Employment template
Employment Contract Template
Set clear expectations for full-time employees, covering remuneration, performance reviews, confidentiality, and post-employment restrictions.
Overview
Hiring talent requires more than an offer email. This employment contract template captures every essential term—salary, benefits, working hours, leave, and termination processes—so both employer and employee understand the relationship from day one.
The clauses align with Malaysia's Employment Act 1955 and the Industrial Relations Act. They also include optional provisions for senior hires, such as performance bonuses, intellectual property ownership, and non-solicitation obligations.
Beyond the legal wording, the guide explains how to onboard new employees smoothly: integrate the agreement with your employee handbook, share policies on remote work, and set up structured probation reviews.
Who should use this template?
Growing SMEs
Standardise employment documents across departments, ensuring compliance with statutory benefits and probation procedures.
HR managers
Generate role-specific clauses—for sales, engineering, or support teams—and maintain an audit trail of contract revisions.
Employees
Review your rights around overtime, leave, and termination so you can confidently negotiate terms before signing.
Key clauses to review
Job scope and reporting line
Clearly define responsibilities and direct supervisors. This sets performance expectations and simplifies organisational chart updates.
Compensation and benefits
Document salary, allowances, bonuses, and reimbursement policies. Include payout schedules and taxation handling.
Probation and confirmation
Outline the probation duration, evaluation criteria, and confirmation process. Clarify whether probation can be extended.
Termination and notice
Provide notice periods for both parties, grounds for summary dismissal, and severance calculations when applicable.
Drafting tips
- Align leave entitlements with statutory requirements and include any additional company perks, such as wellness days or learning budgets.
- If remote or hybrid work is allowed, detail expectations around working hours, equipment, and cybersecurity practices.
- For roles handling trade secrets, incorporate confidentiality and IP assignment clauses alongside post-employment restrictions.
- Reference your employee handbook so policies can be updated without amending the contract each time.
Detailed playbook
Structuring the probation period
Probation lets you evaluate cultural fit and performance before confirming an employee. Use this template to define clear objectives for the first three to six months. Schedule check-ins at the 30-, 60-, and 90-day marks, documenting feedback in Legalise AI's notes panel. If the employee excels, trigger the confirmation letter automatically. If performance lags, extend probation with a written plan or proceed to termination in line with the contract.
Employees should also understand their rights during probation: they accrue leave proportionally, enjoy statutory benefits, and must receive written notice before termination. Transparent communication prevents misunderstandings and maintains morale.
Designing competitive compensation packages
Beyond base salary, modern employment contracts include allowances (transport, mobile, meal), insurance coverage, and performance incentives. Use the compensation section to outline each element, the payment schedule, and eligibility criteria. For sales roles, embed commission formulas that reference annexed tables so adjustments can be made without rewriting the contract.
Clarify payroll logistics: specify payment dates, bank transfer details, and statutory deductions (EPF, SOCSO, EIS). Doing so builds trust and reduces payroll support tickets.
Leave and flexible work provisions
Employees increasingly value flexibility. The template includes clauses for annual leave, medical leave, parental leave, and optional wellness days. If you offer remote work, describe eligibility, required availability hours, and tools for collaboration. Link to your remote work policy for detailed cybersecurity and equipment rules.
During busy seasons, employers can block out certain dates where leave approvals are limited. Document these blackout periods in an annex so employees have clarity when planning vacations.
Protecting company information
Confidentiality, intellectual property, and data protection clauses keep your business secure. Tailor the confidentiality definition to cover source code, client databases, and internal processes. Include obligations to return equipment and data upon termination. For tech companies, add IP assignment clauses ensuring new inventions belong to the employer, with carve-outs for employee-owned prior inventions.
Remind employees about PDPA compliance, particularly if they handle customer personal data. Provide training and document attendance to demonstrate compliance if audited.
Termination procedures
The contract details notice periods, resignation processes, and summary dismissal grounds (such as misconduct or fraud). Employers should follow progressive discipline: issue verbal warnings, written warnings, and suspension before dismissal where appropriate. Record all steps within Legalise AI so you can defend the decision if challenged at the Industrial Court.
When an employee resigns, plan the handover by listing outstanding tasks, retrieving equipment, and revoking system access. Provide a termination checklist to ensure nothing is overlooked.
Streamlining HR workflows with Legalise AI
Create contract templates for each role family and let the AI assistant auto-populate names, salaries, and start dates. Generate offer letters, confirmation letters, and warning notices using the same data set. Centralise signed contracts in Legalise AI's vault with permission controls, ensuring compliance audits are effortless.
Integrate the platform with HRIS systems via API to sync employee details. When policies change, update the master template and regenerate contracts or addenda in bulk.
Sample clause excerpt
During the Probationary Period, either party may terminate the employment by providing seven (7) days' written notice or salary in lieu thereof. Upon confirmation, the notice period shall be thirty (30) days unless otherwise agreed in writing. All intellectual property created by the Employee in the course of employment shall belong exclusively to the Company. The Employee shall execute further documents as necessary to give effect to this clause without additional compensation.
Frequently asked questions
Do I need to issue a letter of offer and a contract?
The offer letter sets out headline terms, while the employment contract covers detailed clauses. Use both: the offer letter summarises the role, and the contract (signed before the start date) provides the legal framework.
Can I enforce non-compete clauses in Malaysia?
Non-compete clauses are generally unenforceable under Section 28 of the Contracts Act. Focus instead on non-solicitation and confidentiality clauses, which are more defensible if narrowly drafted.
What should I include for remote employees?
Specify working hours relative to Malaysian time zones, equipment provisioning, and expectations around data security. Clarify reimbursement for internet or workspace costs if applicable.
How do I handle overtime payments?
Employees earning below the statutory threshold are entitled to overtime rates as defined by the Employment Act. Include calculation formulas or refer to your HR policy manual for transparency.