United States: Your Global Workforce In Malaysia

Malaysia is both exotic and magical, and we want to ensure that the management of your global workforce in Malaysia is in compliance with all employment and labor laws.  The key statutory authorities governing employment and labor law in Malaysia include Employment Act  of 1955 ("Employment Act") in peninsular Malaysia and territory of Labuan, the Industrial Relations Act of 1967, Labor Ordinances (in Sabah and Sarawak areas), Workmen's Compensation Act of 1952, Trade Unions Act of 1959, Employees' Social Security Act of 1969, the Factories and Machinery Act of 1967, and the Occupational Safety and Health Act of 1994.  Please be mindful that several amendments to Malaysia's Employment Act came into operation and effect on April 1, 2012.  We will discuss general Malaysian employment laws, best business practice for managing your workforce in Malaysia, and key changes in 2012 to the Employment Act.

The Malaysian common law recognizes that employment may take various forms:  ongoing no fixed-term employment agreement, fixed-term employment agreement, full-time employment, and part-time employment.  Generally, employees in Malaysia are covered by the Employment Act, which also provides remuneration structure (i.e wages, costs for housing/ accommodation, traveling allowances, contribution to pension funds, gratuity payable on retirement, annual bonuses, etc.), minimum works hours, rest periods, overtime compensation, and public holidays.  Pursuant to the amendments to the Employment Act in April 2012, minimum wage standards were implemented as follows: national minimum wage will be Malaysian Ringgit (MYR) 900 per month for employees in the peninsular Malaysia, and MTR800 per month for employees in Sabah, Sarawak, and the Labuan Federal Territory.  Employers must ensure that they are paying wages in compliance with the newly introduced minimum wage laws. 

Further, under the Employment Act, an employer cannot require employees covered by the Act to: (1) work more than five consecutive hours without a period rest of at least 30 minutes; (2) to work more than a ten hour spread over the course of a single day; and (3) to work more than 48 hours a week.  Exceptions to the hours worked requirement exist regarding a foreseeable interruption of work, urgent work to be done to machinery or plant, work that is essential for the well being of the community, or work that is essential for the defense or security of the country, or work to be performed in an industrial undertaking essential to the economy of Malaysia. 

Based on the Employment Act, employees are entitled to one rest day each week, which is usually Sunday or Friday.  However, employers can set the day of rest on any day of the week at its discretion.  According to the Employment Act, employees are entitled to a paid rest day on public holidays.  Please be mindful that in 2012, employees covered by the Employment Act are entitled to an extra day of pay on "Malaysia Day."  Malaysia Day is held on September 16 every year to commemorate the establishment of the Malaysian Federation in 1963.  With respect to overtime, any work done in excess of the normal hours of work is consider overtime and must be paid: (1) at least 150% of the basic hourly rate of pay during an ordinary working day; (2) at least 200% of the basic hourly rate of pay during rest days; and (3) at least 300% of the basic hourly rate of pay during public holidays.  Additionally, employers must be mindful that part-time employees covered by the Employment Act are specifically regulated by the Employment Part-Time Regulations.  A part-time employee is defined as an employee whose average hours of work as agreed with their employer do not exceed 70% of the normal hours of work of a full-time employee employed in a similar capacity in the same enterprise.  However, exceptions exist regarding the application of the part-time employee regulations, which include but are not limited to, casual employees who are engaged on an occasional or irregular basis, and employees who perform work at a residence irrespective of occupation. 

Interestingly, there are no legal requirements in Malaysia for an employer to establish work rules.  This means that an employer may choose to formulate work rules, company policies, employee handbooks, and similar documents, or an employer may choose not to do so.  Despite this lack of legal requirement, many companies establish work rules for best business practice purposes.  If a company establishes work rules and policies, an employer should be careful that the work rules and policies do not become a part of the employee contract of employment for the following reasons:  if a company decides to allow its work rules and policies to become a part of the employee contract, then the employee's consent may be required to amend such rules and policies.  Therefore, it is best business practice to establish and implement work rules, policies, procedures, employee handbooks, and other documents that expressly and specifically state that they do not form a contract of employment and are not a part of any employee contract of employment. 

Further, there are no specific regulations governing probationary periods in Malaysia.  However, in Malaysia, it is best business practice to utilize a three-month period for non-executive and non-management employees, and a six-month period for executive and management employees.  The purpose of instituting a probationary period is to protect your company in the event an employee covered on the Employment Act brings a complaint of dismissal "without just cause or excuse."  In recent years, the ability for employees to lodge a complaint of dismissal "without just cause or excuse" has led to a body of case law regarding circumstances in which termination of employment is legally justified.  Examples include: termination for misconduct and termination for redundancy.  However, courts will examine the genuine nature of redundancy dismissals and seriousness of misconduct (e.g. habitual neglect of duties, dishonesty, fraud) with a high degree of scrutiny.  Hence, for best business practice, employers should properly document misconduct and be able to support dismissals prior to any termination decisions. 

Additionally, there are also specific statutory restrictions on the termination of any employee on the basis of: (1) trade union membership or activities; (2) certain occupational health and safety activities (such as making a complaint about a safety concern); (3) disclosures to government agency in accordance with the Whistleblower Protection Act of 2010; and (4) maternity leave.  Employers must be mindful that effective April 1, 2012, maternity leave entitlements and benefits are required by law and extended to all female employees regardless of the amount of salary earned.  Further, dismissal of an employee on maternity leave is strictly prohibited by law and considered an offense to the Employment Act with respect to all female employees regarding of the amount of salary earned. 

Regarding foreign employees, the Employment Act provides that no employer shall terminate the contract of service of a local employee for the purpose of employing a foreign employee.  Therefore, for best business practice, some employers instill a standard operating procedure in which all contracts with foreign employees employed by an employer in a capacity similar to that of the local employees must first be terminated before any contracts with local employees are terminated during a restructure or situation of redundancy.  However, employers with foreign employees must be mindful that effective April 2012, amendments to the Employment Act require that employers of foreign employees must notify the Employment Director General within 30 days of a foreigner's employment being terminated or a foreigner separating from the workplace. 

Lastly, employers with employees in Malaysia must be cognizant of two recent major amendments to the Employment Act: (1) an amendment establishing a new administrative regime for the sole purpose of handling sexual harassment complaints and investigations in the workplace, and (2) an amendment permitting and imposing personal liability on individual directors and officers of corporate entities for offenses and violations of the Employment act, including those arising from the new sexual harassment regime. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions