The Malaysian Employment Law is generally governed by the Employment Act 1955, which highlights the minimum benefits that are required to be given to employees. However, the Employment Act 1955 only protects applicable employees which includes the following criteria:
- Employees whose monthly salary is not more than RM2000
- Employees involved in manual labor (regardless of salary)
- Employees involved in operation and maintenance in mechanically driven vehicles
- Employees involved in any capacity on a vessel (subject to certain other conditions)
Employees who are not protected by the Employment Act 1955 (aka- Non-EA Employees) are governed by the terms and conditions of their employment contract. This means that employers are free to set any benefits for the Non-EA Employees, as long as the employees agree to those benefits. However, the Employment Act 1955 should serve as a guideline for employers to set the minimum benefits for Non-EA Employees.
Minimum Wages
Under the Minimum Wages order 2020, effective from 1 February 2021, the minimum wage for employees in any of the 16 City Council areas or the 40 Municipal Council areas should be RM1200.00. Employees who are employed in areas besides the City Council or Municipal Council listed should be RM1100.00.
Statutory Deductions
Several deductions are required to be made by employers from an employee’s salary regardless of being an EA Employee or Non-EA Employee:
- Employee’s contribution to Employees Provident Fund (EPF)
- Employee’s contribution to social security organization (SOCSO)
- Monthly income tax deduction
The current SOCSO rates can be checked out here.
Annual Leave
The Employment Act of 1955 provides several types of leave entitlements, which include:
- Public holidays
Employees are eligible for paid holidays on 11 official public holidays in Malaysia.
If employees are unable to be granted leave on public holidays due to business needs, employers are subjected to offer a paid leave on another day as a substitution. Likewise, if a public holidays falls during the same period when an employee is under an annual/sick leave, employers are required to offer a paid leave on another day as a substitution as well.
- Paid leave
Employees are granted a certain number of paid annual leaves depending on the period of service in a company.
| Period of Service | Number of Paid Annual Leaves |
| Less than 2 years | 8 days |
| 2 to 5 years | 12 days |
| More than 5 years | 16 days |
- Sick leave
Employees are granted a certain number of sick leaves (where hospitalization is not necessary), which is also depending on the period of service in a company.
| Period of Service | Number of Sick Leaves |
| Less than 2 years | 14 days |
| 2 to 5 years | 18 days |
| More than 5 years | 22 days |
If the illness is critical and requires hospitalization, employees will receive 60 days of paid sick leave per year in total.
- Maternity leave
Under the Employment Act 1955, female employees working in the private sector will be given 60 days of maternity leave while female employees in public sectors are offered 90 days of maternity leave.
- Optional leave entitlements
Optional leaves are generally unpaid leaves taken by employees subject to approval of their employers.
Public workers are eligible for 7 days of paid paternity leaves, but private workers are not provided paid paternity leaves, but can opt to take unpaid leaves.
Compassionate or bereavement leave are usually granted for 1-3 days.
Marriage leave may be granted for 1-3 days.
Study leave is subject to employers’ approval, granted for the period of employee training or examination.
Termination of Employees
Employers may terminate employees provided that proper justifications and reasons (“just cause and excuse”) are given prior to termination.
Employers are not allowed to terminate and employee simply by handing in a notice or payment in lieu of notice.
