Monday, 13 November 2017

Unfair Dismissal in Malaysia – Is there a need for reform?

Author: Donovan Cheah (Partner, Donovan & Ho)
The article was first published in the March/April 2017 edition of MGCC Perspectives, a publication of the Malaysian German Chamber of Commerce and Industry.

 “The Company has decided to terminate your employment. Pursuant to your employment contract, you are given 1 month’s notice of termination.”


There is no shortage of such brief and curt termination letters in Malaysia. No reasons are provided, and employers commonly believe that compliance with the notice clause is the extent of their legal obligations when it comes to terminating employees.

Tuesday, 7 November 2017

Refusing a Performance Improvement Plan

Author: Donovan Cheah (Partner) (Donovan & Ho)
Employers who are facing difficulties with poor performing employees may opt to place them on a performance improvement plan (or “PIP”). The PIP is an exercise, taking place over a number of weeks or months, and is usually meant to achieve the following objectives:
          • Making the employee aware of their shortcomings
          • Structuring an action plan to allow them to improve their performance, and
          • Giving them clear and measurable goals to achieve.
In the best outcome, the employee understands where they have been underperforming and uses the PIP as an opportunity to rectify their performance to a suitable standard. In the worst case, the employee fails to measure up despite the PIP and is terminated.
Employees who are subject to a PIP understandably don’t view this as a benevolent gesture by their employer. It is very human response to disagree with allegations that one is underperforming. There are cases where an employee refuses to participate in a PIP, alleging that the employer is biased, vindictive or otherwise telling lies about the employee’s performance.
Can an employee refuse to participate in a performance improvement plan?

Tuesday, 31 October 2017

Top 3 Reasons to attend the Wolters Kluwer Malaysian Budget Conference 2018

Let’s face it, budgets come and budgets go. Before a Budget, experts will speculate on what’s going to be announced. On the day itself, there’ll be running commentary on each item announced, whether through traditional media or social media. Post-Budget, the in-depth analysis starts streaming in.

However, at the end of the day, companies have to go beyond just finding out what’s been announced. They have to consider current trends, existing laws and how everything interrelates. Whatever’s announced in Budget 2018 must be put into context.


And that’s where the Wolters Kluwer Malaysian Budget Conference 2018 comes in. Just like the Budget itself, our conference is an annual affair, yet it’s anything but routine. There are plenty of other conferences going on out there, but let me tell you the Top 3 Reasons why you should come to OURS:

1. Extensive coverage: Our conference contains sessions that cover every important topic currently hotly discussed amongst tax professionals. From the broader perspective view of the current economic outlook and Budget 2018 highlights, right down to in-depth discussion of tax and GST audit processes. We look at the latest tax audit trends as well as the ongoing developments of international tax compliance matters.

2. All-inclusive: We get together the best minds from professional practice, the corporate industry AND the academic profession industry to discuss the topics mentioned above. Our priority is to ensure you get quality, substantive discussions from a variety of perspectives and expert viewpoints.

3. Practical and forward-looking: Our conference is focused on practical knowledge, whether it’s finding opportunities, learning how to minimise risk and making every Ringgit count. Look out for tips and tricks as our speakers impart useful guidance on handling the various critical issues that pop up in the tax world.

Just to give you one example, we all know that the Inland Revenue Board of Malaysia (IRB) are constantly looking for ways to boost the government coffers. Naturally, a key approach is to clamp down on non-compliance. As such, tax audits are expected to gain momentum even as we speak.
Fortunately, we’ve made the effort to get the authorities on our side to help us out. Joining us from the IRB in an exclusive session will be Pn Koh Sai Tian, the head of the Large Taxpayers Branch. Together with Soh Lian Seng of KPMG, we expect her to give us valuable insights into how the IRB will go about their audits and their direction. This is one session you cannot afford to miss!

We could go on and on, but if you have never attended this annual event before, you should start now. Get in touch with us now, our Annual Wolters Kluwer Malaysian Budget Conference is an event we are always proud to bring to you, as it is an experience to remember. We hope to catch up with you at this year’s edition!

See you there!

Monday, 23 October 2017

Thoughts for taxing the digital economy

Dave Namasivayam Ananth is a senior lawyer, a former Magistrate and advocate in Malaysia before taking up a position with the Inland Revenue Department in New Zealand as a Prosecutor. He now practises as a Tax Barrister, based in Auckland. He is an expert on Malaysian GST and a familiar speaker on the local Malaysian circuit, spending considerable time in Malaysia with a consulting firm working on GST. He also writes extensively on GST in Malaysia. He can be reached at davetaxnz@gmail.com.


There has been a lot of hype about the digital economy recently.  The Director General (DG) of the Royal Malaysian Customs Department (RMCD) clearly stated on 18 September 2017 that the GST Act 2014 will be amended to capture the GST impact on the digital economy. In New Zealand, this tax, sometimes also called the “Netflix tax”, came into force 1 October 2016. This tax is paid by the consumers of the product and not by the company.

I note the changing nature of doing business – the standard way will eventually give way to the digital economy. Tax collection year-on-year is declining, and that is likely to do with this new e-commerce way of doing business and the permanent establishment requirement. Therefore, we must recognise that GST on digital services is yet another example of digital transformation. It is here to stay and will get more complex as the style of doing business evolves to the next level.  
GST has always been intended as a broad-based tax on the consumer which is intended to cover the vast majority of transactions[1]. Virtual goods are increasingly commonplace (eg, Netflix, Uber, Alibaba, etc.) so they should not be exempt. It should be noted that these companies providing goods did not come up with some cunning tax plan to avoid charging it; they were just operating within the way the rules worked until the recent law change[2]. No one would have thought the rules of the game will change this soon. However, the GST committee, when introducing the first draft of the GST Bill in Parliament in 2009, should have considered the fact that e-commerce was already in place and downloading of software was a common occurrence at that time. Even if that was too early, the drafters could have included it in 2014 when the Bill became law. We have been living in the digital age for some time and the government needs to catch up with times.

Should the government choose to tax digital services, these are some points to be considered:

Monday, 9 October 2017

Talk before you punish, RMCD

Dave Namasivayam Ananth is a senior lawyer, a former Magistrate and advocate in Malaysia before taking up a position with the Inland Revenue Department in New Zealand as a Prosecutor. He now practises as a Tax Barrister, based in Auckland. He is an expert on Malaysian GST, an author and a familiar speaker on the local Malaysian circuit. He writes extensively in Malaysia and New Zealand on taxation. He can be reached at davetaxnz@gmail.com.




The Malaysian Reserve recently published an article on 25 September 2017 highlighting that MLM businesses that do not comply with GST law will be blacklisted and banned from travelling overseas. Dave Ananth muses over the effectiveness of blacklisting errant taxpayers to protect GST collection.


Blacklisting is not the answer unless all avenues have been exhausted. In any tax or revenue system, you will have recalcitrant taxpayers. Revenue laws in Malaysia, just like in New Zealand, have adequate laws to punish and even incarcerate them. However, that approach is changing across Organisation for Economic Co-operation and Development (OECD) countries.

Tuesday, 3 October 2017

If an employee is pregnant or on parental leave, can they still be made redundant?

Author: Lisa Qiu (Lawyer & Registered Migration Agent, Coleman Greig Lawyers)

Recently, the Federal Circuit Court (in Australia - ed) found energy company, BOC, had unlawfully terminated the employment of a pregnant employee when they made her position redundant, two days before she was due to start parental leave.


Caroline Power was to start parental leave on 6 November, 2015, but was made redundant on 4 November, 2015. Ms Power wasn’t the only BOC employee to be made redundant but all other affected employees were made redundant on 12 November, 2015. Although Ms Power’s redundancy was a genuine redundancy, the fact that her termination date was brought forward from 12 November (when she would have been on parental leave) to 4 November, meant that the decision to make her position redundant on the earlier date, was due to the fact that she was pregnant and about to commence parental leave, and was therefore tainted as “adverse action” as it was partly based on illegitimate grounds.

Thursday, 28 September 2017

Can employers give bad references?

Authors: Donovan Cheah (Partner) and Adryenne Lim (Legal Executive) (Donovan & Ho)
Academic qualifications and work experience are just one part of the deal in the hiring process. The other part involves interpersonal skills, personality traits and work ethics, all of which are qualities that employers have no way of knowing other than through the recommendations of other people and/or based on the employer’s own assessment during interviews with prospective employees. In this regard, references bear considerable weight in the hiring decisions of employers: a bad reference may in some instances cause someone a job opportunity.

Given that the potential damage that may flow from a bad reference that was prepared out of bad faith or without due care, these questions are worth considering:

          • To what extent can an employer provide a bad reference?
          • Can an employer be held liable for damages due to a bad reference given?