Malaysia Country Guide

Malaysia

HR and HR Software Guide

Country Overview

Malaysia has emerged as an industrialized economy, and the country is poised to become the world’s 21st largest economy by 2050 with a GDP of $1.2 trillion. High labor productivity, knowledge-based industries, and integration of cutting-edge technology have made Malaysia one of the most competitive economies in the world. It is a leading exporter of electronic parts, electrical appliances, and natural gas. Malaysia’s economic outlook is favorable, leveraged by a stable labor market and continued economic growth.

Currency: Malaysian Ringgit

Principal Language: Malay

Government: Representative Democracy

Capital City: Kuala Lumpur

Major Provinces: Johor Bahru, George Town of Penang, Ipoh

Regular work schedule should not exceed 8 hours per day or 48 hours per week. An employment contract can have provisions for a work schedule that requires employees to work for more than 8 hours some days and less other days. This is acceptable, provided that the work schedule doesn’t exceed 12 hour day and 48 hours per week. Employees must get a 30-minute rest period after 5 hours of consecutive work. In the case that continual attendance is required, employees must be given a 45-minute rest period after working continuously for 6 hours.

Under the Work Regulation or Part-time Workers 2010, employers are required to give part-time employees benefits provided to full-time employees including annual leave, medical leave, overtime pay, and off on public holidays. Employees who work between 30% and 70% of full-time work hours are classified as part-time employees. Those who fall below 30% are considered casual employees and not covered by this regulation while those who work for more than 70% are considered full-time employees.

Holidays
The Malaysian law has the following paid public holidays:

  • Chinese New Year
  • Birthday of the Prophet Muhammad
  • Wesak Day
  • Hari Raya Puasa Day (2 days)
  • Hari Raya Haji (2 days in Kedah, Kelantan, Perlis and Terengganu states, 1 day in all other states)
  • Deepavali
  • Aug. 31: National Day
  • June 1: Birthday of Yang di-pertuan Agong
  • May 1: Labor Day
  • Sept. 16: Malaysia Day
  • Dec. 25: Christmas Day

Annual Leave
Employees get paid annual leave if they are:

  • with the current employer for less than 2 years: 8 days’ annual leave for every 12 months
  • with the current employer for 2 to 5 years: 12 days’ annual leave for every 12 months, and
  • with the current employer for 5 years or more: 16 days’ annual leave for every 12 months.

Annual leave may be accumulated and carried over to the next year after it is earned. An employee may voluntarily accept payment in lieu of leave. If leaves are carried over, the vacation must be approved and taken within the first 3 months of the subsequent calendar year.

Maternity Leave
Women employees, under the Employment Act, are entitled to 60 days of paid maternity leave for every child, beginning not earlier than 22 weeks before the expected date of delivery and not later than the day after the childbirth. Employers may require pregnant employees to commence maternity leave up to 14 days before the due date if a doctor certifies that they will not be able to perform their duties satisfactorily. These provisions apply to a still-birth also if the pregnancy lasts a minimum of 28 weeks.

Sick Leave
Employees are entitled to the following paid sick leaves in total each year if no hospitalization is required:

  • 14 days for less than 2 years of employment
  • 18 days for 2 to 5 years of employment
  • 22 days for 5 or more years of employment

Employees are entitled to 60 days of paid sick leave every year if hospitalization is necessary. A medical practitioner should certify an illness.

Social security benefits such as disability, retirement, medical payments, and survivors’ benefits are provided by the Social Security Organization and the Employees Provident Fund. It is mandatory for all employers and employees including temporary, part-time, and probationary employees to participate in these social security programs. Foreign workers, domestic workers, and sole proprietors are not required to participate but can make voluntary contributions to the fund.

Until an employee reaches the age of 54, employers are required to contribute an amount equal to 12% of employees’ wages, and employees must contribute 11%. For employees aged between 55 and 75 years, employers contribute 6% while employees contribute 5.5%. Employees working until the age of 75 can also contribute regardless of whether they have made a partial or full withdrawal from their account.

Retirement Benefits
The normal retirement age is 60. Employees who have reached the age of 75 are encouraged to fully withdraw from their account. If a full withdrawal is not made by 80, the remaining funds are transferred to the Registrar of Unclaimed Monies.

Disability Benefits
Employees with a medical certificate specifying their inability to work, due to a mental or physical incapacitation, can withdraw the full savings from the Provident Fund.

Survivors’ Benefits
Employees can nominate 1 or more individuals as their beneficiaries in the case of their death. Beneficiaries aged 18 or more can withdraw the full amount they are entitled to. Guardians of beneficiaries aged less than 18 can apply for making a withdrawal, but the amount must be used for the benefit of the beneficiaries. Or else, beneficiaries are required to wait until they turn 18 to withdraw the funds.

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  • Ensured compliance with in-country employment and labor laws
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