Employer Vs. Ex-Employee Showdown: Handshake Deals Gone Haywire
- Muhammad Syahmi Akif Jamili (Associate)
While many articles primarily focus on how employees can take legal action against their former employers, it is equally important to consider employers’ legal rights in such situations.
Among other reasons, employers may have grounds to take legal action against their former employees based on the following:
- Insufficient notice: Every Employment Contract should specify the notice period required when an employee decides to leave their position. If an employee departs without giving sufficient notice, the employer can demand repayment for that notice period. In cases where the contract does not specify the notice period, the Employment Act 1955 provides guidelines:
- 4 weeks if the employment duration is less than 2 years.
- 6 weeks if employed for at least 2 years but less than 5 years.
- 8 weeks if employed for at least 5 years.
In such instances, employers can sue former employees for breach of the Employment Contract and seek compensation for the resulting damages, especially when it hampers the employer’s ability to find a suitable replacement.
- Bond: An employment bond, voluntarily agreed upon by both employer and employee without coercion or undue influence, holds legal validity according to the Employment Act 1955. The Court recognized this claim, among others, in the case of KUMPULAN PERUBATAN (JOHOR) SDN BHD v. LINDAWATI MA’AMOR [2003] 1 ILR 912.
However, it’s important to note that if an employer seeks damages for breaching the bond, they must substantiate incurring substantial expenses related to training or other employee-related costs. In the case of MIGHT METEOR ADVANCED MANUFACTURING SDN. BHD. v MAHASURIA BINTI IDRIS & 2 ORS [2018] 1 LNS 1373, the court emphasized the importance of proving damages, and failure to do so may hinder the claim.
- Excess Leave: Employers have the right to claim and deduct excess leave from a former employee if clear evidence exists that the employee took more leave than is entitled to under company policies or the Employment Contract.
- Overpaid Salary: If employers realize that they have overpaid an employee’s salary, they have the right to reclaim the excess amount. This situation often arises when an employee departs without notice, and after recalculating wages, the employer identifies the overpayment. Such a claim is allowed under SECTION 73 OF THE CONTRACT ACT 1950, which states that any payment made by mistake or under coercion must be repaid or returned.
Considering the aforementioned grounds (referring to the respective Employment Contract), it is a well-established legal principle that:
“A party who signs a written contract is bound by its terms… Even if a party has not read the contract’s contents, they are held to be bound by its terms.”
- POLYGRAM RECORDS SDN. BHD. V. HILLARY ANG & 4 ORS. (COLLECTIVELY KNOWN AS “THE SEARCH”) & ANOR. [1994] 3 CLJ 806
In conclusion, it is evident that a company can sue a former employee under specific circumstances. The cause of action typically depends on the situation and the specific grounds for the lawsuit.
Disclaimer: This article is for informational purposes only and does not constitute any legal advice. If you have any questions, please contact us directly.
