Sunday, September 11, 2011

Retrenchment / VSS compensation packages in Malaysia: A Comparison

Usually companies do not make public the severance packages (retrenchment, voluntary separation scheme) paid to the affected employees. You will find that you are most likely to get such data only if the company has an in-house union and/or belongs to an industry with a strong union (e.g. banks)

It is always good to arm yourself with some form of market data (who paid how much to whom) especially if you want to negotiate with your employer for a better severance package. Note however, that no circumstances are exactly the same -- Compensation package typically depends on the type of organization e.g. MNC/GLC/local, industry, job position, circumstances under which you've been made redundant, company's financial position, company's moral and CSR standing etc.

Hence, the compensation data below (or which you've gathered) should only be used for general comparison purposes only. That said, as you can see below, most companies pay above statutory rates (i.e. min. required as per Malaysian Employment Act) which is ---

For service up to 2 years: 10 days wages per year of service
Service between 2-5 years: 15 days wages per year of service
Service of more than 5 years: 20 days per year of service

I also hope that more retrenched employees would share the compensation data that their ex-employer have paid out in the past. This will help the other soon-to-retrenched workers

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Maybank (bank, VSS in 2001, source: news article)
paid 1.35 to 1.85 months per year of service or 65% of one's last drawn salary X no of months to retirement (whichever lower, subject to a maximum of 36 months)
also gave RM 1,000 cash as medical assistance and continuation of certain staff benefits for 2 years

Intel Penang (electronics, 2001, source: news article)
Report indicated that those who opt for the scheme will receive 4 months' base salary as well as a 1.5-month salary for each year of service.

Malaysia Airline (airline, 2006, source: press release)
Payment based on current monthly salary ranging from 1-3 months for every year of service. Apart from that, MAS will give a one-off medical benefit, buy back all unutilised leave, give a free air ticket to be used by the end of the year and give laid-off staff hospitalisation coverage for a year

Timedotcom (telecommunications, 2006, source: news article)
Package of between 1.8 -2 months' salary for each completed year of service with the company

EON (car distributor, VSS in 2006, source: news article)
paid 1.5 times their last drawn salary per year of service subject to a maximum of 24 years, or last drawn salary X remaining months to retirement subject to a maximum of 36 months, which ever is lower. Medical assistance of RM 1,000 per employee. Outplacement training and workshops, and employment placement assistance

NST/MalayMail (newspaper publisher, 2006, source: thestar quoting sources)
voluntary separation scheme (VSS) of between 1.1- 1.75 months' salary per year of service based of the last-drawn basic salary.

Spansion
Penang (electronics, VSS in 2009, source: news article)
Employees who have served < than 2 years offered 10 days’ pay and a month’s salary in lieu of notice, those who have clocked 5 years or more were offered 20 days’ pay and two months’ salary in lieu of notice. The offer for employees in between the two categories was 15 days’ pay and 1.5 months’ salary.

More cases (especially for involuntary separation or dismissals)
One good website to check is
www.mp.gov.my which is the official website for the Industrial Court of Malaysia for past cases. Or simply google using keywords such as "malaysia industrial court case RM" and one can get a list of past court cases and the judgement passed by the court (e.g. how much was awarded).

I will update compensation database as I get more data

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