Malaysia (MY)
Multicultural, English-friendly Malaysia offers affordable living, world-class street food, tropical lifestyle, and a well-developed expat infrastructure in Kuala Lumpur and Penang.
Employment Rights
Sick leave, dismissal protection and red flags in Malaysia.
The Employment Act 1955 (EA 1955), amended significantly in 2022, is Malaysia's primary employment legislation. The 2022 amendment (effective January 2023) expanded coverage to ALL employees regardless of salary — previously the EA only applied to employees earning under RM2,000/month. Key 2022 reforms: maternity leave extended to 98 days, paternity leave introduced (7 days), flexible working arrangements formalised, sexual harassment provisions strengthened. Minimum wage: RM1,700/month nationwide (effective February 2023, unchanged through 2026). All expatriates on Employment Passes are covered by the EA — employer cannot contract out of statutory minimums.
Sick leave
Rules: Sick leave entitlement scales with service: under 2 years service = 14 days/year; 2–5 years = 18 days/year; over 5 years = 22 days/year. Additionally, 60 days/year hospitalisation leave (in-patient) is available on top of ordinary sick leave. Sick leave is paid at full salary. Non-hospitalisation sick leave requires a certificate from a panel doctor or registered medical practitioner — employee must notify employer as soon as possible.
Doctor note: Medical certificate (MC) is required from day 1 of sick leave in most cases. Malaysia has no self-certification period. Employer may specify a panel clinic list; use of non-panel clinic may require prior approval for cashless treatment, though sick leave remains valid with any registered doctor's MC.
Employer pay: Full salary paid for all statutory sick leave days. There is no statutory waiting day (no first-day deduction). Employer must not penalise or dismiss an employee for taking statutory sick leave supported by a valid MC.
Long-term: For work-related injuries or occupational disease: SOCSO (Social Security Organisation) provides Employment Injury Benefits including Medical Benefit (full medical cost), Temporary Disablement Benefit (80% of insured wages), Permanent Disablement Benefit (lump sum or annuity), and Dependent's Benefit. Non-occupational long-term illness: no separate statutory long-term sickness benefit beyond the 60-day hospitalisation leave; EIS (Employment Insurance System) provides benefits only on retrenchment, not sickness.
Dismissal protection
Law: Industrial Relations Act 1967 (IRA 1967) governs dismissal protection. An employee may not be dismissed without "just cause or excuse." Grounds for lawful dismissal include misconduct (after domestic inquiry), poor performance (after performance improvement process), and redundancy/retrenchment (genuine restructuring). Constructive dismissal (forced resignation due to employer conduct) is actionable under IRA 1967. The Industrial Court is the primary forum — can award reinstatement or back-pay compensation (typically up to 24 months' salary).
Deadline to sue: 60 days from the date of dismissal to file a representation with the Industrial Relations Department (IRD/JTKSM). Filing after 60 days is generally time-barred. File at the nearest Industrial Relations Department office or online at the JTKSM portal. The IRD conciliation process is mandatory before referral to the Industrial Court.
Probation
Probation period is not mandated by the EA 1955 — it is a contractual matter. Typical probation: 3–6 months in Malaysian employment contracts. During probation, employer may dismiss without notice in many cases, but wrongful dismissal claims can still be brought if dismissal was without just cause — Industrial Court has found in favour of probationary employees in some cases. After probation confirmation, full EA protections apply. Employees should request written confirmation of probation period end.
Notice periods
Minimum statutory notice periods under EA 1955: under 2 years service = 4 weeks notice; 2–5 years = 6 weeks; over 5 years = 8 weeks. Notice can be waived by payment in lieu. Most professional employment contracts specify 1–3 months notice — the contractual period applies if higher than the statutory minimum. Fixed-term contract employees cannot be dismissed before contract end without payment for the remaining term (subject to contract terms).
Working time
Max hours: Maximum working hours: 8 hours/day, 48 hours/week under EA 1955. For employees under EA, rest period of at least 30 minutes after 5 consecutive hours of work. At least 1 rest day per week (Sunday is the default unless another day is designated). Working on a rest day: for EA-covered employees, employer must pay at least 2x the daily rate. Working on a public holiday: 3x the daily rate.
Min rest: Minimum rest period: 30 minutes after 5 hours continuous work. 1 rest day per week mandatory. EA mandates at least 11 consecutive hours of rest between working periods (via regulations). Part-time employees covered under Part-Time Regulations of EA have proportional entitlements.
Overtime: Overtime for EA-covered employees: maximum 104 hours per month. Overtime rate: 1.5x hourly rate for overtime on normal working days; 2x hourly rate on rest days (beyond 8 hours); 3x hourly rate on public holidays. Senior managers and executives earning above RM4,000/month were previously exempt — the 2022 amendment now includes all employees under EA, though some executive-level EA provisions differ in application.
Vacation
Annual leave scales with service under EA 1955: under 2 years = 8 days/year; 2–5 years = 12 days/year; over 5 years = 16 days/year. Professional contracts typically offer 14–21 days. Public holidays: 11 national public holidays + state public holidays (varies by state, typically 3–5 additional days for a total of 14–16 paid public holidays annually). Annual leave must be taken within 12 months of accrual — forfeiture varies by contract; some contracts allow carry-over up to 5 days. Encashment of unused leave: payable on termination under EA.
Anti-discrimination
Malaysia does not have a comprehensive anti-discrimination employment law equivalent to EU Equality Directives. The EA 1955 contains some provisions against gender discrimination (maternity leave, no dismissal during maternity). The 2022 amendment specifically prohibits sexual harassment at the workplace and requires employers to have a complaint mechanism. There is no explicit statutory prohibition on race or religion discrimination in private employment — discrimination claims are handled through the EA industrial relations framework. Bumiputera affirmative action applies to government and some government-linked companies. Foreign employees on Employment Passes have the same basic EA rights as Malaysian employees.
Contract red flags
- !Contracts that waive statutory EA entitlements (sick leave, annual leave, notice period) — these waivers are void under EA 1955
- !Contracts with unrealistic non-compete clauses (Malaysian courts have held broad non-competes as void for being in restraint of trade)
- !Salary structure where a large portion is "allowance" rather than basic salary — overtime, leave, and SOCSO/EPF calculations are based on basic salary
- !Employment Pass tied to a single employer with no provisions for employer-sponsored EP transfer process
- !Contracts that specify disputes under non-Malaysian jurisdiction — not advisable as Malaysian labour law applies regardless
- !Bonds or training bonds exceeding reasonable amounts with no clear repayment schedule — may be unenforceable
- !"Flexi hours" arrangements with no cap on total hours — EA maximum hours still apply
- !Probation periods longer than 6 months without clear written justification — extended probation can be used to delay protection
- !Contracts that exclude commission, bonus, or allowances from "wages" for EA calculation purposes
- !Service charges (restaurant industry) that do not flow through to employees as legally required
- !Employment Pass salary below new 2026 thresholds (effective June 1 2026): Category III minimum RM5,000/month (up from RM3,000); Category II minimum RM10,000 (up from RM5,000); Category I minimum RM20,000 (up from RM10,000) — employers must renew at new thresholds or risk pass cancellation
Employment Rights
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