Updated: Jun 5
Resigning Without Notice: Understanding the Implications and Payment Obligations
In employment, situations may arise where an employee feels compelled to resign without serving the contractual notice period or, in some cases, leaves abruptly without providing any notice.
Such circumstances can be complex, both for the employee and the employer, and it is essential to comprehend the implications and payment obligations associated with these actions.
Termination without Notice: Breaking Down the Scenarios
When an employee decides to resign without serving the required notice period or leaves without providing any notice at all, it is considered termination without notice.
Let's explore some scenarios and circumstances that may lead to such a decision.
Breaking the contract terms: If an employee violates the terms and conditions outlined in their employment contract, the employer may consider it a breach of contract. This breach can result in termination without notice as a legal consequence.
Failure to pay salary: When an employer fails to fulfil their obligation of paying the employee's salary as per the agreed terms, it can be an immensely frustrating situation for the employee. In extreme cases where this issue persists, the employee may resign without notice, exercising their right to terminate the employment relationship due to the employer's non-compliance.
Absence without cause: If an employee is absent from work for an extended period without providing a valid reason or without seeking prior approval, it can be considered a severe violation of the employment agreement. In such instances, the employer may view it as a breach of trust and resort to termination without notice.
What if an employee resigns without serving the contractual notice period to their employer or leaves without notice?
Before we answer this question, let us see what is stated in section 69 of the Employment Act 1955.
Understanding the Director General's Power to Inquire into Complaints under Section 69 of the Employment Act 1955
In the Employment Act 1955 context, Section 69 plays a vital role in empowering the Director General to investigate and address complaints lodged by employees and employers.
Section 69(1): Director General's Power to Inquire into Complaints
Section 69(1) of the Employment Act 1955 confers the Director General with the power to investigate and inquire into complaints lodged by employees and employers alike. This provision serves as a crucial mechanism for resolving disputes and ensuring fair treatment within the employment relationship. The Director General acts as an impartial mediator, examining the merits of each complaint and facilitating the resolution process.
Section 69(2)(iii): Indemnity in Lieu of Notice of Termination
Within Section 69(2)(iii) of the Employment Act 1955, we find a specific provision that expands the scope of the Director General's power to inquire into complaints. This provision pertains to claims made by employers against their employees regarding indemnity in lieu of notice of termination.
Understanding Waiver of Notice and Indemnity in Lieu of Notice in Employment Contracts
Section 13(1) of the Employment Act 1955 establishes that either the employer or the employee may waive the necessity of providing notice in situations where it is practical or desirable to do so.
This provision offers flexibility in employment contracts by allowing parties to forego the standard notice period, provided it is mutually agreeable and serves the best interests of both parties.
Under this provision, the employee may be asked to leave immediately without serving the notice period by paying an indemnity in lieu of notice.
This indemnity payment is intended to compensate the employer for the absence of the notice period. It is typically calculated based on the wages the employee would have earned if they had completed the notice period.
It is important to note that the specifics of notice waivers and indemnity payments may vary depending on the employment contract, industry practices, and applicable labour laws in Malaysia.
Employee A's contract stipulates that he may quit his job by giving 3 months' notice or paying in lieu of notice.
On 14 January 2023, Employee A submitted his resignation, saying that his resignation was effective immediately, and he did not turn up to work on 15 January 2023.
Employee A’s monthly salary is RM 1,800.
Since Employee A has failed to serve his 3-month notice, he is required to make payment to his employer in lieu of that notice (i.e., RM 5,400 representing 3 months of his salary).
If employee A failed to do so, the consequence could be:-
雇员 A 的雇佣合约规定，他可以通过提前 3 个月通知或支付替代通知金来提早离职。
2023年1月14日，雇员 A 提交了他的辞职信，并说明他的辞职立即生效，他在2023年1月15日后，就没有再去上班了。
假设雇员 A 的月薪是 1,800 令吉。
由于雇员 A 没有履行其 3 个月的通知，他需要向其雇主支付替代通知金（即：5,400令吉，代表其3个月的工资）。
The waiver of notice and indemnity in lieu of notice provides a mechanism for employers and employees to mutually agree upon immediate separation without adhering to the standard notice period.
Understanding the practicality, implications, and financial considerations associated with this arrangement allows both parties to navigate the termination process fairly and transparently.
Therefore, it is advisable to seek professional legal advice or refer to the labour office for a comprehensive understanding of the rights, obligations, and procedures related to waiver of notice and indemnity in lieu of notice.
Open communication and mutual agreement between the employer and employee are crucial when considering waiving notice and indemnity in lieu of notice.
By fostering a collaborative and transparent approach, employers and employees can navigate employment termination fairly and respectfully.
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