Malaysia Labor Law and Employment Policy Overview

Employment Law Overview

• Key Legislations:
  • Employment Act 1955
  • Occupational Safety and Health Act 2000
  • Social Security Act 2002
  • Employment Insurance Act 2007
• Legal Characteristics:
  • Aims to protect employees' rights and welfare
  • Prescribes standards for minimum wage, working hours, leave, and severance pay
  • Enforced by the Ministry of Human Resources

Employment Contract Requirements

• Contract Types:
  • Fixed-term contracts
  • Indefinite-term contracts
• Contractual Terms:
  • Must include details of job scope, remuneration, working hours, leave, etc.
  • Must be written in both English and Malay
• Language and Currency:
  • Contracts must be in English and Malay
  • Salary and benefits must be specified in Malaysian Ringgit (MYR)

Working Hours Regulations

• Standard Working Hours: 48 hours per week
• Rest Days and Breaks:
  • At least one rest day per week
  • Entitled to a 30-minute break after 6 hours of work per day

Leave Policy

• Annual Leave:
  • Less than 2 years of service: 8 days
  • 2 to 5 years of service: 12 days
  • More than 5 years of service: 16 days
• Public Holidays: 11 days
• Special Leave:
  • Sick Leave:
    • Less than 2 years of service: 14 days per year
    • 2 to 5 years of service: 18 days per year
    • More than 5 years of service: 22 days per year
  • Maternity Leave: 98 consecutive days
  • Paternity Leave: 7 days

Employee Severance and Termination

• Notice Period:
  • Less than 2 years of service: 4 weeks
  • 2 to 5 years of service: 6 weeks
  • More than 5 years of service: 8 weeks
• Severance Pay:
  • Less than 2 years of service: Nil
  • 2 to 5 years of service: 15 days' wages for each year of service
  • More than 5 years of service: 20 days' wages for each year of service
• Unfair Dismissal Protection:
  • Employers cannot dismiss employees based on discrimination or retaliation
  • Employees have the right to lodge a complaint for unfair dismissal

Taxation

• Personal Income Tax:
  • Please login first.

    Detailed tax and insurance tables are available after login to protect gated compliance content.

    LoginRegister
• Social Security Contributions:
  • Employee: 1.75%
  • Employer: 12%

Health Insurance

• Insurance Policy:
  • Employees are required to participate in the health insurance scheme of the Social Security Organization of Malaysia (SOCSO)
• Insurance Coverage:
  • Medical expenses
  • Disability benefits
  • Death benefits

Compensation and Benefits

• Minimum Wage: MYR 1,500/month
• Salary Structure:
  • Basic salary
  • Allowances
  • Bonuses

Work Permits and Visas

• Permit Requirement:
  • Foreign employees require a work permit
• Application Process:
  • Employer applies to the Ministry of Human Resources
  • Employee submits necessary documents, such as passport and resume

Confidentiality and Non-Compete Clauses

• Enforceability:
  • Confidentiality and non-compete clauses are enforceable in Malaysia
• Common Provisions:
  • Restrict employees from disclosing confidential information after leaving employment
  • Restrict employees from working for competitors after leaving employment

Training and Development

• Legal Requirement:
  • Employers must provide safety training to employees
• Government Support:
  • Government provides funding and incentives to support employee training

Workplace Diversity and Inclusion

• Legal Requirement:
  • Prohibits discrimination based on factors such as race, religion, or gender
• Enforcement Measures:
  • Employers must establish policies and procedures to prevent discrimination

Remote Work Policy

• Legal Framework:
  • No specific legal framework governing remote work
• Tax and Insurance Implications:
  • Remote work may affect employees' tax and social security obligations

Authoritative Website Addresses

• Ministry of Human Resources Malaysia: https://www.mohr.gov.my/