Employment Regulations

Malaysian employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. However, there are key differences that one must be aware of for compliance with local laws. For this and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Malaysia.

Key Factors to Consider When Employing in Malaysia:

There are several key areas to be aware of within Malaysia’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

Contracts

For employment periods over one month, the employee must be given a contract that specifies work hours, overtime, benefits and termination policies.

Employee Entitlements

Time Off Work

An employee is entitled to paid annual leave of

• Eight days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of less than two years
• Twelve days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of two years or more but less than five years
• Sixteen days for every twelve months of continuous service with the same employer if employee has been employed by that employer for a period of five years or more

Medical Leave

An employee is entitled to paid sick leave, where no hospitalization is necessary,

• Fourteen days in the aggregate in each calendar year if the employee has been employed for less than two years
• Eighteen days in the aggregate in each calendar year if the employee has been employed for two years or more but less than five years
• Twenty-two days in the aggregate in each calendar year if the employee has been employed for five years or more
• Sixty days in the aggregate in each calendar year if hospitalization is necessary, as may be certified by such registered medical practitioner or medical officer

Employment Termination

Resignation / End of Service Payment

Monthly as event occurs.

Probation Period

The general consensus appears to be that Malaysian law does not distinguish between employees and those under probation. However, JustLanded.com reports that if the employment period of an employee in a Malaysian company exceeds 1 month, they have to be given a written contract and that even if a probation period continues past 1 month dismissal still needs to be justified.

This means that after 1 month any employee will enjoy the same benefits as a full employee regardless of status. An industrial relations consultant’s blog states that it “is very clear that a probationer will be entitled to the minimum benefits provided under the EA. There are no exceptions stated in specific sections excluding probationers from such benefits.”