Malaysia Labour Law Mutual Separation Agreement

What would you say if the employer had managed to negotiate the terms of the mutual dismissal and order the worker to file for dismissal. The employer then accepted the dismissal and paid the agreed benefit into the worker`s bank account In order not to have to find a simple reason – and to terminate an employment relationship without being exposed to the risk of an action for unjustified dismissal – many employers choose to negotiate a mutual separation with the worker. Jamil Arshad & Ors v. CNA Manufacturing Sdn. Bhd. [2010] 2 LNS 1305 provided that the worker was required to prove, by sound evidence, that he was obliged to approve the separation system. However, offers of mutual separation in certain situations, such as redundancy, may raise questions. If the employee agrees to a mutual separation after being informed that he or she has been dismissed, is this applicable? Or can the employee invoke unfair dismissal? The Murali Tharan Nair Labour Court a/l G Narayana Nair v HLMG Management Co Sdn Bhd (2020 Prize 276, 28 January 2020) recently addressed this issue. In the case of unionized workers, a worker must consider the terms of the collective agreement and determine whether there are clauses relating to cuts or severance pay.

If so, the employer must pay in accordance with the provisions of the collective agreement. • the objective of reaching a mutual intention or an ad-idem consensus for the employer to commit to a financial payment system and for the worker to agree, in return, to give up his company security and agree to voluntarily leave his employer. For example, in cases of poor performance, there may be a mutual separation where both parties recognize that the employment relationship is no longer feasible due to a mis-orientation of performance expectations or management style. The employee receives a financial package of dismissal and avoids a performance management process or a possible dismissal that could be a black mark in his employment balance sheet. In this case, no mutual separation agreement was signed and there was no written agreement by the employee not to assert a claim. But would it have made a difference? Since VSS or MSS is a contract that terminates the service contract under certain conditions, as agreed by both the company and the employees, the company must be attentive to the negotiation process with the employees. Any aggravating factors that prompt employees to enter into a VSS or MSS agreement would render the VSS or MSS agreement invalid or countervailable. Typically, some form of financial compensation (and sometimes other terms) is negotiated between the parties and recorded in a mutual separation agreement. The agreement usually contains a clause stipulating that the employee confirms that the separation package and the terms of full payment of all the worker`s rights and that the worker will not bring an action for unjustified dismissal. From time to time, instead of performing a VSS, a company may decide to enter into individual negotiations with each employee in order to accept a mutual separation agreement. It is also an acceptable conclusion of an employment contract.

However, the company must be careful not to be accused of forcing or forcing the employee to sign the mutual separation agreement. This case illustrates the complexity of the end of the case. Mutual separations are often seen as a “quick fix” to problematic dismissals, without much consideration being whether they are conceptually appropriate to the situation at hand. . . .