How to Handle Employee Resignations Professionally in Malaysia

Employee resignations are a normal part of workplace dynamics. But when handled poorly, they can create disruption, legal risks, and negative employer branding. For HR leaders and managers in Malaysia, it’s vital to manage resignations with clarity, respect, and compliance. This guide covers best practices—from accepting a resignation to offboarding smoothly and protecting your organization’s reputation.

 

1. Accepting the Resignation: Formalities & Legal Standing

a. Request a formal resignation letter

Ask the resigning employee to submit a written resignation letter (or email) stating their intention, notice period, and last working day. This ensures clarity and a documented start to the resignation process. 

 

b. Understand that an employer cannot reject a valid resignation

Under Section 12 of the Employment Act 1955, both employees and employers may terminate a contract by giving notice. Legally, an employer cannot refuse a resignation by simply “not accepting” it. Even without a formal acceptance, the notice period begins once the resignation is tendered. 

 

c. Confirm the notice period

If the employment contract specifies a notice period, that will apply. If not, the Employment Act provides default minimum notice periods:

• < 2 years’ service: 4 weeks

• 2 to <5 years: 6 weeks

• ≥ 5 years: 8 weeks 

Parties may agree to pay in lieu of notice (i.e. compensation instead of working through the notice period). 

 

2. During the Notice Period: Transition & Handover

a. Plan a clear handover process

Ask the resigning employee to document key responsibilities, ongoing projects, critical contacts, and pending deliverables. Schedule handover meetings to transfer work to remaining or new staff.

 

b. Communicate sensitively with the team

Inform relevant stakeholders of the upcoming departure—with discretion. Avoid rumors or negative framing. Maintain morale by reinforcing continuity plans.

 

c. Manage leave balance and final pay

Review the employee’s accrued leave (annual leave, unutilised time) and determine whether it will be paid out or offset against the notice period. Document these adjustments. 

Ensure the final paycheck includes outstanding salaries, overtime, allowances, and other contractual benefits.

 

d. Collect company property and settle clearances

Before the last working day, collect company assets (laptops, keys, ID cards, mobile devices). Use a signed return checklist. 

Use the clearance process to settle outstanding liabilities, nondisclosure agreements, or post-resignation obligations.

 

3. Legal & Statutory Obligations: Reporting & Compliance

a. Statutory filings & notifications

• EPF / KWSP: No special filing is required for resignation, but ensure contributions are up to date.

• SOCSO / EIS: Update resignation information in the Assist portal or relevant system. 

• Inland Revenue Board (LHDN): Submit Form CP22A at least 30 days before departure (for those leaving the company permanently) or Form CP21 when leaving Malaysia. 

b. Accepting or rejecting resignation withdrawal

Once a resignation is validly tendered, an employer is under no legal obligation to accept retraction. A refusal to retract doesn’t amount to dismissal.

At its discretion, an employer may agree to retract, but this should be documented and mutually accepted.

 

4. Exit Interviews & Knowledge Retention

a. Conducting exit interviews

Use the final week to gather feedback about reasons for leaving, workplace satisfaction, and improvement suggestions. This insight can guide retention strategies for future employees.

 

b. Capture institutional knowledge

Before departure, encourage the outgoing employee to document unique processes, client relationships, or best practices. Use this as input to your company knowledge base.

 

c. Maintain goodwill & alumni relations

Send a gracious farewell message or appreciation letter. Offer to stay connected via LinkedIn or future collaborations. A respectful exit fosters positive employer branding and potential boomerang hires.

 

5. Avoiding Risks: Constructive Resignation & Retaliation Claims

In some cases, resignations are prompted by employer conduct—this might amount to constructive dismissal. HR leaders must be cautious to avoid pushy tactics, hostile work environments, or unfair changes in job scope that force resignations. 
Ensure transparent communication, fair treatment, and procedural fairness to reduce legal exposure.

 

6. Summary: Best Practices Checklist
 

Stage	Key Actions
Resignation Received	Request written notice, confirm notice period, document date
Notice Period	Plan handover, communicate internally, manage leave & pay
Compliance	File statutory notifications (EPF, SOCSO, LHDN)
Exit Execution	Collect assets, conduct exit interview, document handovers
Post-Resignation	Keep communication channels open, preserve employer goodwill

Final Thoughts

Handling employee resignations professionally in Malaysia is not merely a transaction—it’s a reflection of your organization’s culture, legal acumen, and respect for people. By combining clear resignation procedures, legal compliance, knowledge retention, and exit engagement, employers can minimize disruption, protect their brand, and maintain positive relationships—even when people move on.

 

Looking for new career opportunities? Check out our latest job openings here: Job listings

Need hiring support? Connect with Reeracoen Malaysia today!

 

 

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References
https://www.synergy-outsourcing.com/post/how-to-handle-employee-resignation
https://althr.my/resources/malaysia-employer-reject-employee-resignation-letter
https://dnh.com.my/retraction-of-resignation
https://dnplawgroup.com/article/termination-of-employment-under-employment-act-1955-and-industrial-relations-act-1967
https://help.talenox.com/en/articles/8290137-what-does-an-employer-need-to-do-if-their-employee-is-leaving-the-company-malaysia
https://briohr.com/blog/understanding-constructive-dismissal-in-malaysia-a-comprehensive-guide-for-hr-professionals/