Fixed Term Contract Case in Malaysia

Fixed Term Contract Case in Malaysia: What You Need to Know

Fixed term contracts are a common practice in many industries, including Malaysia. These contracts are agreements between employers and employees that specify the duration of their employment and the conditions of their work. However, a recent case in Malaysia has highlighted the need for employers to be mindful of their obligations when it comes to fixed term contracts. In this article, we`ll take a closer look at the case and what it means for employers in Malaysia.

What is a fixed term contract?

A fixed term contract is a type of employment agreement where an employee is hired for a specific period of time. This could be for a few months, a year, or even several years. These contracts have a set end date, and the employee`s employment automatically terminates at the end of that contract.

Fixed term contracts are often used to cover temporary or project-based work. They`re useful for employers who need extra staff for a specific period of time but don`t want to commit to hiring a full-time employee. They`re also commonly used in industries that are cyclical in nature, such as agriculture, tourism, and retail.

What was the recent fixed term contract case in Malaysia?

In November 2020, a fixed term contract case made headlines in Malaysia. The case involved a former employee of a Malaysian airline who had been hired on a six-month fixed term contract. According to the employee, the airline had promised to extend his contract if he performed well. However, when his contract expired, he was not given an extension.

The employee then filed a complaint with the Malaysian Industrial Relations Department, claiming that the airline had breached his contract by not extending it. The case went to a hearing, where the airline argued that the contract had a clear end date and that they were under no obligation to extend it. The Industrial Relations Department ultimately ruled in favor of the airline, stating that fixed term contracts are legally binding and that employers are not required to renew them.

What does this case mean for employers in Malaysia?

The case serves as a reminder to employers in Malaysia to be mindful of their obligations when it comes to fixed term contracts. While these contracts can be useful for covering temporary or project-based work, employers must ensure that the terms of the contract are clear and unambiguous. They should also be aware of any promises they make to employees regarding contract extensions or renewals.

Employers should also be aware that fixed term contracts are subject to certain legal requirements. For example, under Malaysian law, fixed term contracts cannot be used to evade the obligations of an employer under the Employment Act 1955. This means that employees on fixed term contracts must still be entitled to benefits such as annual leave, sick leave, and public holidays.

Conclusion

Fixed term contracts are a common practice in Malaysia, but employers must be mindful of their obligations when using them. The recent case involving a Malaysian airline serves as a reminder that fixed term contracts are legally binding and that employers must ensure that the terms of the contract are clear and unambiguous. Employers should also be aware that fixed term contracts are subject to certain legal requirements, such as the entitlement to benefits under the Employment Act 1955. By being aware of these requirements and keeping their contracts clear and transparent, employers can avoid potential legal disputes and ensure that their employees are treated fairly.

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