Notice Of Non Renewal Of Employment Contract Template for Malaysia

When you need to formally notify an employee that their fixed-term contract will not be renewed in Malaysia, you must issue a Notice of Non-Renewal of Employment Contract. This document serves as official communication that complies with Malaysian employment legislation while protecting your business from potential legal complications. The notice provides clear documentation of your decision and ensures both parties understand the employment relationship will conclude on the contract's natural expiry date.

When do you need this document?

You need this notice whenever a fixed-term employment contract is approaching its expiration date and you decide not to offer renewal or extension. This commonly occurs with project-based employees, temporary staff, probationary workers, or seasonal employees whose contracts have specific end dates. The notice is particularly important when the employee might reasonably expect renewal, such as after successful completion of probationary periods or multiple contract renewals. You should also use this document when organizational restructuring, budget constraints, or changing business needs prevent contract extension, ensuring transparent communication about your decision.

Key legal considerations

Your notice must clearly reference the original employment contract, including its commencement date and expiry terms, to establish the legal foundation for non-renewal. Include specific details about final working dates, outstanding leave entitlements, and procedures for returning company property to avoid disputes. Address any contractual obligations regarding notice periods, as some contracts require advance notification beyond the natural expiry date. Consider severance pay requirements under the Employment (Termination and Lay-Off Benefits) Regulations 1980, particularly for employees who have completed substantial service periods. Document any performance issues or business justifications for non-renewal to demonstrate the decision was made in good faith and not based on discriminatory factors.

Legal requirements in Malaysia

Under the Employment Act 1955, you must provide notice according to the terms specified in the original employment contract, which typically ranges from one to three months depending on the employee's position and length of service. The Industrial Relations Act 1967 requires that termination decisions, including non-renewal, must not be discriminatory or in bad faith. Your notice must comply with the Contracts Act 1950 regarding contractual termination procedures and cannot violate any implied terms of continued employment. Calculate final settlements accurately, including pro-rated bonuses, unused annual leave, and any contractual benefits due upon termination. Ensure the notice is delivered through proper channels, preferably in writing with acknowledgment of receipt, and maintain copies for your employment records as required by Malaysian labor regulations.