Cooling off Period for Employment Contract Malaysia

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Cooling Off Period for Employment Contract in Malaysia

An employment contract is a document that outlines the terms and conditions of the employment relationship between an employer and an employee. It is a legally binding document that sets out the rights and obligations of both parties. Sometimes, employees might feel pressured to sign an employment contract without fully understanding the terms and conditions. Therefore, it is important to have a cooling off period in Malaysia that allows employees to reconsider their decision before entering into a binding agreement.

What is a Cooling Off Period?

A cooling off period is a specific time frame during which an employee can review and reconsider signing an employment contract. It gives employees the opportunity to consult with legal counsel or seek advice from family and friends before committing to an employment agreement. The cooling off period is designed to protect employees from making rash decisions and protect them from being taken advantage of.

Cooling off periods are not mandatory in all countries, but the Malaysian government saw the need for such a provision in employment contracts. This provision allows employees to change their minds and cancel the contract within a specific period without any penalty.

What is the Duration of the Cooling Off Period?

In Malaysia, the Employment Act 1955 does not provide specific provisions for a cooling off period. However, employees are given a minimum of one day after signing the employment contract to reconsider their decision. In practice, cooling off periods can range from one day to two weeks. The exact duration of the cooling off period can be negotiated between employers and employees.

Who is Entitled to a Cooling Off Period?

All employees in Malaysia are entitled to a cooling off period. It is especially important for new employees who might have been pressured to sign an employment contract without fully understanding the terms and conditions. Employers are required to provide employees with a copy of the employment contract and inform them of the cooling off period.

What are the Benefits of a Cooling Off Period?

A cooling off period provides several benefits to both employers and employees. For employees, it provides a safety net that allows them to reconsider their agreement and seek advice before signing a binding contract. Employees can take this opportunity to clarify any doubts or negotiate better terms before entering into a long-term agreement.

For employers, providing a cooling off period shows that the company is willing to work with its employees and respects their decision-making process. Employees who feel valued and respected are more likely to be loyal and committed to their employer. Furthermore, a cooling off period can mitigate disputes and misunderstandings between employers and employees.


A cooling off period is an essential provision in an employment contract as it protects the interests of employees and employers. Employees are given the opportunity to reconsider their decision and seek clarification before signing a binding agreement. Employers benefit from employee loyalty and commitment, and a reduction in disputes. Consequently, employers in Malaysia should provide a cooling off period in their employment contracts, and employees should take advantage of this provision.