Got retrenched, what severance and rights am I entitled to?

Question

Company doing restructuring and I kena retrench after 5 years service. HR mention some compensation but I not sure if they short changing me. What is the proper retrenchment benefit in Malaysia and what should I check before signing anything?

Startup Founder Hakim · Accepted Answer

Sorry you kena, been through it too. Key things to know: under the Employment (Termination and Lay-Off Benefits) Regulations, if you are covered (was originally for those under RM2000 but the 2023 Employment Act amendment expanded coverage, check your case), the minimum layoff benefit is based on years of service, roughly 10 days wages per year for under 2 years, 15 days for 2 to under 5 years, and 20 days per year for 5 years and above. With 5 years you are in the 20 days per year bracket. That is the LEGAL MINIMUM, many companies pay more, so negotiate. Also you are entitled to: notice pay (or pay in lieu), payment for unused annual leave, and any prorated bonus per your contract. IMPORTANT: before signing any release/settlement letter, check the numbers match, and if it feels unfair, you can lodge a complaint with the Labour Department, or if you suspect the "retrenchment" is actually unfair dismissal in disguise (e.g. they hire someone for your role right after), you can file at the Industrial Relations Department within 60 days. Dont sign under pressure on the spot, ask for time to review. Also claim your EPF and check SOCSO, you may qualify for the Employment Insurance System (EIS/SIP) which pays a portion of your income while you job hunt, apply within 60 days.

Uncle Raju Insurance · Answer

Negotiate, the first offer is rarely the ceiling. Companies often have room to give more, especially to avoid disputes and get a clean signed release. I calmly asked for an extra month plus my full leave encashment and they agreed rather than risk a complaint. Stay professional, know your minimum entitlement as the floor, and negotiate up from there. Get everything in writing before you sign.

Civil Servant Encik Azman · Answer

Check that the selection for retrenchment was fair, the principle is usually LIFO (last in first out) within the same category, unless justified otherwise. If a junior in the same role was kept while you (senior, 5 years) were cut without good reason, that may be a ground to challenge. Get the reason in writing. Consult the Labour office or a cheap legal aid consultation before signing away your rights for a lowball payout.

Uncle Civil Servant Rahman · Answer

Dont forget to claim your EIS (SIP) from SOCSO, so many people miss this. If you lost your job involuntarily (retrenchment counts), you can get monthly financial assistance for several months while looking for work, plus job placement help. Apply within 60 days of losing the job at the PERKESO office or online. It really helped bridge my income gap after I was let go. Free money you already contributed to, dont leave it on the table.

Got retrenched, what severance and rights am I entitled to?

4 contributors answered

Answer this

Related questions

MNC or GLC, which one better for long term career?

Boss want me to serve 2 months notice, can I shorten?