Thursday, February 11, 2010

Reorganization and Retrenchment

The company is currently conducting a reorgnization as well as staff retrenchment exercise for the purpose of cost-cutting. Some colleagues have already received the letter informing them to start looking and applying internal jobs available within the company by end of Feb. The termination exercise will commence by next month and a severance package will be offered to the candidate who is unable to obtain the internal job at the end of the notice period (1 or 3 months depending on the individual letter of offer). The working atmosphere has been weird ever since the company announced the reorganization in Nov last year. The recent announcement has made the situation worse as different type of rumours were just flying around on who is staying and who is leaving.

To have a clearer understanding about the employees’ rights during the retrenchment exercise, a few of us made a trip to the Malaysia labour dept (Jabatan Buruh at Jabatan Tenaga Kerja) head-quartered in Putrajaya, inside one of the block of the red cement buildings beside Alamanda Mall. The parking is disastrous there as the single lane road were occupied with illegally parked vehicles on one of the lane.

Here are some points collected from the consultation with the officer in-charge
(1) It is up to the company conducting the retrenchment on whether to disclose to the employees the total headcounts impacted by the retrenchment. This is a bit surprise to us as we always think that the company should be transparent in this aspect when come to retrenchment.

(2) Approval from the labour dept is not required for retrenchment. Well, I guess this is the so called business friendly environment

(3) There is no provision for female employees in their pregnancies to be exempted from the retrenchment exercise if the severance package is offered and that the retrenchment is not done with the intention for escaping from the 2 months obligated maternity leave

(4) The employee can report to the labour dept for request for investigation if it is felt that the dismissal is not done properly.

(5) The employee can report to the labour dept with proof that the retrenchment for the local employees are done for the purpose of keeping the foreign employees within the same dept of the company.

(6) If the dismissal is not done correctly, the employee can report, within 2 months after the dismissal, to another government dept to seek reinstatement of job position.

(7) There is no provision that states that types of works or assignments to be assigned to the employees have to be equivalent or similar in nature with the current position or matching the skills for the employees. In summary, this can subject to abuse by employers who assign inappropriate tasks to the employees in order to make the life difficult for the targeted employees, hopefully the employees would reassign before the severance package is offered.

(8) The letter of offers or contracts offered to the employees in the local company usually does not contain any statement on the terms of dismissal and the relevant compensation for the employee in the event of dismissal, other that the notice period.


Generally, the local employment law is more geared towards and favoured the employer and the poor employees are always in the disadvantage end when comes to retrenchment.

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