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Summary of Employment Laws in Malaysia

EMPLOYMENT ACT, 1955

The Employment Act, 1955 is the main legislation on labour matters in Malaysia.

The Employment Act provides minimum terms and conditions (mostly of monetary value) to certain category of workers :-

  1. Any employee as long as his month wages is less than RM2000.00 and
  2. Any employee employed in manual work including artisan, apprentice, transport operator, supervisors or overseers of manual workers, persons employed on vessels and even domestic servants are classified as employees even if their wages is more than RM2000.00 per month.

 

Paid maternity leave : 60 days
Normal work hours : Not exceeding eight hours in one day or 48 hours in one week
Paid holiday : At least 11 gazetted public holidays ( inclusive of five compulsory public holidays; National Day, Birthday of the Yang Dipertuan Agong, Birthday of Ruler/Federal Territory Day, Labour Day and Malaysia day) in one calendar year and on any day declared as a public holiday under section 8 of the Holiday Act 1951

 

Paid annual leave for employees:
Less than two years of service : 8 days
Two or more but less than five years of service : 12 days
Over five years of service : 16 days

*Minimum paid annual leave to be provided for employees

 

Paid sick leave per calendar year:
Less than two years of service : 14 days
Two or more but less than five years of service : 18 days
Over five years of service : 22 days
Where hospitalisation is necessary : Up to 60 days (inclusive of the paid sick leave entitlement stated above)

*Minimum paid sick leave to be provided for employees

 

Payment for overtime work:
Normal working days : One-and-a-half times the hourly rate of pay
Rest days : Two times the hourly rate of pay
Public holidays : Three times the hourly rate of pay

Source: Ministry of Human Resources – www.mohr.gov.my

 

Children and Young persons (Employment) Act 1966

  • To prevent the exploitation of child labor
  • Under 14 years – only light work in family’s business
  • 14-16 years – In light work that does not involve the use of machinery
  • A maximum of 7 hours per day
  • Only able to work between 8am – 6pm

 

Employment (Restriction) Act 1968

  • Non-Malaysian citizens are required to obtain a valid work permit before they can be employed locally.
  • Working without a valid work permit is strictly illegally under the Immigration Act 1966.

 

Occupational Safety and Health Act 1994

  • This Act which provides the legislative framework to secure the safety, health and welfare among all Malaysian workforce and to protect others against risks to safety or health in connection with the activities of persons at work.
  • Section 15 outlines the duties of the employer includes maintenance of plant and systems that are safe and without risk to health, provides information, instruction, training and supervision to ensure the safety and the health at work.
  • Section 16 requires the employer to formulate safety and health policy at the workplace and regularly revise the policies to align the policies with changes and best practices in the business world.
  • Safety and Health Policy is to demonstrate the company’s commitment and concern to ensure safety and health at place of work. Issues on safety and health stated in the policy must be taken into account.

Please refer to Department of Occupational Safety and Health for further details

 

Factories and Machinery Act 1967

  • Gives protection in terms of health and safety for all workers working in factories regardless of sex
  • The jurisdiction of the act covers all factories

 

Minimum Wages Order 2016

  • Minimum wage has been implemented in 2013 and has been closely observed thereafter.
  • Minimum wages is basic wages, excluding any allowances or other payments.
MINIMUM WAGES RATE (as per Minimum Wages Order 2016)
Regional areas Monthly Hourly Daily
Number of days worked in a week
6 5 4
Peninsular Malaysia RM1,000 RM4.81 RM38.46 RM46.15 RM57.69
Sabah, Sarawak and Labuan RM920 RM4.42 RM35.38 RM42.46 RM53.08
  • The Minimum Wages Policy also applies to employees who are paid on piece-rates, tonnage, trip- or commission-based. Employers are required to supplement the wages of these employees if their income does not meet RM1,000 per month for Peninsular Malaysia and RM920 for Sabah, Sarawak and Labuan.

Source: Ministry of Human Resources Malaysia

 

Minimum Retirement Age Act 2012

  • The minimum retirement age increased from 55 to 60 for civil servants and the private sector employees in Malaysia.
  • The act doesn’t prevent employees from choosing to retire early if the contract of service or collective agreement permits earlier retirement.
  • The new law will impose a fine of 10,000 ringgits on any employer found guilty of requiring an employee to retire prior to age 60. However, the legislation does not prevent employees from choosing to retire earlier than age 60 if the service contract or collective agreement that applies to their job permits an earlier retirement date

 

Workman’s Compensation Act 1952

  • Enforced by the Labour Department
  • Only foreign workers are covered under this Act in respect of compensation for employment injury as well as non-employment injury vide Workmen’s Compensation (Foreign Worker’s Scheme) (Insurance) Order 199
  • To provide compensation to workers who have accidents at work or who contract employment-related diseases.
  • Encompass: • Foreign workers earning RM 900 per month
  • Employers must take out an insurance policy to cover liability under the act.
  • What Should Be Done If A Worker Is Involved in an Accident
    • Each worker involved in an accident must inform the employer within 7 days from the date of such accident except in the even of fatal accident.
    • An employer must notify the nearest Department of Labour from the place of accident in writing. Such notice must be submitted within 10 days from the date of accident.
    • An employer shall ensure that all information is with full details and supporting documents are enclosed such as medical certificate or death certificate.
    • An employer must ensure that compensation settlement as determined by the Department of Labour are paid direct to the injured worker by depositing such payment to the Department of Labour as directed.
    • However, compensation settlement cannot be paid direct to the wife, children or dependants, but to be deposited to the Department of Labour concerned. • Failure to notify the Department of Labour in the event of an accident is an offence and the employer shall be liable, on conviction to a fine of RM5,000 for the first offence and RM10,000 for the second offence.

 

Quick Links

Statutory Payroll Contributions
Employment of Expatriates in Malaysia
Summary of Immigration Process
Company’s Paid Up Capital Requirements for Employment of Expatriate
Requirements to Apply for Expatriate Employment Pass
Approvals Required from Agencies/ Regulatory Bodies for Employment Pass Application
List of Positions Not Applicable for Expatriate Positions