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05/08/2009 00:40:20
Re: Company bought over by another company

The company I'm working in was bought over by a new company, all the staff will be transferred to the new company. We were ask to sign a new letter of offer.

My questions are:
- Can the T&C of the letter of offer be worst than the current one that I have?
- If the above is possible, what if I op not to sign it? Am I consider as resigning from the company?
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KL Siew
05/08/2009 08:58:15
Regulation 4 of the Employment(Termination and Layoff Benefits)Regulations:

"4. (1) Subject to paragraphs (2), (3) and (4), an employee shall be entitled to termination benefits payment where his contract of service is terminated for any reason whatsoever otherwise than -

(2) An employee shall not be entitled to any termination benefits payment if -

(a) his contract of service is renewed, or he is re-engaged by the same employer under a new contract of service on terms and conditions which are not less favourable; and

(b) the renewal or re-engagement takes effect immediately on the ending of his employment under the previous contract;..."

The above is the law pertaining to payment of termination benefit. From that it is quite clear when the terms are less favourable, the employee's service is deemed to have been terminated and the employee is entitled to the benefit.

But now, you will have to consider the following factors before you decide whether you want to accept the offer by the new owner or not.

1. The Employment Act and its Regulations only cover non manual employees with salary not more than RM1500. If your salary is above that and not covered by the Act, then the Regulations are not applicable to you. If you choose to reject the offer, you may not be able to use that law to protect your interest.
2. Even if you are covered by the EA, you will still have to consider your period of service with the former company. If your period of service is short, there is not much termination benefit you can get.
3. Consider the reality. Unless you have no problem in finding alternative employment, you may not want to reject the new offer to quickly even though it is less favourable.

I suggest you get acquainted with the Employment(Termination and Layoff Benefits) Regulations for detailed info.

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05/08/2009 23:20:17
Thanks for your respond! :)
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06/08/2009 15:45:22
Mr Siew,
Other than the Employment Act, what other recourse do employees have in the following scenario:-
1) Employer is a MNC
2) More than 1,000 employees are involved in the takeover
3) The new employer is offering less favourable terms ie reduced salary, benefits etc
4) If employees do not accept the offer by new employer, can it be deemed resignation, and employees are not entitled to separation benefits?
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KL Siew
07/08/2009 20:24:19
Besides the Labour Department, you may also consult the Industrial Relations Department.
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