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Retrenchment Termination

Mun U
Mon, 06 Apr 2020 02:30:25 PM  (Last updated: Mon, 06 Apr 2020 03:24:32 PM)

Hi there would like to ask about termination notice and procedure for the following case.

I've a non-manual employee who has been working for 7 years. His salary is RM4500. Due to downsizing of the company, company has to terminate him. There is not contract or Letter of Appointment signed between the parties earlier. 

(1) Since the said employee doesn't fall within the ambit of Employment Act and there is no Contract of Service signed between the parties, what is the termination benefit/entitlement of the employee? Does employer follow the termination benefit calculation in accordance with the Employment Act or in accordance with it's own company policy? What is the minimal notice to be served on the employee? 8 weeks?

(2) If the company decides to retain him for other department with reduction of salary to RM2500 which the said employee is agreeable. Assume 2 years later, the company needs to retrench/ terminate the said employee due to bad economy/business, what is the termination benefit calculation? Is the amount to be calculated based on earlier RM4500 or new RM2500?

Appreciate advise for the above. Thank you.

KL Siew
Mon, 06 Apr 2020 03:24:32 PM

1. Although he is not covered by the Employment Act, he still can take action under the Industrial Relations Act. He can make a claim for reinstatement under section 20 of the IR Act.

2. You will have to discuss with him about you intend to do. As for termination benefit, I think  you still can refer to the Employment(Termination and Layoff Benfits)Regulations for some guidance on the  basis of compensation although he is not covered by Employment Act.

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