In the dynamic employment landscape in Malaysia, facilitating and ensuring a positive and productive work environment is crucial for the success of any organisation. Employment law in Malaysia is mainly governed and regulated by the Employment Act 1955. Organisations generally implement standard operating procedures and other internal policies to ensure compliance with the various provisions of the Employment Act 1955. However, these can all be integrated into a single document, the Employee Handbook. Although there is no legal requirement for an organisation to adopt an Employee Handbook, it can serve as a valuable mechanism to communicate and implement the organisation’s expectations, policies and procedures whilst at the same time avoiding any ambiguity about supplementary employment terms and conditions that may not be expressly contained in employment contracts.

What is an Employee Handbook?

An Employee Handbook serves as a reference guide for the employer and employees. It outlines the rights and responsibilities of the employer and employees, the policies and procedures implemented by the organisation and the overall culture of the work environment. An Employee Handbook is usually prepared comprehensively and provides clarity on several aspects of supplementary employment terms and the division of roles within the organisation. Organisations that have an Employee Handbook in place typically require all employees to read and understand the contents of the Employee Handbook as part of its onboarding or training process to align the employees’ expectations with the organisation’s mission and objectives.

The contents that an Employee Handbook covers vary from organisation to organisation. Nevertheless, the following are some crucial points for an organisation to consider when preparing an Employee Handbook:

1.  About the Organisation

Employees should know and be familiar with the organisation’s inception, corporate structure, mission and objectives. It is good practice for employees to be aware of the significant milestones achieved by the organisation.

2.  Employment with the Organisation

The Employee Handbook should state the general terms of employment for each division of personnel, including roles and responsibilities, advancements, transfers, compensation and reimbursements, training opportunities, work hours and overtime. It is also important that the Employee Handbook sets out the rights of its employees.

3.  Procedures

The standard operating procedures of an organisation provide the methods by which the organisation executes an action. This serves as a reference for employers, employees and selected committees to observe and adhere to the implemented procedures for various matters, such as recruitment and hiring, onboarding, performance management, complaints and grievances, and termination of employment.

4.  Policies

The Employee Handbook should include all policies implemented and effected by the organisation. These policies provide employees with the necessary information on various aspects of employment within the organisation. Such policies may include a privacy policy, anti-bribery and corruption policy, anti-money laundering policy, whistleblowing policy, discrimination and harassment policy, disciplinary policy and employee disability policy.

5.  Code of Conduct

An employee code of conduct is essentially a set of guidelines and principles that outline the ethical standards and professional conduct expected from the organisation’s employees whilst maintaining and safeguarding the organisation’s values. A code of conduct will outline elements such as professionalism, ethical standards, integrity, diversity, office romance or relationships and compliance.

Benefits of an Employee Handbook

The adoption of an Employee Handbook can contribute in various ways to a positive work environment that is more effective, organised and transparent. There are various benefits to an Employee Handbook, some of which are as follows:

1.  Efficient Onboarding

An Employee Handbook contributes to an efficient onboarding process for incoming employees, with incoming employees enjoying a consistent onboarding experience. If employees fail to observe the expected standards and policies, they cannot give the excuse that they were not aware of them, as the expected standards and policies were pointed out to them during onboarding.

2.  Centralised and Standardised Information

An Employee Handbook is a centralised source of information that is standardised across the board. It also serves as a centralised source of communication between management and employees. All employees must be accountable for reading, understanding, and adhering to the Employee Handbook.

3.  Empowerment and Transparency

Employees are empowered with standardised and transparent information that is provided to them by their employers. Furthermore, if the Employee Handbook outlines training and career advancement and progression, the employees will be equipped with all necessary information to make informed decisions for their respective careers in the organisation.

4.  Legal Compliance and Mitigation

As a centralised source of information that comprises policies and standards, an Employee Handbook contributes to the organisation complying with the labour laws in Malaysia and outlining employees’ statutory rights, obligations and benefits. Such contributions can reduce the risk of potential legal issues or disputes, be it an issue of non-compliance or a dispute between the organisation and an employee.

5.  Management and Retention

An Employee Handbook ensures consistency in standards and policies, allowing the organisation’s management more time to address specific individual concerns that the Employee Handbook could not address. Effectively managing employees and addressing their concerns can contribute to employee satisfaction, resulting in higher employee retention.


The benefits of adopting an Employee Handbook extend far beyond legal compliance. The move to adopt an Employee Handbook can be an organisation’s strategy to achieve various objectives, such as employee retention and efficient overall management of employees. If prepared comprehensively, an Employee Handbook is valuable for any organisation and can significantly contribute to a positive and sustainable work environment. Although organisations don’t need to have an Employee Handbook under the laws of Malaysia, organisations are encouraged to prepare an Employee Handbook to safeguard their interests as well as the interests of their employees. This can ultimately lead to sustainable growth and success of the organisation.

If you would like to explore the strategic move of adopting an Employee Handbook or to gain a better understanding of the benefits and dynamics of an Employee Handbook, we invite you to reach out to our Employment and Industrial Relations Team. We are committed to assisting your organisation in achieving its objectives and growing its business continuously and successfully.

By Tommy Wong


Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.