Using fixed term employment contract the right way

The Industrial Court often awards against companies that disguise permanent employment as fixed term employment contract (FTC), since this robs the employee of job security and termination benefits.

MUNISWAR OFFERS VALUABLE INSIGHTS ON ISSUES RELATING TO FIXED TERM EMPLOYMENT CONTRACT.

WOU’s School of Business & Administration (SBA) Senior Lecturer Muniswar Munisamy shared many industrial cases of non-renewal and premature termination of FTC, during the webinar on ‘Law on Fixed Term Contract (FTC) and Practice’. About 70 people attended the event organised by SBA today.

He explained that genuine fixed term employment contracts are for temporary, one-off jobs, seasonal work, to fill gaps caused by temporary absence of a permanent staff and for specific tasks/research. An employer can engage the employee for a fixed term and is not obliged to extend the contract upon expiry, he added. However, the employer cannot keep renewing the FTC for an indefinite period – except for those over 60.

FEATURES OF A GENUINE FIXED TERM CONTRACT.

He said if an employee’s services are required for ongoing work, such employee must be engaged in ordinary employment. He cited the case of 35 teachers of Han Chiang High School who had been working for over 20 years on a fixed term basis. Their contract was not renewed when they formed a union. Their permanent job was dressed-up as a fixed term employment contract and so the Industrial Court ruled that their dismissal was without just cause or excuse and ordered reinstatement.

Muniswar also discussed the doctrine of legitimate expectation, sharing about the non-renewal of a contract professor who uprooted himself and his family from Penang to come to Kuala Lumpur. The professor claimed the deputy vice chancellor had implied a permanent tenure.  The High Court ruled that the professor had a legitimate expectation for continued employment, and awarded him compensation accordingly.

 

 

MUNISWAR IS A SENIOR LECTURER WITH THE SCHOOL OF BUSINESS & ADMINISTRATION.

Another case was of a sub-editor on a one-year contract who had his FTC extended twice but not renewed upon expiry of his 3rd contract. The Court accepted that the genuine FTC came to an end automatically, since the company did not lead him to believe otherwise.

He said the Court awards fixed compensation for the premature termination of an FTC based on the remuneration a claimant would have earned for the unexpired period of the contract. He further stated that a workman on FTC enjoys security of tenure for the duration of the contract and as such may only be terminated earlier based on just cause or excuse – such as serious misconduct, poor performance or redundancy.

THE LAW DOES NOT GENERALLY FAVOUR THE PREMATURE TERMINATION OF A FIXED TERM CONTRACT.

He conceded that an FTC can be used to assess the suitabliity of an employee for permanent employment, like the case of a Poslaju clerk whose one-year contract was not renewed due to unsatisfactory work. This court ruling supported that an employer can use performance appraisal to decide on the status of a FTC employee.

Muniswar said all foreign citizens are employed on FTC, citing cases in which wages were awarded for the unexpired period of the contract for premature termination.

FOREIGN CITIZENS ARE ONLY EMPLOYED ON FIXED TERM CONTRACT IN THE COUNTRY

During Q&A, he stressed that the break between fixed term contracts must be at least 31 days if the employer wants to avoid paying termination benefits, while for those above 60, no breaks are necessary.

He said an employer cannot keep renewing the fixed term employment contract without legal consequences, and that FTC employees have the same rights to rest days, annual leave, medical leave, public holidays, EPF, Socso and to due notifications before termination.

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