Malaysian Payment & Overtime Laws Explained for HR and Employers

Malaysia’s growing economy continues to attract businesses, but hiring talent comes with legal responsibilities, especially in how salaries and overtime are handled.

Under the Employment Act 1955, employers must follow clear rules on wages, payslips, deductions, and extra work hours. Ignoring these can lead to penalties and workplace disputes.

What is the Minimum Wage in Malaysia?

Since May 2022, the national minimum wage in Malaysia has been set at RM1,500 per month. This applies to employees paid by time, task, commission, tonnage, or trip.

For those paid hourly or daily, the Minimum Wage Order 2022 outlines the rates as follows:

RM7.21 per hour
RM57.69 per day for six working days a week
RM69.23 per day for five working days a week
RM86.54 per day for four working days a week

Employers must follow this rate based on the employee's work schedule.

Failing to meet the minimum wage requirement is considered an offence under Section 23 of the National Wages Consultative Council Act 2011. If convicted, employers can be fined up to RM10,000 per affected employee.

Deadline for Salary Payment in Malaysia

Salaries must be paid within 7 days after the end of each wage period.

Most companies operate on a monthly cycle, but as long as the agreed pay cycle does not exceed one month, it is acceptable under the law.

Overtime payments, however, can be paid by the end of the next wage cycle.

Salaries should cover the basic wage and any fixed cash payments stated in the employment contract, excluding bonuses, allowances, travel claims, and reimbursements.

Requirements for Payslips in Malaysia

Employers are legally required to provide a payslip every time an employee is paid.

The payslip must include:

Full name and ID details of the employee
Gender and nationality
Wage terms
Total salary paid
Payment date
Breakdown of earnings and deductions
Employer information
Date of issue

This documentation helps both parties track salary payments, deductions, and maintain accurate employment records.

Accepted Payment Methods for Employers in Malaysia

Employers can choose from several legal methods to pay salaries, such as bank transfers, cheques, or even digital payroll platforms.

What matters is that the method supports proper record-keeping and follows the terms agreed in the employment contract.

As digital payment platforms grow in popularity, they are becoming a useful way to process salaries quickly and keep accurate logs.

Regardless of the method used, employers are responsible for meeting the payment timelines agreed with the employee.

What Are the Laws on Salary Deductions in Malaysia?

Salary deductions are controlled by the Employment Act. Employers can only make deductions that are clearly allowed by the law.

Some deductions, like recovery of overpayments or salary advances, do not require the employee’s written permission.

Others, such as union dues or investment plans, must be requested in writing by the employee.

Under Section 24 of the Employment Act, no deduction can be made without a clear provision. The law outlines the conditions and procedures for valid deductions in Section 24(2) to (6).

Deductions such as for excess payments, indemnity, and salary advances may be made without employee request.

However, deductions for matters like union contributions or shares in the employer's business must be based on the employee’s written request.

Any deduction not covered under the Act must receive approval from the Director General of Labour.

Employers who deduct wages without a legal basis risk penalties and damage trust with their staff.

How Much is Overtime Pay in Malaysia?

Overtime in Malaysia is paid at a higher rate.

For regular overtime (beyond normal working hours), the rate is 1.5 times the hourly wage.

For example, with the current minimum hourly wage of RM7.21, overtime would be RM10.815 per hour.

On public holidays, overtime is paid at triple the hourly wage.

Employers must calculate and pay this correctly, especially for workers earning under RM4,000 per month, who are entitled to overtime payments under the latest Employment Act amendments.

What Does Overtime Mean in Malaysia?

Overtime refers to work done outside of an employee’s regular working hours.

This includes extra hours after office hours, working on weekends, or during public holidays.

As long as the work exceeds the agreed hours stated in the contract or the legal daily/weekly limits, it qualifies as overtime.

What Are the Limits for Overtime Work in Malaysia?

The law sets a monthly cap of 104 overtime hours. However, work done on rest days or replacement public holidays does not count toward this limit.

Employees cannot be required to work more than 12 hours in a single day, including overtime.

If employers break these rules, they may face penalties. It's important to note that not all employees qualify for overtime.

Those earning above RM4,000 monthly may be excluded unless they are in industries like banking, insurance, hospitality, or transportation, which have specific rules.

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