Overtime Pay in Malaysia: Legal Requirement and Calculation

Sometimes, employees work extra hours beyond their regular schedule. This is covered by the Employment Act 1955, which ensures employees get additional pay for overtime work.

Calculating overtime pay might seem tricky, but don’t worry.

This article will explain the legal rules, show you how to calculate overtime step by step, and include examples to make it easy to understand.

Overview of the Employment Act 1955 and its provisions on overtime pay

The Employment Act 1955 explains the rules for overtime in Malaysia.

According to Section 60A(3)(b), overtime means working extra hours beyond regular working hours. Employers should use this Act to understand how overtime applies to their workers.

Overtime means working more than 8 hours in a day or 48 hours in a week. This extra work can happen on regular workdays, rest days, or public holidays.

However, not everyone is automatically covered by the Employment Act 1955. The Act applies to

Employees earning RM4,000 or less per month.
Workers involved in manual labor, no matter how much they earn.
Employees who supervise manual workers or maintain machinery.

For employees who are not covered under the Act, overtime pay is determined by the terms of their employment contract or the company’s policies.

Legal Requirements for Overtime in Malaysia

To calculate overtime correctly, you need to know the rules about working hours and overtime pay rates:

Standard Working Hours

8 hours per day
48 hours per week

Overtime Pay Rates

Normal workdays: 1.5 times the hourly pay for extra hours worked.
Rest days: 2 times the hourly pay for overtime beyond normal hours.
Public holidays: 3 times the hourly pay for overtime beyond normal hours.

Overtime Limits

Employees are not allowed to work more than 104 hours of overtime in a month. This limit is set under the Employment (Limitation of Overtime Work) Regulations 1980.

How to Calculate Overtime Pay

You need to understand how the overtime pay is working.

So, if someday you need to do overtime, you can calculate by yourself and match it with the overtime pay that you receive. Check the step-by-step below.

1. Determine the Overtime Rate

To find the overtime rate, multiply the employee’s basic hourly wage with the suitable multiplier:

1.5 times for the first 8 hours of overtime in a day.
2 times for any additional hours beyond 8 hours in a day.

Example: Let’s say an employee earns RM5 per hour and works 10 hours of overtime in a day.

First 8 hours: RM5 x 1.5 = RM7.50 per hour
Additional 2 hours: RM5 x 2 = RM10 per hour

2. Calculate Total Overtime Earnings

Once you know the overtime rates, multiply them by the number of hours worked.

Example: If the employee works 10 hours of overtime:

For the first 8 hours: RM7.50 x 8 = RM60.00
For the additional 2 hours: RM10 x 2 = RM20.00
Total Overtime Earnings = RM60.00 + RM20.00 = RM80.00

3. Include Overtime Earnings in the Payroll

Once you calculate the overtime, make sure to record it and add it to the employee’s payroll. Employers should:

Include the overtime hours and rates clearly on the payslip.
Show the total overtime pay along with the basic salary and any other allowances.

Example salary slip entry:

Description	Hours	Rate (RM)	Total (RM)
Basic Salary	-	-	1,500.00
Overtime (8 hrs x RM7.5)	8	7.50	60.00
Overtime (2 hrs x RM10)	2	10.00	20.00
Total	-	-	1,580.00

Simple Overtime Request Form

Employee Information

Full Name: _______________________________
Employee ID: ____________________________
Department: _____________________________
Position/Role: ___________________________

Overtime Details

Date of Overtime: ________________________
Start Time: _____________________________
End Time: _______________________________
Total Overtime Hours: ___________________

Reason for Overtime
(Please provide a brief explanation of the task/project requiring overtime)

_______________________________

Approval

Immediate Supervisor’s Name: _____________________
Supervisor’s Signature: _________________________
Date: __________________________________________

HR/Managerial Approval

HR Manager’s Name: _____________________________
HR Manager’s Signature: ________________________
Date: __________________________________________

Common Scenarios and FAQs

How to handle overtime when an employee works on public holidays?

Employees who work on public holidays are paid extra. They receive double their daily wages for regular working hours and triple their hourly rate for any overtime.

Example: Ahmad works 9 hours on a public holiday, and his hourly rate is RM15. The calculations are:

For the first 8 hours: RM15 × 2 × 8 = RM240
For 1 extra hour (overtime): RM15 × 3 = RM45
Total pay for the day: RM240 + RM45 = RM285

What happens if the employee works overtime on rest days?

Employees who work on their rest days are paid based on how many hours they work:

If they work half a day or less: They earn half of their daily wage.
If they work more than half a day: They earn their full daily wage.
If they work overtime beyond normal hours: They are paid twice their hourly wage for the extra hours.

What to do if there are disputes over overtime pay?

If employees do not receive the overtime pay they are entitled to, they can file a complaint with the Labour Department of Malaysia.

Employers who fail to follow the rules can be fined up to RM50,000 for not complying.

By following the guidelines in the Employment Act 1955 and keeping accurate records of working hours, employers can confirm employees are paid correctly and avoid any legal problems.

For employers, fair overtime practices build trust, boost employee satisfaction, and keep your business in line with Malaysian labor laws.

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