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Did you know that the employment contract is also important apart from the salary slip if you have just received a job offer? 

This employment contract has been stipulated under the Employment Act 1955 and the Labor Ordinance of Sabah and Sarawak to safeguard workers’ welfare. So, this law does not cover those who are self-employed or unemployed.

From the context of the 1955 Employment Act, this contract is known as a service contract (contract of services) which means: 

“an agreement whether oral or written and express or implied, where one person agrees to hire another person as an employee” that agrees to provide services to his employer as an employee and also includes an apprenticeship contract”.

Are Unwritten Contracts Valid?

The definition above shows that the contract can be in Written or Unwritten form (oral) but must meet the essential elements of the contract as follows:

  • Proposal
  • Acceptance
  • Reply
  • Intention to create a legal relationship
  • Ability to contract
  • Provisions
  • Free will
  • Legitimate purpose

So, if the employer only delivers the contract verbally and is fully understood by the employee, then the contract is legally valid as long as the contract meets the above elements.

Compulsory Contracts In Written Form

However, the same act also stipulates that employers must prepare a written contract with their employees who are employed for more than 1 month and it must be stated how the contract can be terminated by either party.

Certain contracts need to be made in writing such as:

  • Bill of exchange contracts and promissory notes (Bills of Exchange Act 1949)
  • Checks (Bills of Exchange Act 1949)
  • All contracts are by bond
  • Money Lending Contract (Moneylenders Ordinance 1951)

11 Things That Must Be in an Employment Contract

Before you decide to accept a job offer, make sure these 11 things are in the contract provided by the company.

  • Salary
  • Position
  • Allowance
  • Annual Salary Increase
  • Probation period
  • Hours Worked in a Day
  • Employee Rights to Types of Holidays and Public Holidays
  • Rest Days and Off-Days
  • Medical and Insurance Benefits
  • Notice of Termination of Service
  • Employer’s Right to Transfer Employees

Carefully review your employment contract before accepting the offer. The list above is the basic terms that should be contained in every employment contract. The addition of other terms depends on the type of job you accept.

Written or Unwritten Contract?

Of course, a written contract is better than an unwritten or verbal contract. Even if an unwritten contract is still legally valid, if there is any issue involving employment at a later date, it will make it difficult for both parties.

The task of writing this employment contract is the employer’s responsibility, not the employee’s.

So, if you want it to be easier for future use, employers can use MySyarikat to record every employee’s details as well as record the company’s activities.

Let’s experience using HR software MySyarikat now by ‘Book Demo‘ with us!

Asas HR

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MySyarikatMySyarikatJune 19, 2024

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