Employment Laws in Malaysia - Employment Act 1955

The Employment Act, 1955, Malaysia is the core legislation approved for the welfare and all relevant aspects of employee in Malaysia. Employment laws in Malaysia provides standard conditions for specific types of employees working in this nation. These are applicable for native labors who are actively serving various businesses in this country. Following are the employee criteria on which employment Act is valid:

  1. Any active labor whose monthly wages is less than RM2000.
  2. Workers deployed in manual works which typically include, passenger transport operator, Manual labor, supervisors of manual labors, apprentice, employed on container vessels, domestic servants are specifically focused under this acting law.

This Act is implacable on above mentioned employees even if their monthly wages is equal or more than RM2000. The foreign labor and other employees who doesn’t fit into the categories mentioned above are however, excluded from the EPF and SOCSO coverage.  

This article is designed to portray the employment laws of Malaysia and how it benefits employees here. So from here forward we will see various aspects of legal advantages that have been implemented for the benefits of these specific labor criteria.

Benefits of labor laws in Malaysia

The Labor law 1955 made work life much easier for the working capitals in Malaysia. The Act put up several rules for the employers and owners and made it compulsory to abide. For instance, the legislative laws have been approved for the benefits of various aspects beneficial for labors here. For instance, female employee benefits during their maternity period, paid leaves, sick leaves, yearly benefits and overtime compensations.

Let’s have a look on what these employee laws of Malaysia offers to different labor scenarios in Malaysia:

Employee leaves:

  • Duration of maternity leave a female worker can enjoy 60 days of paid leave
  • Working hours should not extend more than 8 hours per day. The total working hours per week should not exceed 48 hours.
  • An employee must be granted with at least 11 public holidays in Malaysia.   

The yearly paid leaves for employees depend on the years he/she have served in a company. As the year served increases the leave allowance also increases up to a certain limit. The table below shows the minimum leave days per year for employees approved by the employment laws in Malaysia:

Duration of service in the company Minimum leave days / year
2 years or less 8 days
2 years – less than 5 years 12 days
5 years or more 16 days

Sometime employees take leaves for various health issues. Labor law has been implemented regarding this issue as well to mitigate employee-company complexities.  The table below shows the minimum paid leave days for employees during any unfortunate health issues:

Years of employee’s company service Minimum paid Sick leave days
Less than 2 years 14 days
2 years- less than 5 years 18 days
5 years and more 22 days
In case of emergency or hospitalizations Up to 60 days

The employment law took an account of the employees who are subjected for overtime work. Here how it goes to the overtime work payments for Malaysian labors:

Overtime period Payment rate
During regular working days 1.5 times the hourly rate of regular payment
During off days 2 times the hourly rate of regular payment
During public holidays 3 times the hourly rate of regular payment

Various labor Acts under employment laws in Malaysia

Act 1994 - Occupational safety, health and hazard  

  • This Act secures the law in favor of employee health and safety. It is by far one of the most important Acts as far as the welfare of all Malaysian working labor force is concerned. Law under this Act confirms protection against risk measures and hazardous environments in work spaces that risks labor’s health.
  • Section 15 under health Act 1994 highlighted the duties of an employer. This is to ensure proper maintenance of the industrial plants and its related machineries and systems to mitigate any unfortunate causalities and health issues of employees working in the plants.
  • Act 1994, Section 16 demanded any employer to plan and equip safety and health policies at the workplace. This Act also suggests regular practice and revise of the implemented policies to retrieve the best results out of it for the wellbeing of employees in the company.

Act 1966 - Under-age and child labor

The employment laws in Malaysia clearly prohibited child labor. Especially in the environment compromised to poisonous substance and hazardous elements. Under this Act following rules has been set for the wellbeing of child and under-age individuals in Malaysia:

  • No child under the age of 15 or in between the age range of 15 to below 18 need to be engaged in any sort of labor force or employment. However, under permission and supervision an individual can work not more than 6 days a week.
  • In case of child employee, the work hour must not be more than 6 hours in a day. In case the age limit it 15-18, the work hour is 7 hours per day.
  • Factories and Machinery Act 1967 prohibits the engagements of child labors in the factory environment or handle factory machineries and electronics. 
  • All employees Act including the Occupational Safety and Health Act 1994, the Electricity Supply Act 1990 or Mining industries strictly prohibit child or under age labor in Malaysia.

Act 2012 - Employee Retirement

Employment Act of Malaysia has enlisted several rules in favor for senior employees who have served their companies for years or at the verge of their working carrier. The retirement phase of employment falls under the Act 2012. Following are the benefits for this specific type of individuals in Malaysia:

  • According to the Act 2012, the minimum retirement age has been stretched from 55 to 60. This is applicable for both civil servants as well as the private sector employees in this country.
  • If an employee, however choose to take the retirement status before his/her tenure period, they can do so without any obligations from the company or employment laws in Malaysia.
  • Any employer found forcing his/her employee to take forceful retirement before the worker’s prior age is subjected to be guilty and has to pay a fine of RM10000.
  • The retired employees are subjected to receive proper provident fund and or retirement pensions as employment contract refers.
  • An employer depriving a retiree from these after service facilities is considered guilty and is subjected to pay fines if accusation is confirmed.

Act 1968 - Foreign employment restrictions

The law is consolidated for a foreign employee who is legally enlisted in the company in Malaysia. For this, such employee category must possess sufficient paperwork both from foreign ministry, as well as employee organization who are hiring that particular individual. Following are two criteria that have been ruled under Act 1968, restrictions for foreign employees:

  • A valid work permit, proper passport and employer credentials and approvals are required before he/she can be hired locally in Malaysia.
  • The immigration Act 1966 strictly prohibited the illegal work permits in this nation. Found to do so will result penalties and considered federal crime according to the labor act of Malaysia.
  • Conducting unethical or illegal activities in work place results severe legal actions, such as job termination, imprisonment and even deportation as per foreign employment Act.

Wages Order 2018 - Minimum employee wages in Malaysia

The order of minimum Wages was first implemented on 1 January’13. The revised version of the employee wages have been introduced at the end part of November’18, under the employment laws in Malaysia. This order has been enlisted in an Act which is known as The Minimum Wages Order 2018 or P.U (A) 265/2018. Under this order following rules have been stated:

  • The order clearly stated that the minimum monthly wage has to be no less than RM1100, whereas, minimum hourly wage has to be RM5.29.
  • In case the wages are counted on a daily basis, RM42.31 must be paid per day for 6 days a week employment. Rm50.70 must be paid per day for 5 days a week employment and RM63.45 must be paid per day for 4 days a week employment.
  • All labors who have enlisted themselves under legal contract of the company to provide service are entitled to this category to receive the minimum wages.
  • House servants which include maids, guards, cooks, personal drivers, and apprentices etc. must undergo proper for minimum 2 years to be eligible for minimum wages coverage.

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