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This content is for informational purposes only. We do not guarantee the accuracy or completeness of this content. It is not legal advice and shall not be relied on as such.

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Malaysia is a southeastern Asian country. It is a federal constitutional monarchy made up of 13 states with three federal territories. The official language is Malay although there is a multitude of local languages. Malaysia has a diversified economy, educated labor force, and political stability. Malaysia’s top exports include rubber and palm oil.

Employment contracts in Malaysia are commonly in written form. The contract must specify the terms of the employment such as the location of work, job description, wages, overtime, working hours, leaves and entitlements, health and safety matters, probation and termination. Written contracts must include conditions for termination of the contract.

Labor contracts can be for a fixed term or an indefinite period. A fixed-term contract for more than one month must be in writing. If an employee’s fixed-term contract is renewed multiple times, then they will be considered a permanent employee for dismissal purposes. Probation periods are capped at three months and an employer has the right to terminate the contract during the probation period if the employee is incompetent. Pre-employment background checks are not prohibited but may be subject to data privacy rules.

The standard work period in Malaysia cannot exceed 48 hours in a week, over six days with eight-hour workdays. If less than eight hours is worked on one or more days during the week, the hours worked on the remaining days can exceed eight hours, up to a maximum of nine hours in one day and 48 hours per week.

Overtime, defined as hours above and beyond normal work time, are paid at least 1.5 times the employee’s normal wages in Malaysia. The maximum amount of overtime hours an employee may work is 104 hours per month. Special restrictions for women include protections for female employees working in agriculture. Women are not allowed to work between the hours of 10 p.m. and 5 a.m.

Employees in Malaysia receive 14 days of paid sick leave a year if they have less than two years of service, 18 days if they have between two and five years of service and 22 days if they have five or more years of service. Employees are required, at the employer’s expense, to submit to a medical examination to independently verify an illness or medical condition. If an employee needs to be hospitalized for their illness or medical condition, the employer provides 60 days of leave, including the paid sick leave days the employee used before hospitalization. The employer pays the employee on sick leave at 100% of their normal wages.

Eligible employees in Malaysia receive 98 days of paid maternity leave. Maternity leave can start up to 30 days before the expected birth. Employees are eligible for maternity benefits if they have worked:

  • at least 90 days in the nine months prior to giving birth, and

  • any time within the four months immediately before the birth.

An employee must provide her employer 60 days of notice before she expects to take maternity leave. Failure to do so may result in the suspension of maternity pay. Notice can be written or verbal and can be given to the employee’s supervisor, foreman or any other designated individual. Due to the eligibility requirements, employers may be required to pay maternity benefits to an employee who leaves employment before giving birth. However, an employee who expects to give birth within four months of the last day of work must notify the employer of the pregnancy. Otherwise, the employer will not be obligated to pay maternity benefits. An employee can claim maternity benefits from more than one employer if she qualifies but she is not entitled to double benefits.

Eligible male employees in Malaysia are entitled to seven consecutive days of paid paternity leave.

Employers in Malaysia are not required to pay their employees bonuses. It is common for employers to pay a performance-related bonus that is the equivalent of a 13th month of pay.

Employees are entitled to between eight and 16 days of annual leave in Malaysia, depending on their length of service. Specifically, employees receive:

  • eight days of paid leave if they have less than two years of service,

  • 12 days of paid leave if they have two to five years of service, and

  • 16 days of paid leave if they have five or more years of service.

Employees must work for at least 12 months to be eligible for paid annual leave. Leave is pro-rated for employees who have less than 12 months of service and for employees who separate from service in less than 12 months. Days accrued are calculated using the base of eight days. This means that the accrual of vacation leave happens at roughly 0.66 days per month. Employees can agree to payment in lieu of annual leave. If terminated, employees are entitled to either take the accrued time or the equivalent compensation.

In Malaysia, the public holidays are:

  • New Year's Day

  • Birthday of Yang di-Pertuan Besar (Negeri Sembilan)

  • Thaipusam

  • Federal Territory Day

  • Chinese Lunar New Year's Day

  • Isra and Mi'raj

  • Anniversary of the Coronation of the Sultan of Terengganu

  • Birthday of the Sultan of Johor

  • First Day of Ramadan

  • Declaration of Malacca as Historical City

  • Good Friday

  • Nuzul Al-Quran

  • Birthday of the Sultan of Terengganu

  • Labor Day

Malaysia has universal healthcare for all citizens and residents. Some employers choose to provide private health insurance.

Either the employee or the employer may terminate a Malaysian employment contract at the end of its term. An employer may terminate an employee for misconduct, incompetence, or a criminal or civil offence without providing notice. No notice is required by either party if there is a willful breach of the employment contract. Both the employer and employee can waive their right to notice or provide payment in lieu of notice in the amount of wages the employee would have accrued during the notice period.

  • Local Laws & Regulations

    We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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