Employment in Malaysia: Common Mistakes Employers Make

The management of employees is among the more difficult tasks faced by managers and employers. It is of utmost importance that employees are not wrongfully treated directly or indirectly, as there is nothing more dangerous to a company’s image than a vocal, disgruntled employee who is willing to go to court. 

So here are some common mistakes made by employers, managers and HR when it comes to dealing with employment in Malaysia.

#1. Failing To Commit to The Pay Schedule

Employment in Malaysia
Source: Bloomberg

Not paying an employee is among the biggest mistakes an employer can make. By not keeping true to a schedule, an employee’s financial plans will be difficult to work with. Most employees expect a salary at the end of the month, so as an employer, you should do your part to keep that schedule to avoid any financial mess the employee might face if you don’t.

#2. Getting Employee Information Wrong

Employment in Malaysia
Source: Betterteam

You may think that this should be obvious, that an employer would prioritise information about the employee like their position, their salary, their entitlements, etc. But mistakes can still be made regardless as that information can change from month-to-month. This mistake is most likely to occur in larger companies with a large number of employees, but even small companies are not safe from this mistake as well. To try and prevent this mistake, the HR department of your company, or anyone that is in charge of managing employees, should keep a proper record of information and keep it up-to-date. Communication with employees is also key and avoiding any errors in their information.

#3. Not Organising Records Properly


Keeping records of important information is crucial to ensure that no logistical mistakes are made, but this in itself can be a problem if the organisation of said records is not proper and messy. Relying on manual methods because they seem the most efficient can usually open up the gateway to these mistakes. Such errors can have the potential to lead to future disputes as employers or managers can lose records of employee’s payrolls and so on. This can then lead to a dent in the reputation of that company. 

#4. Miscalculating Employee Finances

employment in malaysia
Source: Econlife

This can include the employee’s individual income tax, Sosco, EPF funds and EIS Deductions. Staff who are in charge of employees payrolls must make sure that the calculations of these funds are correct. Using manual methods and older software to do this can again increase the chances of HR employees messing up when it comes to these delicate calculations. To avoid this, HR managers and employees should invest in newer software that makes the process more easy and efficient, reducing the risk of making mistakes. 

#5. Disregarding Employee Complaints.

employment in malaysia
Source: Getty Images

Oh this is a big one, and something no HR manager and employer should overlook. As a company, you should ensure that you have proper complaint policies in place so that employees can have a way to make suggestions or report any sort of issues in the workplace. And, when these complaints do come through it is of utmost importance that they are tended to as soon as possible and as thoroughly as possible. There are some cases where companies have lashed out on employees for making valid complaints, or just ignore any complaint in the hopes that it will die down. A complaint that is not tended to will not die down, it will only get worse till the point where ti will be hard to solve, and if a company were to lash out on it’s employees, they will have to prepare for a wave of disgruntled workers ready to take it to the courts.

#6. Not Investigating Issues.

employment in malaysia
Source: Catalysit Law

If employees become suspects of misconduct incidents, investigating said incidents and the employees in question is a vital step in ensuring whether the employee(s) are found to have done it and to seek out whether it was done by accident with valid reasoning or whether it was intentional. There have been some cases of companies which jump the bullet and come to a conclusion based on mere rumours and simply pointing the finger at someone because they seem most likely to have done whatever mistake was done. Doing what these companies have done might end up being a costly mistake, especially if the employee has truly done nothing wrong, and again, a trip to the courts will not be a good look for your company either. 

#7. Rushing Important Decisions

employment in malaysia
Source: Stock Image

Whether it is the decision to hire or fire someone, to cut costs, or to even change the dress-code, it is important to take time on thinking upon that decision before it is made. What are the risks? What are/were the employees worth? What are the risks that come with that decision? What are the benefits? Because once that decision has gone through and changes are made, it will not be so easy to reverse that decision if it turns out to be a bad idea, and when the damage is done. 

#8. Having a Poorly Structured Contract

employment in malaysia
Source: Yudien Law

Contracts, as you know, serve an important purpose. Having a poorly worded or unclear contract can bring about some unwanted consequences. It is best to seek help from a lawyer when creating a contract so that you can ensure that whatever is in it would be suitable for your company and the employee who signs it.

#9. Not Having A Contract

Without having the proper documents, it can be easy to forget what an employee’s obligations are, what their work length is, what their job description is, their entitlements, their salary and so on. You may think that having a contract is a no-brainer for any company, but there are still some smaller companies in Malaysia that do not have a formal written contract for their employees. Sometimes, things can still be good, even without a contract, but when issues such as discipline and termination of an employee in a position arise, the lack of a contract would only make such incidents more difficult to manage. 

#10. Poorly Written Policies

Like contracts, company policies must be clearly written and properly drafted. Consistent and clear policies that are not vague are important and must be applied to all employees. There are still cases of company policies only applying to a certain group of employees, meaning that if a person does something that breaks company policies, even when others have done the same, they are the only ones that get the blame. Having this sort of discriminatory act in your company will only spell disaster when the victimised employee bites back.  

#11. Discriminatory Behavior to Employees

employment in malaysia
Source: Stock Image

This should be a very obvious issue to avoid, even outside of the office. But sometimes, we may end up doing something discriminatory without realising it. In Malaysia, a country that is diverse in it’s ethnicities, we should be well aware of how we treat each other. Sometimes, HR managers fall upon stereotyping when they assess employees and base their judgement upon their ethnicity. Discrimination can also be based on the gender of a person as well. Again, such issues may upset the employee when he or she feels like they are being mildly discriminated against. And eventually, when they have had enough, they may lash out upon the company with legal suits. 

#12. Lack of Reviews on Employees

Employee performance reviews are essential in helping both manager and employee see the things about themselves that need to be improved. So, to not give reviews means that the employee will not know whether he or she is doing a good job or not and the manager or employer would not know either. 

#13. Overly Positive Performance Reviews.

Giving reviews that are only positive might make one think that it may encourage the employee, while this is true in some cases, employers should always remember to be wholly honest in their reviews. Sometimes giving an over positive review to an employee will give them the impression that they are doing a good job and have no room for improvement, even if they are not doing a good job and need room for improvement. An honest review will allow an employee to reflect upon themselves and seek out ways to better themselves on the aspects that they are lacking in when it comes to their work in the company. If employers give overly positive reviews to employees who have performance and disciplinary issues, they will keep on carrying out those issues till it begins affecting the company’s overall performance. 

#14. Failing to Document Disciplinary Action

When disciplinary incidents occur with an employee, the management must be sure to document the incident and store it in that employee’s records. Failing to do so may again have negative implications on the company. This is because if a company decides to let go of an employee with valid reasons, they will not have anything to back up their reasoning if that employee decides to file a suit against the company. 

#15. Dismissing Employees without a Process

Employers simply cannot fire an employee on the spot and tell them to leave. There is a proper process when it comes to the termination of employees. By simply dismissing an employee without having prior meetings discussing the reasons that led to it and not giving the employee a chance to tell their side of the story, unfair dismissal claims will await.

Mistakes Made When Hiring

It should also be noted that even the process of hiring is something that can also be grounds to making mistakes as well when it comes to employment in Malaysia. Sometimes these mistakes may end up being a thorn in the company’s side.

#1. Not doing a Proper Background Check

Sometimes, it may be important to ensure that you are aware of an employee’s criminal background and that they are allowed to work in your respective industry. For example, you would not want to have an employee you didn’t know was a previous sexual offender working at a school would you? 

#2. Not Applying Same Recruiting Practices

Employers need to ensure that the same recruiting practices are done for all candidates they are seeking. Changing the practices based on what assumptions an employer has on someone is, believe it or nor, discriminatory and will, again, not be a good look for your firm. 

#3. Asking Irrelavant Questions During Interviews

Being thorough in the interview process is a good thing and is recommended if you want to ensure that you hire the correct people. But sometimes in the quest for thoroughness employers may end up asking slightly inappropriate questions to the person that is being interviewed. Questions about a candidate’s love life, sexuality, race, religion (or how religious they are), political views, disabilities and family is best avoided as they mostly serve no purpose to seeking whether a candidate could do a particular job or not. Giving inappropriate questions may sway even the most desperate job-seeker, and you may have the potential to lose highly skilled workers. 

#4. Hiring because of Ties

It is quite common for employment in Malaysia to hire someone you may know, be it your cousin, your best friend’s son or daughter, your niece. Now, there is nothing wrong with hiring associates or mutuals, so long as they are right for the job. But in some cases, employers may owe a favor to someone and to repay that favor they give a job to a mutual between the two parties. And that person that they hired to repay the favor might not be as skilled in the field. 


And those were a list of mistakes that employers can make when managing employees and seeking out new ones. These mistakes can happen on a case to case basis and may sometimes go on resolved, but eventually the mistakes will come back and it would be a huge problem for a company. So to all employers and HR managers out there reading this, be sure that you are aware of these issues and find ways to improve for the sake of your company and fellow colleagues.

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