Job terms

The Star Malaysia - Star2 - - INSIGHT - BHAG SINGH star2@thes­tar.com.my

IN Malaysia, once an em­ployee is con­firmed in his job, he en­joys se­cu­rity of ten­ure. This means an em­ployee can­not ar­bi­trar­ily have his em­ploy­ment ter­mi­nated, and this ap­plies whether one is in the govern­ment or pri­vate sec­tor. The em­ploy­ment is thus viewed as be­ing “per­ma­nent”.

How­ever, there are oc­ca­sions when an em­ployee is not hired on a per­ma­nent ba­sis but on con­tract. Of course the em­ploy­ment even when per­ma­nent is also based on a con­tract. But in prac­tice, the word “con­tract em­ploy­ment” is used to mean that the per­son is em­ployed for a fixed pe­riod and not per­ma­nently.

The word “per­ma­nent’ it­self is am­bigu­ous. To start with, noth­ing in life is per­ma­nent. But “per­ma­nent” in this con­text means con­tin­ued em­ploy­ment un­til the a fixed term con­tract can be deemed per­ma­nent if re­peat­edly re­newed. per­son reaches the age of re­tire­ment.

In the past, 55 years was re­garded in many jobs as the age for re­tire­ment. There have been changes to this age limit in re­cent years. Read­ers will no doubt be aware of the on­go­ing dis­cus­sions by stake­holder on the is­sue of re­tire­ment age.

What­ever the age limit, the law pro­vides se­cu­rity of ten­ure un­til re­tire­ment. Ac­cord­ingly, in the non-govern­ment sec­tor, the In­dus­trial Re­la­tions Act 1967 en­sures that an em­ployee can­not be dis­missed with­out just cause.

Short-term needs

So how does an em­ployer meet his short term needs? By en­gag­ing an em­ployee un­der a “fixed term con­tract”.

This would be em­ploy­ment for a def­i­nite and fixed pe­riod of time.

A per­son em­ployed un­der a fixed term con­tract is also en­ti­tled to statu­tory con­tri­bu­tions like those to the Em­ploy­ees Prov­i­dent Fund and Socso. Where the Em­ploy­ment Act 1955 ap­plies, other min­i­mum stan­dards must also be com­plied with. Other­wise, the con­trac­tual terms will pre­vail.

In a way, a per­son en­gaged on a fixed term ba­sis is a tem­po­rary em­ployee. How­ever, this does not mean that such an em­ployee can be asked to leave at the whims and fan­cies of the em­ployer. A con­tract worker is as­sured of em­ploy­ment at least for the agreed pe­riod.

In the case of United En­gi­neers Malaysia Bhd vs Jur­gen H. Dor­becker, the plain­tiff’s en­gage­ment as an en­gi­neer for a three year-pe­riod was ter­mi­nated af­ter two years. In the In­dus­trial Court it was held that the ter­mi­na­tion was in breach of the con­tract of em­ploy­ment and he was awarded com­pen­sa­tion equiv­a­lent to his earn­ings for the re­main­ing pe­riod.

If for ex­am­ple a per­son is en­gaged for five years, the em­ployer must al­low the con­tract – in the ab­sence of breaches on the worker’s part – to com­plete the five years. The em­ployer is of course free to dis­miss the em­ployee if there is any mis­con­duct or jus­ti­fi­able breach. In all other cases, the con­tract can­not be ter­mi­nated by no­tice be­fore the ex­piry of the fixed term.

The need for en­gag­ing a per­son on a fixed term ba­sis is of­ten dic­tated by a va­ri­ety of fac­tors. This is re­ferred to in Han Chi­ang High School vs National Union of Teach­ers in Independent Schools in the fol­low­ing words:

“Such fixed term con­tracts for tem­po­rary on-off jobs are an im­por­tant part of the range of em­ploy­ment re­la­tion­ship. Some such jobs are found in sea­sonal work, work to fill gaps caused by tem­po­rary ab­sence of per­ma­nent staff who are on train­ing, and the per­for­mance of spe­cific tasks such as re­search.”

Ter­mi­na­tion and ex­ten­sion

In the case of fixed term con- tracts, un­less a ter­mi­na­tion oc­curs ear­lier, the em­ploy­ment con­tract would come to an end by it­self. This is re­flected in Sec­tion 11(1) of the Em­ploy­ment Act 1955:

“A con­tract of ser­vices for a spec­i­fied pe­riod of time or for the per­for­mance of a spec­i­fied piece of work shall, un­less other­wise ter­mi­nated in ac­cor­dance with this part, ter­mi­nate when the pe­riod of time for which such con­tract was made has ex­pired or when the piece of work spec­i­fied in such con­tract has been com­pleted.”

Any con­tin­ued em­ploy­ment will de­pend on whether there is fur­ther ar­range­ment made. Whether it is called ex­ten­sion, re­newal or new con­tract, there is in re­al­ity no au­to­matic right to con­tinue.

But em­ploy­ers must re­alise that en­ter­ing into fixed term con­tracts when the in­ten­tion is ac­tu­ally to pro­long the em­ploy­ment can cause prob­lems. Con­tin­ued re­newals may give rise to an ex­pec­ta­tion in the mind of the em­ployee that the con­tract will keep on be­ing re­newed.

In Han Chi­ang High School vs National Union of Teach­ers in Independent Schools, the teach­ers were en­gaged on an­nual con­tracts which were ter­mi­nated at the end of each year and new con­tracts were pro­vided the fol­low­ing year. The In­dus­trial Court hence ruled that the teach­ers were em­ployed on a per­ma­nent ba­sis and not on fixed term con­tracts.

The law on this sub­ject seeks to draw a bal­ance be­tween em­ploy­ers who are forced to en­gage per­son­nel for a fixed term, and to pro­tect em­ploy­ees from be­ing de­prived of per­ma­nent em­ploy­ment through so called fixed term con­tracts.

In this con­nec­tion, the words of Phillips J in Terry vs East Sus­sex County Coun­cil are ap­pro­pri­ate: “The great thing is to make sure that the case is a gen­uine one – on the one hand, em­ploy­ers who have a gen­uine need for a fixed term em­ploy­ment, which can be seen from the out­set not to be on go­ing, need to be pro­tected. On the other hand em­ploy­ees have to be pro­tected against be­ing de­prived of their rights through or­di­nary em­ploy­ment be­ing dressed up in the form of tem­po­rary fixed term con­tracts. What we are say­ing in this judg­ment in that there is no magic about fixed term con­tracts.”

Thus in Bhat­tacharyya vs Sec­re­tary Gen­eral of UN, it was held that “as a gen­eral rule a fixed term ap­point­ment does not carry the right of re­newal. Nev­er­the­less the tri­bunal is com­pe­tent to ex­am­ine the sur­round­ing facts in which the let­ter of ap­point­ment was signed. The tri­bunal has to con­sider the con­tract as a whole not only by ref­er­ence to the let­ter of ap­point­ment but also in re­la­tion to the cir­cum­stances in which the con­tract was con­cluded.” n Read­ers who have ques­tions per­tain­ing to le­gal mat­ters can e-mail Bhag Singh at star2@thes­tar.com. my.

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