1. Minimum Retirement Age Act 2012

The minimum retirement age for employees in Malaysia is regulated by the Minimum Retirement Age Act 2012 which came into force on 1 July 2013.

2. Minimum retirement age is 60

The minimum retirement age of an employee shall be upon the employee reaching the age of 60 years, pursuant to Section 4(1) of the Minimum Retirement Age Act 2012.

3. Minimum Retirement Age Act 2012 does not apply to all employees

The Minimum Retirement Age Act 2012 does not apply to the following types of employees:

  • persons who are employed on a permanent, temporary or contractual basis and are paid emoluments by the Federal Government, State Government, statutory body or local authorities;
  • persons who work on a probationary term;
  • apprentices who are employed under apprenticeship contracts;
  • foreign/non-citizen employees;
  • domestic servants;
  • persons who are employed in any employment with average hours of work not exceeding 70% of the normal hours of work of a full-time employee;
  • students who are employed under any contract for a temporary term of employment but do not include employees on study leave and employees who study on a part-time basis;
  • persons who are employed on a fixed-term contract of service, inclusive of any extension, of not more than 24 months; and
  • persons who, before the date of coming into operation of the Minimum Retirement Age Act 2012, have retired at the age of 55 years or above and subsequently are re-employed after they have retired.

4. It is an offence to retire an employee before the employee attains the age of 60

An employer cannot prematurely retire an employee before the employee attains the age of 60. Under Section 5(2) of the Minimum Retirement Age Act 2012, an employer who contravenes this commits an offence and shall be liable to a fine of not more than RM10,000 upon conviction.

5. A prematurely retired employee may complain to the Director General of Labour or file representation of unfair dismissal

An employee who has been prematurely retired by his/her employer may, within 60 days from the date of his/her premature retirement:

If the employee complains to the Director General, he/she shall not file a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967 until his/her complaint to the Director General has been resolved. The Director General will not conduct any inquiry on the employee’s complaint if he/she has already filed a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967.

Upon inquiry, if the Director General is satisfied that the employee has been prematurely retired by his/her employer, the Director General may direct the employer to:

  • Reinstate the employee in his/her former employment and to pay the employee his/her backwages; or
  • Pay the employee compensation in lieu of reinstatement, not exceeding the amount of total wages of the employee calculated from the date the employee’s premature retirement to the date the employee attains the minimum retirement age of 60.

An employer who fails to comply with the direction of the Director General above, commits an offence and shall be liable to a fine not exceeding RM10,000 upon conviction. If an employer has been convicted of the offence under Section 11(1) of the Minimum Retirement Age Act 2012, the Court may order the employer to pay the employee the amount directed by the Director General above. If the employer fails to comply with this Court order, the Court may issue a warrant to levy the employer’s property for the amount ordered to be paid.

Upon inquiry, if the Director General dismisses the employee’s complaint, the employee may then, within 30 days from the communication of the dismissal,:

6. Employee and employer may agree to optional retirement

An employee may voluntarily retire upon reaching the age of optional retirement as agreed in the employment contract or collective agreement. In other words, an employer may retire an employee upon the employee reaching any determined age below 60 with the employee’s consent.

7. Retirement age below 60 in existing employment contracts substituted with age of 60

Any retirement age of less than 60 in an employment contract or collective agreement made before, on or after the coming into force of the Minimum Retirement Age Act 2012, which is less than the age of 60 provided under the Minimum Retirement Age Act 2012, shall be deemed void and invalid. It shall be substituted with the minimum retirement age of 60.

In relation to an employee’s retirement age, both employer and employee cannot contract out of the Minimum Retirement Age Act 2012.

8. What if the employment contract is silent on the employee’s retirement age?

The Industrial Court in the case of Yeoh Yin Ying v Saatchi & Saatchi Worldwide Sdn Bhd [2013] 1 ILR 316 held that where the employment contract is silent on the employee’s retirement age, it is not a sensible proposition to assume that the employee is entitled to be employed for life.

In Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong [1998] 3 ILR 843 (Award No. 368 of 1998), the Industrial Court held that in the absence of any contractually agreed terms regarding the retirement age, an employee is entitled to work until the normal retirement age for employees in that category.

As such, retiring an employee under this circumstance will require legal, contractual and technical considerations and practices in order to avoid (i) breaching the employment contract and (ii) a dismissal without just cause and excuse.

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