Employment & industrial relations chambers — Kuala Lumpur +60 3-2202 4188 WhatsApp
FLS Faiza Loke & SivamAdvocates & Solicitors

Employer desk

Restructuring & retrenchment

Reorganising the business is management's prerogative. Losing the ensuing unfair dismissal references is not compulsory — the difference is planning, paper and sequence.

The exercise, in order

A defensible exercise moves in sequence: the business case documented before names are discussed; the affected categories defined; foreign employees released first within each category; LIFO applied or a departure from it justified on recorded, objective criteria; Borang PK filed with the nearest JTK office at least thirty days before the first termination; notice or pay in lieu under section 12; statutory termination benefits computed under the 1980 Regulations for entitled employees; and communications scripted so the town hall, the letters and the press line say the same thing.

VSS design

A voluntary scheme done well takes the sting — and much of the legal risk — out of an exercise. We design eligibility windows, quantum bands benchmarked against market practice (typically above the statutory floor), release language that actually releases, and management discretion clauses that survive the "voluntary" label. Then we handle the leavers who negotiate.

The exhibit that decides a retrenchment reference is usually created after the exercise ends.
The exhibit that decides a retrenchment reference is usually created after the exercise ends.

After the exercise

Two disciplines protect the file after separation day: do not backfill released roles in substance for a decent interval (re-advertising a "redundant" position is the single most damaging exhibit an ex-employee can produce), and answer every JTK query promptly and consistently. We stay retained through this tail for exactly that reason.

Questions we hear at assessments

Do we owe termination benefits to everyone?

The 1980 Regulations floor applies to Employment Act employees with twelve months' service — broadly those earning RM 4,000 and below. Above that, contract and scheme govern. Many employers pay a single scheme rate above the floor for simplicity and goodwill; we model the options.

Can we retrench while hiring in another department?

Redundancy is assessed by function, not headcount. Hiring welders while retrenching accounts clerks is defensible; the reverse needs careful documentation. Contemporaneous business records decide it.

Get it assessed properly.

Bring the documents; leave with the deadline, the merits and the next step in writing.

Mon–Fri 9am–6pm · Sat morning by appointment · +60 3-2202 4188

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