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Key Country Facts

Currency: Malaysian Ringgit (MYR)

Time zone: GMT +8

Capital city: Kuala Lumpur

Official language: The official language of Malaysia is known as Bahasa Malaysia/ Malay language. Malay is spoken by most of the country and is taught extensively in the country’s public education system. Aside from Malay, English, Mandarin and Tamil is also very commonly spoken in Malaysia.

Employment Contracts

Employment law in Malaysia is governed by the Employment Act (EA) 1955. The EA sets out certain minimum benefits that are afforded to applicable employees. However, the Act only applies to certain employees (mainly, those engaged in manual labor or those whose wages do not exceed MYR 2,000 a month). Other employees are governed by their respective employment contracts.

Contracts must be in writing and must include a provision for termination.

Non-EA employees will be governed by the terms of their employment contracts and subject to any other applicable statutory requirements (e.g. minimum retirement age, SOCSO and EPF, etc.). In other words, employers are mostly free to set any benefits for non-EA employees, on the assumption that those employees agree to those benefits by accepting and signing the employment agreement. That being said, most employers still use the EA benefits as a guideline or “bare minimum,” even for non-EA employees.

Contracts can be in any language, as preferred by the employer. However, they’re generally in English, and courts can use an English version if there is a dispute.

Malaysia Holidays

Public holidays are:

  • New Year’s Day – January 1
  • Thaipusam – January 28
  • Federal Territory Day * – February 1
  • Lunar New Year Holiday – February 12-13
  • Nuzul Al-Quran – April 29
  • Labor Day * – May 1
  • Hari Raya Aldilfitri – May 13-14
  • Wesak Day – May 26
  • Agong’s Birthday * – June 7
  • Hari Raya Haji – July 20
  • Awal Muharram – August 10
  • Merdeka Day * – August 31
  • Malaysia Day * – September 16
  • Prophet Muhammad’s Birthday– October 19
  • Deepavali – November 4
  • Christmas Day – December 25

Employees are entitled to a minimum of 11 public holidays per calendar year; five of which must be the above with “*”.

The other six holidays can be chosen by employers from the list of gazette public holidays. However, employers must exhibit conspicuously at the workplace which six gazette public holidays are being observed.

Vacation

According to Section 60E of the Employment Act 1955, depends on length of service:

  • Less than two years: 8 days per 12 calendar months;
  • More than two years but less than five years: 12 days per 12 calendar months;
  • More than five years: 16 days per 12 calendar months

Company can provide more than the above provision by Law. Annual leave can be pro-rated if an employee has worked less than a full year in that calendar year. Some companies practice pro-rated or earned leave by quarterly basis

Sick Leave

If hospitalization is not required:

  • Length of service of less than 2 years: 14 days
  • More than 2 years but less than 5 years: 18 days
  • More than 5 years: 22 days

When hospitalization is required, EA employees are entitled to 60 days of hospitalization leave per year, provided that the number of sick leave and hospitalization leave per year shall not exceed 60 days in total. Medical certificate is required for all occasions related to sick/medical leave

Maternity/Paternity Leave

All female employees, including non-EA employees, are entitled to 60 consecutive days of paid maternity leave for birth up to 5 surviving child.

Paternity leave: No statutory requirement, depends on company policy

Maternity leave is granted upon giving birth/the 22nd week of pregnancy (in case of premature)

Termination/Severance

Termination is generally very difficult. Terminating employees without valid reason may constitute unfair dismissal. Valid reasons for termination includes but are not limited to poor performance and misconduct.

Employers can decide on the notice period required and have this agreed in the contract of employment. In case where the contract is silent on the length of notice period, the notice shall not be less than four weeks’ notice if employed less than two years, six weeks’ notice if employed more than two years but less than five years, eight weeks’ notice if employed more than five years.

Court case due to unfair dismissal may lead to payment of 24 months of salary

Bonus

Bonus is discretionary. Companies in Malaysia usually only pay discretionary performance bonuses. Bonus payment depends on the company, usually after financial year end or during festive season.

Malaysia Social Security

The following statutory benefit schemes apply in Malaysia to employers and employees, irrespective of whether they are an EA employee or a non-EA employee:

Social Security System Monthly Salary Cap
(MYR)
 Employer Contribution  Employee Contribution
Employment Provident Fund (EPF) – Local only            20,000 13.00% (for salary RM5000 and below)
12.00% (for RM5001 and above)
11.00% / 7.00% (wef April 2020)
Social Security Organization (SOSCO)              4,000 3.00% 0.50%
Employment Insurance System (EIS)              4,000 0.20% 0.20%

This information does not constitute legal advice.

Full Country HR at a Glance

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