Local employment policies in Malaysia

Local employment policies in Malaysia

Minimum wage: 1500 MYR/month

Salary cycle: Monthly salary system, paid on the last working day

Thirteen salaries: mandatory, usually paid at the end of the year

Employer cost estimate: 14% -16%

Working hours standard: 8 hours per day, 45 hours per week, Monday to Friday

Overtime policy

Employees whose monthly income exceeds MYR 4000 are not required to work overtime and must reach an agreement between the employer and the employee.

Up to 104 hours of overtime per month

Overtime on weekdays: 1.5 times the standard hourly wage

Weekend overtime: twice the standard hourly wage

Overtime during public holidays: 3 times the standard hourly wage

Annual leave: 8-16 days

Legal holidays: 11

Trial&Dismissal Rules

Probationary period

In Malaysia, the standard probationary period is usually three or six months. In addition, employers have the right to specify an extension of the probationary period in the employment agreement.

If an employee needs to be dismissed during the probationary period, the employer needs to provide valid reasons and excuses.

If the employer decides to terminate the employment relationship during the probationary period, the notice period and resignation procedure should be listed in the employment agreement.

Dismissal policy

Termination Notice

Resigning employees need to provide appropriate notice to their employers, with a notice period determined by their years of employment.

Employed for 0 to 2 years with 4 weeks prior notice

Employed for 2 to 5 years with 6 weeks prior notice

Employed for more than 5 years with 8 weeks prior notice

Severance pay

In Malaysia, severance pay is mandatory, but the amount varies depending on the length of service.

Within the first two years of employment, 10 days of severance pay will be paid at the normal salary rate for each year of service completed

For employees who have served for two to five years, severance pay is calculated based on 15 days of service per year

Employees with a service life of five years or more shall be counted at 20 days of service per year

Termination conditions

When terminating an employment agreement, the employer is also required to pay severance pay to the employee, and the minimum statutory severance pay varies depending on the length of service. Employers usually include any accumulated and unused vacation days in severance pay.

But if the termination of the employment agreement is due to behavioral issues, such as serious violations of workplace discipline, serious damage caused by serious negligence, or criminal conviction, no notice or severance pay is required.