Late Salary Payment in Malaysia: Can Employers Delay Employee Salaries?

Paying employees on time is one of the most important responsibilities of every employer. Besides helping employees manage their monthly expenses, paying wages on time is also a legal requirement under the Employment Act 1955.

Late salary payments can affect employee morale, reduce trust, increase staff turnover and expose employers to complaints or employment disputes.

Whether the delay is caused by cash flow issues, payroll errors or banking problems, employers should understand their legal responsibilities before delaying salary payments.

What Is a Wage Period?

A wage period is the period for which an employee's wages are calculated. Most employers in Malaysia use a monthly wage period, although some businesses may pay employees weekly or fortnightly.

Under the Employment Act 1955, employers must generally pay wages within the required timeframe after the end of each wage period.

When Must Employers Pay Salary in Malaysia?

Under Section 19(1) of the Employment Act 1955, employers must pay employees their wages no later than the seventh (7th) day after the end of each wage period, after deducting any lawful deductions.

For example:

Wage Period	Latest Salary Payment Date
January	7 February
February	7 March
March	7 April

Many companies choose to pay salaries earlier, such as on the last working day of the month. This is acceptable as long as employees receive their wages within the legal timeframe.

Is Paying Salary on the 7th of the Month Legal?

Yes.

Many employees assume salaries must be paid on the last day of the month, but this is not required by law.

As long as wages are paid within the period allowed under Section 19(1) of the Employment Act 1955, employers are generally complying with the law.

What Is Considered a Late Salary Payment?

A salary payment is generally considered late if employees do not receive their wages within the timeframe required under the Employment Act 1955 or the employment contract.

Examples include:

Paying salary after the seventh day following the end of the wage period.
Frequently paying salaries later than the agreed payday.
Delaying salary without informing employees.

Can Employers Delay Salary Because of Cash Flow Problems?

No.

Cash flow problems do not automatically allow an employer to delay salary payments.

Even if a company is facing temporary financial difficulties, Section 19(1) of the Employment Act 1955 still requires employers to pay wages within the prescribed timeframe.

If payment may be delayed, employers should:

Inform employees as early as possible.
Explain the reason for the delay.
Provide an expected payment date.
Make every effort to pay wages as soon as possible.

Clear communication helps maintain employee trust while the issue is being resolved.

Common Situations HR Often Faces

Situation	Can Employers Delay Salary?
Cash flow problems	No. Employers should still pay wages within the legal timeframe.
Employee has resigned	No. Final salary should be paid according to the Employment Act 1955 and the employment contract.
Employee has not completed a handover	No. This is generally not a valid reason to delay salary payments.
Company laptop, phone or access card has not been returned	No. Employers should handle the matter separately instead of automatically withholding wages.
Waiting for customer payment	No. Business cash flow issues do not remove the obligation to pay wages.
Banking or payroll system issues	Employers should resolve the issue as quickly as possible and keep employees informed.

Can Employers Delay Salary Because of Banking or Payroll Issues?

Sometimes delays happen because of circumstances outside the employer's control, such as:

Banking system maintenance.
Payroll software errors.
Incorrect employee bank account details.
Technical issues during fund transfers.

If this happens, HR should notify affected employees immediately, explain the situation and process the payment as soon as the issue is resolved.

Although unexpected technical issues may occur, employers should make every reasonable effort to minimise delays.

Can Employers Deduct Salary if Company Property Is Not Returned?

Not automatically.

The Employment Act 1955 only allows salary deductions in certain situations permitted by law.

If an employee fails to return company property, employers should follow the employment contract, company policy and applicable laws instead of making unauthorised salary deductions.

When in doubt, employers should seek professional HR or legal advice before deducting wages.

Can Employers Pay Overtime Together With Next Month's Salary?

Yes.

This is specifically allowed under Section 19(2) of the Employment Act 1955.

Unlike normal monthly wages, payment for:

Overtime work
Work performed on a rest day
Work performed on certain public holidays

may be paid no later than the last day of the next wage period.

This is one of the exceptions to the general salary payment rule under Section 19(1).

Can Employers Get More Time to Pay Salaries?

Generally, employers should pay wages within the timeframe required under Section 19(1).

However, Section 19(3) of the Employment Act 1955 allows an employer to apply to the Director General of Labour for an extension if paying wages within the required period is not reasonably practicable.

This extension is not automatic. Employers must submit an application, and approval is subject to the Director General's decision.

What Happens if Employers Frequently Pay Salaries Late?

Repeated late salary payments can affect both employees and the business.

Possible Impact	Explanation
Lower employee morale	Employees may lose confidence in the employer.
Higher staff turnover	Employees may leave for companies with more reliable payroll practices.
Recruitment challenges	A poor employer reputation can make it harder to attract qualified candidates.
Employee complaints	Employees may lodge complaints with the Labour Department.
Employment disputes	Repeated delays can increase the risk of employment-related disputes.

Depending on the circumstances, employers who fail to comply with the Employment Act 1955 may also face investigation or enforcement action by the Labour Department.

Best Practices for Employers

To reduce the risk of late salary payments:

Plan payroll well before payday.
Verify payroll calculations before processing.
Ensure sufficient funds are available for payroll.
Allow enough time for bank processing.
Communicate promptly if unexpected issues occur.
Review payroll processes regularly to prevent recurring delays.

Paying salaries on time not only helps employers comply with the law but also strengthens employee trust and supports a positive workplace culture.

FAQs

Can employers delay employee salaries in Malaysia?

Generally, no. Under Section 19(1) of the Employment Act 1955, employers must pay wages no later than the seventh day after the end of each wage period unless an extension is approved under the law.

Is paying salary on the 7th of the month legal?

Yes. Employers generally comply with the Employment Act 1955 if wages are paid within the prescribed timeframe under Section 19(1).

Can employers delay salary because of cash flow problems?

No. Financial difficulties do not automatically remove an employer's obligation to pay wages on time.

Can employers deduct salary if company property is not returned?

Employers should only make salary deductions where they are permitted under the Employment Act 1955. They should not automatically deduct wages because company property has not been returned.

Can employers pay overtime together with next month's salary?

Yes. Under Section 19(2) of the Employment Act 1955, overtime wages and wages for work on rest days or certain public holidays may be paid by the last day of the next wage period.

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