal with, in prospect or obstructing business operation as you may always reserve a discretion to compensate the employee another day as a paid public holiday in substitution. 

Refer detailed article here.

  1. Annual leave, sick leave, emergency leave, maternity leave

It is better to have a separate policy covering this areas as these are, to a certain extent, discretionary, for example how would you deal with the issue of carrying-over annual leaves, the employee’s long sick leave, et cetera. 

  1. Termination clause

It is common to have a termination clause in employment contracts but it shall be understood there exist an implied condition that any such termination of the employment contract by the employer, must be with ‘just cause or excuse’, as provided under Section 20 of Industrial Relation Act 1967. 

Refer detailed article here.   

  1. Force Majeure clause

While many have sought to have such clause included in the employment contract to provide for future reliance, we view that the risk for unfair or constructive dismissal claims from the employee remains.

A more employee-friendly term should be considered for in the event of any disruption to your business, for example during the country’s previous Movement Control Order (MCO), where an employer is to close down work place and employee who in turn must stay at home by virtue of such health and safety concerns, to reserve the right to temporary layoff without pay or to reduce the employee’s working hours commensurate with the amount of salary paid for up to a certain period.

  1. Disciplinary and grievance rules and procedures

It is important that the policy/procedures must be made reasonably accessible to employees when the employment contract is made, subject to it in order to avoid unfair dismissal claims should the kind of misconduct actually leads to the employee’s dismissal.

  1. Data protection

This is also an important compliance under and pursuant to the Malaysian Personal Data Protection Act 2010. Refer detailed article here.

About the Author: 

This article was written by Chia Swee Yik Partner of this Firm, who endeavors to provide practical advice on employment law.

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