What does Labour law say about retrenchment?

What does Labour law say about retrenchment?

THE SECTION 189 RETRENCHMENT PROCESS IN TERMS OF THE LABOUR RELATIONS ACT. Section 189 of the Labour Relations Act (“LRA”) permits employers to dismiss employees for operational requirements. These are defined as requirements based on economic, technological, structural or similar needs of the employer.

What are my rights when being retrenched?

Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service. However, the employer must pay the retrenched employee the amount specified in any policy or his/her employment contract, if that amount is larger.

How is retrenchment package calculated Malaysia?

Less than 2 years: 10 days of salary (per year of employment) 2 – 5 years: 15 days of salary. 5 years and above: 20 days of salary.

When can an employer retrench?

When can an employer give notice of termination? In terms of s189A(7)(a) of the LRA, an employer can only give a notice of termination once the 60 day period for consultation has lapsed and provided that the consultation process has been exhausted.

What is unfair retrenchment?

That is, targeting an employee for subjective reasons is unfair. For example, deciding to retrench Mr A because he is old, sick, injured, outspoken, strong-willed or performing badly would be considered unfair.

What is VSS Malaysia?

A voluntary separation scheme (VSS) is a scheme where an employer invites the employee to cease employment voluntarily with the payment of a compensation package. A VSS is often used when an employer intends to reduce headcount.

Is retrenchment benefit taxable in Malaysia?

According to LHDN on their website, compensation for the loss of employment is a payment made by an employer to his employee before or after the date of termination, and a certain amount of this payment is exempted from tax.

Can you ask your employer to retrench you?

A. Yes, retrenchments are “no fault” dismissals. It is not the fault of the employee that the company cannot afford the salary of the employee anymore and as such notice periods agreed upon must be honoured. The employer may ask the employee not to return to work but must then pay the notice period.