Salary Calculation

Salary Calculation for Incomplete Month

When an employee joins a company or ceases employment during a month, thereby having an incomplete month of service, the salary payment may have to be apportioned accordingly.

the Salary of a monthly rated employee is apportioned base on the number of days in the respective calendar month.

the apportionment is made on a calendar month basis because the salary payment is contracted on a monthly basis, whether the month has only 28 days as in February or 31 days as in august the employee gets the agreed monthly salary.

(Monthly Salary x Number of Days employed in the month ) / Number of days in the respective month

Example: employee Starts work on 12.1.2016, his salary is RM 1000.

Salary for January 2016 = (RM 1000 x 20 ) / 31 = RM 645.16

The calculations is base on the number of days in a month. it is not based on the number of working days in the month. The employer can use any other formula as he wished as long as the answer he gets is more favourable to the employee than the above answer.

Ordinary Rate of Pay (OPR)

OPR means wages whether calculated by the month, the week, the day, the hour or by piece rate or otherwise which an employee is entitled to receive for the normal hours of work for one day. Does not include

  1. any payment made under an approved incentive payment scheme or
  2. any payment for work done on a rest day or any gazetted PH granted by the employer or on any day substituted for the gazetted public holiday

Hourly rate of pay means the OPR divided by the normal hours of work.

Monthly OPR calculated monthly rate of pay / 26

Where an employee is employed on a weekly rate of pay the OPR is week

Weekly rate of pay / 6

Where employee is employed on a daily rate of pay or on piece rate, the OPR is

Employee’s total wages earned in the preceding wage period excluding (a) / actual days worked by the employee during that wage period excluding (b)

(a): any payment made under an approved incentive payment scheme or for work done on any rest day, any gazetted PH granted by the employer or any day substituted for the gazetted PH

(b): any rest day, any gazetted PH or any paid holiday substituted for gazetted PH

An employer may adopt any method or formula other than the above method or formula for calculating the OPR of an employee.  However the adoption of any other method or formula must not result in a rate that is less than any of the rates set out above.

for sick Leave payment the calculation of the ORP of an employee employed on a daily rate of pay or on piece rates, shall take account only of the basic pay the employee receives or the rate per piece he is paid for work done in a day under the contract of service.

Notice Period of Termination

In the absence of written terms the notice period at the date of giving notice shall not be less than

4 weeks : if employed for less than 2 years

6 weeks: if employed for 2 years and more but less than 5 years

8 weeks: if employed for 5 years and more

the notice period is given in the EA applies only if the written contract of service does not contain the notice period.

Either party can waive the right to a notice. Either party can pay the other parth an indemnity amount equal to the wages for the unexpired portion of the notice

Example

Monthly rated employee earning RM 1,400 per month. he wished to resign and leave immediately. The notice period required under his employment contract is 4 weeks. He gave his written notice on 18.6.2015. It was accepted by the management on the same day.

4 weeks notice period = 7 days per week x 4 week = 28 days

The period of 4 weeks is from 18.6.2015 to 15.7.2015

The indemnity amount which has to pay is

(a) 18.6.2015 – 30.6.2015 = 13 days = (RM 1,400/30) x 13 = RM 606.67

(b)1.7.2015 – 15.7.2015 = 15 days = (RM 1,400×31) x 15 = RM 677.42

(c) Total amount payable = RM 606.67 + RM 677.42 = RM 1,284.09

Part Time Employees

The part time employee by definition is working hours should not exceed 70% of the normal hours of work of a full time employee in similar capacity in the enterprise. eg.

  • 8 hours per day x 6 days week = 48 hours per week for normal full time staff
  • 70% x 8 hours = 5.6 hours or 5 hours and 36 minutes account to total 33 hours 36 minutes per week and part time staff cannot exceed this limit if he/she to be considered as part time employee.

Wage Periods

The last date for paying wages is 7th if the following month

Overtime on Public Holidays

Calculation of overtime on Public holiday (PH) which is recognised by employer. In addition to the PH pay, employees get OT of 2 times the ORP for one day. Any hours exceeding normal working hours is paid at 3 times the hourly rate of pay.

OPR

EPF Calculations

Members of the Employees Provident Fund (EPF) earning a monthly wage of not exceeding RM5,000 will be receiving a boost in their retirement savings when the revised employers’ statutory contribution rate of 13 percent takes effect from January 2012 wages.

If employer pays bonus to an employee who receives monthly wages of RM5,000.00 and below and upon receiving the said bonus renders the wages received for that month to exceed RM5,000.00, the calculation of the employer contribution rate shall be calculated at the rate of 12% (calculation by percentage), and the total contribution which includes cents shall be rounded to the next ringgit.

For example,

Calculation 1:
Basic Salary: RM 3000
Bonus: RM 2500

EPF Wages: RM 3000 + RM 2500 = RM 5500
EPF Employer Contribution: RM 5500x 12% = calculation by percentage
EPF Employee Contribution: RM 5500 x 11% = refer Third Schedule

Calculation 2:
Basic Salary: RM 6000
Bonus: RM 2500

EPF Wages: RM 6000 + RM 2500 = RM 8500
EPF Employer Contribution: RM 8500 x 12% = refer Third Schedule
EPF Employee Contribution: RM 8500 x 11% = refer Third Schedule

Calculation 3:
Basic Salary: RM 2000
Bonus: RM 2500

EPF Wages: RM 2000 + RM 2500 = RM 4500
EPF Employer Contribution: RM 4500 x 13% = refer Third Schedule
EPF Employee Contribution: RM 4500x 11% = refer Third Schedule

There will be a difference between the amount in Third Schedule and the actual calculation by percentage. The rate of contribution in the third schedule is set based on range between wages amount. For example: from RM1000- RM 1100).

Employees who are 55 years and above and earning wages not exceeding RM5,000 will also benefit from the revised rate as their employers are now required to contribute at 6.5 per cent which is an additional 0.5 per cent from the current 6 per cent, while the employees continue to contribute at 5.5 per cent.

Which employees are affected with the increase in employer’s share contribution rate?

The affected employees are employees who receive monthly wage/salary of RM5,000.00 and below as stated in Part A and Part C in the Third Schedule, EPF Act 1991.

What is the new employer’s share contribution rate for employees who receive monthly wage/salary of RM5,000.00 and below?

Generally, the new employer’s share contribution rate is divided into two categories:

i) For employees of not more than 55 years old, the new employer’s share contribution rate is 13% (increase of 1%); subject to the total of wage/salary in Part A, Third Schedule.

ii) For employees of 55 years old and above (up to 75 years old), the new employer’s share contribution rate is 6.5%; subject to the total in Part C, Third Schedule.

For future reference, the new employer’s share rates are 13% and 6.5% stated in para (i) and (ii) will be referred as the new rate for employer’s share contribution.

Employer EPF Contribution

Employers are required to submit their monthly contribution details through e-Caruman facility.

The e-Caruman is an online facility available via i-Akaun at myEPF website (www.kwsp.gov.my). Employers can access it anytime and anywhere, hence allowing them to perform their monthly EPF commitment in a secure and time-saving manner.

Employers who wish to utilise e-Caruman facility would need to firstly register for i-Akaun.

Submission of employees’ EPF contribution details online via e-Caruman will also reduce the number of errors, enhance employers’ operational efficiency and cost effectiveness as well as ensure prompt crediting of contributions into members’ EPF accounts.

EPF Contribution Schedule (Third Schedule) – source EPF website

The latest contribution rate for employees and employers effective 1 March 2016 can be referred in the Third Schedule, EPF Act 1991 (click to download). Employers are required to remit EPF contributions based on this schedule.

For late contribution payments, employers are required to remit contributions in accordance with the third schedule as attached below by referring to the applicable effective date. Please click on the hyperlinks below for employee and employer contribution rates:

a) Effective from 1 August 2013 to February 2016 (August 2013 salary/wage up to February 2016)

b) Effective from 1 January 2012 to July 2013 (January 2012 salary/wage up to July 2013)

c) Effective prior 1 January 2012 (December 2011 salary/wage and previous month)

Socso Calculation

All remuneration payable in money to an employee is taken into account as wages for the purposes of SOCSO contributions. These include the following payments:

  • Salary
  • Overtime payments
  • Commission
  • Payments for leave such as annual, sick and maternity leave, rest day, public holidays
  • Allowances such as incentive, good behavior, cost of living (COLA)
  • Service Charge

However, the following payments are not considered as wages:

  • Payments by employer to any pension or provident fund for employees
  • Mileage claims
  • Gratuity payment(s) for dismissal or retrenchments
  • Annual bonus

refer socso table

Scenario A

  • Salary = RM 1,800
  • Allowances = RM 150
  • Annual Bonus = RM 3,600
  • Total = RM 5,550

Total for SOSCO Contribution = RM 1,950 (Annual Bonus is excluded as it is not considered as SOCSO Wages)

  • Amount payable by Employer = RM 34.15
  • Amount payable by Employee = RM 9.75
  • Total payable amount for SOCSO Contributions = RM 43.90

Scenario B

  • Salary = RM 2,450
  • Allowances = RM 150
  • Total = RM 2,600
  • Total for SOSCO Contribution = RM 2,600
  • Amount payable by Employer = RM 44.65
  • Amount payable by Employee = RM 12.75
  • Total payable amount for SOCSO Contributions = RM 57.40

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