Calculate Bonus Raya Aidilfitri 2025 for Employees in Malaysia

The Hari Raya bonus is something employees look forward to during Ramadan.

It’s an extra payment, usually around one month’s salary, but the amount depends on each employer’s policy.

As an employer, you might not be fully familiar with how to calculate the Hari Raya bonus or how it differs from an annual bonus.

In this article, we will explain how to calculate the Hari Raya bonus and answer common questions about it. Read on to learn more.

What is a Hari Raya Bonus?

A Hari Raya bonus is a festive bonus that some companies give to employees as a goodwill gesture during the Hari Raya season.

It is different from the annual bonus, which is usually linked to an employee’s performance or company profitability.

Hari Raya Bonus vs. Annual Bonus

Hari Raya bonus: A festive bonus given during Hari Raya to help employees celebrate. It is not always linked to performance and is often a fixed amount.
Annual bonus: A performance-based bonus, usually given at the end of the year, based on company profits and individual performance.

Is the Hari Raya Bonus Mandatory?

No, Malaysian labor laws do not require businesses to give a Hari Raya bonus.

However, if a company has promised a bonus in an employment contract or collective agreement, it must be given.

Even though it is not compulsory, many companies still give a bonus to keep employees happy and motivated.

Legal Aspects of Hari Raya Bonus in Malaysia

The Employment Act 1955 does not require businesses to give bonuses, including the Hari Raya bonus.

However, if a company has included a bonus policy in its contracts, it must follow the agreement.

Some industries are more likely to give Hari Raya bonuses, such as banking and finance, government and GLCs, and retail and hospitality.

If an employer has a Collective Agreement (CA) with employees, the agreement may include a Hari Raya bonus. In this case, the company must follow the agreement.

How to Determine the Bonus Amount?

Since the Hari Raya bonus is not compulsory, companies can decide how much to give based on their financial situation and internal policies.

Fixed Amount vs. Salary Percentage

Some businesses give a fixed amount (e.g., RM500 for each employee). Others give a percentage of salary, such as half a month’s pay or one full month’s salary.

What Affects the Bonus Amount?

Several factors can determine the bonus amount, such as:

Company profits
Employee performance
Company policies on bonuses
Industry practices

Example to Calculate Hari Raya Bonus

If a company gives a one-month bonus, the calculation is:

Employee Salary: RM3,000
Bonus Amount: RM3,000 (1 month’s salary)

Since bonuses are subject to EPF deductions, the actual amount received will be lower:

EPF Deduction (9%): RM3,000 × 9% = RM270
Bonus After Deduction: RM3,000 – RM270 = RM2,730

If the company gives a two-month bonus, the calculation is:

Bonus Amount: RM3,000 × 2 = RM6,000
EPF Deduction (9%): RM6,000 × 9% = RM540
Bonus After Deduction: RM6,000 – RM540 = RM5,460

When should the Hari Raya bonus be paid?

It is best to give the Hari Raya bonus 1-2 weeks before the festive season, so employees can use it for their celebrations.

Employers should clearly inform employees about bonus policies.

Whether the company is giving a cash bonus, vouchers, or extra leave, employees will appreciate knowing in advance.

What If Cash Bonuses Are Not Possible?

If a business cannot afford to give a Hari Raya bonus, there are other ways to reward employees:

Shopping vouchers for groceries or shopping
Gift hampers
Extra leave to help them enjoy their celebrations

Regardless of the reward given, it is important to be fair and transparent in how bonuses or alternatives are distributed.

Employers should clearly communicate why a cash bonus may not be given and explain how alternative rewards are provided.

This helps employees feel valued and prevents misunderstandings about favoritism or unfair treatment.

Keeping the process open and fair can create a positive workplace culture even in times of financial limitations.

Tax Implications of Hari Raya Bonus

Giving a Hari Raya bonus is a generous way to appreciate employees, but employers must also consider tax deductions and contributions when processing the payment.

Is the Hari Raya Bonus Taxable?

Yes, the Hari Raya bonus is subject to tax, just like the regular salary.

Employees who receive a bonus must pay Potongan Cukai Bulanan (PCB), which is Malaysia’s monthly tax deduction.

This means the actual amount an employee takes home will be slightly lower than the total bonus given.

Do Employers Get Tax Deductions on Bonus Payments?

Yes, businesses can deduct the cost of bonuses from their taxable income.

This means that while the company pays bonuses to employees, it can also reduce its tax burden.

Offering a Hari Raya bonus can also be a smart financial decision for companies.

EPF, SOCSO, and PCB Deductions

When paying a bonus, employers must also calculate statutory deductions:

EPF contribution

The Hari Raya bonus is subject to EPF (Employees Provident Fund) deductions. Both employees and employers contribute based on the standard EPF rate.

SOCSO and EIS

Unlike regular salary, bonuses are not deducted for SOCSO (Social Security) or EIS (Employment Insurance System) contributions.

PCB (Monthly Tax Deduction)

The bonus amount is taxed under PCB, which means the actual payout will be lower after tax deductions.

Alternatives to Hari Raya Bonus for SMEs and Startups

Not all businesses, especially small businesses and startups, can afford to give cash bonuses. Here are other ways to appreciate employees:

Salary advance: Employees can get part of their salary early to help with festive expenses.
Performance incentives: Instead of a fixed bonus, employees can receive incentives based on their performance.
Employee appreciation events: Hosting a team dinner, giving hampers, or offering flexible work arrangements can show gratitude.

FAQ

Is Hari Raya bonus compulsory in Malaysia?

No, it is not required by law. However, if a company has a policy or agreement that includes a Hari Raya bonus, it must be given.

How much should an employer pay as a Hari Raya bonus?

It depends on company policies, financial health, and industry standards. Some companies give a fixed amount, while others give a percentage of salary.

Can an employer replace a cash bonus with other incentives?

Yes, employers can offer vouchers, hampers, or extra leave instead of a cash bonus.

Is the Hari Raya bonus subject to EPF, SOCSO, and PCB deductions?

Yes, EPF and PCB (income tax) apply, but SOCSO and EIS deductions do not apply to bonuses.

Can an employer deduct the Hari Raya bonus for underperforming employees?

If the bonus is performance-based, employers can adjust the amount. However, if a fixed bonus is stated in a contract, it must be paid as agreed.

Giving a Hari Raya bonus to employees is a great way to show appreciation and keep employees motivated.

While it is not required by law, many businesses choose to give bonuses to build loyalty and encourage productivity.

If a cash bonus is not possible, employers can explore other ways to support employees during the festive season.

Whether through vouchers, hampers, or extra leave, small gestures can make a big difference.

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