is a process to discharge the surplus labour arising due to various factors
which renders the services of the redundant worker no longer needed by the
employer. This might happen firstly, when the business itself ceases to operate
or the business no longer exists, secondly, when the place where the employee
was contracted to work disappears, thirdly, the job itself disappears and
fourthly, when less employees are needed to do the same job while the job still
exists. All these are brought about because of change in business as times are
not always booming in the business world. In a genuine redundancy situation, it
is pertinent for the employer to pay retrenchment benefits or compensation to
the affected workers in order that they are able to cope with immediate
aftermath of retrenchment. The retrenchment payment is a minimum sum paid to
the employee based on the length of service for loss of the job.
said the above, this paper will seek to discuss genuine redundancy and the
retrenchment compensation with reference to the law and practice in Malaysia.
Here, unlike some developed countries such as the United Kingdom, not all
workers will be eligible for the compensation in the event their services are
no longer required by the organisation due to genuine redundancy in the
organisation. Hence, this paper will, apart from discussing what it means by
‘genuine redundancy’ and ‘retrenchment compensation’ from the Malaysian
perspective, will also propose reform of the existing law to accord
retrenchment compensation to all workers affected by the retrenchment.