From retrenched employees to employers of labor and heads of HR, knowing the employee benefits of someone who has been working in some capacity for an organization is essential. It is more the case because failing to do so violates existing laws in the country and its code of conduct for industrial harmony. With the Fincrew Retrenchment Benefits Calculator, you can accurately estimate just what someone laid off after being employed under a continuous contract should get. Our algorithm uses variables like the year of employment, the type of employment contracts, working hours, and the amount of regular salary to give a breakdown of what an employee should get after the retrenchment exercise. You have to fill out the allotted fields here, and you’ll never have to worry about determining retrenchment benefits in Malaysia.

Understanding Retrenchment Benefits In Malaysia

The reduction is when employment contracts are terminated because the employer is experiencing financial difficulties or can’t get work. In Malaysia, the retrenchment exercise is carried out in two ways. The first is through the Voluntary Separation Scheme or VSS, while the second is via the Mandatory Severance Scheme (MSS).

Voluntary Separation Scheme (VSS)

In this case, the employee is given a choice to undergo the retrenchment exercise willingly. They are then given a letter of employment termination, and lay-off pay or employee benefits compensation.

Mandatory Severance Scheme (MSS)

All employees to be retrenched here are chosen by the employer without the consent or awareness of the employee. MSS then requires that the employer work out an acceptable compensation and notice period for the employees to undergo the retrenchment process. No matter which approach is adopted, to ensure that affairs operate within the purview of the industrial court, you need a tool that will help you correctly calculate retrenchment benefits in Malaysia.

Length Of Notice Period

It depends on whether the employee is under the Employment Act and how long they’ve been under the company’s employment. It can be anything from a month to two months.

Considerations Before Retrenchment In Malaysia

Under the law and the Employment Act, you should know that employment termination and lay-off are supposed to be the last recourse of any employer. Some options that employers are allowed to explore before resorting to the retrenchment exercise include:

• Decrease in regular salary or a pay cut
• Reducing overtime working hours
• Transfer excess individuals under an employment contract to another department in the company
• Reducing normal working hours or working days
• Freeze head-counting

Only when all of these alternatives prove abortive is an employer expected to turn to a decrease in the country. Retrenchment is challenging, both for the employer and the employee. But with our retrenchment benefits calculator, you can make this complex process a little easier.