Work and Wages

Minimum Wage

The minimum wages legislations in Malaysia are National Wages Consultative Council Act 2011[Act 732], Minimum Wages Order 2012, Guidelines on the Implementation of the Minimum Wages Order 2012, Minimum Wages( Amendment) Order 2012, Minimum Wages(Amendment) Order 2013,  Minimum Wages(Amendment)(No.2) Order 2013, Minimum Wages (Amendment) (No. 3) Order 2013, Employment Act 1955, Sabah Labour Ordinance[Cap. 67], Sarawak Labor Ordinance[Cap. 76] ,Industrial Relations Act 1967[Act 177], Employment (Part-Time Employees) Regulation 2010, Labour (Part-Time Employees)(Sarawak) Rules 2013, Labour (Part-Time Employees)(Sabah) Rules 2013 and Income Tax (Deduction For Expenditure In Relation to Minimum Wages)Rule 2014.

Malaysia has different wage rates for different regions. For the Peninsular Malaysia, the monthly rate of minimum wages is different from the one in Sabah, Sarawak and Federal Territory of Labuan. This is in accordance with Section 4 of the Minimum Wages Order 2012.

Malaysia’s minimum wages policy is decided under the National Wages Consultative Council Act 2011 (Act 732). There is a tripartite body known as the National Wages Consultative Council which is formed to recommend the minimum wages rate to the Government and once approved by the Government, the Minister of Human Resources makes a Minimum Wages Order.

The criteria to decide minimum wages are divided into two; base and adjustment criteria. Base criteria include Poverty Line Income (PLI) and Median Wage while the adjustment criteria include changes in Consumer Price Index (CPI), Productivity Growth (P) and Real Unemployment Rate (UE).

Enforcement officers, as are appointed under the Employment Act, enforce the provisions on minimum wage. An employer who fails to pay the basic wages as are specified in the minimum wages order to his employees commits an offence and shall, on conviction, be liable to a fine of not more than 10,000 ringgits for each employee.

An employer who is convicted of failing to pay the basic wages as specified in a minimum wages order may, in addition to a fine, be ordered to pay the difference between the minimum wages rate as specified in the minimum wages order and the basic wages paid by the employer to the employee, including the outstanding difference and any other payments accrued.

For any repeated offence, a person shall be liable to imprisonment for a term not exceeding 5 years (or a fine not exceeding 20,000 ringgits).

Sources: §4 of the Minimum Wages Order 2012; §2, §60I, Part III-§18-23, Part IV –§24 of the Employment Act 1955(Act 265); §2 of the Employees Provident Fund Act 1991 (Act 452)

For detailed minimum wage rates, kindly refer to the §on minimum wages.

Regular Pay

There are several legal definitions of the word wages under the written laws.

Wages are defined under the Employment Act 1955 as “basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service”. Certain exclusions are applicable like wages do not include value of any house accommodation, travelling allowance, gratuity, annual bonus, etc. Wages have different meanings under different Acts and thus a different explanation of wages is found under section 2 of Employees Provident Fund Act 1991. 

The Employment Act 1955 also has stated some rules and laws on the payment of wages. The Act specifies that a wage period cannot exceed one month and even when the employment contract (referred to as contract of service under the law) does not specify the wage period, it is deemed to be one month.

The Employment Act also touches on the time of payment of wages. Every employer is required to pay wages to each of his employees within seven days of the last day of the wage period after making law deductions. The wages for overtime, work done on weekly rest days and public holidays must be paid by the last days of the next wage period. If the Director General of Labour is convinced that payment within such time is not reasonably practicable, he may, on the application of the employer, extend the time of payment by such number of days as he thinks fit.

Employment Act has detailed instructions on deductions from workers’ wages. It sets a general rule that no deductions can be made by an employer from the wages of an employee otherwise than in accordance with Employment Act. It then lists out the conditions when an employer can make lawful deductions (deductions for overpayment, deductions for indemnity due to employer, deductions for recovery of advance without interest) and the certain conditions of deductions that shall not or shall be made except with the request in writing of the employee (payments to a registered trade union, payment for any shares of employer’s business) or the Director General (payments into any superannuation or worker welfare scheme, payments for recovery of advance with interest, payments for accommodation and food, etc.).

Employers are required to provide a wage slip to every employee (relating to details of wages and other allowances earned during each wage period as specified in Employment Regulations 1957) on or before the date of payment of wages.

A draft amendment in the Employment Act, to be tabled in the Parliament in 2019, plans to make the Employment Act applicable to all workers irrespective of their wages or job type. Currently, the Employment Act is applicable to only those employed whose wages do not exceed RM2,000 or those workers who are engaged in manual labour. While the amended law will be applicable on all workers, certain provisions such as working hours, retrenchment benefits or compensation for working on a public holidays will still not be available for employees earning more than Rm5,000.

Source: Section 2, 18, 19 & 24 of the Employment Act 1955 (Act 265); Section 2 of Employees Provident Fund Act 1991; Regulation 9 of the Employment Regulations 1957

Regulations on Work and Wages

  • Perintah Gaji Minimum 2012 / Minimum Wages Order 2012
  • Kerja 1955 (Akta 265) / Employment Act 1955(Act 265)
  • Kumpulan Wang Simpanan Pekerja 1991 (Akta 452) / Employees Provident Fund Act 1991 (Act 452)

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