LANDMARK HIGH COURT DECISION ON TERMINATION BENEFITS CALCULATION
Jan
Date: 6.1.2025
A recent High Court appeal has clarified a crucial aspect of the Employment (Termination and Lay-Off Benefits) Regulations 1980 in Malaysia.
The key issue: whether the Director General of Labour (DGL) correctly interpreted the formula for calculating termination benefits — particularly the meaning of “average true day’s wages” and “the period of twelve completed months’ service immediately preceding the relevant date.”
The High Court allowed the appeal, ruling that:
- The 12-month period must run right up to the actual termination date.
- Calculations must be based on actual earnings, not theoretical wages.
- Unpaid or medical leave during that period reduces the benefit calculation base.
This ruling reinforces a literal and practical application of the law, providing clarity for employers, HR practitioners, and legal advisors in handling future termination cases.
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