WHAT IS A CONTRACT OF SERVICE
CONTRACT OF SERVICE
Contract of service means
any agreement, whether oral or in writing and whether express or implied,
whereby one person agrees to employ another as an employee and that other agree
to serve his employer as his employee and includes an apprenticeship contract
(s.2 EA).
A contract of service may be oral or in writing, but under Rule 5 (b) and
8 Employment Regulations 1957 the following terms must be given to an
employee in writing on or before the commencement of his employment ;
•
name of employee/NRIC
•
occupation or appointment
•
wage rates (excluding allowances)
•
allowances payable and rates
•
rates for overtime work
Implied Terms in a CoS are
terms which the law assumes to be known by both the employer and employee -
essential to facilitate the smooth running of the business. E.g:
•
to work diligently and
honestly
•
to be punctual
•
to obey all lawful orders,
instructions, regulations etc
•
not to be absent without
leave
•
not to commit fraud or
criminal breach of trust
Express conditions on the
other hand are those expressly stated in the contract, job description, company
handbook or manual, circulars, memos etc
However by Sec 10 - a
contract of service for a specific period of time exceeding one month or for
the performance of a specified piece of work which is likely to take more than
a month to complete - MUST be in writing.
The terms and condition of a CoS which are less favourable than those stipulated in the EA - will be null and void but those which are more favourable are allowed - as long as not contravene any express prohibition under the Act.
A CoS cannot be changed
unilaterally by either party
In SPORTS TOTO MALAYSIA v. WONG
YAT SING (1998) 1 ILR 79
The company unilaterally
vary the age of retirement of the claimant through a company letter send to him
where no such clause existed in his letter of appointment. The claimant claimed
termination was illegal and without just cause.IC held that the termination was
indeed without just cause and order termination benefits to be paid to the claimant.
A CoS cannot in any way
restrain an employee from joining a Trade Union, join in the activities or
organizing the formation of a TU
In every written CoS- manner
in which the contract may be terminated by either party must be set out.
The EA allows for the
employer and employee to agree upon the notice period between themselves
provided that:
– the period agreed upon is the same for both parties
– such provision for notice is put in writing
If either party wants to
terminate the CoS - give notice of his intention to do so in the agreed period
as stated in the CoS
If there is no such
provision included in the CoS, then the notice period SHALL NOT BE LESS THAN
i.e.the minimum of:
•
4 weeks notice if employed
less than 2 years
•
6 weeks notice if employed
for more than 2 years but less than 5 years
•
8 weeks notice if has been
employed for more than 5 years
Usually the notice period
contained in the CoS comes into play when the employee wants to resign from his
job.
However in case of
termination - the notice period required may differ according to the ground for
termination
Where the grounds for
termination is related to retrenchment due to:
•
closure of business
•
shrinkage of operation,
restructuring or reorganization
•
change in the business
ownership (sale, merger, takeover etc)
•
refusal of the employee to
accept a transfer that he is not contractually bound to
then the law requires that a
notice to be served to the employee and the period must NOT BE LESS than those
prescribed by Sec 12(2) regardless of anything contained in the CoS.
If any party fails to
provide any notice of termination - has to pay the other indemnity in lieu of
notice for example: one day’s wage for each day of notice short of the required
period.
The requirement of notice
may be dispensed with :
•
if the party who is supposed
to receive it agree to waive his rights
•
in the case of the dismissal
for misconduct of the employee
•
in situation where the
termination is caused by willful breach of the CoS by either party e.g:
◦ employee Absence Without Leave more than 2 days -
Sec 15 (2)
◦ employer not pay wages according to the law - Sec
15(1)
◦ employee terminate contract due to immediate threat
to the safety of him and his family
WHAT IS A CONTRACT OF SERVICE
Reviewed by Kamaruddin Mahmood
on
11:13:00 PTG
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