What is the Minimum Wage?
Employee must be paid the average minimum wages as set out by the Minimum Wages Order (MWO).
Effective 1 January 2019, the minimum wages for employees in Malaysia is RM 1,100. Pursuant to S.25 (1) of the Employment Act, the employer must pay the employee’s wages through bank. Otherwise, a letter of consent to request the employer to pay via cash should be in place (only peninsular Malaysia).
Public Holidays Entitlement
Every employee is entitled to 11 paid public holidays at Ordinary Rate of Pay (O.R.P.) based on Employment Act, 5 of which shall be:
- National Day (31 August) ;
- Yang di-Pertuan Agong’s Birthday;p
- Birthday of the Sultan or the Governor of the State
- Workers’ Day / Labour Day (1 May);
- Malaysia Day (16 Sept)
The remaining 6 days will be depends on the company policy or reference on that public holiday to give out the paid leave. Thus, it must be at least 11 days of paid leave given to employee.
In addition to that, the employee is also granted holiday on any day appointed as a public holiday for that particular year under S8 of the Holidays Act 1951.
Sick Leave
An employee is entitled to paid sick leave in each calendar year as follows:
a) Where no hospitalization is necessary:
- 14 days: if employed less than 2 years
- 18 days: if employed 2 years or more but less than 5 years
- 22 days: if employed for 5 years or more; or
b) Where hospitalization is necessary:
the entitlement will be 60 days in aggregate but any paid sick leave taken must be deducted from the 60 days.
Medical Claim
Medical consultation for the examination of the employees by the company’s appointed doctor must be paid by the company. However, the medicine given to the employee by the company’s appointed doctor doesn’t have to be paid by the company.
Types of Termination
Termination in relation to an employment contract is just a general word. It indicates that employment has ceased due to the action or circumstances of the employer, or of the employee.
Termination of employment can be arisen due to the following without being initiated by the employer or by the employee:
- On the expiration of the period fixed for the employment;
- Retirement;
- Medically boarded out;
- Due to Death;
- Voluntary resignation; or and
- Separation Schemes.
These are the general types of termination, there are more. During the period of notice, the employer can still terminate the services of an employee with immediate effect if the employee commits any act which justifies instant dismissal, such as misconduct.
Calculating Overtime
According to Employment Act, overtime on public holiday shall be paid in addition to the holiday pay, which is 2 days’ wages at Ordinary Rate of Pay. If overtime exceeds normal hours, then one will be paid at 3 times the hourly rate of pay.
Do note that Employment Act only covers employee whose wages is less than RM2,000.
Overtime is paid 1.5 times the hourly rate. The calculation formula for your ordinary rate of pay per day is your monthly salary divided by 26 days which is fixed and then the amount divided by 8 hours to get your hourly rate of pay. In order to get your overtime earning, you then have to multiply your hourly rate of pay with your hours of overtime with 1.5.
Annual Leave under Employment Act
Under Employment Act Section 60E(1), an employee is entitled to paid annual leave of:
- 8 days : for every 12 months of continuous service with the same employer if employed for less than 2 years;
- 12 days : for every 12 months of continuous service if employed for 2 years or more but less than 5 years; and
- 16 days : for every 12 months of continuous service if employed for 5 years and more.
Part Time Employees
Under the employment act, there are two types of Part-time employees-
- Defined as casual employees. Their working hours does not exceed 30% of the full time employees.
- The “real” part time employees defined in the act. Part time employees are person included in the First Schedule whose average hours of work per week as agreed between him and his employer are more than 30% but do not exceed 70% of the normal hours of work.
If a part-time employee is required by his employer to work beyond his normal hours of work, the employer shall pay him for such extra work at the following rates:
- Not less than his hourly rate of pay for each hour or part thereof which exceeds the normal hours of work of the part-time employee but does not exceed the normal hours of work of a full-time employee employed in a similar capacity in the same company; and
- Not less than one and a half times the hourly rate of pay
Any employer who fails to pay any part-time employee for any work done beyond his normal hours of work in accordance with the rates as specified under sub-regulation (1) commits an offense and shall, on conviction, be liable to a fine not exceeding RM 10,000.
Retirement Age in Malaysia
The Minimum Retirement Age Act (MRAA) 2012 provides for the minimum retirement age, whatever the wages, and for any matters related to it. The MRAA came into effect on 1 July 2013. In spite of any other written law, the minimum retirement age of an employee must be upon the employee attaining the age of 60.
- The Minister can prescribe the minimum retirement age higher than the minimum retirement age mentioned in 1 above. This can be done by notification in the Gazette.
- When the Minister prescribes a higher minimum retirement age according to 2 above, then the prescribed minimum retirement age will supersede the minimum retirement age mentioned in 1 above.
Maternity Leave
Every female employee is entitled to maternity leave for an eligible period in respect of each confinement. Maternity leave cannot commence earlier than 30 days before confinement or later than the day immediately following her confinement. The eligible period of maternity leave is not less than 60 consecutive days.
However, if the doctor certifies that the female employee, as a result of her advanced state of pregnancy, is unable to perform her work satisfactorily, the employee may be request to start her maternity leave at any time during a period of 14 days before her confinement.
Pursuant to Employment Act, an employer cannot terminate the service of a female employee during the period in which she is entitled to maternity leave. This is an offense.
A female employee shall be entitled to receive maternity allowance for the eligible period from her employer if:
- She has been employed by the employer for a period or periods amounting in total to not less than 90 days during that 9 months immediately before her confinement; and
- She has been employed by the employer at any time in the 4 months immediately before her confinement.
The minimum rate of maternity allowance is RM 6 per day. However, a female employee on monthly pay will be deemed to receive her maternity allowance if she continues to receive her monthly wages during her abstention from work during the eligible period without abatement.
Probation
A new employee will invariably have to go through a period of probation enabling the employer to test his or her suitability of the job he or she is engaged to do. Qualification and skill alone may not make one a good employee, other factors such as attitude and aptitude towards work and colleagues must also be tested before he or she can be confirmed to take on the job.
During the probation period, the employee can be dismissed without notice and the same applies to termination on the employee’s side. The probation period is usually between 1 to 6 months, subject to the discretion of the employer and the dismissal has to be justified. If a dismissal on the side of the employer is given after this period and is not due to misconduct of the employee, the latter is entitled to layoff benefits. The basis on which the calculation of number of days paid is the same as for the probation period.
So I hope you’re now clearer with your employer obligation under Employment Act 1955. If you need assistance on our Business Process Outsource Services, please call us at 011-1217 8183.
