The Right to Hire and Fire

Abstract

It is now a trend especially for the Generation-Y to have freedom in their working life. They want flexible working hours, and flexible remuneration package. Job hoping is a norm and loyalty to a company is a thing of the past. Employee will work on certain project for two or three years and move on to the next job as to undertake new challenge. Although this makes one working life an exciting experience, it is not without a risk. Your contract may have expired and your employer do not want to extend your contract, or you might have offended your boss and the boss wanted to terminate your contract, or you are in a special task force collecting evidence against your boss for corruption and the boss is hell bent to make sure you are out from the company as soon as possible. This article intends to detail out the risks, giving these new breed of workforce to take a calculated risks in their next course of action. This article also give a brief guidelines on the Do’s and Don’ts to the company in exercising their right to hire and fire.

Backgrounds.

Before we proceed, it is essential that we differentiate between “contract of service” and “contract for service”.

A contract of service is an agreement where the employer agrees to employ a person as an employee and the employee agrees to serve his employer as an employee.

A contract for service is an agreement whereby a person is engaged as an independent contractor, such as a self-employed person, vendor or freelancer carrying out an assignment or a project. For example, an advertising company engages services of a graphic designer on a particular advertising job by a specific client.

For the purpose of this article, we are concentrating on contract for service.

The Law.

The relationship between the employer and the employee is a contractual relationship. Hence, normal elements of contracts such as offer and acceptance, capacity, considerations, certainty, and intention to create legal relations are applicable.

The rights and liabilities of the employer and the employee are spelled out in the terms and conditions within the four corners of the contract. It is vital for the employee to understand what are being provided in the employment contract. The terms such as remuneration, duration of employment, and leave are some of the vital terms that you need to be aware of.

You also need to take notice of the expectation or the outcome of your employment contract. There was an incident in a private university whereby the university had hired lecturers to teach on part time basis. The terms of the contract for service were spelled out in the university’s letter of offer and the lecturers are supposed to sign and acknowledge their agreement to the terms by signing their name at the end of the letter of offer.

One of the terms of the contract for service is that the lecturer is supposed to come out with teaching video of their respective subject and upload the said video in the university internal e-learning system. The lecturer also supposed to upload their teaching material to the university internal e-learning system. At the start of the semester, all the part time lecturers are happily signing their respective letter of offers. At the end of the academic semester, some lecturers vehemently objecting to upload their teaching video and teaching materials to the university’s internal e-learning system citing copyright issue as a reason. Of course, the usual suspects are law lecturers.

It is an established law that any materials or intellectual property develops by an employee while they are in contract of service or contract for service, and these materials or intellectual property are what the employee are being paid to do by their employer, those materials and intellectual properties belongs to the employer.

The duties of an employee include the duties to:

1.     work in a skillful and competent manner;

2.     obey the employer’s lawful, reasonable and safe commands;

3.     maintain confidentiality;

4.     hand over inventions made during the course of employment;

5.     account for all money or property received in the course of the employment;

6.     disclose information relevant to the employer; and

7.     maintain confidentiality after the employment has ceased.

Lee mei Pheng, Ivan Jeron Detta,Business Law, Oxford University Press, 2009

There is a question on the duties to keep confidentiality as opposed to Whistleblower Protection Act 2010. Here are the excerpts from www.nkracorruption.gov.my:

The Whistleblower Protection Act 2010 is a law of Malaysia to combat corruption and other wrong doings by encouraging and facilitating disclosures of improper conduct in the public and private sector, to protect persons making those disclosures from detrimental action, to provide for the matter disclosed to be investigated and dealt with and to provide for the remedies connected therewith.

The act was passed by Parliament in June 2010, and was brought into force on 15 December 2010. The objective of this act is to give protection to the whistleblower in the form of confidentiality of their information, immunity from civil and criminal action and protection from detrimental action being taken against them. Whistleblower protection is one of the Malaysian Government’s efforts towards tackling corruption and promoting good governance under Government Transformation Programme (GTP).

The whistleblower protection law covers any member of the public and private sectors who discloses wrongdoings. Among the disclosures that intended to be disclosed are abuse of authority, violation of laws and ethical standards, danger to public health or safety, gross waste, illegality and mismanagement. The disclosure should be made in “good faith” based on “honest and reasonable grounds at the material time” without necessitating hard evidence from the whistleblower. The duty of gathering evidence will be tasked to the investigation unit of the enforcement agencies to ensure that the whistleblower is not compromised. However, whistleblowers can provide evidence if it is legally available through the course of their work.

Disclosure of the confidential information will be liable to a fine not exceeding fifty thousand ringgit or to imprisonment for a term not exceeding ten years or both. A whistleblower will not be subject to any civil action or criminal liability and no administrative process can be taken against the whistleblower for making disclosure of improper conduct. Under the act also, no person shall take detrimental action against any whistleblower or person related to or associated with the whistleblower in reprisal for a disclosure of improper conduct.

Section 6 of the Whistleblower Protection Act 2010 stated that a person could report the wrong doing to the relevant authorities provided that any written law does not specifically prohibit the disclosure. For example, if you work for a financial institution, section 133 of the Financial Service Act 2013 prohibits you from disclosing the Bank customer’s information. Disclosure of information must conform to the requirements set out under section 134 of the said act.

Hire and Fire

In Malaysia, an employer cannot simply fire its employee. Although the employer and employee are under contractual relationship, the law recognized the inequality of bargaining power that favours the employer. Article 5(1) of the Federal Constitution also recognized the right of livelihood of the employee. Hence, the laws recognize some form of job security for the employee. In the case of Hong Leong Equipment Sdn Bhd v Lim Fook Chuan & Others [1996] 1 MLJ 481, the Court of Appeal held that:-

“It cannot be gainsaid that Parliament intended to elevate the status of a workman as defined in the Act from the weak ad subordinate position assigned to by common law to a much stronger position. The legislature has willed that the relationship of the employer and employee as resting on a mere consensual basis that is capable of termination by the employer at will with meager consequence of paying the hapless workman a paltry sum a damages should be altered in favour of the workman. It has accordingly provided for security of tenure and equated the right to be engaged in gainful employment to a proprietary right which may not be forfeited save and except for just cause and excuse. Due recognition of this higher status must therefore be accorded by our Courts if they are to act in obedience to the will of Parliament. Quite apart from being a propriety right, the right to livelihood is one of those fundamental liberties guaranteed under Part two of the Federal Constitution…the expression “Life” appearing in Article 5(1) of the Federal Constitution is wide enough to encompass the right to livelihood”.

An employee cannot be dismissed without just cause and excuse. Basically, if the employer wanted to terminate the contract of the employee, the employer may give a notice of termination. Usually, there is a term under the contract stating the notice period. However, if the contract is silence on this matter, an employer must give a ‘reasonable notice’ to the employee.

The employer also can terminate an employee without notice. Although this is an option but an employer must be very careful in using this option. The employer must be very confident that the employee had conducted the following:

1.     gross misconduct, negligence, incompetence, or disobedience; and

2.     the employee breach of the fundamental of the employment contract.

The employer must prove that because of the conduct in item 1 and 2, the contract of employment cannot be carried out. Due to the conduct of the employee, it is impossible to continue with the contract of employment. Failure to prove the above may tantamount to unfair dismissal.

Despite some jurist opinion that there is an option to dismiss without notice, it is strongly advisable for the employer to give a show cause letter to the employee to explain his conduct. If the employee is not satisfied with the explanation, the employer should conduct a domestic inquiry whereby the employee must be given the opportunity to state his defense. After all this has been conducted, if the employer still is of the opinion that the employee had breached his contract, then the employer can dismiss the employee. Still, the employee have the right to challenge this decision in court.

Conclusion

The employee and employer must ensure that the employment contract had covered all the bases. It may be worth the time to iron out the terms before proceeding with the contract. If the employee does not understand the terms, it is advisable to get an advise from the legal expert. If the terms are vague and ambiguous, it is advisable to write is a plain and clear language so as both parties are crystal clear with the intention of the said term.