Many small businesses hire on a handshake and a WhatsApp message. It feels faster, until there's a disagreement about pay, leave or notice and nobody can point to what was agreed. A short, clear offer letter and contract prevents most of those arguments.
When must an employment contract be in writing?
Under section 10 of the Employment Act 1955, a contract of service for more than one month must be in writing. Every written contract must also include a clause setting out how either party can end it.
In practice, this covers almost every permanent or long-term hire. If you employ someone for more than a month on a handshake alone, you're not following the Act.
What should an offer letter include?
An offer letter confirms the main terms before someone accepts the job. Keep it short and specific:
- Job title and who the person reports to
- Start date and place of work
- Monthly salary and any fixed allowances
- Probation period, if any, and how it will be reviewed
- Working hours and working days
- Date to reply by, and how to accept
What should the employment contract cover?
The contract sets out the full terms. A practical checklist for a small business:
| Area | What to state |
|---|---|
| Parties and role | Company and employee details, job title, main duties |
| Pay | Salary, allowances, pay date, how overtime is handled |
| Hours | Normal working hours, rest days, public holidays |
| Leave | Annual and sick leave entitlements and how to apply |
| Probation | Length, review, and confirmation process |
| Termination | Notice period for both sides (required by section 10) |
| Statutory contributions | That EPF, SOCSO, EIS and PCB are deducted as required |
| Policies | Reference to company policies the employee must follow |
| Confidentiality | Protection of business and customer information |
Details small employers often miss
- No notice period. Without one, disputes about resignation and dismissal are much harder to settle.
- Probation with no review date. Probation ends and nobody confirms or extends it in writing.
- Allowances described vaguely. "Allowance as per company policy" causes arguments if there's no written policy.
- Old templates. A contract copied from years ago may not reflect current law or how you actually work.
- No signed copy on file. Keep a signed copy in each employee's record.
Do I need a lawyer?
For everyday hiring, many small businesses use a well-prepared template for each type of role. For senior roles, unusual terms, disputes or dismissals, speak to a qualified employment lawyer. Templates are a starting point, not legal advice.
Frequently asked questions
Is a WhatsApp message enough as an employment contract in Malaysia?
For employment lasting more than one month, the Employment Act 1955 requires a written contract that includes how it can be terminated. A short message is unlikely to cover the required terms, so use a proper written contract signed by both sides.
What is the difference between an offer letter and an employment contract?
An offer letter confirms the main terms so the candidate can accept the job. The employment contract sets out the full terms of employment. Small businesses sometimes combine them into one document, which is fine if it covers everything needed.
How long should probation be?
The Employment Act does not set a fixed probation length. Many small businesses use three to six months. Whatever you choose, state it in writing, and confirm or extend it in writing when it ends.
Can Fitaz Corporate prepare our employment contracts?
Fitaz Corporate prepares everyday HR documents, such as offer letters and employment contracts, from templates agreed with you. It does not give legal advice; for that, consult a qualified employment lawyer.