Employment Act 1955 Malaysia: Employee Rights, Working Hours, Leave Entitlement, Overtime, Termination & 2023 Amendments

If you work in Malaysia, the Employment Act 1955 (EA 1955) is the single most important law governing your working conditions. It sets the minimum standards for wages, working hours, overtime pay, leave, holidays, and termination — standards that every employer must meet, regardless of what your employment contract says.

In January 2023, the EA 1955 underwent its most significant amendment in decades: the RM2,000 salary coverage cap was removed, and the Act now applies to all employees in Peninsular Malaysia regardless of salary. (Sabah and Sarawak have their own Labour Ordinances, though EA 1955 principles heavily influence both.)

This guide walks through your rights under the EA 1955 as they stand in 2026.

Want to check if your payslip reflects the correct overtime and statutory deductions under the law? Use the free salary calculator Malaysia by DuitTools — enter your monthly salary and see your full payslip breakdown.

Who Is Covered by the Employment Act 1955?

Before the 2023 amendments, the EA 1955 applied only to employees earning RM2,000 or below per month, plus certain categories of workers (manual labourers, supervisors of manual labour, domestic workers, and certain maritime workers) regardless of salary.

After the 2023 amendments: The EA 1955 now covers all private-sector employees in Peninsular Malaysia, regardless of salary.

There are limited exceptions:

• Domestic workers (domestic servants, gardeners) are partially covered — specific provisions apply
• Seafarers are governed by the Merchant Shipping Ordinance
• Public sector employees are governed by separate public service regulations and terms
• Independent contractors and genuine freelancers are not employees under the Act (though the test of "employee vs contractor" is one of substance, not just what your contract labels you)

The removal of the salary cap is significant for employees earning above RM2,000 who previously had limited statutory protection for working hours, overtime, and leave — they were often left to negotiate these terms individually or rely on their employment contract alone.

Working Hours and Overtime

Standard Working Hours

Under Section 60A of the EA 1955:

Overtime Rules

Any work beyond the standard hours is overtime and must be paid at a premium rate. The employer cannot ask you to work overtime without proper compensation, and you cannot be forced to work overtime beyond statutory limits.

Maximum overtime: 104 hours per month (approximately 4 hours per working day). Any overtime beyond this limit requires prior approval from the Director-General of Labour.

Overtime Pay Rates

Your hourly rate of pay is: Monthly wages ÷ 26 days ÷ 8 hours

Example: Employee earns RM3,000 per month. Hourly rate = RM3,000 ÷ 26 ÷ 8 = RM14.42. Working 2 hours of overtime on a normal working day = 2 × RM14.42 × 1.5 = RM43.27.

If you want to check your total monthly pay including overtime, use our salary calculator Malaysia.

Leave Entitlements

Annual Leave

Annual leave entitlement under Section 60E depends on your length of service:

These are minimums. Your employment contract or company policy may provide more, but cannot provide less. Employees earning above RM4,000 (pre-2023 threshold: RM2,000) who were previously excluded now receive these statutory minimums.

Annual leave accrues monthly (e.g., 8 days ÷ 12 = 0.67 days per month for someone with under 2 years of service). Leave cannot be carried forward to the following year without employer consent, and unused leave cannot be forfeited without payment in lieu.

Sick Leave

Under Section 60F, you are entitled to paid sick leave as follows:

Sick leave with hospitalisation: Up to 60 days in a calendar year (inclusive of the standard sick leave days above), provided the hospitalisation is certified by a registered medical practitioner.

Documentation: You must provide a medical certificate from a registered medical practitioner or a dental surgeon (for dental-related sick leave). The employer may require you to inform them of your absence as soon as reasonably practicable.

Maternity Leave

Under Section 37 (as amended), female employees are entitled to 98 consecutive days of paid maternity leave, starting from a date not earlier than 30 days before confinement and not later than the day of confinement. This was increased from 60 days by the 2023 amendments.

Key rules:

• The employee must have been employed for at least 90 days immediately before confinement
• The employee must have been employed at any time in the 4 months immediately before confinement
• Maternity leave is paid at the ordinary rate of wages
• The employee is entitled to maternity allowance from the employer for the full 98 days

Paternity Leave

The 2023 amendments introduced 7 days of paid paternity leave for married male employees. This was a new addition — paternity leave did not previously exist under the EA 1955. The leave is available for up to 5 confinements, regardless of the number of spouses.

Public Holidays

Under Section 60D, employees are entitled to 11 paid public holidays per year, of which:

• 5 are compulsory: National Day (31 August), Yang di-Pertuan Agong's Birthday (first Saturday of June), the Ruler of the State's Birthday, Labour Day (1 May), and Malaysia Day (16 September)
• 6 are additional days chosen by the employer (typically from the gazetted public holiday list)

If a public holiday falls on your rest day, the following working day becomes a paid holiday in its place.

Wages and Payment

Payment of Wages (Section 19)

• Wages must be paid no later than the 7th day after the end of the wage period
• Payment must be made on working days and during working hours
• The employer must issue an itemised pay statement for each wage period, showing basic wages, allowances, each deduction with its purpose, and net wages

Lawful Deductions (Section 24)

Employers can only make the following deductions from your wages:

1. Deductions required by statute: EPF, SOCSO, EIS, PCB (income tax), Zakat (where applicable)
2. Deductions for overpaid wages made in the immediately preceding 3 months (correcting a genuine payroll error)
3. Deductions for indemnity due to the employer for loss or damage caused by the employee's negligence (subject to due process and limits)
4. Deductions for the recovery of advances (salary advances, not commercial loans)
5. Deductions with the employee's written consent (e.g., union dues, cooperative loan repayments, insurance premiums)

Employers cannot deduct money from your wages for fines, breakages, cash shortages, or other penalties — these are expressly prohibited unless covered by the specific exceptions in Section 24.

Advances and Loans to Employees (Section 24A)

An employer cannot demand or receive any payment from an employee as a condition of employment (this prohibits "deposits" or "security bonds" paid to the employer). Salary advances and their recovery are regulated.

Termination of Employment

Notice Period

Under Section 12, either party may terminate the employment contract by giving notice:

These are statutory minimums. Your employment contract may specify longer notice periods (which are enforceable up to a point — excessively long notice periods that effectively trap the employee may be challenged). The notice period can be waived by mutual agreement, or either party may pay salary in lieu of notice.

Termination Without Notice (Dismissal)

An employer may dismiss an employee without notice for misconduct that is inconsistent with the fulfilment of the employment contract. However:

• The employer must have conducted a proper domestic inquiry (due process) — though the standard of proof in a domestic inquiry is lower than in a criminal court
• The misconduct must be serious and proven on a balance of probabilities
• The employee has the right to be heard
• If the dismissal is found to be without just cause or excuse, the employee may file a representation with the Director-General of Industrial Relations under Section 20 of the Industrial Relations Act 1967

Constructive Dismissal

If your employer fundamentally breaches the employment contract (e.g., unilaterally reduces your salary, demotes you without cause, or creates a hostile work environment), and you resign as a result, you may have a claim for constructive dismissal. This is a complex area — seek legal advice or contact the Labour Department before resigning.

Termination Benefits

Under the Employment (Termination and Lay-Off Benefits) Regulations 1980, employees terminated for redundancy are entitled to termination benefits:

Termination benefits apply to redundancy situations — not to resignation, retirement, or dismissal for misconduct.

Key 2023 Amendments — Summary

The Employment (Amendment) Act 2022, which took effect on 1 January 2023, made these major changes:

1. Salary cap removed: Coverage extended to all employees regardless of salary
2. Weekly working hours reduced: From 48 hours to 45 hours
3. Maternity leave increased: From 60 days to 98 days
4. Paternity leave introduced: 7 days paid for married male employees
5. Flexible working arrangements: Employees may apply for flexible hours, days, or place of work — employers must respond within 60 days and may refuse on reasonable grounds
6. Sexual harassment provisions strengthened: The Director-General may investigate complaints and order compensation
7. Foreign worker employment: Stricter provisions on foreign worker employment conditions and employer obligations
8. Itemised pay statement mandatory: All employers must issue payslips

What to Do If Your Rights Are Violated

1. Document everything: Keep your employment contract, payslips, correspondence with HR/management, and any records of the issue (dates, times, amounts, people involved).
2. Raise the issue internally: Write to HR or management. Be specific about what provision of the EA 1955 you believe has been breached.
3. File a complaint with the Labour Department: If the internal route fails or is not feasible, file a complaint at the nearest Jabatan Tenaga Kerja (JTK) office. Complaints must generally be filed within 60 days of the issue arising. There is no filing fee for wage complaints.
4. Industrial relations: For dismissal-related disputes, file a representation under Section 20 of the Industrial Relations Act 1967 at the nearest Jabatan Perhubungan Perusahaan (JPP) within 60 days of dismissal.
5. Labour Court: For certain wage claims, the Labour Court has jurisdiction. For claims above RM50,000 (or matters outside the Labour Court's jurisdiction), civil proceedings in the Sessions Court or High Court may be necessary.

Frequently Asked Questions

Does my employer have to pay me overtime even if I volunteered to work late?

Yes. If you work beyond the statutory 8 hours per day or 45 hours per week, the employer must pay overtime at the statutory rate — regardless of whether you "volunteered." The employer is responsible for ensuring employees do not work beyond statutory limits, and cannot accept voluntary overtime without compensation. The law does not recognise "voluntary unpaid overtime" — if you work the hours, you must be paid.

Can my employer force me to work on a public holiday?

An employer can require you to work on a public holiday, but you must be paid at the public holiday rate (3.0× your ordinary rate for work on a public holiday: 2.0× for working on the holiday, plus your holiday pay). You also have the option of agreeing with your employer to substitute the public holiday for another day.

What happens to my annual leave if I resign?

Unused annual leave must be paid out at your ordinary rate of pay (pro-rated for the portion of the year worked). This is not optional — the employer cannot forfeit accrued but unused annual leave without payment.

Am I entitled to overtime if I earn above RM4,000?

Yes. Before the 2023 amendments, employees earning above RM2,000 (later RM4,000) were excluded from overtime provisions. The 2023 amendments removed this threshold — all employees are now covered by the overtime provisions of the EA 1955, regardless of salary.

Can my employer change my job scope or reduce my salary without my consent?

No. Any fundamental change to your employment terms — including salary reduction, demotion, or a significant change to your job scope — requires your consent. If your employer imposes such changes unilaterally and you resign as a result, you may have a claim for constructive dismissal.

If I'm on probation, does the Employment Act still apply to me?

Yes. The EA 1955 covers all employees including probationers. The key difference: during probation, the notice of termination may be shorter (as specified in your contract), and dismissal may be easier if the employer determines you are not suitable for the role. However, statutory minimums for wages, overtime, and working conditions still apply.

Know Your Rights, Check Your Payslip

The Employment Act 1955 sets the floor — your employment contract can provide more, but never less. The most practical thing you can do is verify that your payslip reflects what the law requires.

Use the free salary calculator Malaysia by DuitTools to:

• Check your overtime pay at the correct statutory rates
• Verify your EPF, SOCSO, EIS, and PCB deductions
• See your full payslip breakdown against EA 1955 standards

If your numbers don't add up, you now know which section of the Act to cite.