Malaysian Pay Rates: Regular vs. Extra Work Hours

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Apa khabar my Malaysian friends! Today, we’re diving into a topic that’s all about your hard-earned money and how it’s calculated when you’re putting in extra hours at work. Whether you’re sipping on a teh tarik or enjoying a plate of nasi lemak, it’s essential to know how your pay is determined when you go beyond the regular 9 to 5.

Alright, let’s break it down step by step. Imagine you’re working at a place like Talenox (you know, the awesome company that’s all about HR solutions). In Malaysia, the Employment Act 1955 (Act 265) is the rulebook that lays out how your pay should be calculated, especially when you’re working those extra hours.

Normal Hours of Work: Your Daily Canvas

First things first, we’ve got “normal hours of work.” That’s the set amount of time you agreed to work each day with your employer, usually mentioned in your work contract. 

Think of Afiq, a talented graphic designer at Talenox. His day starts at 10 am and ends at 6 pm, making it a standard 8-hour shift. Just like Afiq, whether you’re designing, coding, or assisting customers, those hours are your daily work framework.

Cracking the 26-Day Pay Calculation

In Malaysia, many employers follow a 26 working days guideline. This guideline dictates how your monthly salary is calculated and is a fundamental part of the country’s employment practices. Here’s how it operates:

Explaining the 26 Working Days Guideline:

Fixed Divisor: Regardless of the number of days in a given month, your monthly salary is divided by a set figure, which is 26. This fixed divisor ensures a consistent income from month to month.

Working Beyond 26 Days: Now, let’s delve into the intriguing aspect. If an employee works more than 26 days in a month, they receive compensation for those additional days.

For instance, if an employee worked 27 days (27 working days) within a month, the calculation for their monthly pay would be: RM3500/26 * 27. This shows that employees can indeed work more than 26 days and receive extra pay for those additional days.

Understanding the Guideline: This guideline may seem counterintuitive since employees typically receive monthly pay, and it doesn’t align with the conventional concept of not working overtime. The discrepancy arises when applying the Ordinary Rate of Pay method of payroll proration, as outlined in the Employment Act 1955.

According to this act, the ordinary rate of pay is calculated by dividing the total wages earned by the employee during the preceding wage period by the actual number of days the employee had worked during that wage period.

It’s important to note that while the 26 working days guideline is widely adopted in Malaysia, different companies may have their own variations or payroll policies.

Consequently, comprehending your employer’s specific policies and understanding the implications of the 26 working days guideline is vital for employees to grasp how their pay is calculated and ensure equitable compensation for their efforts.

The Ordinary Rate of Pay: Crunching the Numbers

Now, let’s talk about the “ordinary rate of pay.” This is what you get paid for the work you do during your normal hours. 

To find this, we take your monthly salary and divide it by the number of working days in a month. Let’s follow the journey of Esha, a diligent content writer at Talenox. 

  • With a monthly salary of RM3500 and around 26 working days, her ordinary rate of pay stands at approximately: RM3500/26 = ~RM134.62 per day.

But wait, there’s more! If you’re curious about your weekly rate of pay, divide your monthly salary by 5 (as there are around 5 working days in a week). 

  • Continuing with Esha’s example, her weekly rate of pay totals to about: RM3500/5 = RM700 per week.

And for those who love keeping an eye on the clock, calculating your hourly rate of pay is a breeze. Just divide your ordinary rate of pay by your normal hours of work.

  • So, if your ordinary rate of pay is RM140, and your work hours are 8 per day, your hourly rate of pay hovers around: RM134.62/8 = ~RM16.83. 

This figure indicates what you earn for each hour you contribute during regular hours.

Overtime: Going the Extra Mile

Now, let’s add a dash of overtime to the mix. Overtime is when you’re putting in extra hours beyond your regular working hours. 

Meet Rina, a dedicated customer support agent at Talenox. When Rina works beyond her 8-hour shift, she’s entitled to overtime pay. As per the law, on a regular working day, the overtime rate of pay should be at least 1.5 times your hourly rate of pay. 

  • Overtime Rate of Pay on a Working Day = Hourly Rate of Pay x 1.5
  • If Rina’s hourly rate is RM17.50, her overtime rate becomes: RM17.50 x 1.5 = RM26.25 per hour.

Overtime begins after exceeding 10 total working hours in a day, breaks included. For example, if you’re working from 9 am to 8 pm, your overtime starts at 7 pm.

Rest Days: Recharging with Extra Pay

Now, let’s talk about the bliss of rest days. Meet Amirah, a dynamic project manager at Talenox. When Amirah decides to work on a rest day, she is in for some extra earnings.

  • Half-day work: Rate remains the same as your ordinary rate.
  • More than half a day: Rate doubles
    • If Amirah’s hourly rate is RM25, her rate becomes: RM25 x 2 = RM50 per hour.

Rate of Pay on Public Holidays

Public holidays deserve their spotlight too. Unlike rest days, the minimum hourly charge for work done on public holidays is at a premium. The ordinary rate of pay on public holidays must be at least twice (2 times) the ordinary rate of pay on working days. The overtime rate of pay on public holidays shall be no less than thrice (3 times) the ordinary rate of pay on working days.

Under Section 60D (3aa) and (3aaa), the rate of pay for work done on public holidays shall be no less than thrice (3 times) the hourly rate of pay during normal hours of work.

Consider Ali, an enthusiastic HR officer at Talenox. If Ali happens to be working on a public holiday, his hourly rate of pay should be at least double the ordinary hourly rate. And if he’s clocking overtime on a public holiday, Ali’s rate should be at least triple his ordinary hourly rate.

  • Rate of Pay on Public Holidays = Ordinary Hourly Rate of Pay x 2
    • If Ali’s hourly rate is RM20, his rate becomes: RM20 x 2 = RM40 per hour.
  • Overtime Rate of Pay Per Hour on Public Holiday = Ordinary Hourly Rate of Pay x 3
    • If Ali’s hourly rate is RM20, his rate becomes: RM20 x 3 = RM60 per hour.

Recapping Your Rights: The Bottom Line

To sum it all up, it’s crucial to understand your rights and how your pay is calculated. Just like the vibrant team at Talenox, knowing the ins and outs empowers you as an employee. Employers have some flexibility, but they can’t stray from the guidelines set by Act 265. So whether you’re pursuing marketing, HR, or any other path, comprehending your rights ensures you’re fairly rewarded for your dedication.

The Wrap-Up: Balancing Work and Earnings

So there you have it!

Understanding how pay rates work in Malaysia empowers you to make informed financial decisions. If you have any questions or insights to share, please feel free to comment below. And don’t forget to check out other informative articles on our blog to further enhance your financial knowledge!

After all, your hard-earned ringgit deserves the recognition it gets. Until next time, stay informed, stay savvy, and continue embracing that work-life balance!

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