HRM659 Chap 3 Oct Feb 2023

HRM 659
Chapter 3 :
The Employment Relationship
By: Suhaila Mohamed

Faculty of Business and Management, UiTM.
Oct_Feb 2023
Chapter Outline:
The Employment Relationship
1. The Employment Contract

2. The Employer
3. The Employee
“The employment relationship is the legal link between employers

and employees. It exists when a person performs work or services
under certain conditions in return for remuneration.”
International Labour Organization

(ILO)
The employment contract
• Let’s recall from the HRM581 class about employment

contract.
1. Types of contract
• Types of terms in an employment contract
2. Types of employees
3. Types of employers
4. Void and breach terms of employment contract
 However, we will extend our discussion to include other provisions
related to Trade Unions Act 1959 and Industrial Relations Act 1967.
 Issues in employment relationship

Scope of the Employment Act (EA) in a diagram
(Source of reference: First Schedule will be effective 1 January 2023)
All private sector employees

under a contract of service
Wages >RM4000 per month, not

entitled to all rates of pay (OT, RD, Domestic employees only
PH) and termination benefit entitle to S.57 (notice of
termination), S.25 (wages via
financial institution), and S.59
Working on ships not entitled to (Rest Day).
PART XII (RD, Hours of Work, PH,
AL, and SL)
Manual labour, supervisor to manual

labour, driver and mechanic
Source: Suhaila Mohamed (pending publication)

Industrial Relations and
Employment Relations / Relationship
Amante, 2003
Definition
EA 1955 defines Contract of Service (COS) as:
“any agreement, whether oral or in writing and whether express or

implied, whereby one person agrees to employ another as an employee
and that other agrees to serve his employer as an employee and includes
an apprenticeship contract.”
IRA 1967 defines Contract of Employment (COE) as:
“any agreement, whether oral or in writing and whether express or

implied, whereby one person agrees to employ another as a workman
and that other agrees to serve his employer as a workman.”
6
Can you spot the differences?
Employer Employee /
Workman
Independent
Employer
contractor
7
CONTRACT FOR LABOUR
Contractor / Employer
Principal Employer
XYZ Sdn Bhd or XYZ
ABC BHD Enterprise
Section 33(1) and Section 33A of EA 1955 –

Obligation of payment of wages
Effective 1 Jan 2023: S. 33 (1A) – Obligation of the

contractor to have and keep a written contract
Employee
Question: Imagine you are an HR
Manager at ABC Bhd, what does Ali & Abu
S. 33 of EA tell you?
8
The term COE and COS are referring to the
employment contract that signify the employee-
employer relationship as contractual in nature.
9
In general, employment contract is an agreement
between an employer and an employee/workman
that sets out their employment rights,
responsibilities and duties i.e. terms of the contract.
Terms of employment contract that
related to Trade Union
Section 8 of EA 1955
Contract of service shall not restrict employee to join union,
participate in activities of a registered union, and associate with
anyone to organize union.
Section 5 of IRA 1967

Employer are not allowed to impose any conditions in contract of
employment seeking to restraint the right of a person to join a trade
union or to continue his membership
EA 1955 TUA 1959 IRA 1967
Who is X (employee) Y (workman) Y (workman)

employee? Z (employee)
Who is
employer?
How does the Governs Governs trade Governs employer-union
law differ employer- unions and union relations. It establishes
according to employee federations. It the principles of: trade
Shawn Sher relations. It defines TU, unionism, union
(BFM Podcast)regulates regulates their recognition, collective
minimum composition and bargaining, and dispute
and Maimunah terms and membership, their resolution.
(2020) conditions of rights, powers,
employment. duties, and Section 20 of this act is for
responsibilities. any workman, regardless
they belong to TU or not to
challenge termination.
Definition of employee under EA1955
•any person or class of persons
(a) included in any category in the First Schedule to the extent specified
therein; or
12
(b) In respect of whom the Minister makes an order under Sec. 2(3) or
Sec. 2A of the EA 1955
An example of implication of the definition
of employee
Employee A is employee under EA (PH: 11 days)
13
Employee B not employee under EA (PH: 4 days)
* Effective 1 January 2023 this example is irrelevant
Employee C is an employee under the scope of a collective

agreement (PH: all gazetted public holidays)
Definition of Workman under
IRA 1967 and TUA 1959
•any person, including an apprentice(trainee), employed by an
employer under a COE to work for hire or reward and for
purposes of any proceedings in relation to a trade dispute
14
includes any such person who has been dismissed, discharged or
retrenched in connection with or as a consequence of that
dispute or whose dismissal, discharge or retrenchment has led to
that disputes.
•This definition and Section 20 or IRA 1967 provides employment

security of a workman employed under a contract of
employment.
Test of Employment Status
TRADITIONAL OR ORGANIZATION MIXED OR MULTIPLE
CONTROL TEST OR INTEGRATION TEST
TEST
Control of an Whether the This test is applied into two
employee by person is part and stages. First whether there is
another, on what, parcel of the control.
how and when organization.
the employee Second, whether the
must do the job. provisions of the contract
are consistent with it being a
contract of service.
Further reading: Jurisdiction of the Industrial Court

at page 252 - 257 of your textbook
Who is an employer?
Under EA 1955,
“employer” is any person who has entered into a contract of service
to employ any other person as an employee and includes the agent,
manager or factor of such first mentioned person, and the word
“employ”, with its grammatical variations and cognate expressions,
16
shall be construed accordingly.
Under IRA 1967, and TUA 1959

“employer” is any person or body of persons, whether corporate or
incorporate, who employs a workman under a contract of
employment, and includes the government and any statutory
authority, unless otherwise expressly stated in this act.
Teh Hock Hai vs Mayto Trading (M) Sdn Bhd
Award 1014/2014
• Claimant start work as plantation supervisor with Mayto on 2/7/2005.
• Due restructuring, Mayto reduced the size of oil palm farm. Claimant agreed
voluntarily to continue to work with Mayto with the same wages RM3500 per
month without deduction of EPF and SOCSO contributions as an independent
subcontractor in exchange for his termination benefits of RM10,000.
17
• Subsequently Mayto terminated claimant due to poor performance.
• Claimant felt the termination was without just cause and excuse because he
was terminated by Mayto orally on 4/3/2008.
Issue before the court: Whether Claimant is an employee
Court Decision: Claimant is not an employee but a subcontractor as he agreed

by accepting the cheque of payment.
All Malayan Mining Industry Staff Union vs
Anglo- Oriental (AO) (Awards 56 of 1974)
• 130 workers of the Larut Tin Fields Bhd (LTFB) were retrenched following the closing
down of the company in 1972.
• The union claimed that 4 of the employees/union member are the employees of AO
• AO claimed the 4 employees were never employed by AO but by the LTFB.
• AO (Private company):
18
- Contract as general manager to provide special service to LTFB as a client
- Engaged senior staff to work on site of mine owned by LTFB
- Owns no mining property but assist in the running a mine for LTFB
• LTFB (Public company):
- Pay monthly salary, EPF, insurance and other remunerations to claimant
- Responsible for day to day activities at site
- Under supervision of mine manager
- Part and parcel of the organization of mining
Issue before the court: Whether Claimant is an employee of AO

Decision by Court: There is no relationship of master and servant between AO and the 4
claimants. AO is not the employer of the 4 claimants but LTFB.
Issues in employment relationship
1. Prevalence of knowledge workers,
2. Growth in shared service and outsourcing (SSO) industry
3. Growth in independent employment (cloud work and gig

work)
• Social security
• Effective 1 Jan 2023: New Section 101c of the Employment
Act, 1955: “Presumption as to who is an employee and
employer”
4. Foreign labours
Effective 1 Jan 2023
Sec. 101c of the Employment Act
Presumption as to who is an employee and employer
….it shall be presumed until the contrary is proved that a

person is an employee —
(a)where his manner of work is subject to the control or

direction of another person;
(b) where his hours of work are subject to the control or

direction of another person;
(c) where he is provided with tools, materials or

equipments by another person to execute work;
Effective 1 Jan 2023
Sec. 101c of the Employment Act (continued)
(d) where his work constitutes an integral part of another

person’s business;
(e) where his work is performed solely for the benefit of

another person; or
(f) where payment is made to him in return for work done

by him at regular intervals and such payment constitutes
the majority of his income.

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HRM 659

By: Suhaila Mohamed

1. The Employment Contract

“The employment relationship is the legal link between employers

International Labour Organization

• Let’s recall from the HRM581 class about employment

4. Void and breach terms of employment contract

 However, we will extend our discussion to include other provisions

 Issues in employment relationship

All private sector employees

Wages >RM4000 per month, not

Manual labour, supervisor to manual

Source: Suhaila Mohamed (pending publication)

“any agreement, whether oral or in writing and whether express or

IRA 1967 defines Contract of Employment (COE) as:

“any agreement, whether oral or in writing and whether express or

Section 33(1) and Section 33A of EA 1955 –

Effective 1 Jan 2023: S. 33 (1A) – Obligation of the

Section 5 of IRA 1967

Who is X (employee) Y (workman) Y (workman)

Employee A is employee under EA (PH: 11 days)

Employee C is an employee under the scope of a collective

•This definition and Section 20 or IRA 1967 provides employment

Further reading: Jurisdiction of the Industrial Court

Under IRA 1967, and TUA 1959

Issue before the court: Whether Claimant is an employee

Court Decision: Claimant is not an employee but a subcontractor as he agreed

Issue before the court: Whether Claimant is an employee of AO

1. Prevalence of knowledge workers,

2. Growth in shared service and outsourcing (SSO) industry

3. Growth in independent employment (cloud work and gig

Presumption as to who is an employee and employer

….it shall be presumed until the contrary is proved that a

(a)where his manner of work is subject to the control or

(b) where his hours of work are subject to the control or

(c) where he is provided with tools, materials or

(d) where his work constitutes an integral part of another

(e) where his work is performed solely for the benefit of

(f) where payment is made to him in return for work done

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