Contract Dismissal Letter Template for Malaysia

A Contract Dismissal Letter is a legally binding document that formally terminates an employment relationship in Malaysia. You must ensure this document complies with Malaysian employment legislation to protect your organisation from potential legal disputes and unfair dismissal claims in industrial courts.

When do you need this document?

You need a Contract Dismissal Letter whenever you terminate an employee's contract, regardless of the reason. This includes dismissals for poor performance, misconduct, redundancy, company restructuring, or breach of employment terms. The document is mandatory under the Employment Act 1955 and serves as official notice to the employee. You must also use this letter when terminating probationary employees, though different notice periods may apply. Additionally, you need this document to establish a clear record of the termination process for potential industrial relations disputes.

Key legal considerations

Your dismissal letter must include specific elements to ensure legal validity under Malaysian law. You must state the exact termination date, provide adequate notice period as specified in the employment contract or Employment Act 1955, and clearly outline the reasons for dismissal with factual supporting details. The letter should specify final payment calculations including outstanding salary, annual leave encashment, and any termination benefits under the Employment (Termination and Lay-off Benefits) Regulations 1980. You must also address the return of company property, confidentiality obligations, and any restraint of trade clauses. Importantly, ensure the dismissal grounds are not discriminatory and comply with Article 8 of the Federal Constitution regarding equality before law.

Legal requirements in Malaysia

Under the Employment Act 1955, you must provide minimum notice periods: four weeks for employees who have worked between two to five years, and six weeks for those employed over five years. Section 12 requires written notice, while Section 13 governs termination benefits calculations. The Industrial Relations Act 1967 protects employees from unfair dismissal, so you must ensure the termination is based on just cause and follows proper procedures. You cannot dismiss employees during certain protected periods, such as maternity leave or when they are pursuing legitimate union activities. The letter must be delivered personally or by registered post to ensure proper service. Additionally, you must comply with any specific termination procedures outlined in the employment contract or collective agreements, and ensure all statutory payments are calculated and paid according to the Employment (Termination and Lay-off Benefits) Regulations 1980.