y System

and
Terminatio
n of
Service
Chapter 9

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  Effective systems of taking disciplinary action.
 The problems relating to transfer of workers.

Preview
 The criteria to be used in promoting workers.
 Methods for handling employee grievances.
 Dealing with absenteeism.
 The role of the Industrial Court in termination
of an employee’s contract.

Copyright © 2023 by McGraw Hill Malaysia. All rights reserved.

 Expiry of fixed-term contracts.
Resignation and retirement.
Preview Causes of redundancy and recommended
procedures for retrenching workers.

(cont.) Appropriate dismissal procedures to be used in

cases of misconduct and poor performance.
Rights of employers to terminate employment
contracts.

Copyright © 2023 by McGraw Hill Malaysia. All rights reserved.

 A disciplinary system must be fair and just.
In a fair disciplinary system, employees know the
rules, and know what they can do and what they
Disciplinar cannot do.
When employees behave in an unacceptable
y Systems manner, they are punished.
The purpose of punishment is to change the
employee’s behaviour and to send a warning to
other employees that unacceptable behaviour
will not be tolerated.

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 When employees commit misconduct, they
may be penalized. Penalties that may be
imposed include:
Oral warning
Penalties Written warning(s)
Suspension without pay
Demotion or downgrading
Dismissal

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 Transfer
Potentially
Transfer is a lateral move of an
Problemati employee from one job to another, or
c Issues from one department to another, or
from one site to another.

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 Employers transfer employees:
To fill vacancies for experienced workers
To solve people problems
To provide training to employees
Transfers
Employees may request transfers:
For personal, non-work related reasons
To have an opportunity to learn
To overcome boredom

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 Transfer is a managerial prerogative.
Employers have the right to transfer an employee,
but the right is subject to:
Any express clause in the contract of
Transfers employment.

(cont.) The reason for the transfer must be a legitimate

business reason.
The reason for the transfer must not be for the
purpose of harassing or victimizing the employee.
The transfer must not be to the detriment of the
employee’s terms and conditions of employment.

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 Promotion is reassignment of an
Promotion employee to a job at a higher level in
the organization.
of Promotion opportunities motivate
Employees employees, providing the promotion
system is perceived as being fair and
transparent.

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 Criteria for Promotion
Promotion Seniority
of Merit
Employees
An Effective performance appraisal
system is required to identify which
(cont.) employees are suitable for
promotion.

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 Effects of Unresolved Grievances
Resignation of employees
Depression amongst employees
Poor quality and quantity of work

Grievance High accident rate

High rate of illness

Handling Complaints from customers

Complaints to the Department of Labour and other bodies
Aggressive unionism
Reduced output
Lowered productivity
Lowered profitability

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 A grievance procedure is a formal
process for hearing and resolving
employees’ complaints.
Grievance A grievance procedure will establish
Procedure deadlines for each stage at which a
grievance is heard.
Grievances should be settled at the
lowest level possible.

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 Managers must be trained on how to
handle grievances.
Grievance Grievance handling requires:
Listening skills
Procedure Understanding of rights of employees
(cont.) and employers
Counselling skills
Problem-solving skills

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 Workers who are regularly absent from work
without permission granted in advance cause
problems.
Employers must have systems in place to
Absenteeis reduce unauthorized absences.
Keep records
m Have clear procedures
Take disciplinary action, when necessary
Employers may encourage full attendance by
offering incentives.

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 Employees may be punished for absence.
Employees within the scope of the
Employment Act or Sabah/Sarawak Labour
Penalties Ordinances:
for Absence without leave for more than 2
consecutive days is a breach of contract for
Absence which the employee may be dismissed.
Prior to any dismissal, proper procedures
must be followed.

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 All employees in the private sector have
The the right to challenge the termination of
Industrial their contract of employment by taking
Relations Act the following steps:
1. File request for reinstatement at the
and nearest Department of Industrial
Termination Relations (IR).
of 2. Attend a conciliation meeting with the
ex-employer, called for by the
Employment Department of IR.

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 The 3. As a result of conciliation:
Industrial the employer may agree to reinstate
the employee, or
Relations Act the employee may agree to withdraw
and his claim, or
Termination the employer and employee may

of agree on a compensation package to

settle the claim, or
Employment the employer and employee may not
(cont.) reach any agreement.

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 The
Industrial
4.Where no agreement is reached, the
Relations Act Director-General of Industrial Relations
and will refer the dispute to the Industrial
Court for arbitration.
Termination
of 5.When the dispute is referred to the
Industrial Court, a hearing will be held.
Employment
(cont.)

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 The 6. The Industrial Court will decide whether
Industrial the employee was dismissed with or
without just cause or excuse.
Relations Act 7. If the dismissal was without just cause
and or excuse, the court will either:
Termination order the employer to reinstate the
employee, or
of
order the employer to pay compensation
Employment to the employee for loss of his
(cont.) employment.

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 The Industrial Court has the power to
Compensatio decide on how much compensation should
be paid to the employee by the employer.
n Formula Typically, the formula followed is:
for Dismissal  back wages from the date of dismissal up to the
date of the court decision, with a maximum of 24
without Just months, and
Cause or  one month’s wages for every year of the
employee’s service.
Excuse The formula is frequently varied, depending
on the circumstances of each case.

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 Fixed-term contracts expire at the end of
the agreed time period.
Fixed- Fixed-term contracts are acceptable to the
Industrial Court if they are for genuine
Term business reasons.
Contracts An employee on fixed-term contract may
file a claim under the Industrial Relations
Act if his contract is not renewed.

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 Fixed-
The Industrial Court will not interfere with
Term an employer’s decision not to renew a
Contracts fixed-term contract if the employer has an
acceptable reason for the decision.
(cont.)

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 Employees have the right to resign
without assigning any reason.
Resignatio Prior to resigning, an employee must
n give notice to the employer as
required by his contract of
employment.

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 As of 2014, the minimum retirement
age for employees is 60.
Retirement
How can an employer help employees
prepare for retirement?

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 Redundancy occurs when an
employer has excess employees.
Redundancy Redundancy may be caused by:
and Mergers and acquisitions
Retrenchmen Restructuring
t Financial problems
Changes in technology

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 Redundant employees may be
Redundancy retrenched.
and Because of the negative consequences
Retrenchmen of retrenchment to employees and
society, employers are expected to
t (cont.) avoid retrenching employees,
if possible.

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 To avoid retrenchment, employers could:
Redundancy Freeze external recruitment and redeploy
employees into any vacancies which arise.
and Conduct a voluntary separation scheme
Retrenchmen (VSS).
t (cont.) Reduce costs.
Reduce wages if employees agree.

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 Procedures for Retrenchment
Consult the trade union and inform the
Redundancy workforce
and Choose who to retrench
Retrenchmen Provide outplacement services
t (cont.) Inform the Labour Department
Pay termination or retrenchment benefits

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 Misconduct is any behaviour which is in
conflict with the employer’s interests.
Dismissal
Employers have the right to punish an
for employee for misconduct.
Misconduct
Major misconduct may be punished by
dismissal.

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 Before dismissing an employee on grounds
Dismissal of misconduct, an employer must:
Carefully record any complaint of alleged
for wrongdoing.
Misconduct Investigate the complaint thoroughly.
(cont.) Charge the employee.
Hold a domestic inquiry.

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 Dismissal Before dismissing an employee on grounds
of poor performance, an employer must:
for Poor Warn the employee.
Performanc Assist him to improve his performance.
e Give him adequate time to improve.

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 Frustration of contract occurs when an
employee is unable to perform the work for
which he was employed because of reasons
beyond his control.
Frustration For example:
of Contract Detention by the authorities for a lengthy
period of time
Serious illness or medical incapacity
Withdrawal of license required for the job

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 Tests for Constructive Dismissal
The employer must have breached the employee’s
contract of employment.
Constructiv The breach of contract must be a breach of a
major or key element in the contract.
e Dismissal The employee must leave his employment in a
timely manner.
The employee must leave his employment as a
result of the breach, and not for any other reason.

Copyright © 2023 by McGraw Hill Malaysia. All rights reserved.

 Effective systems of taking disciplinary action.
The problems relating to transfer of workers.

Review
The criteria to be used in promoting workers.
Methods for handling employee grievances.
Dealing with absenteeism.
The role of the Industrial Court in termination of
an employee’s contract.

Copyright © 2023 by McGraw Hill Malaysia. All rights reserved.

 Expiry of fixed-term contracts.
Resignation and retirement.
Review Causes of redundancy and recommended
procedures for retrenching workers.

(cont.) Appropriate dismissal procedures to be used in

cases of misconduct and poor performance.
Rights of employers to terminate employment
contracts.

Copyright © 2023 by McGraw Hill Malaysia. All rights reserved.