Labour Law Malaysia Salary Payment For Employers

Salary-related disputes are among the most common employee complaints in Malaysia.

Delayed payments, incorrect deductions, or missing payslips can lead to serious consequences for businesses.

To stay compliant and avoid legal trouble, employers need to understand how salary payment laws work.

This guide covers minimum wage requirements, payment deadlines, deductions, and penalties for non-compliance.

Minimum Wage Requirements in Malaysia 2025

The Malaysian government has set a mandatory minimum wage to protect workers' rights and provide them with fair compensation.

As of February 1, 2025, the minimum wage is RM1,700 per month.

For employees paid on a daily basis, the minimum wage is calculated based on their working days:

RM65.38 per day for employees working six days a week
RM78.46 per day for employees working five days a week
RM98.08 per day for employees working four days a week

This wage policy applies to all sectors and regions, including Sabah and Sarawak.

However, domestic workers such as maids, gardeners, and personal drivers are exempted from the minimum wage order.

Is There a Penalty for Failing to Pay Minimum Wage in Malaysia?

Yes. If an employer fails to pay the minimum wage, they are violating Section 23 of the National Wages Consultative Council Act 2011.

This can result in a fine of up to RM10,000 per employee. Employers must comply with the minimum wage law to avoid financial penalties and reputational damage.

When Should a Salary be Paid in Malaysia?

Malaysian labour law states that employers must pay salaries within 7 days after the end of each wage period.

If the salary period ends on June 30, payment must be made by July 7.

While companies can set their own payroll policies, the most common salary payment dates in Malaysia are:

End of the month (e.g., 30th or 31st)
Beginning of the month (e.g., 1st or 2nd)
Mid-month and end-month (bi-monthly salary payments, e.g., 15th and 30th)

In most cases, the wage period is one month, but contracts may specify different payment cycles.

Overtime payments have a separate deadline. They must be paid no later than the last day of the next wage period.

If an employer delays salary payments, employees can file complaints with the Labour Department (JTK).

Repeated failures to pay on time may lead to legal action, fines, or even business suspension.

There will be some cases where a company is unable to pay the employees on time and delay it due to financial difficulties.

This is not a legal solution. Employers should communicate with employees, propose payment schedules, or seek financial solutions.

Unpaid wages can result in employee resignations, complaints, or legal disputes.

What is the Payment Method for Salary in Malaysia?

Malaysia does not enforce a specific payment method, but employers must use a system that provides a clear payment record.

Common salary payment methods include:

Bank transfers (preferred for transparency and easy tracking)
Cheque payments
Cash Payment (Less Common)
Digital payment systems (such as online wallets)

The method used should be stated in the employment contract to avoid misunderstandings.

Is Salary Calculated for 30 Days or 26 Days in Malaysia?

Salary calculations depend on how employees are paid:

Monthly salaries: Based on 30 or 31 days, depending on the calendar month.
Daily wages: Some companies use a 26-day calculation (excluding rest days), while others divide salary by the actual number of working days.

Can Salary be Paid in Cash in Malaysia?

Yes, salary can be paid in cash, but it is not recommended due to lack of documentation. If an employer pays in cash, they must:

Issue a written payslip
Get the employee’s signature as proof of payment
Keep records for at least six years

To avoid risks, bank transfers are preferred, as they provide automatic transaction records.

How Employers Should Calculate and Pay Salaries in Malaysia

Employers are responsible for accurately calculating salaries based on employment contracts and labour laws.

This includes factoring in basic wages, statutory deductions, overtime, and any additional payments agreed upon in the contract.

Salary computation varies depending on the type of employment:

Full-time employees receive a fixed monthly salary, with overtime and deductions calculated according to the Employment Act.
Part-time employees are paid based on their agreed hourly or daily rate, with wages adjusted according to the number of hours worked.
Contract workers may receive salaries on a project basis or fixed-term agreement, with payment schedules and benefits depending on contract terms.

Allowable Salary Deductions

Employers are legally allowed to deduct wages in the following cases:

Statutory Deductions

These are mandatory deductions that employers must make from employees’ salaries:

EPF (Employees Provident Fund) for retirement savings
SOCSO (Social Security Organisation) for workplace injury and disability protection
EIS (Employment Insurance System) for financial support if an employee loses their job
PCB (Potongan Cukai Bulanan) for monthly tax deductions

Loan Deductions & Salary Advances

Employers can deduct wages if an employee agrees in writing to repay:

Company loans
Salary advances

Unauthorized Salary Deductions and Employer Penalties

Employers cannot deduct wages for personal reasons, damages, or work mistakes unless approved by the Director-General of Labour.

Unauthorized deductions can lead to legal penalties.

Overtime & Additional Payments

Employees who work more than 8 hours a day or exceed 45 hours a week are entitled to overtime pay at 1.5 times their hourly wage.

For work done on rest days, employees must be compensated at twice their regular hourly rate.

If they work on a public holiday, they are entitled to three times their hourly wage.

Bonuses are not a legal requirement and are only payable if they are specified in the employment contract or company policy.

Payslips & Salary Transparency

Every employee in Malaysia must receive a payslip each time they are paid. This document provides a clear breakdown of their earnings, deductions, and other relevant details.

A payslip must include:

Employee’s full name and ID number
Salary details (basic wage, overtime, bonuses, deductions)
Employer’s name and registration number
Date of payment and date issued

Employers are required to keep payroll records for at least six (6) years to comply with labour laws.

If an employee disputes their salary, the employer must provide records and address the issue promptly.

Failing to resolve disputes may lead to legal complaints with the Labour Department (JTK).

Termination & Final Salary Payment

When an employee resigns or is terminated, employers are responsible for paying their final wages, including any outstanding amounts.

This payment must be made within seven (7) days after the termination date.

If the employee has unused annual leave, the employer must provide compensation based on their final salary.

FAQ for Employers

What is the minimum salary in Malaysia?

As of February 1, 2025, Malaysia's minimum wage has been increased to RM1,700 per month. The minimum daily wage depends on the number of working days per week:

6-day workweek: RM65.38 per day
5-day workweek: RM78.46 per day
4-day workweek: RM98.08 per day

The minimum hourly wage is RM8.72.

Can employers delay salary payments?

No, employers must pay salaries within 7 days after the wage period ends. If salary payments are late, employees can file a complaint with the Labour Department (JTK). Employers who fail to pay salaries on time may face penalties, legal action, or fines.

What deductions are allowed from an employee’s salary?

Employers can only make salary deductions that are permitted by law. These include:

Statutory deductions: EPF, SOCSO, EIS, PCB (income tax).
Loan repayments: Approved salary advances or loans.
Absence or unpaid leave: Deductions for days the employee did not work.

Unauthorized salary deductions can result in penalties under the Employment Act.

How to handle salary disputes with employees?

If an employee disputes their salary, employers should review payroll records and provide clear documentation. If there is a miscalculation, the employer should correct the payment immediately. If the dispute cannot be resolved internally, employees can file a complaint with JTK, which may lead to mediation or legal action.

Are employers required to provide salary slips?

Yes, all employees must receive a payslip with every salary payment. A payslip should include:

Employee’s name and ID
Salary details (basic wage, overtime, deductions)
Employer’s details
Date of payment

Employers must also keep payroll records for at least six years to comply with labour laws.

Paying wages on time and in full builds trust and encourages employee loyalty.

Employers should stay updated on labour laws and follow best practices in payroll management to create a fair and legally compliant work environment.

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