Malaysia: Termination of employment

Original and updating authors: Lydia Lai Syn Yi and Lim Pei Yuan, Michael Chai & Co.

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Summary

• Employment contracts can generally be terminated by the employer or employee at any time with notice or payment in lieu of notice. (See General)
• Except in cases of summary dismissals, where the employer wishes to dismiss an employee, it must give notice or make a payment in lieu of notice. (See Notice periods)
• An employer can only dismiss an employee with just cause or excuse. Possible grounds for dismissal include misconduct, poor performance, prolonged illness and redundancy. (See Grounds for termination)
• A mutual separation agreement is a voluntary, consensual agreement between an employer and employee to terminate the employment relationship. (See Termination by mutual consent)
• An employee can claim constructive dismissal if their employer fundamentally breaches the employment contract and the employee must prove they were forced to resign due to the employer's conduct. (See Constructive dismissal)
• Employers must not dismiss employees on the ground of age before they reach the retirement age. (See Retirement)
• Female employees are protected from termination due to pregnancy or related illness, except in cases of wilful breach of contract, misconduct, or business closure. (See Protection against dismissal)
• Employers can only dismiss an employee with just cause or excuse. (See Unfair dismissal)
• Employees who have been employed for at least 12 months are entitled to termination benefits, except in cases of retirement with provided benefits, misconduct, voluntary resignation without employer breach, or leaving before the notice period ends without employer consent. (See Severance payments)
• Employers must comply with personal data protection legislation when providing references, ensure references are truthful to avoid civil claims, and keep proper documentation of employment termination. (See References)
• Employers should keep proper documentation related to an employee's termination of employment. (See Termination paperwork)
• Relevant employees who believe that they have been dismissed without just cause or excuse, may lodge a claim in the Industrial Court. (See Contesting dismissals)