Employment Act · 2026 Revised Edition · Part · Contracts of Service
23. Termination of contract of service without notice
In plain English
Not legal advice
Either party may end a contract of service without notice by paying the other party the salary the employee would earn over the notice period. This payment also lets a party end the contract before a notice already given runs out. Either party may end the contract without notice if the other party deliberately breaks a condition of it.
Summary · Drafted with AI, checked against the official text on 30 Sep 2026.
Official textFrom Attorney General's Chambers, unchanged
Either party to a contract of service may terminate the contract of service without notice or, if notice has already been given in accordance with section 22, without waiting for the expiry of that notice, by paying to the other party a sum equal to the amount of salary at the gross rate of pay which would have accrued to the employee during the period of the notice and in the case of a monthly-rated employee where the period of the notice is less than a month, the amount payable for any one day shall be the gross rate of pay for one day’s work.
contract of service
“contract of service” means, subject to section 10, any agreement, whether in writing or oral and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve him as an employee, and includes a contract of apprenticeship;
Either party to a contract of service may terminate the contract of service without notice in the event of any wilful breach by the other party of a condition of the contract of service.
Employment
Terms defined in s 2
contract of service
Defined · s 2“contract of service” means, subject to section 10, any agreement, whether in writing or oral and whether express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve him as an employee, and includes a contract of apprenticeship;
employee
Defined · s 2“employee” means a person who has entered into or who works under a contract of service with an employer, and includes a workman and any public officer or employee of the Government included in a category, class or description of such officers or employees declared by the Minister, with the approval of His Majesty the Sultan and Yang Di-Pertuan, to be employees for the purposes of this Act or any Part thereof; but does not include any seaman, domestic worker or any person employed in a managerial, executive or confidential position or any person belonging to any other class of person whom the Minister, with the approval of His Majesty the Sultan and Yang Di-Pertuan, may by notification published in the Gazette, declare not to be employees for the purposes of this Act;
gross rate of pay
Defined · s 2“gross rate of pay” means the total amount of money including allowances to which an employee is entitled under his contract of service either for working for a period of time, that is, for one hour, one day, one week, one month or for such other period as may be stated or implied in his contract of service, or for each completed piece or task of work but does not include — (a) additional payments by way of overtime payments; (b) additional payments by way of bonus payments or annual salary supplements; (c) any sum paid to the employee to reimburse him for special expenses incurred by him in the course of his employment; (d) productivity incentive payments; and (e) travelling, food or housing allowances: Provided that in the case of employee on piece rates, the ordinary rate of pay shall be calculated by dividing the period of 14 days immediately preceding the day on which the rate of pay is required to be calculated by the number of days on which such employee actually worked during such period;
salary
Defined · s 2“salary” means all remuneration including allowances payable to an employee in respect of work done under his contract of service, but does not include — (a) the value of any accommodation or the supply of any food, fuel, electricity, water or medical attendance, or of any amenity or service excluded by order of the Minister published in the Gazette; (b) any contribution paid by the employer on his own account to any pension fund or provident fund; (c) any travelling allowance or the value of any travelling concession; (d) any sum paid to the employee to reimburse him for special expenses incurred by him in the course of his employment; (e) any gratuity payable on discharge or retirement; and (f) any retrenchment benefit payable on retrenchment;
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