How to Issue a Proper Notice of Termination Employment in Malaysia

Ending an employee’s contract is never easy. It can be one of the most sensitive tasks for any employer or HR manager. A wrong step can lead to legal disputes, employee dissatisfaction, or reputational damage.

This article will share about how to issue a notice of termination of employment according to Malaysian law is crucial.

What Is a Notice of Termination of Employment?

A notice of termination of employment is a written document that formally ends the working relationship between employer and employee. Its main purpose is to inform the employee of the reason and date their employment will end.

This notice is different from a resignation notice, which is given by employees when they choose to leave. Employers issue termination notices for various reasons, such as serious misconduct, redundancy due to restructuring, poor performance after due process, or the expiry of a fixed-term contract.

Legal Requirements Under Malaysian Law

The Employment Act 1955 sets minimum standards for termination notices. Both employers and employees must provide notice based on the length of service:

4 weeks’ notice for employees with less than two years of service.
6 weeks’ notice for employees with two to five years of service.
8 weeks’ notice for employees with more than five years of service.

Employers can either give written notice or pay the equivalent salary instead of notice (commonly known as payment in lieu). For unionised or protected employees, the Industrial Relations Act 1967 also applies, which requires proper consultation and may involve union representation.

Types of Termination Scenarios

Termination can occur in several ways:

Termination with notice

The most common scenario, where notice is given according to the Employment Act or contract.

Termination without notice (summary dismissal)

Applied in serious misconduct cases like theft or harassment, but employers must first conduct a domestic inquiry to confirm the facts.

Retrenchment or redundancy

Often due to business restructuring or downsizing, which must follow fair selection criteria and reporting obligations.

Contract expiry or mutual agreement

Fixed-term contracts end on their agreed date unless renewed. Sometimes both parties mutually agree to end employment earlier.

Common Mistakes by Employers

Many termination disputes arise because of procedural errors rather than the reason for dismissal itself. Common mistakes include:

Fail to provide proper written notice that clearly states the reason for termination.
Skip a domestic inquiry when terminating for misconduct.
Not keeping records of warnings, performance reviews, or investigations.
Ignore the company’s own HR policies, which employees can use to challenge the termination.

How to Issue the Notice Properly

The notice must always be in writing. Employers can deliver it by email or printed letter, but it should be acknowledged by the employee (signature or confirmation reply). Keeping a copy in HR records is essential for future reference.

The tone should remain professional and respectful, even if the termination is due to misconduct. Clear communication helps prevent misunderstandings and reduces the risk of disputes.

What Employers Should Do Next

After issuing the termination notice, employers must handle administrative matters promptly, including paying the final salary, unused leave, and any benefits owed to the employee. Contributions to SOCSO, EPF, and income tax must be updated to reflect the termination.

It is also best practice to conduct an exit process: collecting company property, revoking access to systems, and offering an exit interview if appropriate.

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