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Termination of Employment Due to Business Closure

WJeannie
Member
Mon, 12 Oct 2015 02:04:20 PM  (Last updated: Tue, 13 Oct 2015 08:05:05 PM)

Hello, this is Jeannie. Would like to know what are the right procedures to terminate an employee due to the closure of business. Does the company need to give the employee Letter of Termination (when to be given/dated), payment for termination (how to calculate) and whatsoever in accordance/comply to the Malaysian Labour Law? Thank you and hope to hear from you soon.

Regards,

Jeannie

SuharinKL
Contributor
Mon, 12 Oct 2015 02:37:18 PM
Originally posted by WJeannie on Tue, 13 Oct 2015 08:05:05 PM

Hello, this is Jeannie. Would like to know what are the right procedures to terminate an employee due to the closure of business. Does the company need to give the employee Letter of Termination (when to be given/dated), payment for termination (how to calculate) and whatsoever in accordance/comply to the Malaysian Labour Law? Thank you and hope to hear from you soon.

Regards,

Jeannie

hye there,

Allow me to answer to your query as follows:-

1) In order to carry out retrenchment/termination due to closure of business, the company ought to give the involved employee a notice about the retrenchment/termination/closure as early as possible (preferably more than a month);

2) With regards to retrenchment/ lay off benefit, it is not compulsory for employees with salary more than RM2k. For employee with RM2k and above, the company may give it as a token of appreciation; and

3) Since the reason given is for business closure hence the retrenchment/termination must be made across the board.

Hope the above clarify your query.

Regards,

suharinsulaiman@gmail.com

WJeannie
Member
Mon, 12 Oct 2015 03:02:37 PM

Thanks for your prompt reply. Would also like to the know what are the most important things to be stated in the Letter of Termination since there are no official written Employment Contract to the employee but only verbal contract before commencement.

Regards,

Jeannie

SuharinKL
Contributor
Mon, 12 Oct 2015 03:10:01 PM
Originally posted by WJeannie on Mon, 12 Oct 2015 03:02:37 PM

Thanks for your prompt reply. Would also like to the know what are the most important things to be stated in the Letter of Termination since there are no official written Employment Contract to the employee but only verbal contract before commencement.

Regards,

Jeannie

hye there,

Despite of the non-existence of written contract of employment, the relationship of employer-employee can be inferred from the conduct of parties. For example, if the Company pay the said employee with salary instead of fees, the Company did contribute EPF etc.

The most important thing to mention in the said termination/retrenchment letter is as follows:-

1) the reason for termination/retrenchment i.e. closure of business;

2) reason for the closure of business;

3) effective date of closure; and

4) termination benefit (if any).

Regards,

suharinsulaiman@gmail.com

WJeannie
Member
Tue, 13 Oct 2015 08:05:05 PM

Hello, this is Jeannie again. Would like to make sure that are we compulsory to compensate or to give the employee any retrenchment/lay off benefit? Our company is a sole proprietor and just a very small company. Therefore, we have not been giving any written Employment Contract to any of our employee. We will be giving our employee 1 month notice and will be closing down in December 2015. We really cannot afford to pay termination benefit to our employee.

Please advise whether we will be facing any legal action from the Labour Department under the Employment Act with what we intention to proceed as above mentioned.

Thanks & Regards,

Jeannie 

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