In Malaysia, the concept of a buyout, where an employee offers a sum of money to the employer to waive the notice period, is a common practice. However, whether an employer can reject this buyout offer is a topic that often leads to confusion and requires a clear understanding of Malaysian employment law.
According to the Employment Act 1955, there is no legal requirement for an employer to accept a buyout offer from an employee. The Act provides that both employers and employees can terminate a contract of service by giving notice of their intention, without any requirement for an “acceptance” of the termination by either party. This implies that while an employee can offer a buyout instead of serving the notice period, the employer is not obligated to accept it.
The legal framework in Malaysia generally provides that the Employment Act sets out minimum statutory benefits and entitlements, and from 1 January 2023, it applies to all employees, with certain exceptions related to overtime payments and termination benefits for employees whose wages exceed RM4,000/month. This means that while the Act provides a structure for the notice period and termination of employment, it does not explicitly mandate the acceptance of a buyout offer.
Furthermore, it is essential to note that the employer reserves the sole authority to choose whether to accept or reject the buyout option of the notice period. The HR department typically manages the entire buyout process, and the amount to buy out the notice period is generally calculated using the employee’s gross salary.
Conclusion
In conclusion, while Malaysian employment law allows employees to offer buyouts to their employers instead of serving the notice period, there is no legal compulsion for employers to accept such offers. Employers have the right to accept or reject buyouts at their discretion, unless there is a contractual clause that forbids it. Therefore, it is crucial for employees to review their employment contracts and understand the terms regarding the notice period and buyout options before making such an offer.
For employers, it is advisable to have clear policies regarding buyout offers to ensure consistency and fairness in handling such requests. Both parties should aim for a mutual agreement that respects the legal framework and the contractual obligations agreed upon at the start of employment.
Understanding these nuances can help both employers and employees navigate the complexities of employment contracts and ensure a smooth transition when the time comes to part ways
