Fixed Term or Permanent Employee: One Size Does Not Fit All
May 17, 2023

Fixed Term or Permanent Employee: One Size Does Not Fit All

The recent decision of the Industrial Court in Azalina binthi Adham v. Bursa Malaysia Berhad (Award No. 1087 of 2023) discusses factors considered in determining that the claimant was employed under a genuine fixed term contract which came to end through the natural effluxion of time, and not deemed as a permanent employment.

Claimant’s Employment History

  1. The claimant began her employment since June 2001 as a permanent employee.
  2. In March 2012, the claimant was offered the position of Head, Strategy and Transformation.
  3. She was at all material times aware that her employment as Head, Strategy and Transformation was a fixed term contract of employment and the acceptance of it would result in the permanent employment with the company coming to an end. Having full knowledge of this, the claimant accepted the fixed term employment contract.
  4. The claimant went on to accept another fixed term employment contract as the Director, Strategy and Transformation in 2015. In 2017, the claimant was offered another fixed term employment contract as the Chief Operating Officer, to which she accepted.

In finding that the claimant was employed under a genuine fixed term contract, the Industrial Considered distinguished Ahmad Mirza1  and Han Chiang High School2 , and took into account the following factors: -

(1) the fixed term contracts offered to the claimant were not successive;

(2) there was no automatic renewal of the fixed term contracts without the claimant’s application. For the third contract, the claimant underwent a specific assessment before she was appointed as the Chief Operating Officer;

(3) there were intermittent breaks between the three (3) fixed term contracts; and
(4) the nature of the claimant’s job were different for each fixed term contract.

The claimant relied on Ahmad Mirza to support her contention that, by virtue of the three (3) fixed term contracts issued to her, she was a permanent employee. In Ahmad Mirza, in concluding that the continuous renewal of the fixed term contract was, in fact, a permanent contract, the Federal Court considered the intention of parties, the employer’s subsequent conduct in the course of employment and the nature of the employer’s business and nature of work the employee is engaged for in deciding if the contract was fixed term contract.

This case reinforces the position that there is no straightforward formula in determining whether a contract is a genuine fixed term contract. Every case would depend on the careful scrutiny of its own facts and circumstances.

Written by Janice Leo & Adrienne Sena.

1 Ahmad Zahri Mirza Abdul Hamid v. AIMS Cyberjaya Sdn Bhd [2020] 6 CLJ 557

2 Han Chiang High School Penang, Han Chiang Associated Chinese Schools Association v. National Union of Teachers In Independent Schools, W. Msia [1988] 2 ILR 611

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