Malaysia’s Employment Act (1955): A Short Guide

Hiring employees in Malaysia, but unsure of the terms and benefits to offer? As an employer or business owner in Malaysia, you’ll want to understand the Malaysia Employment Act (1955) clearly to ensure compliance.

This short guide will give you a broad overview of all the key aspects to consider, as well as how the recent changes made to minimum wage and other aspects from the Employment (Amendment) Act 2022 may affect you.

In this guide, we cover the important aspects of Malaysia employment law, including:

What is Malaysia’s Employment Act
Employees that don’t fall under the Employment Act
The current minimum wage in Malaysia
Required statutory deductions from an employee’s salary
Minimum requirements for annual leave
Minimum requirements for sick leave
Public holidays
Overtime rates
Maternity leave and protections
Working hours
Sexual harassment complaints
Flexible work arrangements

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What is Malaysia’s Employment Act (1955)?

The Employment Act (1955), also known as the EA, is an act which outlines the rights of employees and employers and their obligations under the law.

The EA does not cover every single employee in Malaysia, but it does cover the majority of employees and is the main legislation on employment matters in Malaysia.

Who is covered under the Employment Act (1955)?

The Employment Act covers all employees in Malaysia, irrespective of wages or occupation. Domestic servants are excluded from the coverage.

However, employees earning above RM4,000 per month are exempted from certain provisions in the Act, such as:

Overtime rates for employees working on rest days;
Overtime rates outside working hours;
Allowance for shift-based work;
Overtime on public holidays;
Overtime for half working days on holidays; and
Termination, lay-off, retirement benefits.

Gig workers are also covered by the Employment Act. An individual is considered under law to be an employee if the following conditions are met, regardless of whether there is a written contract.

The conditions are:

Their manner of work is subject to the supervision or control of another person;
Their working hours are under the supervision or control of another person;
They receive tools, supplies, or equipment from another individual to do a task;
Their work is a crucial component of another person’s enterprise;
Their effort is made purely for another person’s profit; or
They receive compensation for the task they perform on a regular basis, and this compensation makes up most of their income.

The Employment Act is not applicable to Sabah and Sarawak, as they have their own Labour Ordinances respectively.

Note: Although the Employment (Amendment) Act 2022 was slated to come into effect from 1st Sept 2022, enforcement of amendments have been postponed to 1st Jan 2023 instead — this was decided by the Cabinet after industries and employers have unanimously asked for the postponement.

Disclaimer: The information in this factsheet is current as at 6th July 2022, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this factsheet are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional advice. The Information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising either directly or indirectly as a result of reliance on, use of or inability to use any information provided in this factsheet. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this factsheet.

Download this guide to learn more about the important aspects of Malaysia employment law.