How Notice Period Really Works in Malaysia for Employers and HR

In Malaysia, notice period is one of the most common HR topics that leads to confusion, disagreements, and sometimes disputes.

Whether an employee resigns, is terminated, or leaves early, understanding how notice period works helps HR teams and employers manage exits fairly, legally, and professionally.

This guide explains what notice period means, how it works in Malaysia, and what HR and employers should know to stay compliant and avoid problems.

What Is a Notice Period?

A notice period is the amount of time an employee or employer must give before ending an employment contract.

During the notice period:

The employee is still employed
Salary and benefits continue
The employee is expected to work, unless agreed otherwise

The purpose of a notice period is to:

Give employers time to plan for replacement
Give employees time to prepare for transition
Ensure a smooth and fair exit for both sides

Is Notice Period Required in Malaysia?

Yes. In Malaysia, notice period is recognised under the Employment Act 1955 and is usually stated clearly in the employment contract.

If a notice period is written in the contract, both employer and employee must follow it.

Notice Period Under the Employment Act (If the Contract Doesn't Mention Notice Period)

If the employment contract does not mention notice period, the Employment Act provides minimum notice requirements based on length of service:

Less than 2 years of service: 4 weeks
2 to 5 years of service: 6 weeks
More than 5 years of service: 8 weeks

HR should always check the employment contract first. If a notice period is stated in the contract, that period applies.

Common Notice Periods Used by Employers in Malaysia

In practice, many Malaysian companies use fixed notice periods such as:

1 month notice (most common)
2 months notice
3 months notice (often for managers or senior roles)

Longer notice periods are usually applied to:

Senior employees
Roles with high responsibility
Positions that are difficult to replace

Notice Period for Resignation

When an employee resigns:

They must give notice according to the contract
Notice usually starts from the date the resignation is submitted
HR should acknowledge the resignation in writing

If the employee serves the full notice period:

Salary is paid as usual
EPF, SOCSO, EIS, and PCB still apply
Leave entitlement follows company policy

Not sure how much to contribute during the notice period? Use our EPF, SOCSO & EIS Calculator and PCB Calculator to quickly check the correct statutory contributions before processing final payroll.

Notice Period for Termination by Employer

When an employer terminates an employee:

The same notice period applies, unless the termination is due to misconduct
The employer must either:
- Allow the employee to serve notice, or
- Pay salary in lieu of notice

Termination should always be handled carefully to avoid:

Unfair dismissal claims
Industrial disputes
Reputational issues

What Is Salary in Lieu of Notice?

Salary in lieu of notice means paying the employee instead of asking them to work during the notice period.

It is usually used when:

The employer wants an immediate exit, or
The employee cannot or does not want to serve notice

The amount is usually based on:

Basic salary
Fixed allowances (depending on contract wording)

HR should always check the employment contract before calculating payment in lieu.

Can Employees Leave Without Serving Notice?

Yes, but there are consequences.

If an employee leaves without serving notice:

The employer may deduct salary in lieu of notice
The deduction must match the notice period stated in the contract
The deduction must be clearly explained

HR should properly record:

Resignation date
Last working day
Outstanding notice amount

Can Employers Waive the Notice Period?

Yes.

Employers may:

Shorten the notice period
Waive the notice period fully
Allow early release

Any waiver should be:

Agreed by both parties
Confirmed in writing
Properly recorded for payroll and audit purposes

Notice Period and Annual Leave

During the notice period:

Employees may take annual leave if approved
Employers may allow annual leave to offset the notice period, depending on company policy
Unused annual leave may be encashed, based on contract terms

HR should apply leave rules consistently to avoid disputes.

Notice Period During Probation

Notice period during probation is usually:

Shorter than for confirmed employees
Clearly stated in the offer letter or contract

If not stated, the Employment Act minimum notice still applies.

HR should ensure probation notice terms are:

Written clearly
Explained during onboarding

Best Practices for HR and Employers

To manage notice period smoothly:

Clearly State Notice Period in Contracts

Write the notice period clearly in the employment contract to avoid confusion later.

Acknowledge Resignations in Writing

Confirm the resignation and last working day by email or letter.

Calculate Notice and Final Pay Accurately

Make sure salary, notice pay, and deductions are correct to avoid complaints.

Confirm Last Working Day Clearly

State the final working day clearly for payroll and statutory reporting.

Keep Proper Records

Keep resignation letters and payment records in case of audit or disputes.

Notice Period Checklist for HR & Employers

FAQs

Is notice period compulsory in Malaysia?

In most cases, a notice period is required. It is usually written in the employment contract. If the contract does not mention it, the Employment Act sets the minimum notice period.

Can notice period be longer than one month?

Yes, many companies set notice periods of two or three months, especially for senior or important roles that take longer to replace.

Can salary be deducted if notice is not served?

If an employee leaves without serving notice, the employer can deduct salary in place of the notice period. The amount must follow what is stated in the contract.

Does notice period apply during probation?

Probation staff also need to give notice. The notice period is usually shorter and should be stated in the offer letter or contract.

Can employers terminate immediately without notice?

Immediate termination usually only happens in serious misconduct cases. Employers still need to follow proper steps to avoid disputes.

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