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Malaysia’s Labor Law: Retrenchment

It’s good to know your rights especially when you are being retrenched. As an employee, you should know about the lay off benefits and how much employer should pay you back.

malaysia_labor_law

Under the Malaysia Labor Law: Employee Act 1055 or Industrial Relation Act 1967, this is the minimum amount of money the employer should pay the employee if they decide to retrench. 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 employment under a continuous contract of service with the employer.

*Between 2 to 5 years, you should get minimum of 15 days salary for each year of your your employment under a continuous contract of service with the employer.

*Above 5 years, you should get minimum of 20 days salary for each year of your your employment under a continuous contract of service with the employer.

How about if you work for 1.5 years, 2.2 years, 2.5 years, 3.4 year? Let say, if you work for 1.5 years, then the retrenchment compensation will be calculated like this:

retrenchment_benefits

If you found that your employer fails to provide you whatever stated in the contract of service, then you can make a complaint at the Labour Office.

Labor law in Malaysia is not so strong, the retrenchment compensation is not that much if the company decides to pay you the minimum. For those employees who do not know about their rights and are not aware of such things then they may get retrenched without anything.

There are many factors of retrenchment and it can be happened with all in the sudden. If company is doing very well, doesn’t mean that there will not be any layoff. It could due to many reasons, for example, company restructuring, cost cutting and so on. So, it’s better to know more about Malaysia Labor Law so that you will know what to do if bad luck fallen on you.

4 Responses to “Malaysia’s Labor Law: Retrenchment”

  1. Jayce Says:

    My company gave 1.5 month per year no matter how many year last time. But now no more retrenchment. But redeployment to other department. :P



  2. libraco Says:

    =) informative post. But i am not happy with my current job and still under contract TT.



  3. Regina Joseph Says:

    I am executive in big manufacturing company. I worked for 13 years, left the company & rejoined after a 5 month break. Now I have served the company for more that 15 years. I am asked to leave on a MSS. What should my benefits be?
    Thanks you



  4. Cynthia Says:

    Does this apply to the position of a Finance Manager who is with a company for 11 years and is told to retire early. His pay is more than RM6,000 and the company is a small and medium enterprise.



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