Need legal advice

Legal advice you need a lawyer. You can guess why your company changed the notice period as they can't get new expats in.

Not legal, but in Malaysia in court easy for the employer to slip a bribe to a judge.

Best way out is negotiation.

I'm not a lawyer but I know the way things work in Malaysia. And I totally agree with what Nemadot says, try to negotiate it out with your employer.

Since the amount under dispute is likely under the limit of the Tribunal court in which you dont need a lawyer, you can sue them should they inflict the damage. Also, you can tell them to meet you at a lawyers office who could act as a mediator now. If the contract you have in your hands and duly signed indicates ABC, they cannot arbitrarily change it to XYZ. The changes they may have made to subsequent contracts do not apply to you so dont be fooled. And, the fact that they may have problems replacing you has nothing to do with you and I wouldnt negotiate a sen. Because expats everywhere are easy targets of unscrupulous employers its obviously good advice for expats to always make sure they have done the right thing and have clean hands to make it easier to prevail in a dispute.

Having said that, I highly recommend that you keep your exchanges in writing. I dont have the time this moment to write a letter for you but you should write a letter to them that reviews your hiring, what contract was signed, your obedience to its terms, what your intentions are now, what was said by the employer when you let them know you were leaving, and asking for a written reply/answer. It is those two documents that form your case. Let them say in writing that they wont honor the original contract.

In defense of the other replies here, you cant be sure of fairness in the legal system here. Anything can happen and there is no special treatment of foreigners except perhaps in a bad way. Blood is thicker than water, no more true anywhere than in Malaysia. Fighting is certainly possible and correct but not necessarily true of the outcome which might be anything but correct. Not always but sometimes taking a small loss IS the right answer, though not the fairest or happiest one. Myself, since I know expats are constantly an easy target, I fight fearlessly and why? To call their bluff. Forget fairness in Asia, everything is a damn poker game with poker faces all around the table. Want to get along in Asia? Learn poker.

Not to divert from the topic but to try to hammer the point home, I too am facing a serious situation involving an accident in my car that wasnt my fault but I may have to pay a lot of money or face a very uncertain outcome of an unfair fight. While Im doing everything possible to avoid either a fight or paying big, Asia has a way of sticking a person between two rocks and you sometimes have to choose being crushed by one rock or being crushed by the other rock so think carefully about how to free yourself and that comes from some degree of wits, knowledge, bravery, luck, persuasion and even brute force.

Last thing, by way of a tip for your problem, is that when someone says they want three months notice now instead of one, consider their position and problem and help them out of it. For example, if you said you had a replacement ready to take your place today, suddenly you dont need three months notice and you are free. So instead of straight negotiating to lose money, sit down and get to their root of their problem and complaint and see what ideas you have. This can work wonders and it keeps things friendly.

By the time it took you write this you could have written the letter for him if you thought necessary