work offer letter: termination clause

[kmlim]

Hi,
I've just got a job offer with a permanet position in a fairly big local company. But I've got this clause which sound like they can terminate me at any time by just paying 2 months salary regardless of my service period as below. So to me it is not a permanent job anymore:

“Termination will be on the basis of giving 2 months’ notice by either party or the payment by either party of a sum equivalent to 2 months’ salary in lieu of written notice"

Any place I could refer to like the labour office or could any "lawyer" out there comment a bit.

[coleslaw]

it's the norm in letter of offer. some requires a month and others more. so if u wanna resign, u need to give 2 months notice. that's all. permanent does not mean they can't fire u if u don't perform. except probably govt service.

[Ullas Sahadevan]

When you get a new job, you might be in a 'probationary' period for a few months, during which your services can be terminated with/ without proper notice. After a period of probation, you get 'confirmed'. Employers can still fire you, but this time a notice period is a mandatory clause. Do provide more details on where in this 'slave-to-the-grind' cycle are you right now?

[kmlim]

Employers can still fire you, but this time a notice period is a mandatory clause. Do provide more details on where in this 'slave-to-the-grind' cycle are you right now?
I can't think of any reason why they would terminate us except of course employee misconduct, can you just name a few reasons.
So you all are saying termination is not equal to retrenchment which will be compensated according to labour law right?

[Ullas Sahadevan]

I can't think of any reason why they would terminate us except of course employee misconduct, can you just name a few reasons.
So you all are saying termination is not equal to retrenchment which will be compensated according to labour law right?Well, companies/ management can fire you for non-performance. As far as I understand, retrenchment is when your company cannot afford to employ your services anymore. On the contrary, you can get fired when your company feels you haven't risen to their expectations AND they have found someone better. Employee Misconduct: yes that would be somewhere on the list too! :rolleyes:

[perceval]

No point worrying about the termination term unless you seriously are not performing at all. Prove yourself as an asset to the company and they'll declare you as a critical talent and termination will never happen to you unless the company goes into bankruptcy.
Anyway, all the best in your career ahead. :)

[iml109]

. Employee Misconduct: yes that would be somewhere on the list too! :rolleyes:

That should be under another clause, whether should you commit something like, they can terminate u on the stop. No payments / remaining salary given liao lor!

[birdy]

Please bare in mind that this is Employment Contract, any contract would incorporate termination of contract notice or compensation if termination term is not met. So, don't worry about this very much... if you contribute well to the company, your boss will not terminate you unless of course under unforseen circumstances, they hv to let go you, probably because your salary is a burden to them! :D

[La Vida Loca]

I can't think of any reason why they would terminate us except of course employee misconduct, can you just name a few reasons.
So you all are saying termination is not equal to retrenchment which will be compensated according to labour law right?
Just wanna add that if you're an executive with a salary of more than RM1500 per month, then you're not 'covered' under the labour law. Your company's Terms & Conditions of Employment takes precedence. You are of course welcome not to accept the stipulated Terms, but that will translate to not wanting the job. Best of luck.

[PeterLee]

Just wanna add that if you're an executive with a salary of more than RM1500 per month, then you're not 'covered' under the labour law. Your company's Terms & Conditions of Employment takes precedence. You are of course welcome not to accept the stipulated Terms, but that will translate to not wanting the job. Best of luck.

KM Lim, don't worry.
That's the standard clause for Letter of Offer of Employment.
It is included in all my L/O.
It takes time and money to employ new employees, normally no company would simply fire new recruit without any reason. They are more worried of employees leaving after a short span.
Even though you are still under probation, if you strongly feel that you have been unfairly dismissed, you can still bring your case to the Labour court, if your salary is below RM5K, or Industrial court if it is more than RM5K.
Unlike Singapore, Malaysia labour laws are pro-employees. It is not easy to terminate an employee in Malaysia.

[stanleywkh]

Peter from your post you seems to be very knowlegeable in the Employment Act and Labour Law. I have a question that I hope you can provide some advice.

This is a case of where the head of the company ( not the owner ) is trying to force my sister to resign by issuing warning letters with threats of domestic inquiry and dismissal where the points are all fabricated and she has all the evidence to prove them wrong. It is like a mental hell for her lately.
Her salary is below RM5K.

Can I PM you for advice on what alternatives she can resort to.

Thanks.


KM Lim, don't worry.
That's the standard clause for Letter of Offer of Employment.
It is included in all my L/O.
It takes time and money to employ new employees, normally no company would simply fire new recruit without any reason. They are more worried of employees leaving after a short span.
Even though you are still under probation, if you strongly feel that you have been unfairly dismissed, you can still bring your case to the Labour court, if your salary is below RM5K, or Industrial court if it is more than RM5K.
Unlike Singapore, Malaysia labour laws are pro-employees. It is not easy to terminate an employee in Malaysia.

[denver]

This is a case of where the head of the company ( not the owner ) is trying to force my sister to resign by issuing warning letters with threats of domestic inquiry and dismissal where the points are all fabricated and she has all the evidence to prove them wrong. It is like a mental hell for her lately.

A friend of mine was in a similar case a few years back. She went to the Labour office and seek advice from the officer there (bring all the evidences too). Like PeterLee said, our labour law is actually quite favourable to the employees. The officer should be able to help / give advice on what to do.

[kfboy]

A friend of mine was in a similar case a few years back. She went to the Labour office and seek advice from the officer there (bring all the evidences too). Like PeterLee said, our labour law is actually quite favourable to the employees. The officer should be able to help / give advice on what to do.

Stanley, advise your sister to reply every warning letter with evidence that they are wrong. If there is no response to the letters, the company can immediately terminate your sister. As long as she does, they do not have the excuses to terminate her.

[PeterLee]

This is a case of where the head of the company ( not the owner ) is trying to force my sister to resign by issuing warning letters with threats of domestic inquiry and dismissal where the points are all fabricated and she has all the evidence to prove them wrong. It is like a mental hell for her lately.
Her salary is below RM5K.



Better go to the nearest labour office as soon as possible.
Ask her to keep all evidences, witnesses for future court cases.
Important is she has to reply all warning letters with due care.
Don't fall into their trap.

[evelynlim]

Even though you are still under probation, if you strongly feel that you have been unfairly dismissed, you can still bring your case to the Labour court, if your salary is below RM5K, or Industrial court if it is more than RM5K.
Unlike Singapore, Malaysia labour laws are pro-employees. It is not easy to terminate an employee in Malaysia.

I thought Labour Court only for employee earning less than RM1500 and Industrial Court for more than RM1500 ? :confused:

[kmlim]

KM Lim, don't worry.
That's the standard clause for Letter of Offer of Employment.
It is included in all my L/O.
If the clause is standard then I am ok. Of course if due to misconduct or not performing I will be terminated. I only worries about terminating in way of retrenching and they will only compensate 2 months of salary regardless of service period as what I interpret from the clause posted.

[penangkia]

LOs are all pretty standard in Malaysia. But I am a little surprise that yours actually state that the employer has the right to terminate your service giving some notice. Usually only the confirmed employee needs to give notice.

An employee can be terminated on the spot for offences like cheating, starting a fight in the office, extreme insubordination like insulting his superiors in a meeting, sexual misbehaviour or any such serious misconducts.

To terminate an employee due to non-performance is usually a long winded process in Malaysia. The employer has to prove non-performance and that only after rounds of counseling, and also to prove that the tasks given to the employee is not beyond the employee's abilities in the case where the employee is given new tasks or is promoted. Length of service and rewards such as incentives and bonuses received also count.

Retrenchment must follow labour laws.

In the case of stanleywkh's sister, this is a case of harassment, if the sister believes she has done no wrong. Just answer the warning letters with evidences that the allegations were unfounded. Do it in a professional and NOT an emotional manner....OR
Alternatively, she can resign under protest citing duress from the constant harassments and then sue the company. This of course will depend on how much she want to keep/need her job. And please consult a labour lawyer before doing so to assess the strength of her case. This could well come under Constructive Dismissal.

Terms n conditions in LOs are not always set in concrete. If certain clauses are too bias towards the employer, it can always be challenge in court even if the employee have signed it. Especially if certain conditions are "illegal"

Let me give an example :
Have you seen such condition which prohibits an employee from working for a competitor when he/she resigns from the company ?
The laws in Malaysia do not recognise this, so even if you have signed and committed to this, there is nothing the company can do to stop you from joining a competitor or any other related jobs.

In any case, the best is to consult a lawyer or Labour dept. before taking any actions.

It is true ( rightly or wrongly) that in Bolehland, the courts are usually more sympathetic towards the employee.

[termibait]

LOs are all pretty standard in Malaysia. But I am a little surprise that yours actually state that the employer has the right to terminate your service giving some notice. Usually only the confirmed employee needs to give notice.

An employee can be terminated on the spot for offences like cheating, starting a fight in the office, extreme insubordination like insulting his superiors in a meeting, sexual misbehaviour or any such serious misconducts.

To terminate an employee due to non-performance is usually a long winded process in Malaysia. The employer has to prove non-performance and that only after rounds of counseling, and also to prove that the tasks given to the employee is not beyond the employee's abilities in the case where the employee is given new tasks or is promoted. Length of service and rewards such as incentives and bonuses received also count.

Retrenchment must follow labour laws.

In the case of stanleywkh's sister, this is a case of harassment, if the sister believes she has done no wrong. Just answer the warning letters with evidences that the allegations were unfounded. Do it in a professional and NOT an emotional manner....OR
Alternatively, she can resign under protest citing duress from the constant harassments and then sue the company. This of course will depend on how much she want to keep/need her job. And please consult a labour lawyer before doing so to assess the strength of her case. This could well come under Constructive Dismissal.

Terms n conditions in LOs are not always set in concrete. If certain clauses are too bias towards the employer, it can always be challenge in court even if the employee have signed it. Especially if certain conditions are "illegal"

Let me give an example :
Have you seen such condition which prohibits an employee from working for a competitor when he/she resigns from the company ?
The laws in Malaysia do not recognise this, so even if you have signed and committed to this, there is nothing the company can do to stop you from joining a competitor or any other related jobs.

In any case, the best is to consult a lawyer or Labour dept. before taking any actions.

It is true ( rightly or wrongly) that in Bolehland, the courts are usually more sympathetic towards the employee.

hi penangkia,

Are you sure abuot " THe laws in Malaysia do not recognise this [Have you seen such condition which prohibits an employee from working for a competitor when he/she resigns from the company ?]?

My friend who has signed a service agreement with a company 3 years ago, has been issued a summon letter from the company's lawyer due to her joining the competitor!!! And she is currently seeking legal advice! What shall she do now? go to INdustrial court? or Labour court to seek advice?

[penangkia]

hi penangkia,

Are you sure abuot " THe laws in Malaysia do not recognise this [Have you seen such condition which prohibits an employee from working for a competitor when he/she resigns from the company ?]?

My friend who has signed a service agreement with a company 3 years ago, has been issued a summon letter from the company's lawyer due to her joining the competitor!!! And she is currently seeking legal advice! What shall she do now? go to INdustrial court? or Labour court to seek advice?


Yes I am quite sure about this. But I don't know the specific circumstances about your friend's case. You said that your friend is now seeking legal advice..that's good. What did the lawyer say ?

(Quote)
"Section 28 of the Contracts Act,1950 declares every agreement by which anyone is restrained from exercising a lawful profession,trade or business of any kind is to that extent void." (Unquote)

It's like for example, a doctor working for SJMC being prohibited to work for another hospital when he choose to resign ( for whatever reasons). How then can he earn a living if practising medicine is all he knows to make a living ?

I am not offering legal advice here but merely sharing a similar experience some years ago. My ex-company tried to prevent me from joining a competitor company reminding me of my LO. I told them to ask their lawyers to refer to my lawyer. Never heard from them again.

Your friend's should continue to consult with his/her lawyer.

For the benefit of this forum, it would be interesting to hear of the outcome of your friend's case.

[sinleong]

Well, companies/ management can fire you for non-performance. As far as I understand, retrenchment is when your company cannot afford to employ your services anymore. On the contrary, you can get fired when your company feels you haven't risen to their expectations AND they have found someone better. Employee Misconduct: yes that would be somewhere on the list too! :rolleyes:

it's not so easy to fire anyone in Malaysia. Although the contract says that the company has the right to terminate you by giving 2 months notice, this clause does not have any legal standing in the court of law.

In order to terminate you for misconduct or non-performance, the company must issue you at least 3 written warnings. after each warning is given, you are given sufficient time to correct yourself or explain yourself. unless your offence is so serious, such as murder, rape or selling the company's secrets.

If the company decides to retrench you, the company must prove that they are losing money or unable to sustain and also that your job function is no longer there. if the company out-source your job, it means your job function still exists and the company cannot retrench you.

Even in the case of retrenchment, the company must follow a set of guidelines by the Industrial Relations dept.

if you need further information about the Labour law or Industrial Law please do not hesistate to PM me.

[sinleong]

I am not offering legal advice here but merely sharing a similar experience some years ago. My ex-company tried to prevent me from joining a competitor company reminding me of my LO. I told them to ask their lawyers to refer to my lawyer. Never heard from them again.

Your friend's should continue to consult with his/her lawyer.

For the benefit of this forum, it would be interesting to hear of the outcome of your friend's case.

yes, penangkia, you are right. due to section 28, a clause stating that you cannot join a competitor has no legal standing in court. however, it is an ethical reason. i remember some years back when i tried to hire a competitor's sales manager. when he found out that my company is his company's competitor, he declined the offer although we were almost doubling his salary. though disappointed, i now have much respect for this man.

[birdy]

i remember some years back when i tried to hire a competitor's sales manager. when he found out that my company is his company's competitor, he declined the offer although we were almost doubling his salary. though disappointed, i now have much respect for this man.
:rolleyes: Hmm....sounds to me that he is not a good sales person....he only found out about his competitors after interviewed by you. As a good sales person, he should well verse with who are the main players in the market, how other players participate in the market, etc... (sorry side track a bit)

Since we are on this employment contract topic.... if I may ask - can we terminate the contract with the employer supposing the employer did not contribute the EPF on timely basis? A friend of mine has not been getting his EPF for the entire 2006. When he checked with the employer, the employer said they will pay later. Currently cash flow tight. :eek: I was wondering, since employer LO normally will state a section on statutory contributions such as EPF at the statutory rate, etc... can one terminate this contract on this ground? Any comment?

[chin_wan]

KM Lim, don't worry.
That's the standard clause for Letter of Offer of Employment.
It is included in all my L/O.
It takes time and money to employ new employees, normally no company would simply fire new recruit without any reason. They are more worried of employees leaving after a short span.
Even though you are still under probation, if you strongly feel that you have been unfairly dismissed, you can still bring your case to the Labour court, if your salary is below RM5K, or Industrial court if it is more than RM5K.
Unlike Singapore, Malaysia labour laws are pro-employees. It is not easy to terminate an employee in Malaysia.

Listen to this dude... ;)

[penangkia]

yes, penangkia, you are right. due to section 28, a clause stating that you cannot join a competitor has no legal standing in court. however, it is an ethical reason. i remember some years back when i tried to hire a competitor's sales manager. when he found out that my company is his company's competitor, he declined the offer although we were almost doubling his salary. though disappointed, i now have much respect for this man.

For me, ethics as discussed above has no basis. Like what birdy said, this "sales manager" is either dumb for not knowing that he was interviewed by a competitor until the last moment, or worse...he has no intention of joining but wormed himself in to find out what the competitor is up to. That is cunning not ethics.

Anyway, my believe now is that we ( employees) even in very senior management positions, are nothing more than pawns in the world of heartless corporate chessboards. If ethics means we should not join competitors, then what is ethics when your company is sold to a competitor.
I see this happening so often these days to friends and relatives... 45 year old employees ( from clerks to GMs ) were left without a job when they and their families needed it most. What ethics do we called that?

No, I have long untied myself from the shackles of this false belief.

Yes, loyalty and ethics are important when we conduct ourselves in the performance of our daily duties.,,and we try to perform over and above the worth our salaries.
Beyond that, self and family come first as far as future advancement of oneself is concern.

[termibait]

My friend has consulted a Lawyer. She was told not to worry too much. If her Ex-employer really pursuit the case, the most they can restrict her activities would be only 5KM radius from their trading company address.

she is relieved now!

[mark.eleven]

Anyway, my believe now is that we ( employees) even in very senior management positions, are nothing more than pawns in the world of heartless corporate chessboards. If ethics means we should not join competitors, then what is ethics when your company is sold to a competitor.
I see this happening so often these days to friends and relatives... 45 year old employees ( from clerks to GMs ) were left without a job when they and their families needed it most. What ethics do we called that?

I fully second this.

My boss was a high flyer GM in one very prominent US MNC IT firm, head-hunted over to my company to head a new division. Within a year, he was ousted, the department was closed down, and all of us were left with no jobs.

I was the last one survivor, at least until last week. They slashed my salary by more than 65%, effectively in a way, "firing" me without compensation, with a so called "restucturing plan".

I guess this is corporate ethics.

[birdy]

I fully second this.

My boss was a high flyer GM in one very prominent US MNC IT firm, head-hunted over to my company to head a new division. Within a year, he was ousted, the department was closed down, and all of us were left with no jobs.

I was the last one survivor, at least until last week. They slashed my salary by more than 65%, effectively in a way, "firing" me without compensation, with a so called "restucturing plan".

I guess this is corporate ethics.
I thought labour law prohibits employer from simply 'downgrade' a employee... The same applies to the salary as well. They cannot cut salary simply b'coz tight cashflow, etc... or can they?

[mark.eleven]

I thought labour law prohibits employer from simply 'downgrade' a employee... The same applies to the salary as well. They cannot cut salary simply b'coz tight cashflow, etc... or can they?
Not sure about that,... maybe someone expert can comment on this.

But anyway, we're all on contract (usual case in the IT line). There's a clause that say both party can terminate the contract by giving one month's notice.

They actually proposed to reduce my salary by 65%, I rejected it and my new boss said then I'll need to leave and gave me 6 weeks' notice. Since it's more than the stipulated notice in the contract, I don't think I can do much, unless I can accept their "restructuring plan" which requires me to reduce salary by 65%.

[Ullas Sahadevan]

it's not so easy to fire anyone in Malaysia...if you need further information about the Labour law or Industrial Law please do not hesistate to PM me.Wow, thanks for sharing that detailed info SinLeong! I have a question for you though, if a person is in probationary period, how fast can an employer end up firing him/her?

[ksj_cool]

If under probation 24 hrs notice!

[mark.eleven]

If under probation 24 hrs notice!
It actually depends on the Employment Letter. Some probations have tender notice of 2 weeks, some 1 month.

[Sentinel]

Hi,
I've just got a job offer with a permanet position in a fairly big local company. But I've got this clause which sound like they can terminate me at any time by just paying 2 months salary regardless of my service period as below. So to me it is not a permanent job anymore:

“Termination will be on the basis of giving 2 months’ notice by either party or the payment by either party of a sum equivalent to 2 months’ salary in lieu of written notice"

Any place I could refer to like the labour office or could any "lawyer" out there comment a bit.

I have been working for 25 years after my graduation and except for the present employer, all the previous 4 have been top MNCs. All my Letter of Employment has this termination clause and i have not been terminated before according to this clause. Its always me terminating the employers... :D :D :D :D

[birdy]

They actually proposed to reduce my salary by 65%, I rejected it and my new boss said then I'll need to leave and gave me 6 weeks' notice. Since it's more than the stipulated notice in the contract, I don't think I can do much, unless I can accept their "restructuring plan" which requires me to reduce salary by 65%.
I personally think that this would be unlawful dismissal even though it is mentioned that either party can give notice to terminate the contract. ... if this is allow, I think the employment market will be in a chaos today. Imagine, if a boss doesn't like you, he can tell u that he will cut your salary and you on the other hand, feeling unhappy and resign.

Any experts can comment on this? I ain't expert in this field ... but my common sense tells me that this should not be right. Any comments? :confused: :confused:

[Saruman]

If the clause is standard then I am ok. Of course if due to misconduct or not performing I will be terminated. I only worries about terminating in way of retrenching and they will only compensate 2 months of salary regardless of service period as what I interpret from the clause posted.

The longer your period of employment, the harder it becomes for them to justify terminating you, other than for reasons of gross misconduct.

More so if they have confirmed your employment.

Your letter should actually spell out the probationary period, usually 3 to 6 months, which can be extended by the empoyer but this has to be in writing, during which the termination can be as short as 24 hours notice by either party.

Termination clauses are fairly standard in employment contracts and, depending on the designation and the responsibilities that come with it, can range from three to six months.

P/S Not a lawyer, just an ordinary guy who has been through numerous letters of employment over the years. :)

[Andersen]

I thought labour law prohibits employer from simply 'downgrade' a employee... The same applies to the salary as well. They cannot cut salary simply b'coz tight cashflow, etc... or can they?

Downgrading or cold freezing an employee without sound justification and which leads to the resignation of the employee can be considered 'constructive dismissal'. One can claim damages or reinstatement in the appropriate labour/industrial courts. But it wouldn't be so nice if the newspapers flashes your face or name over such a case...