LEGAL PRECEDENTS ON FIXED-TERM CONTRACT EXPIRY AND TERMINATION BENEFITS

Date: 8.1.2025

This digital podcast examines whether employees on fixed-term contracts are entitled to termination benefits once their employment naturally expires. By analyzing the case of AworldTec Engineering Sdn Bhd v Muhamad Idris Arifin, the source clarifies that a contract ending due to the passage of time does not constitute a “termination” by the employer. Instead, the law distinguishes between a contract that lapses automatically and one that is ended through a positive act by either party. Because the worker is aware of the end date from the beginning, there is no sudden loss of income to justify compensatory payments. Consequently, the High Court ruled that expiry by effluxion of time exempts employers from the liability of paying statutory layoff or termination benefits.