Disclaimer: The information in this article is current as at 12th April 2023, 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 article are general information only, are provided in good faith to assist employers and their employees, and should not be relied on as professional employment or legal advice. Any reference to government policies, regulations, or guidance is for informational purposes only and should not be considered official government 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 directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.
Note: The Employment Act is not applicable to Sabah and Sarawak, as they have their own Labour Ordinances respectively: Sabah Labour Ordinance and Sarawak Labour Ordinance.
Retirement
The minimum retirement age for employees in Malaysia is regulated by the Minimum Retirement Age Act 2012 (MRAA), which came into force on 1 July 2013. It states that the minimum retirement age of an employee in Malaysia is 60 years old.
This applies to all employers and employees in the private sector, with the exception of:
- Employees on a permanent, temporary or contractual basis by the Federal Government, the Government of any State, any statutory body or any local authorities;
- Apprentices and probationary employees;
- Non-citizen employees;
- Domestic employees;
- Part-time employees (with less than 70% the normal working hours of a full-time employee)
- Students employed on a temporary basis;
- Employees on fixed-term contracts of not more than 24 months (inclusive of any extension);
- Employees on fixed-term contracts of more than 24 months but less than 60 months (inclusive of any extension) with basic wages of RM20,000 and above; and
- Individuals who, before the date of this Act coming into operation, have retired at the age of 55 years or above and are subsequently re-employed after he/she has retired.
Premature retirement
It is an offence for any employer to prematurely retire an employee before the employee reaches the minimum age of 60 years old – but exceptions and exemptions do apply. Employers shall be liable to a fine of not more than RM10,000 upon conviction.
If an employee has been prematurely retired by his/her employer, they may, within 60 days from the date of his/her premature retirement:
- Complain in writing to the Director General of Labour; or
- File a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967.
The above methods are mutually exclusive — if the employee complains to the Director General, he/she should not file a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967, until his/her complaint to the Director General has been resolved.
The Director General will not conduct any inquiry on the employee’s complaint if he/she has already filed a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967.
If the Director General finds that the employee has indeed been prematurely retired by his/her employer after an inquiry, the Director General may direct the employer to:
- Reinstate the employee in his/her former role and pay the employee his/her backwages; or
- Pay the employee compensation in lieu of reinstatement, not exceeding the amount of total wages of the employee — calculated from the date of the employee’s premature retirement, to the date the employee attains the minimum retirement age.
An employer who fails to comply with the direction of the Director General commits an offence. If an employer has been convicted of the offence, the Court may order the employer to pay the employee the amount directed by the Director General as stated above. If the employer fails to comply with this Court order, the Court may issue a warrant to levy the employer’s property for the amount ordered to be paid.
On the other hand, if the Director General finds the employee’s complaint unsubstantiated and to be dismissed, the employee may, within 30 days from communication of the dismissal:
- Appeal to the High Court; or
- File a representation of unfair dismissal under Section 20 of the Industrial Relations Act 1967.
An application may be made to the Ministry of Human Resource to evaluate and exempt any employer, or class of employers, from all or any provisions of the act.
Mutual agreement on voluntary retirement
If the employee voluntarily chose to retire upon reaching a certain age, that will not constitute an offence. Such agreements between employers and employees should be put explicitly in writing, and agreed in the contract of service for all intents and purposes.
Employment contracts with retirement age of less than 60
Any retirement age of less than 60 in an employment contract made before, on or after the MRAA coming into force shall be deemed void and substituted with the minimum retirement age of 60 instead.
Relevant legislation
- Employment Act (Updated copy as at 1 Jan 2023)
- Employment (Amendment) Act 2022
- Minimum Retirement Age Act 2012
- Industrial Relations Act 1967
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