Must-know Malaysia Leave Types and Overtime Pay Rates

Editor’s note: ‘Must-know Malaysia Leave Types and Overtime Pay Rates’ is an article written by Nan An in May 2022 and further revised by Jesslyn Phoon in Aug 2023.

We go deep into the nitty-gritty of the labour law landscape in this guide, shedding light on the numerous “Malaysia leave types” that employees and employers must be aware of. But that’s not all; we also offer useful insight into the complexities of “overtime pay rates” in Malaysia. Navigating the maze of rules can be difficult at times, but this post seeks to simplify things by providing you with the most up-to-date and relevant information in Malaysia. Whether you’re a worker looking to understand your rights or an employer looking to assure compliance, our article on Malaysia leave types and overtime pay rates is a must-read.

To summarise, we’ll be exploring some classic examples of Malaysia leave types, such as holiday leave, annual leave, sick leave, maternity leave. We also take into account public holidays such as Deepavali. Lastly, we will describe in detail the various overtime entitlements for employees covered under the Employment Act. 

Before we dive right into the different Malaysia leave types and overtime pay rates, here some technical terms to take note of.

General terms to note

“Employee”

According to the Employment Act (1955), an “employee” is:

• Anyone whose salary is not more than RM2000 per month under a contract of service with an employer; or 
• Any manual worker, regardless of monthly pay, under a contract of service with an employer.

Employees whose monthly salary exceed RM2000 are not covered under the Employment Act.

If you’re an employee earning more than RM2000, fret not – you’re still protected in some ways. Before you agree to take on that new job, make sure you are issued an Employment Contract and check through its terms properly. Some terms that would be useful to note are: working hours, number of paid leave, and overtime rates. Check that your leave entitlement and overtime rates are similar to, or better than the Employment Act stipulations.

For all other employees, the Employment Act is simply a reference point for establishing the terms and conditions of employment. However, take note that any changes to the act will significantly impact the general employment terms across the private sector in Malaysia. 

“Ordinary rate of pay”

This refers to an employee’s daily wage. When an employee receives a monthly rate of pay, the ordinary rate of pay should calculate accordingly:

Monthly rate of pay / No. of work days in the relevant month

So, when an employee works 8 hours a day for a monthly salary of RM2,600, he/she will have an ordinary rate of pay of RM100.

RM2,600 / 26 = RM100

“Hourly rate of pay”

When an employee works 8 hours a day for a monthly salary of RM2,600, the same employee’s hourly rate of pay would be RM12.50.

This is calculated according to the formula below:

Ordinary rate of pay per day / Normal working hours per day 

RM100 / 8 hours = RM12.50

Malaysia Leave Types

Let us begin with an overview of the many Malaysia leave kinds available to employees in both the private and public sectors.

Annual Leave in Malaysia 

According to the Employment Act (1955), an employee in Malaysia is entitled to the following paid annual leave days:

Take note that a paid annual leave day would require the company to pay the employee by their ordinary rate of pay.

If an employee has not completed 12 months of continuous work with the same employer, his entitlement to annual leave should be calculated in direct proportion to the number of completed months of service. 

How to calculate leave entitlement?

Let’s say an employee has applied for a total number of annual leave days that is not a whole number.

• If the total number of annual leave days for the year is, for example, 6.5 days, the half-day should be disregarded; in other words, the total number of annual leave days, in that case, should be rounded up to six days.  

Now, what if the total number of annual leave days is, for example, six-and-three-quarters?

• If that fraction of a day is more than half a day,  you can round it up to one day; in other words, the total number of 6 ³/4 annual leave days should round up to a total number of 7 days.

Other statutory considerations

Does the employee need approval for annual leave?

• Yes. They will need to seek approval from their employer, and get a confirmation of it before taking the actual time-off.

What if the employee falls sick while on annual leave?

• They can request the employer to cancel the annual leave and accept a sick leave application instead.

What if the employee receives their monthly wages without any reduction from annual leave?

• In this scenario, the employee has technically and rightfully received his annual leave pay.

Maternity Leave in Malaysia

Maternity leave is a period of paid absence that a working mother is entitled to utilise before and after the birth of her child.

According to the Employment Act (1955), a mother should be given a minimum of 60 consecutive paid maternity leave days when she has been:

• Employed at any time during the past 4 months before her confinement
• Employed for a period of, or periods amounting in the aggregate to, not less than 90 days during the past 9 months before her confinement.

As of April 2022, The Employment (Amendment) Bill 2021 has increased paid maternity leave to 98 calendar days. It also includes protection against dismissal during pregnancy or in the events of post-birth complications.

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While the Employment Act (1955) extends maternity provisions to all female employees (not just low-paid workers and their supervisors), the Employment (Amendment) Bill 2021 eliminates this extension. Thankfully, the Malaysian government is expecting to restore this extension via ministerial guidance during a review of the EA’s earnings ceiling.

Note: Don’t forget that the paid maternity leave policy will only apply to a female employee for her first five children!  

So there we go, mothers get 98 days of maternity leave for their first five children.

How to apply for maternity leave?

If you’re intending to apply for maternity leave, you will need to do so 30 days ahead of your expected confinement date.

However, if you are unfit for work due to an advanced state of pregnancy, you may need to begin your maternity leave earlier. In order to be eligible for advanced maternity leave, you would need to fulfil the following conditions:

1. Apply for maternity leave 14 days ahead of your confinement date
2. Get certified for earlier maternity from a medical officer or registered medical practitioner that is either:
   • appointed by the employer, if any;
   • or any other registered medical practitioner / medical officer in the event that your employer does not appoint a medical practitioner within a reasonable time or distance.

Last but not least, if you need to extend your maternity leave beyond 60 days, you may speak to your employer. However, this extension would probably come without pay. 

Other statutory conditions

Do note that a company cannot:

• Fire you from your employment; or
• Send a notice of termination;

during the period in which you are entitled to maternity leave.

While on paid maternity leave, you are also entitled to any of the following salary disbursement options from her company (the option that offers more pay will be used):

• Your Ordinary Rate of Pay per Maternity Leave Day
• A Rate of Pay prescribed by the Minister per Maternity Leave Day

However, you should notify her company of her upcoming maternity leave within 60 days before your expected confinement date. If you were to go on maternity leave without notifying your employer, they may suspend your maternity allowance until the appropriate notice is given to the company. 

Paternity Leave in Malaysia

The law on paternity leave is new to Malaysian employees, as paternity leave was not previously mandated by law. This meant that new fathers in Malaysia were not entitled to paid paternity leave. Companies had to offer paternity leave based on their own HR policies. However, despite the fact that it wasn’t legally mandated, it was common for private sector companies to offer 1-3 days of paid paternity leave to their male employees.

Thankfully, The Employment (Amendment) Bill 2021 now introduces seven consecutive days of paid paternity leave (for up to five births) for married male employees.

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If you’re an employee wishing to apply for paternity leave, you’ll need to fulfil these requirements:

• You must be married to the questioned mother.
• You must have been employed by the same employer for at least 12 months
• You must notify your employer at least 30 days from expected confinement (or as early as possible)
• Paternity leave is only available to eligible male employees for the first 5 births, regardless of the number of marriages/spouses.

If you need to extend your paternity leave period, talk to your employee – they may allow that in the form of unpaid leave.

Sick Leave in Malaysia

When an employee is unwell and therefore unfit for duty, they are entitled to paid sick leave. This allows the employee to rest at home.

Take note that sick leave should be certified by a medical doctor in accordance with statutory requirements.

How to calculate leave entitlement?

According to the Employment Act (1955), if an employee is sick but does not require hospitalisation, he/she would be entitled to the following paid sick days:

*The number of Sick Leave Days is aggregated in each calendar year.

However, if the employee’s condition requires hospitalisation, they are entitled to a paid sick leave period for a maximum of 60 days each year.

With regards to paid sick leave entitlement, the employer should pay the Ordinary Rate of Pay per paid sick leave day to the employee. 

For example, when an employee is paid a monthly salary of RM1,170 and applied for a 4-day sick leave, how does one calculate their remuneration during their period of sick leave? Here’s how:

Other statutory conditions

An employee’s sick leave application is not valid when the leave is not:

• Certified by a registered medical practitioner, medical officer or a dental surgeon 
• Relayed to the employer within the first 48 hours of the employee’s sick leave period

Overtime Calculation in Malaysia

When an employee exceeds his/her normal working hours, that counts as working overtime. But how do we define “normal working hours” in Malaysia?

Previously, according to the Employment Act, the maximum number of normal working hours per workday was 8 hours; and that’s because a workweek was 48 hours with six working days per week. 

Now, The Employment (Amendment) Bill 2021 has reduced the normal six-day work week from 48 hours to 45 hours.

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Fun fact: Agricultural and/or industrial companies cannot have female employees work within the hours of 10:00 pm to 5:00 am. This limitation was set in place for female employees’ general safety.

Companies should note that the maximum number of overtime hours to require out of an employee is 104 hours per month. Hence, employers cannot require any employee to work more than 12 hours in one day, no matter the situation.

Normal Working Days‘ Overtime Rates

According to the Employment Act, employees who work overtime on a Normal Working Day should be paid 1.5 x hourly rate of pay. 

For example, let’s say employee Kenneth is paid a monthly salary RM1,950 to work 7.5 hours per Normal Working Day. Over the course of 26 work days for the month, his ordinary rate of pay would be:

From there, his hourly rate of pay would be:

In this case, his overtime rate would be:

When Kenneth clocks in 10 hours for a Normal Working Day, that counts as an additional 2 hours of work. His overtime pay, in that case, should amount to:

What if Kenneth receives a daily wage instead? Let’s say his daily salary is RM75 and he works 7.5 hours per day. His ordinary rate of pay would then be calculated as:

When he clocks in 10 hours for a Normal Working Day, this counts as an additional 2 hours of work. Thus, his overtime rate would be:

From there, his total overtime pay would be:

Rest / Non-Working Days‘ Overtime Rates

Employees are entitled to one rest day per week. If an employee typically works a standard 5-day workweek, they would have two rest days, which fulfil the legal requirements.

When an employee works from Monday to Friday, the rest day that’s valid for overtime compensation would be a Sunday, should they have to work on a Sunday (i.e. the last day of the employee’s rest days).

So how do we calculate overtime rates for rest days? Firstly, we need to keep in mind the number of normal work hours in Malaysia is a maximum of 8 working hours per day.

Public Holidays‘ Overtime Rates

When an employee has to work on a public holiday and the hours follow normal working hours, he/she should be paid a 2-day wage at an ordinary rate of pay.

For example, let’s say Kenneth is paid a monthly salary of RM1,300 to work 8 hours per Normal Working Day. Over the course of 26 workdays for the month, his ordinary rate of pay would be:

Thus, his hourly rate of pay would be:

In this case, if he has to work for 4 hours on Nuzul Al-Quran Day, his overtime rate would be:

What if an employee works beyond the normal working hours on a Public Holiday? If Kenneth has to work for 10 hours (i.e. 2 hours more than the normal working hours) on Nuzul Al-Quran Day (i.e. a Public Holiday in Malaysia), he would be entitled to an overtime payment of RM137.50. This amount is calculated using the following formula:

Feeling overwhelmed with the statutory details?

Staying up-to-date with Malaysia’s employment regulations can be hassle-free! There are online HR tools like Talenox to help your company stay compliant in regard to leave entitlement, overtime compensation, Borang E filing, and more.

The Talenox Leave module also comes preset with local public holidays and Malaysia leave types.

Intrigued? Learn more about the Talenox Leave module available in the SUITE plan or try it out in a 30-day free trial for yourself.