A Guide to What Employees Are Entitled to When Working in the Country
In Malaysia, the employee benefits are outlined in the Employment Act 1955. This includes a guidelines list that all employees are required to abide by. It is a mandatory requirement.
The Definition of Employee Benefits
Employee benefits are defined as the compensation (non-wage) that an employee is entitled to when working for an organisation. The compensation is in addition to the regular monthly wages that they receive. Some examples of benefits include dental, health, life insurance, or more. The benefits would differ based on the organisation that the employee works for.
The Employment Act 1955 Guidelines
It is a mandatory requirement for all employers in Malaysia to follow the Employment Act 1955 guidelines. These guidelines ensure that all employees are given their fundamental care and rights. Employers are encouraged to create even more benefits that exceed the requirements outlined in the Act. The act is there to serve as a framework.
Under the Employment Act 1955, an employee is entitled to the following benefits:
- Annual leave – Annual leaves in Malaysia are calculated based on the days of service by the employee. For example, the employee would get 8 days of annual leave for every 12 months of service (continually) with the same employer.
- Public holidays – Employees are entitled to paid public holidays here in Malaysia. If you require that your staff works on a public holiday, then the staff must be compensated. Payment on public holidays is double the usual daily rate. If the employee is required to work overtime during the public holiday, they are entitled to receive triple pay.
- Maternity leave – As of Malaysia’s Budget 2020, 90-days of maternity leave was proposed by the Government for employees working in the private sector. This came into effect on 1 January 2021.
Other mandatory benefits outlined in the Act include:
- Sick leave
- Hospitalisation leave
- Lay-off benefits
Aside from the benefits above which are listed in the guideline, employees are encouraged to offer the following benefits too:
- Medical insurance
- Dental cover
- Personal accident insurance
- Optical coverage
- Travel allowance
- Parking allowance
- Internet allowance
- Professional training and personal development
- Remote working benefits
- Relocation assistance (if needed)
- Travel incentives
- Education assistance
- Employment injury coverage (SOCSO)
Preparing for Retirement
The Malaysian Labour Law also stipulates that benefits must be provided for employees in preparation for retirement. These benefits are the Employees Provident Fund (EPF) and the Social Security Organisation (SOCSO). These benefits will automatically be deducted from the monthly income.
Upon hiring your employee, the EPF and SOCSO benefits should be very clearly outlined within the offer letter or letter of employment. This is compulsory.
Any additional benefits you would like to offer your employees will be at your company’s discretion.