Employment contracts
in Malaysia.

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Standard employment contract in Malaysia: Open-ended contract

In professional settings, the standard type of employment contracts offered in Malaysia are open-ended contracts. This type of contract is also referred to as an ‘unlimited’ or ‘permanent’ contract.

When hiring in Malaysia, employers should draft concise, written contracts that detail the terms and conditions of employment. The contract provisions should always be written in both English and Malay. When your business partners with Horizons’ Malaysia PEO, our in-country experts will assist you to draft letters of offer and employment contracts that comply with local employment legislation.

Alternative employment contract in Malaysia: Fixed-Term

Fixed-term contracts, also known as ‘limited’ or ‘temporary’ contracts, are used in Malaysia but less frequently than open-ended contracts. Under a fixed-term contract, the terms of the working relationship are only valid for a specified period.

Keep in mind that, where a fixed-term contract has been renewed multiple times, the Malaysian courts may view the employee concerned to be a permanent staff member should they be dismissed.

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FAQs

What are the main differences between the standard contract and the alternative contract in Malaysia?

The primary difference between Open-Ended and Fixed-Term contracts is ‘permanence’ i.e. the potential length of the period of employment. Open-Ended contracts employ on a permanent basis, whereas fixed-term contracts employ for a specified period of time. This means that termination is needed to end an Open-Ended contract, whereas Fixed-Term contracts end on the date specified or upon the occurrence of a pre-specified event, such as the completion of a project.

Which Malaysia employment contract is right for me?

There are certain terms and conditions that must be included in Malaysian employment agreements. For the most part, it’s possible to create employment contracts that align with your company’s objectives and existing policies. At Horizons, our in-country experts can advise on the particulars of any employment agreement to ensure compliance with Malaysian employment law.

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