Minimum Wage

General

The national minimum wage is 1,200 MYR per month (until December 31, 2022) or 1,500 MYR per month for companies in the private sector with five or more employees.

Payroll

Payroll Cycle

The payroll cycle in Malaysia is generally monthly, with payments made on the last working day.

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.

Working Hours

General

Standard working hours are 8 hours per day up to a maximum of 48 hours per week, with the office working hours being slightly less at 45 hours per week; generally, 9 am to 6 pm.

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.

Working Week

Varies across regions, it can be Monday-Friday or Sunday-Thursday

Leave

Paid Time Off

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 8 days 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.

Public Holidays

There are 6 compulsory public holidays and 10 optional public holidays (employer should choose at least 5 of these but it is common for offices to close on all). State day is a compulsory public holiday and the day varies from state to state. All other holidays are national.

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.

Maternity Leave

In Malaysia, the statutory maternity paid leave period for employees in the private sector is 90 consecutive days.  

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.  

Paternity Leave

In Malaysia, fathers in the public sector enjoy seven days of leave to welcome and bond with their new-born, while those in the private sector are not entitled to any leave at all.

Parental Leave

There is no statutory parental leave in Malaysia.

Other Leave

There is no other statutory leave in Malaysia.

Termination

Termination Process

The termination process is standard in Malaysia is based on the Labour 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.

Notice Period

There are no statutory notice periods in Malaysia, but 30 days’ notice is commonly given.

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.

VISA

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.

VAT

General

The standard rate of VAT in Malaysia is 10.00% for sales tax, 6.00% for service tax.