How Public Holiday Pay Works in Malaysia (With Examples)

Public holidays are part of working life in Malaysia. Every year, employers deal with federal holidays, state holidays, religious festivals, and long holiday weekends. When payroll is not handled properly during public holidays, problems can easily happen.

Public holiday pay is not only about paying salaries. It affects payroll accuracy, work scheduling, employee trust, and legal compliance. Many employer–employee disputes start because public holiday rules are misunderstood.

What Is a Public Holiday in Malaysia

Public holiday pay means the payment an employee receives on a gazetted public holiday, whether the employee works on that day or not.

Under Malaysian labour rules, employees are entitled to paid public holidays. If an employee works on a public holiday, the employer must pay extra on top of normal wages.

Public holiday pay is different from normal working day pay, rest day pay, and overtime pay.

Each type is calculated differently, which is why HR teams must understand the difference clearly.

Who Is Covered by Public Holiday Pay Rules

Not all employees in Malaysia receive public holiday pay. Only those covered by the Employment Act 1955 are entitled to this benefit. The rules are as follows:

Employees earning RM4,000 or less.
Manual workers, regardless of their salary.

On the other hand, employees who are not fully covered by the Act typically include employees earning more than RM4,000, who are usually governed by their employment contract and company policy.

However, many employers choose to extend similar public holiday benefits to all staff for fairness and consistency.

Public Holiday Pay Entitlement

Public holiday pay depends on whether the employee works or does not work on the public holiday.

A. Employee Does Not Work on a Public Holiday

When an eligible employee does not work on a gazetted public holiday, the employer is still required to pay them for that day.

Monthly-Paid Employees

For employees on a monthly salary, public holiday pay is already included in their monthly wage.

No additional payment is required
No salary deduction is allowed
The employee receives their full monthly salary as usual

Simply, nothing extra to calculate.

Daily-Rated Employees

For daily-rated employees, the employer must pay one full day’s wage for each public holiday.

Formula (Daily-Rated Employee)

Public Holiday Pay = Daily Wage × Number of Public Holiday Days

Example:

Daily wage: RM80
Public holiday: 1 day

Calculation:

RM80 × 1 = RM80

The employee receives RM80 even though they did not work that day.

B. Employee Works on a Public Holiday

When an employee works on a public holiday, the payment rules change. The law requires extra compensation, not just normal wages.

There are two parts to the payment:

Public holiday pay
Overtime pay (if applicable)

Step 1: Public Holiday Pay (Minimum Entitlement)

An employee who works a full day on a public holiday must be paid at least double their daily wage.

Formula:

Public Holiday Pay = 2 × Daily Wage

Example:

Daily wage: RM100
Worked a full day on a public holiday

Calculation:

RM100 × 2 = RM200

This RM200 covers the public holiday work itself, not overtime.

Step 2: Overtime Pay (If Working Beyond Normal Hours)

If the employee works beyond normal working hours on a public holiday, overtime pay applies on top of the public holiday pay.

Overtime Formula:

Overtime Pay = Hourly Rate × OT Multiplier × OT Hours

Note: For public holidays, overtime is usually paid at 2× the hourly rate, unless the contract states otherwise.

Full Example: Public Holiday + Overtime

Details:

Daily wage: RM100
Normal working hours: 8 hours
Hourly rate: RM12.50
Overtime hours worked: 2 hours

Public Holiday Pay:

RM100 × 2 = RM200

Overtime Pay:

RM12.50 × 2 × 2 = RM50

Total pay for the day → RM200 + RM50 = RM250

The employee must be paid RM250 for that day.

Public Holiday vs Rest Day vs Normal Workday

Before calculating public holiday pay, employers must clearly understand the difference between a normal workday, a rest day, and a public holiday. Each has different pay rules under Malaysian employment practices, and mixing them up is one of the most common payroll errors.

Normal Workday

Regular working day based on the employee’s contract or work schedule. Employees are paid their usual daily or monthly wage for work done on these days.

Rest Day

Scheduled day off, usually once a week. If an employee is required to work on a rest day, special pay rules apply depending on how many hours they work.

Public Holiday

Gazetted holiday declared by the Federal Government or State Government. Public holidays are paid days off for eligible employees, even if they do not work.

Why this distinction matters:

Pay rates are different for each type of day
Overtime rules change based on the day type
Incorrect classification can lead to underpayment or legal issues

Payroll Scenarios During Public Holidays

Public holiday payroll can become confusing because work schedules vary. Below are common scenarios employers face, with a quick explanation before each one.

Scenario 1: Monthly-Paid Employee Works on a Public Holiday

Normal salary is paid as usual
Employee must receive additional public holiday pay
Overtime applies if working beyond normal hours

Scenario 2: Shift Worker Scheduled on a Public Holiday

Treated as working on a public holiday
Paid public holiday entitlement even if scheduled normally
OT applies if hours exceed the standard shift

Scenario 3: Public Holiday Falls on a Rest Day

If employee does not work → no extra payment (unless contract states otherwise)
If employee works → rest day pay rules apply, not public holiday rules

Scenario 4: Employee Works Beyond Normal Hours on a Public Holiday

First calculate public holiday pay, then calculate overtime separately. Both payments must be shown clearly on the payslip

Employer Responsibilities

Employers have a legal and ethical duty to manage public holiday pay properly. This goes beyond simply paying wages. Key responsibilities include:

Paying the correct public holiday entitlement
Applying the correct rate when employees work
Informing employees early about holiday schedules
Issuing replacement holidays only when allowed by law or contract
Keeping accurate attendance and payroll records
Showing clear breakdowns on payslips

Employers should also ensure payroll teams understand:

Which holidays apply in which states
Who is eligible under the Employment Act
How company policies interact with legal requirements

Common Compliance Mistakes Employers Make

Many payroll issues during public holidays are caused by simple misunderstandings rather than intentional non-compliance.

Common mistakes include:

Treating public holidays as normal rest days
Paying only one day’s wage when employees work on a public holiday
Ignoring state-specific public holidays
Applying the wrong overtime multiplier
Not paying daily-rated employees for holidays they did not work
Poor record-keeping for attendance and overtime

These mistakes can lead to:

Employee complaints
Backdated wage claims
Labour disputes or investigations

HR Best Practices for Public Holiday Pay

To avoid confusion and compliance risks, HR teams should take a proactive approach. Best practices include:

Share public holiday calendars at the start of the year
Clearly state which holidays the company observes
Confirm who is required to work during holidays
Set clear approval rules for holiday work and overtime
Align payroll cut-off dates with long holiday periods
Train HR and payroll staff on holiday pay rules
Review employment contracts and company policies regularly

FAQs

What is public holiday pay in Malaysia?

It is the payment employees receive on official public holidays, whether or not they work.

Do employees get paid if they don’t work on public holidays?

Yes, eligible employees are entitled to paid public holidays.

Are employers required to pay extra if employees work on public holidays?

Yes, additional pay is required when employees work on a public holiday.

Does public holiday pay differ by state in Malaysia?

Yes, because public holidays differ between states.

Who is covered under public holiday pay rules?

Mainly employees earning RM4,000 and below, manual workers, and those covered under the Employment Act 1955.

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