Terminating an employee in Malaysia requires careful adherence to the country's employment laws and regulations. Employers must understand the specific requirements for notice periods, severance pay, and justifiable reasons for termination to avoid potential legal challenges. Following proper procedures and documenting all steps is crucial for ensuring a smooth and legally compliant termination process.
Navigating Malaysian employment law can be complex, especially when dealing with termination. This guide provides an overview of the key aspects of termination procedures and severance pay in Malaysia, focusing on the requirements for 2025. Understanding these guidelines is essential for employers to ensure compliance and minimize the risk of disputes.
Notice Period Requirements
The required notice period for termination in Malaysia depends on the employee's length of service. The Employment Act 1955 outlines the minimum notice periods that employers must provide:
| Length of Service | Minimum Notice Period |
|---|---|
| Less than 2 years | 4 weeks |
| 2 years or more but less than 5 years | 6 weeks |
| 5 years or more | 8 weeks |
- Payment in Lieu of Notice: If an employer chooses to terminate an employee without providing the required notice, they must pay the employee a sum equivalent to the salary the employee would have earned during the notice period.
- Contractual Agreements: Employment contracts may stipulate longer notice periods than the statutory minimums. In such cases, the contractual terms prevail.
- Probationary Employees: The notice period for employees on probation is typically shorter and as specified in the employment contract. If the contract is silent, the statutory minimums apply.
Severance Pay Calculations and Entitlements
Severance pay, also known as termination benefits, is payable to employees who are terminated due to redundancy or retrenchment. The Employment Act 1955 specifies the minimum severance pay entitlements:
| Length of Service | Severance Pay Entitlement
