Corporate Rescue Mechanism: Employee’s Position During Business Recue in Malaysia

Employees are essential to the success and sustainability of business operations, providing the basis for organizational productivity and growth. However, when companies face financial distress, employees are often the most vulnerable, resulting in the adverse consequences of layoffs, wage reductions, and job insecurity. In Malaysia, the corporate rescue legal framework includes measures intended to protect the employees’ rights and interests during restructuring process. These measures, however, often fail to provide comprehensive and effective safeguards for employees, leaving significant gaps in their implementation and enforcement. This study examines the role of employees within Malaysia’s corporate rescue framework, focusing on the relevant legal provisions particularly in three different statues and identifying gaps requiring further research. It also proposes strategies to enhance employee protection. the research adopts a doctrinal analysis approach, systematically reviewing the statutory laws governing corporate rescue in Malaysia. It also incorporates insights from recent secondary sources, including legal commentaries, academic literature, and case law, to provide a comprehensive understanding of the current landscape. The study underscores the persistent challenges faced by employees in retaining job security, fair treatment, and adequate compensation amidst corporate rescue efforts. Ultimately, the research concludes that the status of employees within Malaysia’s corporate rescue framework remains a critical issue that requires immediate attention. To address this, the study proposes a range of strategies to enhance employee protection. These recommendations aim to strike a balance between facilitating corporate recovery and safeguarding the fundamental rights of employees, ensuring a more equitable and sustainable approach to business rescue in Malaysia.