Cara Kira Overtime (OT) & Public Holiday Pay in Malaysia

Many employees in Malaysia are still unsure about cara kira overtime correctly. Some know they should be paid for extra hours, but they may not understand how the amount is calculated on their payslip.

Employers and HR teams can face the same problem, too. Overtime is not always calculated using one flat rate. The rate depends on whether the employee works overtime on a normal working day, rest day, or public holiday.

If overtime is calculated wrongly, it can lead to payroll disputes, employee complaints, and confusion between the company and staff. For HR teams, it is important to understand the correct overtime formula, working-hour rules, and public holiday payment treatment.

This guide explains how to calculate overtime in Malaysia in a simple way, OT rates, working hours, and paid public holidays.

What is Overtime (OT)?

Overtime, or OT, means work done beyond an employee’s normal working hours.

For example, if an employee’s normal working hours are 8 hours a day, OT only starts after the employee completes those 8 hours. If the employee continues working after that, the extra hours may be treated as overtime.

In Malaysia, overtime is usually grouped into three main categories:

Normal working day OT: employee works beyond normal working hours on a regular working day.
Rest day OT: employee works overtime on their weekly rest day.
Public holiday OT: employee works overtime on a public holiday.

Each type has a different rate, so HR teams should record and calculate them separately.

Who is Eligible for Overtime in Malaysia

Based on the material shared, employees earning RM4,000 and below per month are eligible for overtime payment under the latest Employment Act update effective from January 2023.

For employees earning more than RM4,000 per month, OT entitlement depends on the employment contract or the company’s policy.

Employers should clearly state OT eligibility in employment contracts, employee handbooks, or HR policies. Employees should know whether they are entitled to overtime, how OT approval works, and how the payment will be calculated.

Maximum Working Hours Under Malaysian Law

The working hours should not be more than 45 hours per week. This weekly limit can be arranged differently depending on the company’s working schedule.

For example, if a company has a 6-day work week, the daily working hours can be around 7.5 hours per day.

If a company has a 5-day work week, the daily working hours can be around 9 hours per day.

Work Schedule	Weekly Working Hours	Approximate Daily Working Hours
6 days per week	45 hours	7.5 hours per day
5 days per week	45 hours	9 hours per day

Before calculating overtime, employers should first check the employee’s normal working schedule. OT should only be counted after the employee has completed their normal working hours for the day.

OT Rates in Malaysia

Below are the three main overtime rates:

Type of Overtime	OT Rate
Normal working day	Hourly rate × 1.5
Rest day	Hourly rate × 2.0
Public holiday	Hourly rate × 3.0

Do not combine all OT hours into one general overtime category because different types of days use different rates.

For example, 3 hours of OT on a normal working day will not be paid the same as 3 hours of OT on a public holiday.

Cara Kira Overtime (Step-by-Step)

To calculate overtime, employers can follow these three steps.

Step 1: Calculate Daily Salary / ORP

First, calculate the employee’s daily salary. This is also called Ordinary Rate of Pay, or ORP.

Formula:

Monthly salary ÷ 26 = Daily salary / ORP

For example, if an employee earns RM2,000 per month:

RM2,000 ÷ 26 = RM76.92 (daily salary)

Step 2: Calculate Hourly Rate / HRP

Next, calculate the employee’s hourly rate. This is also called Hourly Rate of Pay, or HRP.

Formula:

Daily salary ÷ normal working hours = hourly rate

If the employee works 8 normal hours per day:

RM76.92 ÷ 8 = RM9.62 (hourly rate)

Step 3: Multiply by OT Hours and OT Rate

After that, multiply the hourly rate by the number of OT hours and the correct overtime rate.

Formula:

Hourly rate × OT hours × OT rate = OT payment

The overtime rate depends on the type of day: normal working day, rest day, or public holiday.

Example OT Calculation

Siti earns RM2,000 per month and works 8 normal hours per day. Her daily salary is:

RM2,000 ÷ 26 = RM76.92

Her hourly rate is:

RM76.92 ÷ 8 = RM9.62

Now, let’s say Siti works 3 hours overtime after her normal working hours.

OT on Working Day

For a normal working day, the OT rate is 1.5x.

RM9.62 × 3 hours × 1.5 = RM43.29

Siti’s OT payment for 3 hours on a normal working day is RM43.29.

OT on Rest Day

Rest day OT rate is 2x.

RM9.62 × 3 hours × 2 = RM57.72

Siti’s OT payment for 3 hours on a rest day is RM57.72.

OT on Public Holiday

Public holiday OT rate is 3x.

RM9.62 × 3 hours × 3 = RM86.58

Siti’s OT payment for 3 hours on a public holiday is RM86.58.

Employees and employers who want to estimate salary deductions, take-home pay, and overtime impact more easily can also use salarycalculator.my to get a clearer monthly salary breakdown.

Public Holiday Rules Employers Must Know

Employers in Malaysia must provide at least 11 paid public holidays in a year.

These 11 public holidays consist of:

5 mandatory public holidays that cannot be replaced, and
6 selected public holidays chosen by the employer from gazetted public holidays.

The 5 mandatory public holidays are:

Mandatory Public Holiday	Date / Notes
Hari Pekerja	1 May
Hari Kebangsaan	31 August
Hari Malaysia	16 September
Hari Keputeraan YDP Agong	6 June, based on the material
Hari Keputeraan Raja-Raja / Yang di-Pertua Negeri / Hari Wilayah	Depends on state or federal territory

The remaining 6 public holidays can be selected by the employer from other gazetted public holidays, such as Chinese New Year, Hari Raya, Deepavali, or other recognised public holidays.

Employers should decide and communicate these 6 selected public holidays at the beginning of each year. This helps employees understand which public holidays are recognised by the company.

Working on Public Holidays

If an employee is required to work on a public holiday, the employer should calculate the payment carefully.

For example, if Siti works during normal working hours on a public holiday, such as from 9 AM to 5 PM, the calculation is not based on the hourly OT rate. Instead, she is entitled to 2 additional days of salary.

Using Siti’s daily salary:

RM76.92 × 2 = RM153.84

So, Siti would receive RM153.84 as additional payment for working during normal hours on a public holiday.

However, if Siti continues working after her normal working hours on that public holiday, then the 3x public holiday OT rate applies to the extra hours.

This distinction is important because public holiday work during normal hours and public holiday overtime after normal hours are not calculated in the same way.

Common OT Calculation Mistakes

Employers should be careful when calculating overtime because small payroll errors can lead to employee confusion or disputes. Here are some common mistakes to avoid:

Using the Wrong Hourly Rate

Some employers calculate OT directly from the monthly salary. The proper method is to calculate the daily salary first, then the hourly rate.

The basic formula is:

Monthly salary ÷ 26 = Daily salary / ORP
Daily salary ÷ normal working hours = Hourly rate / HRP

If the hourly rate is wrong, the final OT amount will also be wrong.

Calculating OT Before Normal Working Hours End

Overtime only starts after the employee completes their normal working hours. For example, if the employee’s normal working hours are 8 hours a day, OT should only be counted after the 8th hour. Not all extra attendance time automatically counts as OT.

Mixing Up OT Rates

Different types of overtime use different rates:

Type of OT	Rate
Normal working day	1.5x hourly rate
Rest day	2x hourly rate
Public holiday	3x hourly rate

Don’t combine all OT hours under one general rate. Rest day OT and public holiday OT should be recorded separately.

Misunderstanding Public Holiday Pay

Public holiday work can be confusing. If an employee works during normal working hours on a public holiday, the calculation may use daily salary treatment. But if the employee works beyond normal hours on that public holiday, the 3x OT rate applies.

For example, if Siti’s daily salary is RM76.92, working normal hours on a public holiday gives her 2 additional days of salary, which is RM153.84. If she works extra hours after that, the 3x OT rate starts.

Not Keeping Proper Attendance and OT Records

Without proper records, HR may struggle to prove how OT was calculated. Employers should keep clear records of working hours, rest days, public holiday work, and approved OT hours. This helps prevent disputes and makes payroll easier to check.

HR & Employer Relevance

Correct overtime calculation is important for HR because it affects payroll accuracy, employee trust, and company compliance.

Helps Avoid Payroll Disputes

When OT is calculated clearly, employees can understand how their payment is reflected in the payslip. Employees won’t be confused and can prevent unnecessary complaints.

Supports Fair Payment

Employees who work beyond normal hours should be paid according to the correct rate. Using the right OT formula helps employers show fairness and consistency.

Improves Payroll Accuracy

Payroll teams need to handle different work situations, such as normal working days, rest days, and public holidays. Clear OT categories help reduce calculation mistakes.

Helps Employers Manage Labour Cost

Overtime can increase payroll costs, especially for rest day and public holiday work. By tracking OT properly, employers can monitor workload, control cost, and plan manpower better.

Strengthens Company Policy

For employees earning above RM4,000, OT entitlement depends on the employment contract or company policy. This makes it important for HR to clearly state who is eligible for OT, how approval works, and how payment is calculated.

Practical Tips for Employers

Employers can reduce OT issues by having clear rules, proper records, and regular payroll checks.

Set Clear Working Hours

State the employee’s normal working hours clearly in the contract or HR policy. OT only starts after normal working hours are completed.

Explain OT Eligibility

Employees earning RM4,000 and below are eligible for OT. For employees earning above RM4,000, HR should refer to the contract or company policy. This should be explained during onboarding so employees know what to expect.

Separate OT by Category

Payroll should separate OT into normal working day, rest day, and public holiday categories. Each category uses a different multiplier, so separating them helps avoid wrong payment.

Use Proper Attendance Records

A proper attendance system helps HR track clock-in time, clock-out time, OT hours, rest days, and public holiday work. HR can use a digital attendance system to make payroll checking easier.

Keep OT Approval Records

Managers should approve OT clearly before employees work extra hours to confirm whether the OT was requested and should be paid.

Review Payroll Regularly

Before salary is released, HR should check the hourly rate, OT hours, OT category, and multiplier. Regular checking helps prevent repeated payroll mistakes.

FAQs

How to calculate overtime in Malaysia?

To calculate overtime, first divide the monthly salary by 26 to get the daily salary. Then, divide the daily salary by the employee’s normal working hours to get the hourly rate. After that, multiply the hourly rate by the number of OT hours and the correct OT rate.

What is the OT rate for public holiday?

The OT rate for public holiday overtime is 3x the hourly rate. This applies when the employee works beyond normal working hours on a public holiday.

Who is eligible for overtime pay?

Employees earning RM4,000 and below per month are eligible for overtime payment. For employees earning more than RM4,000, eligibility depends on the employment contract or company policy.

Is OT mandatory for employers?

If an eligible employee is asked to work overtime, the employer must pay the overtime according to the correct rate. OT should be based on agreement, but if the employer requests it, payment must be made.

How many working hours are allowed per week in Malaysia?

The working hour limit is 45 hours per week. For a 6-day work week, this is around 7.5 hours per day. For a 5-day work week, this is around 9 hours per day.

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