Contracts in Malaysia

Overview by

The Active Population in Figures

Main Indicators 2008 2007 2006 2005
Labor Force 10 889 500
Labor Force (Annual Growth, %) - - - -
Rate of Activity (%) - - - -
Unemployment Rate (%) - 3.2 3.3 3.5

Source: ILO, Laborsta Malaysia

Employed Persons, by Occupation (% of Total Labor Force) 2007
Agriculture, forestry, hunting 3.2%
Fishing 0.3%
Mines 0.1%
Clothing industry, manufacturing 41.1%
Electricity, gas and water supplies 0.3%
Construction 6.6%
Wholesale and retail trade, repairs to motor vehicles, motorcycles, personal and household goods 12.9%
Hotel and catering industries 4.0%
Transport, warehousing, communication 2.9%
Financial intermediation 4.7%
Real estate, rental, business activities 4.4%
Public administration, defense, social security 5.9%
Education 3.9%
Health and social care 0.6%
Other activities in community, personal and social services 8.7%
Household domestic 0.1%
Extra-territorial organizations and entities 0.1%
Others 0.1%

Source: ILO, Laborsta Malaysia

For Further Statistics
ILO, Laborsta Malaysia
For Further Information About the Labor Market
International Labour Organization

Management of Human Resources



Method of Recruitment
Private and public recruitment agencies, Internet, individual interview.
Recruitment Agencies
A list of private recruitment agencies is available on the website of the Ministry of Human Resources.
Recruitment Websites
JobsDB Malaysia
Asiaco Jobs Center

The Contract

Type of Contract
Called "Contract of Service" or "Contract of Employment", the contract is deemed to exist as soon as the employee starts to work. There are fixed-term contracts and open-ended contracts.
Breach of Contracts
  • Retirement
There is no legal age for retirement in the private sector but the EPF (Employment Provident Fund) considers people are eligible from 55 for men and 50 for women.
  • Dismissals
A dismissal needs three oral warnings beforehand in front of witnesses then three written warnings, followed by a conciliation meeting.
  • Other Possible Methods
Collective procedure (voluntary separation scheme) or limited procedure (retrenchment) of downsizing, contracts reaching their their expiry date.
Labor Laws
Attorney General's Chambers

Dispute Settlement


Conciliation Process

Cases of Dispute
Immigrant workers and women are the most vulnerable; the most frequent abuses are non-payment of wages, confiscation of travel documents, not observing rest periods, physical violence.
  • Legal Framework
Industrial Relations Act 1967
  • Procedure
The Industrial Relations Act 1967 sets out the procedure to be followed.

Judicial Structures

  • Legal Framework
Industrial Relations Act 1967
  • Competent Legal Body
Industrial Tribunal, Labor Office

Social Partners

Social Dialogue and Involvement of Social Partners
There are two national organizations: the Malaysian Trade Union Corporation (MTUC) and the Congress of Unions of Employees in the Public and Civil Service (CUEPACS).
Unionization Rate
9.5% of workers are unionized.
National Union of Journalists Malaysia
Regulation Bodies
Ministry of Human Resources

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Experts Views (1)
  • Employment Law in Malaysia

    This article defines the nature of employment in Malaysia citing laws within contract of service by explaining the employer’s duty and revealing the mechanism for settling disputes.

    Azmi & Associates on 21 Jun 2012 related to Contracts in Malaysia

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  • Azmi & Associates

    Corporate Law Firm, Malaysia