Getting to Know Working Hours and Overtime in Malaysia

Overtime can help businesses meet urgent demands, but without proper management, it leads to burnout, disputes, and high turnover. That’s why the Employment Act 1955 sets clear rules on working hours, rest days, and overtime pay. Employers who respect these limits not only stay compliant but also build healthier, more productive workplaces.

This guide covers everything employers need to know about standard working hours, overtime regulations, leave entitlements, and penalties for non-compliance.

What are the Standard Working Hours in Malaysia?

The Employment Act 1955 (Act 265) regulates working hours for employees in Peninsular Malaysia and Labuan.

As of 1 January 2023, the maximum weekly hours were reduced from 48 hours to 45 hours.

Key rules for working hours:

Daily limit: Maximum 8 hours per day (excluding breaks).
Weekly limit: Maximum 45 hours per week.
Break entitlement: Employees cannot work more than 5 consecutive hours without a 30-minute break.
Spread of hours: Total working hours, including breaks, cannot exceed 10 hours in one day.

For shift workers, hours may exceed 8 on certain days, as long as the average across a 3-week cycle does not exceed 45 hours per week.

Overtime in Malaysia

Overtime work is any work performed beyond the employee’s normal working hours.

Overtime limit: Employees may not work more than 104 hours of overtime per month, or 12 hours total in any one day.
Overtime pay rates:
- 1.5x hourly rate on normal working days.
- 2x hourly rate on rest days.
- 3x hourly rate on public holidays.

Eligibility:

Employees earning ≤ RM4,000/month are covered by the Act.
Manual labourers are covered regardless of salary.
Managers and executives may not be entitled unless their contract provides it.

Rest Days and Public Holidays

Employers must provide at least 1 rest day per week. Typically, this falls on Sunday, but it may differ based on company or state practices.

If employees work on rest days:

Half day: 0.5x daily wage.
Full day: 2x daily wage.

Public holidays:

Employees are entitled to 11 paid public holidays annually. Work done on these days must be paid at triple the hourly rate or substituted with another paid holiday.

Leave Entitlements and Working Hours

Working hours also interact with leave entitlements under the Employment Act:

Sick leave: 14, 18, or 22 days per year depending on years of service, plus 60 days of hospitalisation.
Maternity leave: 98 days.
Paternity leave: 7 consecutive days.
Annual leave: 8, 12, or 16 days based on years of service.

During approved leave, employees are not considered to be working and overtime does not apply. Employers must respect leave entitlements and cannot treat absence as unpaid if it falls under statutory leave.

How to Calculate Overtime Pay in Malaysia

1. Formula for Daily and Hourly Wage

Overtime is calculated based on the employee’s Ordinary Rate of Pay (ORP) and Hourly Rate of Pay (HRP), as defined under the Employment Act.

ORP (Daily Wage) = Monthly Salary ÷ 26
HRP (Hourly Wage) = ORP ÷ Normal Daily Working Hours (usually 8 hours)

2. Examples for Different Pay Structures

Monthly-paid employee
- Salary: RM2,600/month
- ORP = 2,600 ÷ 26 = RM100/day
- HRP = 100 ÷ 8 = RM12.50/hour
Daily-paid employee
- Daily wage: RM80
- HRP = 80 ÷ 8 = RM10/hour
Hourly-paid employee
- Hourly rate: RM12/hour (already given, so HRP = RM12)

3. Calculation for Working on Rest Days and Public Holidays

Normal working day overtime: HRP × 1.5
- Example: RM12.50 × 1.5 = RM18.75 per hour
Rest day overtime
- Half-day work: ORP × 0.5 = RM50
- Full day work: ORP × 2.0 = RM200
Public holiday overtime
- Work during normal hours: ORP × 2.0
- Work beyond normal hours: HRP × 3.0
- Example: RM12.50 × 3.0 = RM37.50 per hour

Employer Responsibilities and Penalties

Employers must:

Keep accurate records of employee working hours, overtime, and rest days.
Ensure employees are not required to work beyond legal limits.
Pay overtime promptly at the correct rate.

Penalties for non-compliance:

Employers who breach the Act may face fines up to RM10,000 per offence.
Employees may file complaints with the Labour Department if their rights are denied.
The Act overrides contracts. Any clause less favourable than the law is invalid.

Best practices for employers:

Use digital timekeeping systems to track working hours.
Monitor overtime trends to prevent over-reliance.
Train HR managers on compliance with the Employment Act.

FAQ

What are the maximum working hours allowed in Malaysia?

8 hours per day, 45 hours per week, with no more than 5 hours worked without a 30-minute break.

How is overtime calculated in Malaysia?

At 1.5x hourly rate on normal days, 2x on rest days, and 3x on public holidays.

Can an employer force overtime?

Employees cannot be compelled to work beyond 104 overtime hours per month. Consent and fairness are required.

What is the penalty for not paying overtime?

Employers may be fined up to RM10,000 per offence under the Employment Act.

Do employees get double pay on public holidays?

Yes. Employees working on public holidays are entitled to at least double their daily wage, and triple pay if working beyond normal hours.

What is the difference between overtime and shift allowance?

Overtime is pay for hours worked beyond normal limits. Shift allowance compensates for irregular working hours but is not tied to extra hours.

Are managers and executives entitled to overtime?

Generally, no, unless stated in their employment contract.

How does sick leave affect overtime pay eligibility?

Employees on sick leave are not required to work and cannot be scheduled for overtime during that period.

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