The Employment Act 1955 is the main legislation that regulates the terms and conditions of employment in Malaysia. It applies to employees whose wages do not exceed RM4,000 per month, who are engaged in manual labor, or who perform supervisory or managerial functions.
The Minimum Wage Order has recently increased the minimum monthly wage of employees to RM1,500 per month from 1 May 2022. Consequently, it is now mandatory for employers to ensure that their employees receive at least this minimum monthly salary.
The Employment Act in Malaysia provides clear guidelines regarding working hours to safeguard the well-being of employees.
Effective from January 1, 2023, the Employment Act 1955 in Malaysia has embraced the contemporary concept of Flexible Working Arrangement (FWA), also known as 'Work from Home' (WFH), to foster a healthier work-life balance.
Employees are entitled to a paid holiday at the ordinary rate of pay on 11 of the gazetted public holidays and on any day designated as a public holiday under the Holidays Act 1951.
According to the Employment (Amendment) Act 2022, the employee's normal working hours should not be more than 45 hours per week. Those monthly wages that do not exceed RM4,000.00 are entitled to overtime and are covered by Employment Act regulations.
The Employment Act of 1955 doesn't specifically address unpaid leave. However, employers generally cannot enforce unpaid leave without mutual agreement.
When the employee joined/resigned for an incomplete month, it is typically calculated based on the number of working days of that month. The salary formulae are as follows:
Termination must be for "just cause or excuse." While there isn't a fixed list of acceptable grounds for termination, common reasons include misconduct, poor performance, redundancy, or business closure. All employees are protected from unfair dismissal.
Employees with wages of up to RM4,000/month, employed for 12 months or more, are entitled to the following minimum statutory severance payments according to the Employment (Termination and Lay-Off Benefits) Regulations 1980:
During a retrenchment exercise, employers must submit a notification to the nearest Department of Labour, using the standard “Borang PK” form, at least 30 days before the termination of employment.
Payroll calculation involves determining the amount of compensation due to employees, including wages, salaries, and deductions. The process can vary depending on employment status, hours worked, tax withholdings, and benefits.
The Employees' Provident Fund (EPF) is a social security and retirement savings scheme by KWSP. Every employee and every employer of a person who is an employee within the meaning of this Act shall be liable to pay monthly contributions on the number of wages at the rate respectively set out in the Third Schedule.
SOCSO Contribution is a payment to the Social Security Organization made by both employees and employers. SOCSO Contributions should be made for each month of salary payment as a deduction from the employee's net pay.
The Employment Insurance System (EIS) in Malaysia is a social security scheme designed to offer financial assistance and support to workers who lose their jobs.
PCB/MTD is an income tax deduction mechanism from an employee’s current monthly remuneration following the schedule of Monthly Tax Deductions (PCB) or other methods approved by the Malaysian government.
The Human Resources Corporation (HRD Corp) is a fund created from levies collected from employers in manufacturing and service sectors, both mandatory and optional registrants. Its main purpose is to support training and skill improvement for the Malaysian workforce.
When providing an employment contract to staff or contractors, the differentiation between a 'Contract of Service' and a 'Contract for Service' hinges on the employment or service arrangement and the relationship between the involved parties.
When your company decides to hire a foreigner to work, there are key steps to take when hiring foreign nationals in Malaysia.
The process of recruitment involves several key steps, and there are some necessary documents required to compile when onboarding a new staff:
Payroll software automates the process of calculating employee wages based on hours worked, overtime, and any other applicable pay rates. Here are some key features and functionalities commonly found in payroll software:
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