Who Is Eligible For OT In Malaysia

Long working hours have become the norm today, particularly in Malaysian culture. Working overtime has become more common due to the economic recession caused by the Covid-19 global epidemic, with so many business owners finding it difficult to survive.

Most businesses specify in their employment agreements that employees might well be obligated to work extra hours beyond their normal working hours to fulfil the requirements of employers and/or clients.

Employees who work from home effectively need to stay in the 'office' at the end of the day in today's age of regularly prescribed 'work-from-home' arrangements, and the line between both regular working hours and extra hours would seem to have been blurred further.

As a result, it is reasonable to ask, "What constitutes overtime?" and 'What are the laws in Malaysia governing overtime?'

The Employment Act of 1955

The Employment Act 1955 ("EA 1955") is the primary piece of employment legislation in Malaysia. Together in simply put, the EA 1955 establishes the fundamental obligations and rights of Malaysian employees.

It should be noted that the EA 1955 does not apply to all employees because it only applies to the following:

employees for whom the monthly wage does not surpass RM2,000;
employees in the private industry;
employees working in Peninsular Malaysia or the Federal Territory of Labuan;
employees, regardless of wage,
who are involved in manual labour;
who are involved in the operation or maintenance of any commercial motor vehicle operated for transportation purposes;
who monitor or oversee other manual labour employees;
who work in any potential on a vessel subject towards certain conditions; or
who work as domestic servants

(also known as "EA Employees")

Employees whose rights and entitlements are outside the scope of the EA 1955 ("Non-EA Employees") are governed by the terms of their employment contracts.

Overtime

"Overtime" refers to the number of hours worked over the standard number of hours worked per day.

"Normal hours of work" means the number of hours agreed upon being an employer and an EA Employee in the service contract to be the usual hours of work per day, and certain hours of work must, therefore, not exceed the limits recommended in Section 60A(1) of EA 1955.

EA employees have the right to statutorily mandated overtime compensation. Non-EA Employees, on the other hand, do not have the same legal protections, and it is relatively common (and in certain cases, standard industry practices) for Non-EA Employees' employment contracts to exclude overtime entitlement programs in terms of better salaries.

If an employer has contractual provisions for extra hours in a Non-EA Employee's employment contract, the employer must follow the applicable conditions that have been agreed upon by the parties; otherwise, the Non-EA Employee may file a claim against the employer for violation of the contract and/or constructive dismissal.

As a result, the subsequent subsections address EA Employees' overtime rights and entitlements as recommended by the EA 1955.

Overtime - Regular Working Hours

Working full-time Employee of EA

a. EA Employees will be paid 1.5 times their hourly rate of pay ("HRP") for any overtime work performed over the standard working hours, regardless of the basic principle on which their pay rate is fixed.

b. Employers are also strictly forbidden from requiring or allowing an EA Employee to work more than 104 hours of overtime in any one month.

Part-time EA Position

If a part-time EA Employee is required to work beyond his/her normal working hours by his/her employer, the part-time EA Employee will receive at the following rates:

a. not below twice the HRP for every hour or part thereof that surpasses the part-time EA Employee's standard hours of work; and

b. not less than three times the HRP for every hour or part of certain that surpasses the normal working hours of a full-time EA Employee employed in a similar arrangement in the same organisation.

Overtime Wage Payment

Employers are required by the EA 1955 to pay overtime wages to EA employees no later than the final day of the upcoming wage period.

Fails to adhere to Overtime Wages

EA on a full-time basis

It is an offence under section the EA 1955 for the employer to fail to pay overtime wages to full-time EA employees. On such conviction, the court will order the employer to pay the overtime wages owed to the EA Employee in question, which will be able to recover as if it were a fine issued by the court.

Part-time EA

Meanwhile, for part-time EA Workers, any employer who fails to compensate any part-time EA Employee for work done outside of his/her normal working hours and/or work done on a public holiday commits the crime and is subject to a fine not exceeding RM10,000.00 if found guilty.

Keynote

Although it is common for employees to demonstrate confusion or a lack of awareness about the extent to which they are entitled to overtime pay, Malaysian laws require employers to pay overtime to a specific segment of the nation's working population.

There have already been modifications recommended to the EA 1955 as a result of the government's consultation with business stakeholders to level the playing field and provide legal protections to all employees regardless of wage earnings (along with the right to overtime pay); even so, these constitutional reforms have not yet been tabled in Parliament, and it is uncertain whether these amendments will be provided with the force of statute in the near future, given the sources of uncertainty brought about by the Covid-19 situation.

Visit the HR Library to acquire all relevant HR resources.

Find out more about hiring staff here.

Contact here for more information on hiring employees.