Gaji Minimum RM1700 in Malaysia Starting August 2025

From August 2025, every employer in Malaysia must comply with the new minimum wage of RM1,700 per month. While this move aims to improve employee welfare, it also brings challenges for businesses, especially in managing higher wage bills and restructuring payroll. Understanding the new law is crucial to staying compliant while maintaining business sustainability.

Announcement of Minimum Wage Increase in Budget 2025

The Malaysian Government announced in Budget 2025 that the national minimum wage would increase from RM1,500 to RM1,700 per month. The policy reflects the Government’s commitment to protecting workers’ welfare while strengthening the labour market.

The increase was rolled out in two phases. From 1 February 2025, the RM1,700 rate applies to employers with at least five workers and to companies engaged in professional activities as defined under the Malaysia Standard Classification of Occupations (MASCO) 2020. Employers with fewer than five workers were granted a grace period of six months. By 1 August 2025, the new wage becomes compulsory for all employers, regardless of company size.

For businesses, this means higher labour costs and the need to review payroll structures. Employers are expected to balance compliance with productivity, training, and financial planning to absorb the additional wage burden.

Minimum Wage Act 2025

The new wage is governed under the National Wages Consultative Council Act 2011 [Act 732]. This Act established the National Wages Consultative Council (Majlis Perundingan Gaji Negara), which advises the Government on wage policies.

Under the law:

Employers must pay at least RM1,700 as basic salary.
Allowances, incentives, or commissions cannot be counted towards the minimum wage.
Failure to comply is an offence punishable under Section 43 of the Act.

Payroll compliance is non-negotiable. Even if an employee agrees to accept less, paying below RM1,700 is illegal.

Wage Rates: Monthly / Daily / Hourly

Under the new Minimum Wages Order, the basic pay of RM1,700 per month applies nationwide, covering all full-time employees regardless of sector.

For employees who are paid daily or hourly, the rate is calculated according to the number of working days per week.

Here is the breakdown:

Category	Minimum Wage Rate
Monthly	RM1,700
Daily (6 working days/week)	RM65.38
Daily (5 working days/week)	RM78.46
Daily (4 working days/week)	RM98.08
Hourly	RM8.72

This means:

Employers paying daily wages must adjust the rate based on the company’s workweek structure.
Part-time and hourly workers must be paid at least RM8.72 per hour.
Piece-rate or commission-based workers must still receive the equivalent of at least RM1,700 per month for a full-time workload.

Who is Affected by the RM1700 Minimum Wage?

The Minimum Wages Order (PGM) 2024 applies to all employees in the private sector, including foreign workers and contract staff. Exemptions are limited:

Not covered: Domestic servants and apprentices under contract.
Covered: Malaysian citizens, foreign workers, and professional staff.

Importantly, the Ministry of Human Resources stressed that RM1,700 is a minimum wage, not a starting salary. Employers are encouraged to pay above this amount, especially for graduates and skilled workers.

Implementation Timeline

The new minimum wage policy is rolled out in two phases, giving smaller employers a short adjustment period before full enforcement:

1 February 2025

The RM1,700 minimum wage applies to:

Employers with five or more employees; and
Employers engaged in professional activities as classified under the Malaysia Standard Classification of Occupations (MASCO) 2020. Professional activities under MASCO fall under Major Group 2: Professionals, which include nine sub-groups:
1. Science and engineering professionals
2. Health professionals
3. Teaching professionals
4. Business and administration professionals
5. Information and communication technology professionals
6. Legal professionals
7. Hospitality and related service professionals
8. Social and cultural professionals
9. Regulatory body professionals

1 August 2025

The RM1,700 minimum wage becomes mandatory for all employers, including those with fewer than five employees. The grace period ends, and no employer is exempt.

The key date to remember is 1 August 2025. By then, payroll systems, employment contracts, and budgeting must be updated to reflect the RM1,700 wage across the board. Delays or non-compliance after this date can result in heavy penalties.

Federal Gazette Announcement

The increase was formalised through the Federal Gazette under the Minimum Wages Order 2024. Employers are advised to review the official gazette, which is available via the Attorney-General’s Chambers and the Ministry of Human Resources websites, to ensure full compliance with the exact provisions.

Penalties for Employers Who Fail to Comply

Non-compliance with the RM1,700 wage carries heavy consequences:

First offence: Fine up to RM10,000 per employee.
General penalty: Fine up to RM10,000 for unspecified breaches.
Continuous offence: Additional RM1,000 per day until rectified.
Repeat offence: Fine up to RM20,000 or imprisonment up to 5 years.

These penalties underline the seriousness of compliance. Employers should act early to avoid financial and reputational risks.

Employee Complaints

Employees who are not paid according to the new minimum wage are entitled to lodge a formal complaint. Cases will be investigated by the Labour Department (Jabatan Tenaga Kerja, JTK), and employers should be prepared that legal enforcement action may follow.

If there is a violation of the Minimum Wages Order, employees can make complaints through the following channels:

Jabatan Tenaga Kerja Semenanjung Malaysia (JTKSM)

Kementerian Sumber Manusia
Aras 5, Blok Setia Perkasa 3, Kompleks Setia Perkasa
Pusat Pentadbiran Kerajaan Persekutuan, 62530 PUTRAJAYA
Phone: 03-8886 5192 | Faks: 03-8889 2368
Email: jtksm@mohr.gov.my
Official Website: jtksm.mohr.gov.my

Jabatan Tenaga Kerja Sabah (JTK Sabah)

Kementerian Sumber Manusia
Tingkat 1, Blok C & D, Bangunan KWSP P/S 14557
88852, Kota Kinabalu, SABAH
Phone: 088-238755 / 233820 | Faks: 088-242445
Email: jtknsabah@mohr.gov.my
Official Website: jtksabah.gov.my

Jabatan Tenaga Kerja Sarawak (JTK Sarawak)

Kementerian Sumber Manusia
Tingkat 13, Bangunan Sultan Iskandar, Jalan Simpang Tiga
93532, Kuching, SARAWAK
Phone: 082-242261 / 414062 | Faks: 082-244909
Email: gajimin@mohr.gov.my
Official Website: jtkswk.gov.my

Employer Action Steps

Employers can prepare by taking these proactive measures:

Update payroll systems and ensure salary calculations reflect the RM1,700 rate across monthly, daily, and hourly structures.
Communicate with employees by sharing clear updates on salary adjustments to maintain transparency and trust.
Plan budgets. Factor in higher wage bills and explore efficiency gains through training, automation, or productivity-linked wage systems (PLWS).
Review contracts and check all employment agreements to ensure basic salaries comply with the law.
Adopt the voluntary Dasar Gaji Progresif (DGP) to reward performance beyond the minimum wage, with potential government incentives.

FAQ – Minimum Wage RM1700 (2025)

1. Is RM1,700 the same across all states in Malaysia?

Yes. The RM1,700 minimum wage applies nationwide.

2. Does the RM1,700 minimum wage apply to probation staff?

Yes. All employees, including probationers, must receive at least RM1,700 basic pay.

3. How does the RM1,700 wage affect part-time and hourly workers?

Their pay must be calculated so that when prorated, it equals or exceeds RM1,700 for a full month of work.

4. Do foreign workers qualify for the RM1,700 wage?

Yes. The law applies equally to foreign and local workers, except domestic servants and apprentices.

5. What happens if an employer cannot afford to pay RM1,700?

Financial difficulty is not a legal defence. Employers must comply or risk penalties. Planning and restructuring are essential.

6. How do employees lodge a complaint if they are not paid according to the new rate?

They can file a report with JTKSM, JTK Sabah, or JTK Sarawak. Authorities will investigate and take enforcement action.

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