Malaysia’s Financial Blogger | Financial Freedom Ideas | imDavidLee.Com

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.

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:

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.