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Last updated on: December 28th, 2023
Labor Requirements
The Labor Law in Malaysia is regulated mainly by the Employment Act, 1955. The Law governs the terms and conditions of employment such as working hours, holidays and rest periods, wages, overtime, and other employment conditions.
Hours & Pay Regulations
Normal Working Hours
An employee’s normal working time and working time at night shall not exceed more than 8 hours per day and more than 45 hours per week. The spread-over period of work shall not exceed more than 10 hours per day exclusive of overtime(inclusive of breaks for rest).
The government authority may on written application from the employer allow the work to be carried out in excess of the normal working hours if justified on the grounds of special circumstances necessary for the continuance of business operations.
In an agreement between the employers and employees, where the number of working hours on 1 or more days of the week is less than 8 hours, the limit of 8 hours may be exceeded on the remaining days of the week, provided that no employee shall be required to work for more than 9 hours in a day or 45 hours in a week.
Casual Employee – A casual employee is an employee who is engaged by the employer occasionally or on an irregular basis, as and when needed, and whose weekly working hours do not exceed 30% of the weekly working hours of a full-time employee (eg if full-timers work a 45 hour week, casuals work no more than 13.5 hours per week). Malaysia Employment Act, 1955 § 60A and The Employment (Part-Time Employees) Regulations 2010, Employment Amendment Bill, 2021.
Shift Work – An employee who is engaged in shift work may be required by the employer to work more than 8 hours on any day or more than 45 hours in any one week in a manner that the average number of hours worked over any period of 3 weeks, or over any period exceeding 3 weeks as may be approved by the government, the authority shall not exceed 45 hours per week.
The Minister may make regulations relating to the entitlement of allowance during shift work. Malaysia Employment Act, 1955, § 60C.
Task Work – An employer and employee may agree that the wages of the employee shall be paid at an agreed rate in accordance with the task, i.e. the specific amount of work to be performed and not by the day or by the piece. Malaysia Employment Act, 1955, § 60B.
Flexible Working Arrangements – Employees have the right to submit a written request to their employers to change the hours, days, or location of their employment.
The employee shall make an application for a flexible working arrangement in the form and manner as may be determined by the Director General. After receiving the application, the employer shall within 60 days from the date such application is received, approve or refuse the application.
The employer shall inform the employee in writing of the employer’s approval or refusal of the application and in the case of a refusal, the employer shall state the ground of such refusal. Malaysia Employment Act, 1955, § 60P amended under Employment Amendment Bill, 2021.
Recording Requirements – An employer shall maintain a register concerning each employee with information as may be required to be kept by the legislation for a period of at least 6 years. Malaysia Employment Act, 1955, § 61.
Overtime
Any work performed beyond the normal working time of 8 hours per day or 45 hours per week is considered overtime. An employee may be required to perform overtime work in cases related to accidents, work necessary for continuous operations, work necessary for the life of the community, urgent work, etc.
If any work is carried out after the spread over a period of 10 hours, the whole period beginning from the time that the said spread over period ends up to the time that the employee ceases work for the day shall be deemed to be overtime.
The maximum number of overtime hours performed by an shall not exceed more than 104 hours in any one month.
Any work carried out on a rest day, any of the gazetted public holidays, or any paid holiday substituted, therefore, shall not be construed as overtime work for the purposes of calculating 104 hours of overtime in any one month.
No employer shall require any employee under any circumstances to work for more than 12 hours on any one day inclusive of overtime hours.
Pay – An employee who performs overtime work shall be entitled to the premium paid at a rate not less than 1.5 times the hourly rate of pay. Employment Act, 1955 §60A(2), 60A(4)(a) and Employment (Limitations on overtime work) Regulations, Art. 2.
Breaks
An employee who works more than 5 consecutive hours is entitled to an unpaid break of not less than 30 minutes.
Any break of fewer than 30 minutes in the 5 consecutive hours shall not break the continuity of that 5 consecutive hours.
An employee who is engaged in work which must be carried on continuously and which requires the employee’s continual attendance and also requires 8 consecutive hours of work shall be entitled to not less than 45 minutes of unpaid rest period in aggregate to take rest and have a meal. Malaysia Employment Act, 1955, § 60A.
Weekly Rest
Every employee shall be allowed each week a rest day of 1 whole day as may be determined from time to time by the employer. For employees engaged in shift work, any continuous period of not less than 30 hours shall constitute a rest day.
This shall not apply during the period in which the employee is on maternity leave, on sick leave, or during the period of temporary disablement.
The government authority on a written application by the employer may permit to grant the rest day for each week on any other day of the month in which the rest days fall and the day so granted shall be deemed to be the employee’s rest day.
Work On Rest Days
No employee shall be compelled to work on a rest day unless engaged in work which by reason of its nature requires to be carried on continuously or continually by 2 or more shifts. In the case of an employee employed on a daily, hourly, or other similar rates of pay who works on a rest day, shall be paid for any period of work-
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- which does not exceed half his normal hours of work, 1 day’s wages at the ordinary rate pay; or,
- which is more than half but does not exceed his normal hours of work, 2 days’ wages at the ordinary rate of pay.
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In the case of an employee employed on a monthly rate of pay who works on a rest day, shall be paid for any period of work –
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- which does not exceed half his normal hours of work, wages equivalent to half the ordinary rate of pay for work done on that day; or
- which is more than half but which does not exceed his normal hours of work,1 day’s wages at the ordinary rate of pay for work done on that day.
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Overtime Work on Rest Day – An employee shall be paid at a rate that is not less than 200% of the hourly rate of pay for overtime work performed on a rest day. Malaysia Employment Act, 1955, § 60
Public Holidays
Every employee shall be entitled to 11 paid holidays at his ordinary rate of pay on the following days in any 1 calendar year: 5 of which shall be-
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- The National Day;
- The Birthday of the Yang di-Pertuan Agong (1st Monday of June);
- The Birthday of the Ruler of the Yang di-Pertua Negeri – August 24
- The Workers’ Day – May 1st; and
- Malaysia Day – September 16.
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The employer is then free to choose the remaining 6 gazetted public holidays from the below list of 8 holidays to make up the 11 days, and these chosen days must be effectively communicated with the employees either through notice or stated in the employment contract:-
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- Birthday of the Prophet Muhammad (s.a.w)
- Chinese New Year (2 days, except 1 day in the states of Terengganu and Kelantan)
- Wesak Day,
- Hari Raya Puasa (2 days)
- Hari Raya Haji (1 day, except 2 days in the states of Terengganu and Kelantan)
- Deepavali
- Christmas day – December 25
- Nuzul Al-Quran – only in Federal Territory of Kuala Lumpur, Putrajaya, Labuan
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The employer shall clearly display a notice at the place of employment before the commencement of each calendar year specifying the remaining 6 gazetted paid public holidays in respect of which the employees shall be entitled to paid leaves.
The remaining six public holidays may be replaced with other days if both the employer and the employee agree. Individual states can mandate additional paid holidays.
In the case where any of the public holidays or the substitute holidays falls during sick leave, annual leave, or temporary disablement, the employer shall grant another day as a paid holiday in substitution for that public holiday.
A public holiday falling on a rest day – If any of the gazetted public holidays falls on a rest day, in such case, the employer shall grant the next working day as a substitute for a paid public holiday.
Any employee who absents himself from work without prior permission of their employer, on the day before or the day after a public holiday, two or more consecutive public holidays, or any day of substituted holiday shall not be entitled to any holiday pay for a such holiday or consecutive holidays unless they have reasonable answers for such absence on work.
Pay for Work on Public Holiday
An employee who performs work on a public holiday is entitled to holiday pay and in addition to that a premium of 200% on the ordinary rate of pay regardless that the period of work done on that day is less than the normal hours of work.
Overtime Work on a Public Holiday – For any overtime work carried out by an employee in excess of the normal hours of work on a paid public holiday, the employee shall be paid at a premium of 300% on the hourly rate of pay.
If any such holiday falls on a half working day, the ordinary rate or pay payable shall be that of a full working day.
An employee who works on a holiday shall be entitled to a traveling allowance for that day if payable under the terms of the agreement but the employee shall not be entitled to receive an increased rate of any housing allowance or food allowance. Malaysia Employment Act, 1955, § 60D.
Annual Leave
An employee is entitled to paid annual leave of –
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- 8 days (working days) for every 12 months of continuous service if the employee has been in employment for a period of fewer than 2 years;
- 12 days (working days) for every 12 months of continuous service if the employee has been in employment for a period of two years or more but less than 5 years; and
- 16 days (working days) for every 12 months of continuous service if the employee has been in employment for a period of 5 years or more.
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The paid annual leave to which an employee is entitled shall be in addition to rest days and paid holidays.
An employee who has not completed 12 months of continuous service with the same employer during the year in which the contract of service terminates, the entitlement to paid annual leave shall be in direct proportion to the number of completed months of service. However, when annual leave is calculated, any fraction of a day that is less than one-half of a day is ignored, and when the fraction of a day is one-half or more, it is considered to be one day.
In the event where an employee is absent from work without the permission of their employer and without reasonable excuse for more than 10% of the working days during the 12 months of continuous service in respect of which the entitlement to such leave accrues, such employees shall not be entitled to annual leaves.
Where an employee who is on paid annual leave becomes entitled to sick leave or maternity leave while on such annual leave, the employee shall be granted the sick leave or the maternity leave, as the case may be, and the annual leave shall be considered to have not been taken in respect of the days for which sick leave or maternity leave is so granted.
Timing of Leave
The employer shall grant and the employee shall take such leave not later than 12 months after the end of every 12 months of continuous service. Any employee who fails to take such leave at the end of such period shall cease to be entitled to such leave.
However, an employee shall be entitled to payment in lieu of such annual leave if, at the request of the employer, the employee agrees in writing not to avail of any or all of annual leave entitlement.
Pay
An employee shall be paid at the ordinary rate of pay for each day of annual leave. Where an employee is granted a leave of absence without pay by the employer during any period of 12 months and the period of absence exceeds the aggregate of 30 days, that period of leave of absence shall not be considered for the purpose of computing the employee’s length of service with the employer.
Termination of Employment
An employee whose employment relationship has been terminated shall be entitled to be paid at the ordinary rate of pay for the amount of annual leave not taken. Malaysia Employment Act, 1955, § 60E
Special Leave
An employee shall be entitled to paid sick leave after examination at the expense of the employer by a registered medical practitioner duly appointed by the employer –
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- 14 working days per year if employed for 1-2 years,
- 18 working days per year if employed for 2- 5 years,
- 22 working days per year if employed for longer than 5 years.
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Apart from sick leave, an employee is entitled to hospitalization leave if the employee needs to be admitted to the hospital. Employees are entitled to 60 working days of hospital leave per year. Hospitalization leave is separate from sick leave. An employee will need to be certified by a doctor in order to utilize their hospitalization leave.
The total amount of sick leave plus hospitalization leave days is as follows:
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- 74 days per year if employed for 1–2 years,
- 78 days per year if employed for 2–5 years,
- 82 days per year if employed for longer than 5 years.
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An employee who absents on sick leave which is not certified by a medical practitioner or which is certified by the medical practitioner but without informing the employer within a period of 48 hours of the commencement shall be considered to be absent without permission and without reasonable excuse in respect of the days on which the employee took sick leave.
Pay – The employer shall pay the employee their ordinary rate of pay for every day of sick leave. § 60F of Malaysia Employment Act, 1955.
Female employees are entitled to 98 consecutive days of paid maternity leave for each child up to 5 children, starting as early as 30 days before childbirth and no later than the day after the birth of the child.
If a doctor certifies that an employee is unable to perform the duties satisfactorily due to advanced pregnancy, an employer may require that the employee begin maternity leave up to 14 days before the due date.
An employee who takes leave on a date earlier than the period of 30 days immediately preceding the childbirth shall not be considered as maternity leave and the employee will not be entitled to maternity leave allowance.
Termination of employment– Employers cannot terminate pregnant employees if they are suffering from an illness arising out of pregnancy except on the grounds of misconduct, willful breach of a condition of the employment contract, or closure of the employer’s business.
Pay – A female employee shall be entitled to receive maternity allowance for the eligible period from her employer if–
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- Have been employed by the employer at any time in the 4 months immediately before the date of delivery; and
- Have been employed by the employer for a period of, or periods amounting in the aggregate to, not less than 90 days during the 9 months immediately before the date of delivery.
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Where a female employee is entitled to maternity leave, whether or not they are entitled to receive maternity allowance from the employer for the eligible period, or whether or not they have fulfilled the conditions, the employee may, with the consent of the employer, commence work at any time during the eligible period if the employee has been certified fit to resume work by a registered medical practitioner.
Employers are restricted from terminating a pregnant employee if they are suffering from an illness arising out of pregnancy except on the grounds of misconduct, willful breach of a condition of the employment contract, or closure of the employer’s business.
Payment of allowance to a nominee
A female employee may nominate some other person to whom the maternity allowance may be paid on their behalf and any payment of the maternity allowance made to the person so nominated shall be deemed to be a payment to the female employee.
Payment of allowance to the nominee on death or of female employee –
If a female employee dies from any cause while on maternity leave, the employer or any other employer who would have been responsible for paying maternity benefits shall pay the allowance at the rate calculated or prescribed from the date of the employee’s death to the person designated by the employee or, in the absence of such a person, to the employee’s legal personal representative.
Loss of maternity allowance for failure to notify the employer
A female employee who is about to leave the employment and who knows or has reason to believe that they shall be confined within 4 months from the date upon which they leave shall before leaving the employment notify the employer of their pregnancy. Failure to do so, shall not entitle them to receive any maternity allowance. Malaysia Employment Act, 1955, § 37- 42.
A married male employee is entitled to a paid paternity leave at the regular rate of pay for a period of 7 consecutive days for each birth but shall be restricted to 5 births irrespective of the number of spouses.
In order to be eligible to apply for paternity leave, the male employee is required to be employed for at least 12 months immediately before the commencement of leave, with the same employer. The employee is required to notify the employer of the pregnancy of his or their spouse at least 30 days prior to the expected confinement or as early as possible after the birth. Malaysia Employment Act, 1955, § 60FA.
