Employment and labor laws vary from country to country. This guide is intended to provide the most up to date information available. We will update this guide as needed when changes are made to the laws.
Employment Contracts
Employers are legally required to provide formal written contracts for all employees that include salary/wage, termination terms, job title, etc. The contracts must be written in Malaysian and use the Malaysian Ringgit currency (MYR).
Working Hours
Standard working hours are eight hours per day up to a maximum of 45 hours per week, though it is common to work 40 hours per week.
Overtime
All work more than the standard working hours a week is to be paid as overtime and is regulated by the Employment Act, the employment contract, and the collective agreements. Generally, the Employment Act is used as guidance, although it is only legally relevant to manual and non-manual employees with a salary of less than 2,000 MYR.
The Act states that overtime hours during the week on a working day are paid at 150.00% of the regular salary rate and overtime hours worked on rest days and weekends are paid at 200.00% of the regular salary rate.
Payment for overtime worked on public holidays is paid at a rate of 300.00% of the regular salary rate.
Public Holidays
Employees are entitled to 11 paid public holidays per year, determined by the state of the worker.
Public holidays falling on Sundays are moved to a working day in lieu.
For the year 2024:
- Jan 1: New Year’s Day (Monday)
- Jan 25: Thaipusam (Thursday) – Kaula Lumpur, Putrajaya, Selangor, major states of Malaysia
- Feb 1: Federal Territory Day (Thursday) – Federal Territory – Capital City
- Feb 10: Chinese New Year (Saturday)
- Feb 11: Chinese New Year (Sunday)
- Feb 12: Chinese New Year – Day off in Lieu (Monday)
- Mar 28: Nuzul Al-Quran (Thursday)
- Apr 10: Hari Raya Aidilfitri (Wednesday) – Tentative
- Apr 11: Hari Raya Aidilfitri (Thursday) – Tentative
- May 1: Labour Day (Wednesday)
- May 22: Wesak Day (Wednesday)
- Jun 3: Agong’s Birthday (Monday)
- Jun 17: Hari Raya Haji (Monday)
- Jul 7: Awal Muharram (Sunday)
- Jul 8: Awal Muharram – Replacement (Monday)
- Aug 31: Merdeka Day (Saturday)
- Sep 16: Malaysia Day (Monday)
- Sep 16: Prophet Muhammad’s Birthday (Monday)
- Sep 17: Malaysia Day Holiday – Day Off in Lieu (Monday)
- Oct 31: Deepavali (Thursday)
- Dec 11: Sultan Selangor’s Birthday (Wednesday) – Selangor
- Dec 25: Christmas Day (Wednesday)
Annual Leave (vacation)
Paid leave in Malaysia is outlined in the employment contract as dependent upon the years of employment. This paid leave is in addition to any public holidays.
An employee within the first two years of employment is entitled to eight days of paid leave per year. From the second to the fifth year of service, the employee is entitled to 12 days per year, which increases to 16 days for employees with more than five years of service. It is common to start with 12-15 days per year and increase with seniority. Leave is accrued from January to December.
Sick Days
Paid Sick pay in Malaysia is set in the employment contract as dependent upon the years of employment and the provision of a professional medical certificate.
The amount of paid sick leave entitlement is based on the number of years’ service.
- If an employee has less than two years of service, they are entitled to 14 days of sick leave per year.
- An employee with 2 to 5 years of service will be entitled to 18 days of sick leave per year.
- Employees with more than five years’ service are entitled to up to 22 days of sick leave per year.
Workers who are admitted to the hospital are entitled to hospitalization leave of 60 days per year in addition to the regular sick leave.
Maternity and Paternity
Maternity Leave
In Malaysia, the statutory maternity paid leave period for employees in the private sector is 98 consecutive days (paid in full).
The maternity leave period cannot start earlier than 30 days before the due date. All maternity leave in Malaysia is only applicable to a female employee’s first five surviving children. The female worker can resume work anytime during the 98 days, with consent from her employer & certified fit to resume work by a medical practitioner.
Paternity Leave
In Malaysia, married fathers, with 12 months of service are entitled to seven consecutive days of leave per birth, paid in full. Employers must be informed 30 days ahead of the expected due date.
Paternal Leave
There is no statutory parental leave in Malaysia.
Other Leave
There is no other statutory leave in Malaysia.
Employee Severance and Terminations
Termination Process
The termination process is standard in Malaysia is based on the Labor Law requirements unless an employer can provide sufficient cause for dismissal without notice.
Notice of termination must be in writing and sent to the relevant governmental authorities.
There are restrictions on terminating pregnant workers except for cases of breach of employment contract, misconduct, or company cease operation.
Notice Period
Employees are entitled to the following minimum notice periods:
- 4 weeks’ notice if the employee has been employed for less than 2 years on the date on which the notice is given
- 6 weeks’ notice if the employee has been so employed for 2 years or more, but less than 5 years on such date
- 8 weeks’ notice if the employee has been so employed for 5 years or more on such date
Alternatively, a payment in lieu of notice can be made by either party.
Severance Pay
In Malaysia, severance pay is mandatory if applicable, but the amount differs based on the length of service.
- Ten days of severance pay at the regular salary pay rate for every year of service completed for employees within the first two years of employment.
- For employees who have completed between two and five years, the payment is calculated at 15 days per year of service.
- For an employee with five or more years of service, the entitlement is 20 days per year of service.
Probation Period
The probation period in Malaysia for permanent employees is generally between 1 and 3 months. Although, the Employment Act confirms that there is no difference applicable to entitlements to employees whether they are within their probation period or not.
Payroll Cycle
The payroll cycle in Malaysia is generally monthly, with payments made on the last working day.
The National Wage in Malaysia is 1,500 MYR per month.
The wage increase is only applicable to companies in the private sector with five or more employees.
13th Salary
In Malaysia, it is customary to pay a “13th-month” payment at the end of the year. This will be stipulated within the employment contract.
Contributions
Employer Payroll Contributions
*Expat workers are subject to different contribution rates.
VISA
The employer must sponsor the visa and must be an accredited company that may hire foreign employees. The employee must be a certified foreign expert in the field they will be working. Malaysia also has a reported critical occupations list (COL), highlighting job types where there is a skills shortage within the country that supports work permits/visa applications.
In Malaysia, there are three work permit/visa types: an employment pass, a professional visit pass, and a temporary employment pass. Each type of pass has its criteria for acceptance, with several stipulations that the employee must meet to qualify.
Prior approval of the director-general is needed before employing foreign employees.
The employer must notify director general within 30 days if/when foreign employee is terminated.
VAT
The standard rate of VAT in Malaysia is 10.00% for sales tax, 8.00% for service tax.