When an employee in Malaysia decides to resign before their notice period is over, they may have the option to buy out the remaining notice period. This process allows the employee to leave the company immediately without serving the full notice period, by paying a sum of money to the employer. This is particularly useful in situations where the employee needs to join another company urgently or has other pressing commitments.
The buyout amount is generally calculated based on the employee’s gross salary. Here’s a step-by-step guide to understanding how this calculation is made:
- Determine the Notice Period: First, check the employment contract to determine the length of the notice period required by the employer.
- Gross Salary Calculation: Calculate the gross salary of the employee, which includes all the monetary benefits before deductions like taxes and contributions.
- Daily Wage Calculation: Divide the gross monthly salary by the number of working days in a month to find the daily wage.
- Buyout Amount: Multiply the daily wage by the number of days left in the notice period. This will give you the buyout amount.
For example, if an employee has a monthly gross salary of RM 5,000 and a notice period of 30 days, but they want to leave after 10 days, they would need to buy out the remaining 20 days. If we assume a month has 20 working days, the daily wage would be RM 250 (RM 5,000 / 20). Therefore, the buyout amount would be RM 5,000 (RM 250 x 20).
It’s important to note that the employer has the discretion to accept or reject the buyout option. Additionally, the buyout process should be managed by the HR department, ensuring that all legal and financial aspects are handled correctly.
In some cases, the future employer might agree to pay the buyout amount as part of the hiring process. This amount can sometimes be reimbursed to the employee as a joining bonus or settled in the full and final settlement.
It’s also crucial to be aware of the local employment laws. For instance, the Employment Act 1955 and the Industrial Relations Act 1967 provide the legal framework for employment in Malaysia. From 1 January 2023, the Employment Act applies to all employees, with certain sections on overtime payments and termination benefits subject to an increased salary threshold.
In conclusion, calculating the buyout amount for an employee in Malaysia requires a clear understanding of the employment contract, gross salary, and local employment laws. It’s a straightforward process, but it must be handled with care to ensure compliance with legal requirements and fairness for both the employee and the employer. For more detailed information or legal advice, it’s always best to consult with a professional or refer to the latest updates on Malaysian employment law.
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