Employment Act 1955 Fixed Term Contract

The Employment Act 1955 (EA) encompasses a range of employment-related legislations in Malaysia, including Fixed-Term Contract (FTC) regulations. In this article, we will delve into the particulars of the EA`s FTC policies, including the benefits and drawbacks of employing workers under fixed-term contracts.

What are Fixed-Term Contracts (FTCs)?

Fixed-term contracts refer to an agreement between an employer and an employee, stipulating the duration of employment, which is typically for a specific period. Under an FTC, the employer and employee are bound by the duration and terms of the employment agreement.

The EA`s FTC regulations lay out specific guidelines and limitations that employers must follow, including the maximum duration of an FTC, provisions for renewal and termination, and the rights of FTC employees.

Benefits of FTCs

FTCs are beneficial for both employers and employees. Employers benefit from FTCs by having the flexibility to adapt to changes in their business needs without committing to permanent employment contracts. FTCs allow employers to manage their workforce, reducing the risk of overstaffing or underemployment and thus, saving money.

FTCs also benefit employees, particularly those who may not be interested in long-term job security. For some workers, FTCs offer flexibility and the opportunity to gain a variety of experiences in a short amount of time. Additionally, FTCs can be an excellent opportunity for workers to enter new industries and acquire new skill sets.

Drawbacks of FTCs

The primary drawback of FTCs is that they do not offer job security. Compared to permanent employees, FTC employees may feel insecure about their future employment prospects, making it difficult to plan their lives, including making long-term investments like buying a home or starting a family.

FTCs may also create a sense of discrimination among workers, with some permanent employees receiving better pay and benefits. FTC employees may also find it challenging to access training and development opportunities, making it harder for them to advance their careers.

FTCs under the EA

The EA governs the use of FTCs in Malaysia, with several key provisions that employers must follow. These include:

– FTCs can only last for a maximum of 24 months.

– Employers may only renew FTCs once, with a maximum renewal period of 24 months.

– Employers must provide FTC employees with the same terms and conditions as permanent employees, including wages, benefits, training, and opportunities for advancement.

– Employers must provide six days of leave for every 12 months of service to FTC employees.

Conclusion

Employers and employees in Malaysia must be aware of the EA`s FTC regulations to ensure that they are compliant with the law. While FTCs offer flexibility to employers and employees, they also come with drawbacks, such as job insecurity and potential discrimination. Employers must carefully consider whether FTCs are appropriate for their business needs, weighing the benefits and drawbacks before making a decision.