HR Software for Malaysia
Leave Policy
Maternity Leave
Pregnant employees who have worked at least 90 calendar days in the last four months are entitled to 98 calendar days of paid leave. The leave can be taken up to 30 days before the birth. The remaining days can be divided into two periods. The employee receives 100% of her salary during this period and the employer is responsible for payment.
You can use the leave module in IceHrm to manage maternity leave in Malaysia.
Paternity Leave
There is currently no statutory paternity leave.
Parental Leave
Parental leave is not regulated by law in Malaysia. However, employees may be entitled to maternity leave.
Sick Leave
Employees are entitled to paid sick leave. The number of sick days depends on the length of employment, which is between 14 and 22 days per calendar year. The employee receives 100% of his average salary paid by the employer.
- Less than two years of employment – 14 days of sick leave
- Between two and five years of employment – 18 days of sick leave
- More than five years of service – 22 days of sick leave
In addition to sick leave, employees are entitled to two months of hospital leave per year. Sick leave is paid by the employer at 100% of salary. A medical certificate is required in all cases.
Pay & Tax
Minimum Wage Requirements
The minimum wage for workers in Malaysia is MYR 1,500 per month.
Individual Income Tax
Personal income tax ranges from 0% to 30%. Income tax is calculated at progressive rates. Several additional factors can affect overall rates, such as: B. the household status and the number of children.
| Gross Annual Income | Tax Rate (%) |
|---|---|
| Up to MYR 5,000 | 0 |
| Up to MYR 20,000 | 1% |
| Up to MYR 35,000 | 3% |
| Up to MYR 50,000 | 8% |
| Up to MYR 70,000 | 11% |
| Up to MYR 100,000 | 19% |
| Up to MYR 250,000 | 24% |
| Up to MYR 400,000 | 25% |
| Up to MYR 600,000 | 25% |
| Up to MYR 1,000,000 | 26% |
| Up to MYR 2,000,000 | 28% |
| Over 2,000,000 | 30% |
Payroll Cost
The costs for the employer are between 13% and 14% of the employee’s salary:
- Employees Provident Fund (EPF):
1. 12% for salaries below MYR5,000
2. 13% for salaries above RM5,000 - Employees’ Social Security (SOCSO): from MYR23.65 to MYR86.65, depending on the employee’s salary
- Employment Insurance Scheme (EIS): MYR2.70 to MYR9.90
- Human Resources Development Fund (HRDF) – 1.00%
Optional costs
13th Salary: Employers may choose to provide their employees in Malaysia with a 13. This is an optional bonus equal to one month’s salary, usually paid in January or December.
Overtime Pay & Maximum Hours
Overtime pay is mandatory and may be offset against salary if the employee earns less than RM4,000 per month.
For employees earning more than RM4,000 per month, overtime is not required and must be agreed between the employer and employee. Employees can work a maximum of 104 hours of overtime per month. For any additional hours, employees receive 150% of their hourly rate. Employees receive 200% of their hourly rate on weekends and 300% of their hourly rate on public holidays.
The standard working hours are eight hours per day and 40 hours per week. The normal working week lasts from Monday to Friday.
Termination
Termination Requirements
Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as required or recommended steps in certain termination cases.
Terminations in Malaysia can be complex. Employers cannot terminate at their own discretion in Malaysia and the termination must be for a valid reason.
Compliant terminations are:
- Voluntary by the employee
- By mutual agreement
- Due to the expiry of the contract
- Unilaterally by the employer due to:
1. Probation period
2. Objective reasons
3. Dismissal for disciplinary reasons
4. Performance due to unsuitability for the position
Notice Period
The minimum notice period is four weeks and increases with the duration of the employment relationship.
- If you have been with the company for less than two years: four weeks
- If you have been with the company for two or more years but less than five years, the notice period is six weeks.
- If you have been with the company for five years or more, the notice period is eight weeks.
For employees not covered by the Employment Act, the notice period depends on the agreement between the employer and the employee. Employees under the Labor Act are generally those who earn less than RM2,000 per month or are employed as laborers.
Severance for Employees
In Malaysia, severance pay is generally not required unless the employee earns less than RM4,000 per month.
In order to protect you from unforeseen financial risks arising from the termination of an employment relationship, IceHrm includes a severance payment provision in all employment contracts in this country. IceHrm has extensive expertise in managing litigation risk around the world and our severance provision calculation is based on prevailing common law or statutory claims and best local practices. If your employee resigns or is not entitled to severance pay, you will receive a refund of any unused amounts.
Statutory Time Off
Paid Time Off
Both full-time and part-time employees are entitled to paid time off (PTO), with the number of days depending on length of service. Employees are eligible to take PTO once they have accumulated enough.
Public Holidays
There are 5 national holidays in Malaysia. However, every employee is entitled to the 11 public holidays and to any day designated as a holiday under section 8 of the Holidays Act under section 60D of the Employment Act. The 11 days include 5 compulsory days (see below) and 6 election days (at the discretion of the employer from the list on the government website). In addition, there are several regional and unofficial holidays that may be granted at the employer’s discretion. For more information about regional holidays in 2023, visit the Malaysian government website.
- Labor Day: May 1st
- Birthday of the Agong: June 5th
- Merdeka (Independence Day): August 31st
- Malaysia Day: September 16th
- Birthday of the head of state
Onboarding
Onboarding
Onboarding takes five working days.
Additional Info
Employment Contract Details
The contracts must be written in English. They must be in writing and signed by both parties.
A contract must contain:
- Position offered
- Duration of the contract
- Place of work
- Basic wage & pay date
- Working hours and days
- Other benefits (if any)
- Overtime (if any)
- Annual leave
- Termination clause
- Sick leave and hospitalization leave
- Rest day
- Probationary period
- Notice period
- Duties and responsibilities
- Termination clause
- Statutory deductions and income tax
Probation Period
Employees hired through IceHrm have a probationary period of 90 days, which you can extend up to 180 days. From January 2022, it is IceHrm’s company policy to include probationary periods in all employment contracts.
The probationary period helps employers and employees make sure they are a good fit for each other. This allows the company to quickly decide whether the position is right for them, and the employee can see whether it matches their career goals.