Employment Act (EA) 1955

The Employment Act, 1955 is the main legislation on labour matters in Malaysia

The Employment Act provides minimum terms and conditions (mostly of monetary value) to certain category of workers :-

  1. Any employee as long as his month wages is less than RM2000.00 and
  2. Any employee employed in manual work including artisan, apprentice, transport operator, supervisors or overseers of manual workers, persons employed on vessels and even domestic servants are classified as employees even if their wages is more than RM2000.00 per month.
  3. Person engaged in operation or maintenance of mechanically propelled vehicle
  4. Supervises or oversees other employees engaged in manual labour employed by the same employer
  5. The word “wages” excludes commission, subsistence, allowance and overtime payment

Terms frequently used

  1. Employer
  2. Foreign Employee
  3. Medical Officer
  4. Part time employee
  5. Permanent resident
  6. Shift Work
  7. Spread of period of ten hours
  8. Wages
  9. Casual Worker
  10. Temporary Employees

Contract of Employment

A contract of service for a specified period of time exceeding one month or the performance of a specified piece of work, where the time reasonably required for the completion of the work exceeds or may exceed one month shall be in writing

Note: A contract of service cannot restrict the rights of employees to join, participate in or organize trade unions

Collective Agreement (CA)

Certain categories of employees are covered by a valid Collective Agreement (CA) signed between the company and its union, the employer and such employees (who are covered within the CA) cannot agree on terms and conditions which differ from the CA. In such case, the terms and conditions as set out in the CA will apply.

Employees who are not within the scope of EA are mainly management personnel. The terms and conditions of their employment are normally set out in a contract of employment. Should a dispute arise relating to the terms and conditions of their employment the agreed terms in the contract of employment would have an important impact on the resolution of the dispute.

Minimum Wages Order 2016

  • Minimum wage has been implemented in 2013 and has been closely observed thereafter.
  • Minimum wages is basic wages, excluding any allowances or other payments.
MINIMUM WAGES RATE (as per Minimum Wages Order 2016)
Regional areasMonthlyHourlyDaily
Number of days worked in a week
654
Peninsular MalaysiaRM1,000RM4.81RM38.46RM46.15RM57.69
Sabah, Sarawak and LabuanRM920RM4.42RM35.38RM42.46RM53.08
  • The Minimum Wages Policy also applies to employees who are paid on piece-rates, tonnage, trip- or commission-based. Employers are required to supplement the wages of these employees if their income does not meet RM1,000 per month for Peninsular Malaysia and RM920 for Sabah, Sarawak and Labuan.

Occupational Safety and Health Act 1994

  • This Act which provides the legislative framework to secure the safety, health and welfare among all Malaysian workforce and to protect others against risks to safety or health in connection with the activities of persons at work.
  • Section 15 outlines the duties of the employer includes maintenance of plant and systems that are safe and without risk to health, provides information, instruction, training and supervision to ensure the safety and the health at work.
  • Section 16 requires the employer to formulate safety and health policy at the workplace and regularly revise the policies to align the policies with changes and best practices in the business world.
  • Safety and Health Policy is to demonstrate the company’s commitment and concern to ensure safety and health at place of work. Issues on safety and health stated in the policy must be taken into account.

Children and Young persons (Employment) Act 1966

  • To prevent the exploitation of child labor
  • Under 14 years – only light work in family’s business
  • 14-16 years – In light work that does not involve the use of machinery
  • A maximum of 7 hours per day
  • Only able to work between 8am – 6pm

Employment (Restriction) Act 1968

  • Non-Malaysian citizens are required to obtain a valid work permit before they can be employed locally.
  • Working without a valid work permit is strictly illegally under the Immigration Act 1966.

Factories and Machinery Act 1967

  • Gives protection in terms of health and safety for all workers working in factories regardless of sex
  • The jurisdiction of the act covers all factories

Minimum Retirement Age Act 2012

  • The minimum retirement age increased from 55 to 60 for civil servants and the private sector employees in Malaysia.
  • The act doesn’t prevent employees from choosing to retire early if the contract of service or collective agreement permits earlier retirement.
  • The new law will impose a fine of 10,000 ringgits on any employer found guilty of requiring an employee to retire prior to age 60. However, the legislation does not prevent employees from choosing to retire earlier than age 60 if the service contract or collective agreement that applies to their job permits an earlier retirement date