Contract of Service under Employment Act 1955

January 18, 2023

A contract of service is a legally binding agreement between an employer and an employee that outlines the terms and conditions of their working relationship. It is required under the Employment Act 1955 for all employees in Malaysia. A contract of service serves as a reference point for both the employer and employee and provides clarity on the expectations of the parties involved.

The Employment Act 1955 is the primary legislation governing employment relationships in Malaysia. Under the Act, employers must provide employees with a written contract of service within the first two months of employment. The contract of service must include, among other things, the employee`s job title, job scope, remuneration, and working hours.

One of the critical elements of a contract of service is the remuneration section, which outlines the employee`s salary, allowances, and benefits. Employers must make sure that the remuneration in the contract of service complies with the minimum wage rate set by the Malaysian government. As of January 1, 2021, the minimum wage rate for employees in Peninsular Malaysia is RM1,200 per month, while employees in Sabah, Sarawak, and Labuan have a minimum wage of RM1,100 per month.

The contract of service must also state the working hours, including the number of hours per day or week, and the days of rest. Under the Employment Act 1955, employees are entitled to one rest day per week.

The contract of service should also cover termination of employment. The Act provides that either party may terminate the employment relationship by giving the required notice period or payment in lieu of notice. The notice period is usually one month, although it may vary according to the terms of the contract of service.

In conclusion, a contract of service under the Employment Act 1955 is a crucial document that outlines the terms and conditions of an employment relationship in Malaysia. It protects the rights and interests of both the employer and employee and provides clarity on the expectations of the parties involved. Employers must provide a written contract of service to their employees within the first two months of employment and ensure that the agreement complies with the minimum wage rate, working hours, and termination provisions set by the Act.

Posted in Uncategorized